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Podravka Group

Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002.

2Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002

Podravka – a Leading Central European Food(and Pharma) Business

Note: Podravka also have representative office in Australia

Geretsried

Prague

Riga

Kiev

Belgrade

Skopje

Moscow

Prague

Ljubljana

Budapest

Bratislava

Warsaw

� The largest food company and the secondlargest pharmaceutical company in Croatia

� One of the largest branded foodbusinesses in CEE with leading brandsVegeta (universal seasoning) andPodravka (dried soups, ready-made mealsetc.)

� Sales 2001: 343 million EURO

� Leading Croatian corporate listed on theZagreb stock exchange since 1998.

� Strong distribution network with facilitiesand sales staff covering key emergingEuropean markets

� Modern production facilities in Croatia,Poland, Slovenia and Hungary

Headquarters of Podravka and Belupo

International subsidiaries andrepresentative offices

Home market: Croatia(2001 Sales: HRK1,414 mm)

Other emerging European markets(2001 Sales: HRK86 mm)

Other Western markets(2001 Sales: HRK 116 mm)

Core international markets(2001 sales: HRK920 mm)

Koprivnica


Podravka Worldwide

• Presence in more than 40 countries.• 25 companies in 15 countries.

• Strategic market CEE.

• Short Term priority: full coverage ofmarkets in CEE & SEE.

• Entered Yugoslavia, Ukraine andBaltic in the 2001.

• Turkey, Italy, Greece, Bulgaria endyear 2002.

• Export emphasis on selectedproducts.

• Vegeta strongest brand.• Podravka’s presence on the market


Podravka Operates in a Fast Growing Market…

5,0% 4,8%3,9% 3,9% 4,1%

3,4%3,0% 3,1%

1,2%

Rus

sia

Rom

ania

Bul

garia

Hun

gary

Cro

atia

Cze

ch

Slo

veni

a

Slo

vaki

a

Pol

and

GDP growth in selected CEE countries – 2001%� Central and Eastern European GDP expected

to continue growing at levels above WesternEurope due to convergence with EU driven byhigh FDI inflow and improving productivitylevels

� As a number of CEE countries prepare forentry into EU between 2003 and 2005, inflationrates are falling

� Large population pool of approximately 80 mmin Central Europe

� Podravka currently generates 44,3% of salesoutside Croatia – predominantly in other CEEcountries

� Relative nascence of CEE markets ideal to rollout new products

4,7%4,9%5,3%7,1%7,4%7,4%8,4%

21,6%

34,5%

Rom

ania

Rus

sia

Slo

veni

a

Slo

vaki

a

Bul

garia

Hun

gary

Pol

and

Cro

atia

Cze

ch

Inflation in selected CEE countries 2001%


6

7

8

9

Jan-99 Jun-99 Nov-99 Apr-00 Sep-00 Mar-01 Aug-01 Jan-02

4,8%

4,9%6,2%

4,2%

02468

1999 2000 2001 2002F

2,7%

4,1%3,7%

(0,4%) (2)0246

1999 2000 2001 2002F

… With an Improving Macro-economicOutlook

GDP growth (real)

%

Inflation%

Croatian Kuna exchange rates (spot rate-average)HRK

Dollar

Euro

� Croatia represents Podravka’s homemarket (55,7% of sales)

� Following a period of recovery,Croatia has entered into a period ofrobust growth

� Inflation has stabilised around a levelof 5.0%

� Croatian Kuna exchange rateincreasingly follows Euro


Podravka’s Business Structure

Podravka food Belupo pharma Non-core

Str

uct

ure

Pro

du

cts

Prodravka dd(food trading and production)

