Podravka d.d. Management Board - about facts

Compliant to the Media Act, we found it necessary to respond to the statements heard in the program "Otvoreno" broadcasted on 19 January 2010, on the first channel of Croatian National Television, and we would like to remind of the facts about Podravka d.d. which were in the here mentioned program not revealed or were said incorrectly.

We would like to remind of the facts known to the public: Podravka d.d. was listed in the official quotation of the Zagreb Stock Exchange in 1998 and has regularly fulfilled all the laws and regulations regarding public notices, business transparency and providing information to the public that showed interest about the company.
The Company compiles its financial reports compliant to International Financial Reporting Standards, for which an auditor provides its independent opinion in line with the International Auditing Standards.

It is inappropriate to bring in question the long-year transparency of the Company based on the persons held suspect to abuse their position and perform actions outside the procedures and policies of the Company, and to use this fact in order to create a public image that the Company was hiding certain documents, i.e. holding secret the factual situation from the auditors and indirectly from the owners of Podravka d.d. We hereby refute such interpretations and emphasize that from the moment this newly elected Management Board found out about their existence, it identified all possible risks, and due to sensitivity of this information we are unable to make them public or make any comments on them before the business results for 2009 are officially published.

Podravka d.d. is a manufacturer of branded products characterized by high quality standards in production and raw materials, and development of added value of every product enables Podravka's continuity in doing business on ever demanding markets where it enjoys trust of millions of consumers, ensuring that Croatia will always have a respectable representative in the food industry.

In the period from 2002 to 2008 Podravka realised significant annual sales growth of 4.9%, while its organic growth at the same time was 5.6% and we hereby refute the incorrect information repeatedly stated in the program Otvoreno.

In 2005 the Company started a restructuring process, but also a cycle of strong acquisitions, mostly financed by additional loans from the banks. In other words, the Company was simultaneously focused on restructuring and growth and development, which is a heavy burden in business and for that reason the profitability rates were not a priority, all with the purpose of creating healthy basis for efficient long term business. Business strategy communicated at investors conferences, shareholders' assemblies and to all interested investors on individual meetings clearly portrayed strategic goals of the Company, but also the operating procedures and programs necessary in individual stages to fulfill those goals, and mislead no one nor encouraged high expectations. Podravka d.d. is implementing the strategy of a food company, not a company in the fast growing segment. Any suggestion of unreasonably high or unreachable strategic goals or any decision that would not be directed towards fulfilling Company's existing strategy would be irresponsible towards its shareholders.

Podravka d.d. is currently exposed to high media pressure, often unethical, where reactions are provoked leading into further speculations on Podravka's share in the stock market.

Being aware of the realistic possibility of Company's successful business, Podravka's employees lead by its Management Board are implementing a process which will in the future make Podravka a more successful and more competitive company.

PODRAVKA d.d. Management Board