Atlantic Grupa d.d. June 20th, 2012 1 KEY BUSINESS DEVELOPMENTS IN - - PowerPoint PPT Presentation

1

GENERAL ASSEMBLY Atlantic Grupa d.d.

June 20th, 2012

2

KEY BUSINESS DEVELOPMENTS IN 2011

 Guidance delivered despite challenging macroeconomic environment  Successful execution of integration of Droga Kolinska and Atlantic Grupa  Divestment of non-core assets: 13% share in RTL Hrvatska television channel  Bond refinancing: new corporate bond ATGR-O-169A  Regular fulfilment of all financial obligations  Surging prices of all key raw and packaging materials  PPA – Purchase Price Allocation for Droga Kolinska  Achievement of synergy effects

3

• Sales at 4,727.8 million kuna

+ 108.4% yoy based on reported figures + 1.2% yoy organic growth + 4.8% yoy growth compared to pro-forma consolidated level in the same period last year

• Normalized earnings before interests, taxes and depreciation (EBITDA) at 517.3 million kuna

+ 156.5% yoy based on reported figures

• 1.7 yoy growth compared to pro-forma consolidated level in the same period last year
• Normalized earnings before interests and taxes (EBIT) at 309.2 million kuna

+ 110.9% yoy based on reported figures + 12.1% yoy growth compared to pro-forma consolidated level in the same period last year

• Net profit after minorities at 46.6 million kuna

* Normalised net profit after minorities at 19.7 million kuna

OWERVIEW OF FY11 RESULTS

4

RESULTS IN LINE WITH GUIDANCE

HRKm

101.7% 98.2% 96.9%

 2011 result normalized

4,550 4,650 4,750

Sales 4,728 4,650

2011A 2011E 200 400 600

EBITDA EBIT 517 309 527 319

2011A 2011E

5

SALES IN 2011

* Sales growth: +108.4%

• Growth generators:

(i) Acquisition of Droga Kolinska (ii) Organic growth of Atlantic Grupa * Sales growth: + 4.8% comparing to pro-forma consolidated sales in 2010

• Growth generators:

(i) Growth on regional markets after acquisition of Droga Kolinska (ii) Growth in coffee, sweet and salted snacks and baby food segments (iii) Growth in Sports and Functional Food and Pharma divisions * Sales growth : +1.2% without Droga Kolinska effect

• Growth generators:

(i) Growth of own brands within Sports and Functional Food division (ii) Sales growth of private label (iii) Newly opened pharmacies and specialized stores (iv) Final consolidation of acquired pharmacy chain Dvoržak

HRKm 1,000 2,000 3,000 4,000 5,000

4,728 2,269 FY11 vs. FY10

FY11 FY10

+108.4%

4,000 4,200 4,400 4,600 4,800

4,728 4,513 FY11 vs. FY10 Pro-forma

FY11 FY10

+4.8%

2,100 2,150 2,200 2,250 2,300

2,296 2,269 FY11 vs. FY10 organic

FY11 FY10

+1.2%

6

GEOGRAPHIC SALES PROFILE

 Croatian market remained the largest selling market after acquisition of Droga Kolinska with 28.2% share of total sales, however the acquisition itself significantly reduced exposure to domestic market from 55.1% in 2010  Regional markets (without Croatia) have 52.0% share of total sales compared to 18.9% in 2010  Share of Western and Northern European markets fell to 14.7% from 19.1% in 2010, as sales of acquired Droga Kolinska are mostly focused on regional markets and to smaller extent on Russian market  East European markets have 3.0% share of sales compared to 1.8% in 2010, due to Droga Kolinska’s presences on those markets

*Other ex. YU: Macedonia, Monte Negro, Kosovo

28% 25% 13% 8% 6% 15% 3%2%

2011

Croatia Serbia Slovenia B&H Other ex. Yu* Western and Northern Europe Russia and EE Other

30% 24% 13% 9% 6% 11% 4% 3%

Pro-forma consolidated 2010

Croatia Serbia Slovenia B&H Other ex. Yu* Western and Northern Europe Russia and EE Other

55% 6% 8% 3% 2% 19% 2% 5%

Stand-alone 2010

Croatia Serbia Slovenia B&H Other ex. Yu* Western and Northern Europe Russia and EE Other

7

SALES BY PRODUCT TYPE

Own brands +6.4% compared to pro-forma consolidated sales in 2010 +1.8% on organic level (without Droga Kolinska) Principal brands

• 9.7% yoy

 Share decrease due to conolidation of Droga Kolinske Private label +31.8% yoy Farmacia +15.6% yoy +9.8% on organic level (excluding acquired chain Dvoržak) 72% 17% 5% 6%

2011

Own brands Principal brands Private label Farmacia

71% 20% 4% 5%

Pro-forma consolidated 2010

Own brands Principal brands Private label Farmacia

41% 40% 8% 11%

Stand-alone 2010

Own brands Principal brands Private label Farmacia

8

597 441 333 304 235 172 171 144 141 126 125

Grand Kafa Argeta Cedevita Barcaffe Multipower Smoki Cockta Najlepše želje Bebi Champ Donat Mg HRKm Sales Net I

KEY BRANDS IN 2011

The following brands achieved growth: i. Coffee – Grand Kafa 12.3% i Barcaffe 9.7% ii. Sweet and salted snack – Najlepše želje 11.6% andSmoki 5.5% iii. Baby food – Bebi 11.7% iv. Sports and functional food – Champ and Multaben

9

SALES BY CATEGORIES

Indicative overview of sales by categories (according to the new business model) in 2011 reflect the following:  Product category – coffee – with brands Grand Kafa i Barcaffe is the largest individual product category with 21% share in total sales  Product category – beverages – with key brands Cedevita, Cockta, Donat Mg is the second largest product category with 14% share in total sales  Product category – sports and functional foods – with key brands Multipower and Champ is the third largest product category with 14% share in total sales  Distribution which includes principal brands has 17% share in total sales 17% 14% 10% 21% 12% 9% 14% 3%