Podravka’s domestic andinternational food trading

subsidiaries

Belupo doo

International Belupo tradingsubsidiaries

Non-Core assets

� Koprivnica Tiskarnica

� Hotel Podravina

� Podravka Inzenjering

100% 100%

é Vegeta é Cardiovascular

é Meat delicatessen é Osteomuscular

é Hotel and restaurants in Koprivnica

é Podravka dishes é CNS é Printing facilities

é Dolcella é Dermatology é Engineering facilities

é Fruit and vegetables

é Beverages

é Children’s food

Total food sales 2001: HRK1,911 mm1 Total pharma sales 2001: HRK544 mm1 Total non-core sales 2001: HRK82 mm �


Podravka Organisation Structure

Supervisory Board

BoardMember;Domestic &

SEE Markets

Board Member;CFO

Deputy President ofthe Board

President of theBoard; CEO

Board Member;Foreign Markets

Management Board

Finance Director

Belupo President

CorporateFinance

CorporateCommunication

HumanResources

StrategicMarketing

R&D BusinessDevelopment

Croatian market South-East Europemarket

West Europe marketand overseas

East Europe marketMiddle Europemarket

Vegeta Podravka dishes Lino, dolcelaand snack

Beverages Danica d.o.o. Mill andbakery

Fruit andvegetable


History/Recent Developments

Oct-2000 Opening of Vegeta plant in tax free zone in Poland

May-2000 Opening of new Vegeta plant in Croatia

Nov-1998 Initial Public Offering on Zagreb Stock Exchange

Mar-2000 Appointment of new management team

Sept-1999 Opening of Belupo pharmaceutical complex

Apr-2002 5-yr contract between Podravka d.d. and Nestlé Corp. Sales, Logistics and Distribution Agreement regardingNestlé’s cetrain products to be sold in Croatia & SEEurope


Current Podravka Shareholder Structure

Shareholders as per 10-May-2002

Shareholders No. of shares % stake HFP (Government controlled) 783,953 12.97% Kapitalni Fond (Government controlled)

732,990 12.13%

EBRD 636,000 10.53% Dom Fond 264,675 4,38% PBZ 255,084 4,22% Franck 229,630 3,80% Treasury shares 161,903 2.68% Hypo Alpe Adria 129,639 2.15% Individual shareholders 2,068,754 34,24% Other legal entities 780,068 12,90% Total 6,042,696 100%

Shareholders’ stake

Total = 100%

IndividualShareholders

34,24%

HFP 12.97%

Kapitalni Fond12,13%

EBRD 10,53%

Dom Fond 4,38%

PBZ 4,22%

Franck 3,80%

Hypo Alpe Adria bank 2,15%

Treasury shares 2.68%

Other legal entities 12,9%

� 7 institutional shareholders control appr. 50% ofequity

� Over 20,000 individual shareholders comprise34,24% of equity


Podravka Share Price Performance

¹ calculated for period Jan 2001 - Apr 20022 Exchange rate on 12.04..2001: HRK/ �7.3958

Podravka share price performance for period Jan 2001- Apr 2002

� Most liquid stock on Croatian stockexchange

� Turnover data1 :– Average daily turnover of HRK

0.70 m ( 94,680)– 16 month turnover of Podravka

shares: 15.1% of total stockturnover

� 16 month high/low HRK: 246/139,99

� average price HRK: 162,58

� % in total zse Mkt Cap: 3,2%

� Croatian stock exchange regulated byCroatian SEC with listing rulesmodelled on the UK rules

100,00

120,00

140,00

160,00

180,00

200,00

220,00

240,00

260,00

2.1.20012.2.2001

2.3.20012.4.2001

2.5.20012.6.2001

2.7.20012.8.2001

2.9.2001

2.10.2001

2.11.2001

2.12.20012.1.2002

2.2.20022.3.2002

2.4.2002

HRK

600,00

700,00

800,00

900,00

1.000,00

1.100,00

1.200,00

1.300,00

1.400,00

Low: HRK 139,99Podravka

CROBEX

High: HRK 246

Avg: HRK 162,58

Mkt Capt: HRK ��( ��m)2 as at 30-04-2002


Listing Requirements – 1st Quotation ZSE

• Free transferability

• Whole class of securities to be listed

• Prospectus required

• Independent audited financials statements

• Three years of operation

• Min. Expected MarketCap: 10 Million Euros

• 25% of Securities in Public


Privatistion Process

� Approximately 2/3 of the Croatian Economy has beenprivatised.

