atlantic grupacarbonated soft drinks vitamin instant drinks functional waters waters tea and...

ATLANTIC GRUPA Company of Added Value EBRD’s 15th ANNUAL SYNDICATIONS AND CO-FINANCIERS MEETING

March 2013

CONTENT

OVERVIEW OF ATLANTIC GRUPA

REFINANCING

2012 FINANCIALS AND 2013 OUTLOOK

2

ONE OF THE LARGEST FOOD AND BEVERAGES COMPANIES IN THE REGION*

Key business segments: Key brands:

The leading coffee producer in the region GRAND KAFA, BARCAFFE

Prominent European company in the sports nutrition MULTIPOWER

Among the leading soft drinks producers in the region CEDEVITA, COCKTA, DONAT Mg

Among the leading confectionary & snacks producers in the region SMOKI, NAJLEPŠE ŽELJE, BANANICA

Among the leading savoury spreads producers in the region ARGETA

Producer of the No1 Croatian brand in the VMS segment DIETPHARM

The leading private pharmacy chain in Croatia FARMACIA

The leading FMCG distributer in the SEE region International Brands (Ferrero, Wrigley...)

Business Fast Moving Consumer Goods

Headquarters Zagreb, Croatia (Europe)

Foundation 1991

No of employees 4,247

FY12 sales EUR 657 millions

Key Markets CEE region, Western Europe, Russia presence on over 40 markets

Production locations 14 production locations in Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Macedonia and Germany

*The region includes: Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Montenegro, Macedonia and Kosovo; Figure translated at EUR/HRK FX rate of 7.5

3

1 6 12 17 27 33 36 42 61 81 90 102145

186223

267 293 302

602630

657

0

100

200

300

400

500

600

700

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2010* 2011 2012

Sales in EUR millions

CAGR 1993-2012:+40.2%

DEVELOPMENT CYCLE: EXTENSIVE M&A TRACK RECORD

Acquisition of Kalničke vode Bionatura

Acquisition of DROGA KOLINSKA

Acquisition of pharmacies – Farmacia

IPO

Acquisition of Fidifarm (Croatia) & Multivita (Serbia)

Representative office Moscow

Acquisition of Haleko & Power Gym: MULTIPOWER

European company

2010

2010

2008/9

2007

2007

2006

2005

Acquisition of Melem

Atlantic Slovenia

Atlantic Macedonia

Acquisition of Neva

Acquisition of CEDEVITA

Atlantic Serbia

Representative office Bosnia and Herzegovina

Regional company

2004

2004

2003

2003

2001

2001

2001

Cooperation Johnson & Johnson

Cooperation Duracell

Distribution center Rijeka

Distribution center Osijek

Distribution center Split

Cooperation Wrigley

National company

1999

1996

1994

1994

1992

1991

DIST

RIBU

TIO

N CO

MPA

NY

DIST

RIBU

TIO

N &

PRO

DUCT

ION

COM

PANY

VERT

ICAL

LY IN

TEG

RATE

D CO

MPA

NY

2010*: Pro-forma consolidated with Droga Kolinska; Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences

4

ATLANTIC GRUPA’S BUSINESS MODEL FROM 2012

SBU

COFFEE

Reorganization in 2012 with an aim to manage business segments and distribution markets in a more efficient manner The new business organisation includes six Strategic Business Units (SBU), four Strategic Distribution Units (SDU) and

Russian market

SBU

BEVERAGES

SBU

SPORTS AND FUNCTIONAL

FOOD

SBU

PHARMA AND PERSONAL

CARE

SBU

SAVOURY SPREADS

SBU

SNACKS

SDU

Croatia

SDU

Slovenia, Serbia and Macedonia

SDU

HoReCa Hotels,

Restaurants, Cafes

RUSSIAN MARKET

Baby food,

All products in Russia and CIS

SDU

International Markets

All markets outside the region,

Russia and CIS

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PRODUCT/DISTRIBUTION PORTFOLIO OVERVIEW

Cof

fee • Turkish Coffee

• Espresso coffee • Instant coffee

Be

vera

ges • Carbonated soft drinks

• Vitamin instant drinks • Functional waters • Waters • Tea and Functional tea

P

harm

a • Food supplements • OTC products • Pharmacy chain

Snac

ks

• Savoury snacks • Chocolate tablets • Wafers & Biscuits • Bars

S

avou

ry

s

prea

ds • Meat spreads • Fish spreads • Sandwiches

B

aby

food • Baby cereals

• Milk formula • Juices, tea, water • Biscuits, jars

S

ports

and

fu

nctio

nal f

ood

• Sports food • Weight management range • Energy range • Body building range

6

ATLANTIC GRUPA’S GREATEST ASSETS

Brands with key market positions - among the top 3 in their category based on Nielsen Retail Panel and company data