Distribution (Principal brands) Sports and Functional Food Pharma &Personal care (Farmacia, Fidifarm, Multivita, Neva) Coffee Sweet and salted snack Savoury spreads Beverages Baby food

10 10

PROFITABILITY DYNAMICS

 Two-fold higher profitability on EBITDA and EBIT levels compared to 2010 primarily reflected consolidation of Droga Kolinska  Decline in EBITDA compared to pro-forma consolidated 2010 largely reflected 20.7% yoy higher production materials costs  Normalised EBIT reflected the impact of finalised PPA process for Droga Kolinska on tangible assets depreciation and intangible assets amortization 2011 vs. 2010 2011 vs. 2010 pro-forma Normalised EBITDA +156.5%

• 1.7%

Normalised EBIT +110.9% +12.1% Normalised Net profit

• 67.5%
• 77.7%

HRKm 100 200 300 400 500 600 FY11 FY10 Pro-forma FY10 Stand-alone

501 545 220 517 526 202

EBITDA

EBITDA Normalized EBITDA

100 200 300 400 FY11 FY10 Pro-forma FY10 Stand-alone

335 294 165 309 276 147

EBIT

EBIT Normalized EBIT 50 100 150 200 FY11 FY10 Pro-forma FY10 Stand-alone

55 146 107 28 126 86

Net profit

Net income Normalized net income

11 11

Leverage indicators:

 Net debt-to-normalized EBITDA at 4.8 times

 Interest covered with normalized EBITDA at 2.3 times  Gearing ratio (net debt-to-net debt and total equity) at 62.3%  In accordance with the Policy of active financial debt management, Atlantic Grupa fixed substantial portion of its long- term financial liabilities with interest rate swaps in the 1Q11  In 2011, Atlantic Grupa refinanced corporate bond in the nominal amount of HRK 115m maturing in 2016

FINANCIAL INDICATORS

Require: prudent debt management and delivery of synergies

in HRKm FY11 YE10* Net debt 2,494.0 2,495.8 Total assets 5,355.2 5,259.3 Equity 1,512.3 1,456.3 Current ratio 1.84 1.34 Gearing ratio 62.3% 63.2% Net debt/EBITDA** 4.8 4.7 Interest coverage ratio** 2.3 5.3 Capex 96.5 34.8 Cash flow from operating activities*** 165.1 101.5

* P&L items on pro-forma consolidated basis **Normalized *** Excluding impact of transaction costs

12 12

NEW BUSINESS MODEL OF ATLANTIC GRUPA FROM 2012

SBU COFFEE

Turkish, Espresso, Instant  Reorganization in 2012 with an aim to manage business segments and distribution markets more efficiently  Operational business also includes Central procurement, Central marketing and Corporative quality management functions

SBU BEVERAGES

Vitamin instant drinks and teas Carbonated soft drinks Functional water and Water

SBU SPORTS AND FUNCTIONAL FOOD

Sports and functional food

SBU PHARMA AND PERSONAL CARE

VMS and OTC Pharmacy chain Cosmetics and personal care

SBU SAVOURY SPREADS

Savoury spreads Sandwiches of extended freshness

SBU SNACKS

Sweet and salted snacks

SMU Croatia SMU Slovenia, Serbia and Macedonia SMU HoReCa

Hotels, restaurants and cafes

MU Russia

Baby food All products sold in CIS region

SMU International markets

All markets outside ex.-YU region and Russia

13 13

ORGANISATIONAL STRUCTURE

MANAGEMENT SUPERVISORY BOARD

Mladen Veber Senior Group Vice President Business Operations Zoran Stanković Group Vice President Finance, IT and Business Development Neven Vranković Group Vice President Corporate Affairs Emil Tedeschi President of the Management Board

Strategic Management Council: deals with vital strategic and operational corporate issues. Consists of: Board members, Senior Executive Directors of SBUs and SDUs, Secretary General, Executive Directors of Controlling, Brand operations management, Central Purchasing and HR as well as the Head of Investment Committee.

14 14

FY12 GUIDANCE (I)

Strategic management guidance

 Further delivery of planned synergy potentials both on sales and costs side following finalisation

• f the first integration phase of Atlantic Grupa and Droga Kolinska;

 Focus on execution of the second integration phase (consolidation of production facilities, information technology consolidation, real estate portfolio management) as the basis for further improvement of operating efficiency;  Further focus on organic growth through innovations in product categories and active brand management (new flavours, modernized packaging, product line extensions), strengthening the regional character of distribution business and further development of certain distribution channels as HoReCa segment;  Meeting financial commitments on regularly basis coupled with active debt and financial cost management;  Cost management through the CORE program and optimisation of operating processes on both centralised and lower levels, aiming to improve operating efficiency;  Prudent liquidity management;  Continuous analysis of global commodity markets with particular focus on coffee, sugar, cocoa and milk powder as well as more active application of hedging instruments;  More focused development of risk management on all levels in the company.

15 15

FY12 GUIDANCE (II)

* In 2011, EBIT was calculated on normalised EBITDA level, however depreciation and amortization expenses have not been normalized for the PPA impact in order to make it more comparable to 2012 guidance. In HRKm 2012 Guidance (excluding

• ne-offs)

2011 Normalized 2012/2011 Sales 4,964 4,728 5.0% EBITDA 550 517 6.3% EBIT* 385 351 9.5% Interest expense 223 222

16 16

GENERAL ASSEMBLY Atlantic Grupa d.d.

June 20th, 2012