News

Fortenova Group generates excellent results in 1-9/2022 Business results

22.11.2022.

Update on Fortenova Group Ownership Structure on November 17th, 2022 Fortenova group

17.11.2022.

A fortnight after Russia’s Sberbank, with a 42.5 percent stake Fortenova Group’s largest single co-owner, had disclosed to have sold the company that formally holds its beneficial ownership in Fortenova Group to a natural person, an investor from the United Arab Emirates, Fortenova Group received confirmation that the alleged new owner has not even contacted the Dutch registrar of ownership, UK-based Kroll, to change the data on the ultimate owner.

Kroll confirmed to Fortenova Group that to date they have not received any request to initiate the procedure of registering the change of ultimate owner.

Should such request be received, in order to accept any change Kroll must establish beyond doubt that the sanctions in effect in the European Union and the United Kingdom have not been breached in any way whatsoever. Should the sanctions have been breached by the sale-purchase, Kroll will not be able to acknowledge the exercise of rights from ownership shares thus acquired.

Any breach of sanctions also entails criminal liability for all citizens of EU member states and the United Kingdom who may have taken part therein and the company would like to use this opportunity to once again point out that Fortenova Group has had nothing to do with the transaction pursued by Sberbank.

As at 17^th November 2022 Sberbank’s share in Fortenova Group is still in the ultimate ownership of Sberbank as it has been so far, which means that due to the sanctions this share does not bear the rights arising from ownership – including for example the exercise of voting rights.

Commenting on this fact, Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, pointed out: “The fact that Sberbank is still its largest single owner shall continue to affect Fortenova Group’s day-to-day operations as it has done so far, where due to the Russian co-ownership we occasionally have to argue and document that we as company are not subject to sanctions, which does take some time and energy, but we have been and shall continue to be able to manage that. The most important thing, apart from the fact that we do not have a new co-owner, is that nothing has changed in our everyday operations. Behind us there is an excellent tourist season and ahead of us the operationally intensive holiday season for which we are very well prepared, we operate in an orderly and successful manner and I expect, provided that we all continue to be equally committed to our work, that we will achieve all the goals set this year.”

This information is intended, in the light of a number of media publications ( Jutarnji list 4 Nov 2022 , Vecernji list 4 Nov 2022 , Jutarnji list 5 Nov 2022 , Vecernji list 8 Nov 2022 , Jutarnji list 9 Nov 2022 , Express 11 Nov 2022 , Jutarnji list 12 Nov 2022 ) over the last two weeks, to inform all stakeholders as accurately as possible of the ownership structure of Fortenova Group.

As at 2^nd November 2022 Russia’s Sberbank and the natural person Saif Alketbi, citizen of the United Arab Emirates, claimed in separate, though timely coordinated media releases, that the aforementioned citizen of the UAE had acquired the 43.5 percent ownership stake in Fortenova Group by having purchased the company SBK Art LLC from Sberbank.

Fortenova Group immediately reacted to those announcements with the following information:

“Fortenova Group has no official knowledge whatsoever about the sale of Sberbank’s share. Sberbank’s assets are under sanctions and any sale-purchase requires special approvals to be obtained from the authorities in charge of implementing the sanctions. The first potential buyer of Sberbank’s share, Hungary-based Indotek, was not able to obtain those approvals. In the second attempt, i.e. the divestment to the pension funds, the approvals were obtained, but the representatives of German Allianz in the Supervisory Board of the AZ Fund stopped the sale-purchase. To Fortenova Group’s knowledge no further approvals for sale have been obtained and hence we do not see how a valid sale-purchase could have happened. Also, following the one performed by the pension funds, no other due diligence exercise has been performed. In case that the sanctions should have been avoided, this would constitute a criminal offence and the company has not taken part in it”.

More detailed clarifications of the developments related to Sberbank’s share in Fortenova Group were offered by Fabris Peruško, Fortenova Group’s CEO and Member of the BoD, in his interviews for Večernji list and HRT’s (Croatian TV) News.

As there was imprecise and inaccurate information published in some of the media commentaries, we herewith disclose a more detailed explanation of Fortenova Group’s ownership structure:

When it comes to the Russian banks, as the public is already aware, during the process of restructuring Agrokor through the Extraordinary Administration Procedure and the creditor’s Settlement Plan debts to creditors that were suppliers were mostly fully repaid during the EA Procedure itself. Financial institutions that had financed Agrokor until 2017 under the former owner have not recovered any cash, but their claims were rather swapped to ownership shares. The Russian bank Sberbank was Agrokor’s largest creditor, with the debt to that Bank prior to the opening of the Extraordinary Administration Procedure having amounted to EUR 1.1 billion. Hence, in pursuance of the Settlement Plan, Sberbank has also become Fortenova Group’s largest single owner.