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STABLE MANAGEMENT TEAM AND OWNERSHIP STRUCTURE Management Ownership structure on 31/12/2012

Supervisory board

Supervisory Board

Audit Committee Nomination and Remuneration

Committee

Corporate Governance Committee

Mladen Veber Senior Group Vice President Business Operations

Zoran Stanković Group Vice President Finance

Neven Vranković Group Vice President Corporate Affairs

Emil Tedeschi President of the Management Board

Lada Franz VedranaZdenko Tedeschi Siniša Željko Josef Saša JelušićAdrović Fiorio Petrović Perić Flosbach Pekeč Kašić

President Vice President Member Member Member Member Memberof the of the of the of the of the of the of theSupervisory Supervisory Supervisory Supervisory Supervisory Supervisory SupervisoryBord Bord Bord Bord Bord Bord Bord

Emil Tedeschi50.2%

Pension funds18.6

EBRD 8.5%

DEG 8.5%

Lada Tedeschi Fiorio 5.8%

Management 1.1%

Other 7.3%

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Strategic Management Council: deals with vital strategic and operational corporate issues. Consists of: Board Members, Vice Presidents and Senior Executive Directors of each SBU and SDU, Senior Executive Director for Regional KAM and Sales Croatia, the Secretary General, Executive Directors of Corporate Controlling, Central Procurement and Human Resources, and the Head of the Investment Committee.

GEOGRAPHIC PRESENCE

PRESENCE ON MORE THAN 40 MARKETS INCLUDING: Regional countries: Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia, Montenegro, Kosovo Western European countries: Germany, United Kingdom, Italy, Austria, Switzerland, Spain, France Northern European countries: Sweden, Norway Eastern European countries: Russia, Ukraine, Poland, CIS countries

Strong production and distribution network in the region

17 production facilities in Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia and Germany

Own distribution network in Croatia, Slovenia, Serbia and Macedonia

16 distribution centers in the region

11 companies and representative offices in Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia, Montenegro, Germany, United Kingdom, Italy, Spain and Russia

Slovenia Croatia

Bosnia and Herzegovina

Serbia

Macedonia + production facility in Germany

Overview of production facilities

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REFINANCING


10

CONTENT

REFINANCING

Refinancing structure

EBRD arranged loan EUR 232m

EBRD EUR 60m

Raiffeisen Bank, Unicredit Bank,

Sberbank, Erste Bank EUR 172m

Bilateral loan EUR 75m

IFC EUR 50m

Raiffeisenbank Austria Zagreb,

Zagrebačka banka

EUR 25m

Transaction value and purpose

EUR 307m, out of which: Balance sheet restructuring → EUR 272m Energy efficiency improvement → EUR 10m Working capital financing → EUR 25m

Reasoning for refinancing

Agreement of more favourable loan conditions with average interest rate of 4.71% at the time of refinancing and prolonged maturity

Cost savings Balance sheet restructuring – placing a

permanent financing structure Diversifying lenders’ base Creating platform for growth Increasing operational efficiency on the group

level

EBRD19.5%

Raiffeisen Bank, Unicredit Bank,

Sberbank, Erste Bank56.0%

IFC16.3%

Raiffeisenbank Austria Zagreb, Zagrebačka banka

8.1%

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REFINANCING


12

CONTENT

RESULTS IN LINE WITH THE GUIDANCE

2012 and 2011 results normalized

(in EUR millions) 2012A/2011E: 99.3% 2012A/2011A: 104.3%

2012A/2011E: 101.6% 2012A/2011A: 108.0%

2012A/2011E: 103.7% 2012A/2011A: 113.6%

0

100

200

300

400

500

600

700

Sales

657 662 6302012A2012E2011A

0

20

40

60

80

EBITDA EBIT

74

53

73

51

69

47

2012A2012E2011A

Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences

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SALES PROFILE BY STRATEGIC BUSINESS UNITS AND STRATEGIC DISTRIBUTION UNITS

HRKm

* Other segments include SDU HoReCa, Russian market and non-allocable business activities (headquarters and support functions in Serbia, Slovenia and Macedonia) which are excluded from the reportable operating segments. For the time being, SDU International Markets will not be separated, but its sales and profitability will be presented within SBU to which they relate. For the time being, the Russian market will include only the baby food product range sales under the Bebi brand.

