Podravka Group Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002. Podravka – a Leading Central European Food (and Pharma) Business é The largest food company and the second largest pharmaceutical company in Croatia Headquarters of Podravka and Belupo International subsidiaries and representative offices é One of the largest branded food Home market: Croatia (2001 Sales: HRK1,414 mm) businesses in CEE with leading brands Core international markets Vegeta (universal seasoning) and (2001 sales: HRK920 mm) Other emerging European markets Podravka (dried soups, ready-made meals (2001 Sales: HRK86 mm) Other Western markets etc.) (2001 Sales: HRK 116 mm) Moscow é Sales 2001: 343 million EURO Riga é Leading Croatian corporate listed on the Warsaw Kiev Zagreb stock exchange since 1998. Prague Geretsried Bratislava Budapest é Strong distribution network with facilities Ljubljana Belgrade and sales staff covering key emerging Koprivnica European markets Skopje é Modern production facilities in Croatia, Poland, Slovenia and Hungary Note: Podravka also have representative office in Australia Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 2 Podravka Worldwide • Presence in more than 40 countries. • 25 companies in 15 countries. • Strategic market CEE. • Short Term priority: full coverage of markets in CEE & SEE. • Entered Yugoslavia, Ukraine and Baltic in the 2001. • Turkey, Italy, Greece, Bulgaria end year 2002. • Export emphasis on selected products. • Podravka’s presence on the market • Vegeta strongest brand. Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 3 Podravka Operates in a Fast Growing Market … GDP growth in selected CEE countries – 2001 é Central and Eastern European GDP expected % to continue growing at levels above Western 5,0% 4,8% 3,9% 3,9% 4,1% Europe due to convergence with EU driven by 3,4% high FDI inflow and improving productivity 3,0% 3,1% levels 1,2% é As a number of CEE countries prepare for Czech Poland entry into EU between 2003 and 2005, inflation Russia Croatia Bulgaria Slovakia rates are falling Romania Hungary Slovenia é Large population pool of approximately 80 mm Inflation in selected CEE countries 2001 % in Central Europe 34,5% é Podravka currently generates 44,3% of sales 21,6% outside Croatia – predominantly in other CEE 8,4% countries 7,4% 7,4% 7,1% 5,3% 4,9% 4,7% é Relative nascence of CEE markets ideal to roll Czech Poland Russia Croatia Bulgaria Slovakia Hungary Slovenia out new products Romania Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 4 … With an Improving Macro-economic Outlook GDP growth (real) é Croatia represents Podravka’s home % market (55,7% of sales) 6 4,1% 4 3,7% 2 2,7% 0 (0,4%) é Following a period of recovery, (2) Croatia has entered into a period of 1999 2000 2001 2002F robust growth Inflation % 8 é 6,2% Inflation has stabilised around a level 6 4,9% 4 of 5.0% 4,8% 2 4,2% 0 1999 2000 2001 2002F é Croatian Kuna exchange rate increasingly follows Euro Croatian Kuna exchange rates (spot rate-average) HRK 9 Dollar 8 7 Euro 6 Jan-99 Jun-99 Nov-99 Apr-00 Sep-00 Mar-01 Aug-01 Jan-02 Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 5 Podravka’s Business Structure Podravka food Belupo pharma Non-core Prodravka dd (food trading and production) 100% 100% Belupo doo Non-Core assets é Koprivnica Tiskarnica Structure Podravka’s domestic and é Hotel Podravina International Belupo trading international food trading é subsidiaries Podravka Inzenjering subsidiaries é Vegeta é Cardiovascular é Hotel and restaurants in é Meat delicatessen é Osteomuscular Koprivnica é Podravka dishes é CNS é Printing facilities é Dolcella é Dermatology é Engineering facilities é Fruit and vegetables é Beverages Products é Children’s food Total food sales 2001: HRK1,911 mm1 Total pharma sales 2001: HRK544 mm1 Total non-core sales 2001: HRK82 mm Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 6 Podravka Organisation Structure Supervisory Board Management Board Board Board Member; President of the Deputy President of Board Member; Member;Domestic & CFO Board; CEO the Board Foreign Markets SEE Markets Corporate Corporate Strategic Human R&D Business Belupo Finance Communication Marketing Resources Development President Finance Director Vegeta Podravka dishes Lino, dolcela Fruit and Beverages Danica d.o.o. Mill and and snack vegetable bakery