Due to the crisis in Ukraine, i.e. the conflict regarding Crimea, which already existed at the time when the Settlement Plan among Agrokor’s creditors was closed, it was restricted by the statutory document of Foretnova Group’ Dutch ownership structure for co-owners under (at that time still only sectoral) sanctions to not be able to hold 50 percent of ownership or more. The mechanism applied has existed in the Netherlands for a number of years and makes sure that the Russian systemic banks cannot exceed an ownership share of 50 percent in companies, neither when issuing new nor when transferring existing instruments. This is why, at the time when Sberbank was assuming additional Fortenova Group instruments in exchange for Mercator shares, for the amount that would have meant that the 50 percent threshold has been exceeded, instruments held by Sberbank were transferred to a special escrow account in the name of a specialized private share issue management service provider (also an independent company of the UK based Kroll), and Sberbank cannot dispose of them at any point in time. These shares, if they were to be released from the escrow, would represent some 0.9 percent of votes. All shares exceeding 50 percent were transferred to a special account in 2021 as part of the overall share swap transaction and are still on that account, bearing no ownership and governance rights.

The second largest shareholder is a group of Croatian investors, led by Open Pass, who together hold some 28 percent, while the remaining around 22 percent of the company is owned by an array of institutional and private investors.

Successful graduation of the first Accelerate Programme generation Career

15.11.2022.

Extraordinary Administration Procedure closed, Agrokor erased from Court Registry Management

13.10.2022.

Pursuant to the published final ruling of the Commercial Court of Zagreb, the Extraordinary Administration Procedure in Agrokor has been closed and Agrokor d.d. has been erased from the Court Registry.

With its Ruling dated 19^th July 2022 the Commercial Court of Zagreb has established that with the legally effective amalgamation of 46 non-viable companies to the debtor Agrokor d.d. as transferee the Settlement Plan of Agrokor’s creditors shall be considered implemented and the Extraordinary Administration Procedure over the debtor Agrokor d.d. closed. One of the world’s major restructuring-through-bankruptcy proceedings, recognized as such on an international level, has thus been successfully completed, after having gained legal legitimacy in the European Union, United Kingdom, the USA and Switzerland. During the Extraordinary Administration Procedure the overindebted Agrokor, although in bankruptcy, continued its business with all operations and full employment having been preserved in the process. At that point the system employed over 50,000 people in SE Europe and its failure, due to its impact on thousands of associated companies, would have had severe negative consequences on the economies of Croatia and all countries of the region.

The Extraordinary Administration Procedure in Agrokor had commenced on 10^th April 2017 and comprised a total of 77 Agrokor subsidiaries. The company’s total debt at that point amounted to HRK 56 billion, with a debt to operating profits ratio of around 30 times and only six kunas on its accounts. Within only a year’s time the Extraordinary Commissioner Fabris Peruško and his team normalized the operations and completed negotiations on the creditors’ settlement, and the Settlement Plan was adopted with over 80 percent of the creditors’ votes in July 2018 and declared final and non-appealable in October 2018.

The most important result of the Extraordinary Administration Procedure, besides the accomplished settlement and preserved business operations, was the fact that during the Procedure itself the debts to a total of 2400 micro and small suppliers were settled in full, while other creditors’ recoveries amounted to 60 percent on average. All payments to suppliers and the overall costs of stabilizing the collapsed operations were settled from Agrokor’s operations and assets, without spending any Croatian tax payers’ money. At the same time, the Extraordinary Administration Procedure received international legal protection and with the TMA Award the international financial industry declared it to be one of the world’s best restructuring processes in 2018.

With the cessation of Agrokor’s existence, the authorities and duties of Fabris Peruško in his capacity as Extraordinary Commissioner under Art. 12 of the Act on Extraordinary Administration Proceedings in Companies of Systemic Importance for the Republic of Croatia, i.e. his rights and obligations as the debtor’s administrative body and representation authority shall cease.