� Impact of improving Corporate Governance

� Transparency


EU Accession

� Croatia joined Stabilisation & Association Agreementin 2001.

� Subject to ratification by Parliaments of EU membercountries

� Formal application for joining EU – 2003.


Laws Regulating CROSEC Activities

• Law on Issuance and Sale of Securities (‘95)

• Law of the Amendments and Changes to the Law onthe Issuance and Sale of Securities (’98)

• Law for the Takeover of Joint Stock Companies (’97)

• Law on Investment Funds (’95, ’96)

• Law on Privatization Investment Funds (’95)


Rules of Discolosure – ZSE (1)

• Annual reports independently audited, within fourmonths from the end of the financial year

• Semiannual reports within three months from the endof the semiannual period

• Changes and new developments of the main businessactivities

• Shareholder & Supervisory Board meetings (date,agenda, proposed decisions)

• Changes in Management and Supervisory Board


Rules of Discolosure – ZSE (2)

• Major changes in the ownership structure

• New issues of securities

• Mergers & Acquisitions procedures

• Trading in own (treasury) shares

• Trading by members of the Management andSupervisory Board

• Transactions with related parties


The Importance of Disclosure

• Shareholders rights & their equitable treatment

• Attracting & retaining financial resources

• Improvement of the investment climate

• Following first rate international standards ofCorporate Governance & Transparency


Role of the Management Board

• External international auditor engaged 5 years ago(E&Y, Vienna; PWC, Zagreb)

• Accounting organised according to the IAS

• Investors relation department established in 2000.

• Roadshows for existing & potential investors


Role of the Auditor (1)

• Appointed by GSM

• An independent opinion on the truth and fairness of thefinancial statements as a whole

• Assesment of risk of material misstatement andeffectiveness of controls

• But, cannot substitute Management’s responsibility


Role of the Auditor (2)

• Auditing semmi-annual & annual reports

• Making financial reports for:• Mother company• Consolidated financial reports for the Group• Financial reports of subsidiaries in Croatia & abroad

• Presenting financial reports to the Management Board& Supervisory Board

• Management Letter – prepared solely for the use ofManagement Board in order to improve weaknessesdue to their potential effect on the future performance


Podravka’s Key Initiatives

� Extend and consolidate position in new markets (Baltics, Balkans)

� Improve existing distribution network (ECR)

� Extend brand to additional product lines

� Improve focus on core activities

� Consider new acquisitions on a selected basis

� Manage future capex needs

� SAP

� ISO 9001:2000 (awarded to all Vegeta brands)

� HACCP

Sales &marketing

Strategic/financial

Supportsystems


Podravka’s Objectives (1)

More International

� Penetrate new markets and strengthen position in existingmarkets by better following consumer trends

� International inside (changing culture and habits)

� Management of the Group – Multilocal; more influence ofinternational staff on corporate strategy; Headquarterscoordinates activities and sets goals

“Satisfying Customers Needs Beyond Their Expectations”

� Local taste philosophy as main orientation

� Convenience food (easy to use)

Consequence: Multilocal R&D


Podravka’s Objectives (2)

Increasing Shareholders’ Value

� Sustainable growth and development

� Double –digit growth of revenues

� Continuous improvement of profitability

� Focus on core growth product areas


Contact

Nevenka Cerovsky, B. Sc. (Econ.)

Member of the Board, CFO

PODRAVKA d.d.

Tel: 385 48 651 102; 385 1 4877 812

Fax: 385 48 621 793; 385 1 4877 813

E-mail: [email protected]


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