Croatian market South-East Europe Middle Europe East Europe market West Europe market market market and overseas Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 7 History/Recent Developments Apr-2002 5-yr contract between Podravka d.d. and Nestlé Corp. Sales, Logistics and Distribution Agreement regarding Nestlé’s cetrain products to be sold in Croatia & SEEurope Oct-2000 Opening of Vegeta plant in tax free zone in Poland May-2000 Opening of new Vegeta plant in Croatia Mar-2000 Appointment of new management team Sept-1999 Opening of Belupo pharmaceutical complex Nov-1998 Initial Public Offering on Zagreb Stock Exchange Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 8 Current Podravka Shareholder Structure Shareholders’ stake é 7 institutional shareholders control appr. 50% of equity é Over 20,000 individual shareholders comprise 34,24% of equity Other legal entities 12,9% HFP 12.97% Shareholders as per 10-May-2002 Kapitalni Fond Shareholders No. of shares % stake 12,13% HFP (Government controlled) 783,953 12.97% Kapitalni Fond (Government 732,990 12.13% controlled) Individual EBRD 636,000 10.53% Shareholders 34,24% EBRD 10,53% Dom Fond 264,675 4,38% PBZ 255,084 4,22% Franck 229,630 3,80% Dom Fond 4,38% Treasury shares 161,903 2.68% PBZ 4,22% Hypo Alpe Adria 129,639 2.15% Franck 3,80% Individual shareholders 2,068,754 34,24% Hypo Alpe Adria bank 2,15% Other legal entities 780,068 12,90% Treasury shares 2.68% Total 6,042,696 100% Total = 100% Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 9 Podravka sharePodravka price performance forShare period Jan Price 2001- Apr 2002Performance é Most liquid stock on Croatian stock exchange é Turnover data – Average daily turnover of HRK 0.70 m ( 1 – : 16 month turnover of Podravka shares: 15.1%94,680) of total stock é turnover 16 month high/low HRK: 246/139,99 é average price HRK: 162,58 H é RK 260,00 Mkt Capt: HRK % in total zse Mkt Cap: 3,2% é 240,00 Croatian stock exchange regulated by 220,00 Croatian SEC with listing rules ( modelled on the UK rules 200,00 180,00 m) 2 as at 30-04-2002 ¹ calculated for period Jan 2001 - Apr 2002 160,00 2Exchange rate on 12.04..2001: HRK/ 140,00 CROBEX High: HRK 246 120,00 100,00 Podravka 1.400,00 1.300,00 Ã7.3958 2.1.2001 2.2.2001 1.200,00 2.3.2001 Low: HRK 139,99 Istanbul, 2 2.4.2001 2.5.2001 1.100,00 2.6.2001 Avg: HRK 162,58 nd SEE Corporate Governance Roundtable, 30-31 May 20022.7.2001 1.000,00 2.8.2001 2.9.2001 900,00 2.10.2001 2.11.2001 800,00 2.12.2001 2.1.2002 700,00 2.2.2002 2.3.2002 2.4.2002 600,00 10 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 Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 11 Privatistion Process é Approximately 2/3 of the Croatian Economy has been privatised. é Impact of improving Corporate Governance é Transparency Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 12 EU Accession é Croatia joined Stabilisation & Association Agreement in 2001. é Subject to ratification by Parliaments of EU member countries é Formal application for joining EU – 2003. Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 13 Laws Regulating CROSEC Activities • Law on Issuance and Sale of Securities (‘95) • Law of the Amendments and Changes to the Law on the 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) Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 14 Rules of Discolosure – ZSE (1) • Annual reports independently audited, within four months from the end of the financial year • Semiannual reports within three months from the end of the semiannual period • Changes and new developments of the main business activities • Shareholder & Supervisory Board meetings (date, agenda, proposed decisions) • Changes in Management and Supervisory Board Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 15 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 and Supervisory Board • Transactions with related parties Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 16 The Importance of Disclosure • Shareholders rights & their equitable treatment • Attracting & retaining financial resources • Improvement of the investment climate • Following first rate international standards of Corporate Governance & Transparency Istanbul, 2nd SEE Corporate Governance Roundtable, 30-31 May 2002 17 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 Istanbul, 2nd SEE Corporate