“We can rightfully be proud to have completed one of the most important economic processes ever to have taken place in Croatia, with impact on the entire region. It was a challenging and complex process; the scope of work was enormous and the deadlines short. During the very difficult settlement negotiations we had to reconcile the frequently diametrically opposed interests of the different creditors. In our attempts to reach an agreement that would be acceptable to everyone, we had to face tensions, renouncement and compromises. Finally, the high percentage of support provided by the creditors to the Settlement Plan at the hearing and everything that we have done thereafter in transforming the company towards Fortenova Group, bear witness to the fact that we have had the knowledge and the determination required to manage this complex process. The Government of the Republic of Croatia, the financial creditors, suppliers, employees, myself in the capacity as Commissioner and our entire team have exerted exceptional efforts for the Extraordinary Administration Procedure to secure viable operations for a company that had practically been bankrupt. This was the basic assumption for everything that we have done in the period of three and a half years since the incorporation of Fortenova Group, which we have brought to a point where it has five billion euros of revenue, a leverage ratio of less than 4 times and the status of one of the most desirable employers and major investor across the region. I would like to thank everyone who has made a personal constructive contribution to the Extraordinary Administration Procedure, the Government of the Republic of Croatia that had nominated me for the responsible task of the Extraordinary Commissioner and the Commercial Court of Zagreb that appointed me. I take particular pride in the fact that today, together with the team in which there are numerous colleagues who also took part in the Extraordinary Administration Procedure, I run a company that has, thanks to the positive changes, successfully overcome all the challenges that we have been faced with” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, on the occasion of closing the Extraordinary Administration Procedure and the completion of his role as Extraordinary Commissioner.

Fortenova Group signs Cooperation Agreement with Hrvoje Požar EI for its carbon footprint calculation study Social Responsibility

06.10.2022.

Fortenova Group and the Hrvoje Požar Energy Institute (EIHP) signed a cooperation agreement for the preparation of a carbon footprint calculation study for Fortenova grupa d.d. and its operating companies. The Agreement was signed by Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, and Dražen Jakšić, Director of the Hrvoje Požar Energy Institute.

The study to be prepared for Fortenova Group by EIHP will include a calculation of GHG emissions from Scopes 1, 2 and 3 and is intended for the Group to be able to systematically work on their reduction. Scope 1 includes direct emissions occurring at company locations due to fuel combustion in immovable and movable energy sources, production processes, use of land, changes in the use of land and forestry as well as from fugitive sources. Indirect emissions from Scope 2 occur outside of the company’s locations and are related to the purchase and consumption of electricity, heat and cooling energy. The calculation will also include other significant indirect emissions from Scope 3, related to input and output material and people flows required for the functioning of Fortenova Group’s business units.

The calculations obtained shall be the basis for defining short-term and long-term GHG emission reduction objectives and the preparation of the Strategy and Action Plan for the reduction of Fortenova Group’s carbon footprint.

It is business entities that actually constitute a major part of the solution to the problem of climate change and achieving neutrality within the deadlines envisaged by the Paris Agreement as well as the goals set in that regard by the EU, namely, to reduce GHG emissions by the year 2030 by at least 55 percent against the emissions from 1990 and for Europe to eventually become a climate-neutral continent by the year 2050.

„As the largest private employer in the SEE region we are aware of our impact on the communities in which we operate and consequently also our responsibilities when it comes to assuming the leading role in contributing to the reduction of GHG emissions; hence achieving our own carbon neutrality is the long-term goal of our sustainability strategy. This project that we have launched with EIHP is therefore not only key in calculating the current level of our carbon footprint and setting concrete objectives for its reduction, but also for establishing high sustainability standards in all our companies, regardless of the respective market on which they operate, the level of its development and the national regulations when it comes to matters of reducing the impact on climate changes” – commented Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of signing the agreement with the Hrvoje Požar EI.

“By providing expert support to the business sector in transforming their operations towards low-carbon, EIHP also accomplishes its own mission in contributing to the green energy transition. We are pleased that Fortenova Group has recognized us as a reliable partner in implementing its sustainability strategy and reducing GHG emissions. A detailed carbon footprint calculation, both at the level of individual operating companies and at Group level, is an important first step that will enable Fortenova Group to get to know the emissions structure and recognize those activities that contribute to the carbon footprint. The next step is the preparation of a strategy and action plan defining the measures for reducing emissions, the implementation whereof will be Fortenova Group’s significant contribution to achieving climate neutrality of the society as a whole”, said Dražen Jakšić, Director of the Hrvoje Požar EI.

The project in question will take place in several stages – from calculating emissions and presenting the results in accordance with the GHG protocol and ISO 14064-1 standards to preparing the carbon footprint management strategy, the action plan for reducing GHG emissions and analysing the conditions for achieving carbon neutrality.

Fortenova Group records double-digit growth of revenues and operating profits in H12022 Business results

26.08.2022.

In H1/2022 Fortenova Group generated HRK 18.8 billion of total revenue from continuing operations, which is 57 more than in the same period last year mainly driven by the integration of Mercator. On a like for like basis revenue grew by 14%.