** Line item “Reconciliation” relates to the sale of own brands which is included in the appropriate SBU and in SDUs through which the products were distributed.

Key highlights:

Strategic Business Unit Coffee recorded highest increase in sales with this year being the second best year after 2008

SBU Pharma and Personal Care and SBU Savoury Spread recorded significant increase in sales – 7.8% and 7.6%, respectively

SDU Croatia recorded decrease in sales as a consequence of a drop in the principals’ brands segment distribution, primarily caused by the termination of a portion of Karolina product range distribution

(in EUR thousands) 2012 2011 2012/2011

SBU Beverages 89,591 89,380 0.2%

SBU Coffee 145,423 133,555 8.9%

SBU (Sweet and Salted) Snacks 80,063 77,170 3.7%

SBU Savoury Spreads 61,822 57,460 7.6%

SBU Sports and Functional Food 90,663 86,419 4.9%

SBU Pharma and Personal Care 64,177 59,507 7.8%

SDU Croatia 116,910 118,411 (1.3%)

SDU Slovenia, Serbia, Macedonia 257,385 250,060 2.9%

Other segments* 49,754 43,685 13.9%0 0

Reconciliation** (298,396) (285,277) n/a

Sales 657,392 630,369 4.3%


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SALES BY CATEGORIES

HRKm

Key highlights:

The product category coffee with Grand kafa and Barcaffe brands is the largest individual product category, with a share of 22%

The product category Sports and functional food with key brands Multipower and Champ, and the product category Beverages with key brands Cedevita, Cockta and Donat Mg are the second and third largest product categories, with 14% shares, respectively

Principal brands make 16% of the total sales

Baby food 3%Principal

brands 16%

Sports and FunctionalFood 14%

Pharma & Personal care 10%

Coffee 22%

Sweet and salted snack12%

Savoury spreads 9%

Beverages 14%

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SALES PROFILE BY MARKETS

HRKm

Key highlights:

Reduced share of the Croatian market in total sales, but the Croatian market still remains the largest retail market of the Group

Serbian market has generated nearly a quarter of the Group’s sales in 2012.

Growth of the share of Slovenia in the Atlantic Grupa’s total sales as a result of sales increase in the above market

The share of Bosnia and Herzegovina in the Atlantic Grupa’s total sales remained unchanged compared to 2011

A slight increase of the share of other markets in the region

Increased market share of Russia and the CIS

Increase in the share of other markets

*Other regional markets: Macedonia, Montenegro, Kosovo; **Western Europe: Germany, United Kingdom, Italy

2012

Croatia 26.6%

Serbia 24.9%

Slovenia 13.2%Bosnia and Herzegovina

7.6%

Other regionalmarkets* 6.4%

Western Europe**7.3%

Russia and Commonwealthof Independent States 5.0%

Other markets 8.9%

2011

Croatia 28.2%

Serbia 25.5%

Slovenia 12.7%

Bosnia and Herzegovina7.6%

Other regionalmarkets* 6.2%

Western Europe**8.0%

Russia and Commonwealthof Independent States 3.9%

Other markets 8.0%

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Ownbrands72.0%

Farmacia6.1%

2012

Private label6.0%

Principal brands15.9%

Own brands71.6%

Farmacia5.8%

2011

Private label5.3%

Principal brands 17.3%

SALES PROFILE BY PRODUCT CATEGORY

HRKm

Own brands: Sales of EUR 473.6 million with a growth in sales of 5.1% compared to

2011 The most prominent growth in sales was recorded by brands in the

following segments: (i) coffee – Barcaffe, Grand kafa and Bonito, (ii) beverages – Donat Mg and Cocta, (iii) savoury spreads - Argeta, (iv) snacks - Smoki, and (v) baby food - Bebi