At the same time the Group’s consolidated EBITDA for the first six months of the year exceeded a billion kuna which is 74% more than in the same period last year, while on a like- for-like basis the adjusted consolidated EBITDA grew by 19%.

The fastest growth of revenue was recorded by the companies from Fortenova Group’s Food Division, while the Agriculture Division saw the fastest growth of EBITDA.

Net profits of the period, after exclusion of currency exchange impacts, amounted to HRK 12 million, as against the loss of HRK 213 million after exclusion of currency exchange impacts in H1/2021. At the end of H1/2022 Fortenova Group also had HRK 1.7 billion of cash on its accounts and continuing its already long-term deleveraging trend, it closed H1/2022 with a debt to operating profit ratio moving 3,94 times.

“The strong realization in the first half of the year continues the positive trend that we recorded throughout the last year, with positive underlying business improvement accelerated by the integration of Mercator into Fortenova. This underlying growth is shown by the Group’s total revenue from continuing operations in H1/2022 has grown by 14% on a like for like basis excluding Mercator. These excellent operating results were generated in spite of the negative impacts of inflation on the increase in prices of labour, energy and raw materials and the consequently increased costs across the supply chain. The ’22 tourist season in Croatia is almost at the level of the record year 2019, which is an additional driver for our results that will show its full benefit in the third quarter of the year, which is the most important time period for us” – said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors, commenting on the half-year results.

“Looking further forward the expected changeover to the euro will have an additional long-term positive impact on the Group’s credit profile, as after the conversion 80 percent of our business will be generated in euros. Additionally, the currency risk for our debt will be eliminated,” – Peruško said. He also noted that the process of ownership transformation and the divestment of shares held in Fortenova Group by Sberbank continues and that over the course of H1/2022 the final prerequisites for a court ruling on closing the Extraordinary Administration Procedure in Agrokor will have been met.

James Pearson, Fortenova Group’s CFO, commented that the Group had a very positive first half of the year, having focused on market realization and achieving the planned operational improvements.

“Following the significant deleveraging achieved by Fortenova Group in 2021 by the transactions related to Mercator, the Frozen Food Business Group and a number of non-core business and property disposals, in 2022 we have continued to generate higher revenues and operating profits, which brought about a further decrease in the leverage ratio, which now amounts to 3.94 times which reflects the increasing financial strength of the Group. ” – Pearson said.

Fortenova Group companies accede Code of Ethics for replacement of Croatian kuna by euro Business

25.08.2022.

Fortenova Group publishes its first Sustainability Report Social Responsibility

30.06.2022.

Fortenova Group has prepared its 2021 Sustainability Report and published it on its website (https://fortenova.hr/en/sustainability/ ). It is the Group’s first Report of this kind, whereby it has established its ESG (Environmental, Social and Governance) sustainability objectives, prepared in compliance with GRI standards – sustainability reporting guidelines devised by the Global Reporting Initiative (GRI).

The Report provides a comprehensive and detailed overview of the Group’s entire business operations in 2021, as well as insight in its strategy and key values and sustainability topics that are material for Fortenova Group and its stakeholders, i.e. those where the Group has the greatest impact.

It comprises seven key topics starting from the objective to build sustainability as a relevant criterion into the Group’s decision making processes, through reducing GHG emissions, waste management across the chain from food production to packaging, improving life quality by way of the quality of food, reducing the impact that the Group and its operating companies have on soil and waters, impact on improving the standard of living in the communities where it operates to continuing to encourage diversity and inclusion at all levels.

The Report features a lot of data related to the above topics from the Group’s 45 companies that have significant operating activities and actively employ. At the same time, the 2021 Report also includes selected initiatives that were launched in early 2022 to illustrate the current status of topics that are the most relevant for the Group.

Furthermore, given that some of the operating companies’ everyday activities comprised in the Report also include activities specified in the first two objectives of the EU Taxonomy – climate change mitigation and climat change adaptation – in order to act in accordance with its regulatory obligations for 2022, as a first step Fortenova Group disclosed the evaluation of eligibility for 2021.

Namely, the Taxonomy Regulation is the EU’s key document for the achievement of climate objectives and features a classification system that establishes a list of environmentally sustainable economic activities and aligns the criteria for determining whether an economic activity qualifies as environmentally sustainable.

„Everything that we have done over the last few years, and particularly in 2021, is part of the activities that have improved our social and corporate responsibility, while having a positive impact on the economic development of the communities in which we operate. This Report not only shows that we have timely accepted the responsibilities arising from the European Green Deal, but that in 2021 we laid the organizational foundation, as well as the foundation pertaining to activities required for sustainability to be integrated in our internal management system and become part of the Group’s long-term strategy. We have thus raised the responsibility not only to ourselves, but to our consumers, partners, suppliers, the environment and the society as a whole – to an even higher level” – commented Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of publishing Fortenova Group’s first Sustainability Report.