Principal brands: Sales of EUR 104.3 million with the 5.1% decrease in sales compared to

2011 Impact of the termination of a portion of the Karolina product range

distribution and the termination of the Tvornica Duhana Rovinj product portfolio distribution

Private labels: Sales of EUR 39.5 million with the growth of 18.7% compared to 2011. The growth primarily relates to the product range sports and functional food

Farmacia: 9.4% growth in sales compared to 2011 The growth in the pharmacy chain was achieved at the organic level, as

well as through the merger of 5 pharmacies acquired in May 2011 As at 31 December 2012, the pharmacy chain Farmacia consisted of 45

pharmacies and 13 specialised stores

Figures translated at EUR/HRK FX rate of 7.5

17

OPERATING PROFITABILITY OF SBU’S AND SDU’S

HRKm

Key highlights:

The most significant contribution to the Group EBIT by the SBU Coffee with EBIT of EUR 18.8 million, SBU Savoury Spreads with EBIT of EUR 14.7 million and SBU Beverages with EBIT of EUR 14.1 million.

Management of Atlantic Grupa is focused on the growth in operating result of the SBU Sports and Functional Food and especially SDU Croatia, which recorded a negative EBIT of EUR 0.6 million.

Since in 2012 the organisational structure, business model and manner of reporting significantly changed, it was not practical to restate the comparative results for 2011 by Strategic Business Units and Strategic Distribution Units.

Figures translated at EUR/HRK FX rate of 7.5

(in EUR millions) 2012

SBU Beverages 14.1SBU Coffee 18.8SBU (Sweet and Salted) Snacks 12.8SBU Savoury Spreads 14.7SBU Sports and Functional Food 0.6SBU Pharma and Personal Care 6.7SDU Croatia (0.6)SDU Slovenia, Serbia, Macedonia 10.0Other segments (24.5)

Group EBIT 52.7

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Equity and liabilities structure as at 31 December 2012

Short term financialdebt 6.9%

Bond 2.2%

Trade and otherpayables 15.4%

Other liabilities 6.5%

Long term financial debt

40.6%

Capital and reserves 28.4%

FINANCIAL INDICATORS

HRKm

Key highlights:

Net debt was reduced by EUR 18.8 million compared to previous year

Non-current and current financial liabilities with the bond make 49.7% of the Atlantic Grupa’s total equity and liabilities.

Key capital expenditures in 2012:

The construction of the Cockta bottling plant in Apatovac

Investment in IT – SAP licence for Slovenia, purchase of HRIS system (human resources information system)

Investments related to transferring the production of Multipower beverages to Rogaška Slatina

Investment in modernisation of equipment – the wafers packaging machine in Soko Štark, equipping the bottling plant of Palanački Kiseljak, purchase of equipment for the production of coffee, automation of the Bosch line for coffee in Izola

purchase of espresso machines for the HoReCa channel

(in EUR millions) 2012 2011

Net debt 313.8 332.5

Total assets 685.6 714.0

Equity 194.8 201.6

Current ratio 1.8 1.8

Gearing ratio 61.7% 62.3%

Net debt/EBITDA* 4.2 4.8

Interest coverage ratio* 2.6 2.3

Capex 10.5 12.9

Cash flow from operating activities 39.5 21.2

*Normalized; Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences

19

Strategic management

guidance

Focus on organic business growth through active brand management with a special emphasis on strengthening the position of brands in international markets; strengthening the regional character of distribution business and further development of the HoReCa segment;

Focus on further business rationalisation and cost management through the CORE program and optimisation of operating processes on all operating levels, aimed to improve operating efficiency;

Regular settlement of existing financial liabilities with an active management of debt and finance costs; and

Prudent liquidity management.

ATLANTIC GRUPA’S STRATEGIC MANAGEMENT GUIDANCE FOR 2013


(in EUR millions) 2013 Guidance (normalized) 2012 Normalized 2013/2012

Sales 684 657 4.0%

EBITDA 78 74 4.7%

EBIT 56 53 5.3%

Interest expense 25 29 (14.1%)

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CONTACT

Atlantic Grupa

Investor Relations

Miramarska 23, 10 000 Zagreb, Croatia

+385 1 2413 908

[email protected]

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