According to the assessment of the Expert Commission of the Croatian Business Council for Sustainable Development (HR PSOR), Fortenova Group’s 2021 Sustainability Report is in accordance with the core level of GRI reporting and complies with the legal provisions of the Republic of Croatia in the area of sustainability reporting.

„ We as a Commission noted that Fortenova, as the largest regional company, has prepared a very comprehensive and thorough report with a lot of useful information that give us complete overview of all their operations. Even though there are some parts of the Report that can be improved, generally, considering that it is the Group’s first report of this kind, we found it very well aligned with the requirements of GRI. It is in our opinion one of the most complete reports to be published in Croatia in recent years and probably one of the finest sustainability reports in the region. We commend Fortenova Group for this accomplishment and look forward to their future work on sustainable practices and on the development of the reporting process itself“ – HR PSOR stated in its assessment of Fortenova Group’s first Sustainability Report.

Fortenova Group Closes 2021 with a net profit of HRK 523 million Business results

21.06.2022.

Fortenova Group’s 2021 total consolidated revenue from continuing operations amounted to HRK 31.4 billion, with consolidated adjusted EBITDA in the amount of HRK 1,955 million and a net profit of HRK 523 million after the gain on the sale of the Frozen Group. The Group closed the year with HRK 1,872 million in cash on its accounts.

These results equate to a growth of consolidated revenue from continuing operations of 65 percent and adjusted consolidated EBITDA growth of 52 percent vs 2020. The main driver of the consolidated results performance is due to Mercator Poslovni Sistemi, being consolidated into Fortenova Group’s results as of May 1st, 2021.

Compared to the 2020 year-end results, the 18 companies from the Group’s core business, excluding the Frozen segment that has been sold and including full year of Mercator Group companies, recorded on a like-for-like basis a revenue growth of 5 percent, an increase in EBITDA of 20 percent, and an increase in EBIT of 64 percent.

These positive growth trends have continued in 2022 and in Q1 2022 our 18 companies from the Group’s core business realized on a like-for-like basis higher net sales revenues by 6 percent, higher EBITDA by 2 percent and higher EBIT by 6 percent, compared to Q1 last year.

„We had very strong performance last year and in the beginning of this year with the key achievements being Mercator’s refinance, transfer and integration along with immediate delivery of planned synergies, closing of Frozen segment sale and resulting deleveraging in Q3 ‘21 as well as significant operational improvements and a good summer season. As a result, our net profit of HRK 523 million shows an improvement of HRK 1.8 billion compared to 2020 and our cash position remains very strong, with HRK 1.9 billion at the end of 2021.

We can look back at a really excellent year, in terms of the results and strengthened capital and financial structure that have set the foundations for continued growth. All activities that we have pursued were aimed at increasing our value as well as Fortenova Group’s overall corporate and social responsibility, in the sense of impact we have on the economies across the region as this region’s largest employer.

I am especially proud of the fact that everything that we have done has also resulted in meeting one of our most important goals – raising the investment strength of Fortenova Group, which is now in the position to pursue a regional investment cycle worth over EUR 130 million in ‘22. All our investments are focused on more sustainable and more efficient operations, so that they can further build on their leading positions. I would also like to emphasize that in addition to all of that, in 2021 we have set very ambitious ESG objectives and have prepared our first Sustainability Report, which will be published in the coming days” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, summarizing the key features of the 2021 operations.

James Pearson, Fortenova Group’s Chief Financial Officer, said that “We continue to deliver on our planned financial strengthening and simplification of the Group. Through the transactions dealing with Mercator, Frozen Group as well a number of non-core and real estate sales we reduced debt in 2021 by HRK 4.4 billion which led to an underlying leverage ratio of 4.3x at year end. This is a significant decrease from the 6.8x leverage ratio we had at the beginning of the year and demonstrates the great step we have taken.

The results are also a testament to ability and great resilience of the Group’s employees. Despite covid, earthquakes, supply chain pressure, inflation etc they continue to deliver whether improving customer service, improving existing offers or developing new ones all of which is all leading to the reported results.” – Pearson said.

Change in Fortenova Group’s Board of Directors Management

09.06.2022.

Ownership structure Statement Fortenova group

01.06.2022.

Sale and Purchase Agreement Signed on Sale of Sberbank’s Share in Fortenova Group to Indotek Fund Fortenova group

08.04.2022.

Pursuant to the published final ruling of the Commercial Court of Zagreb, the Extraordinary Administration Procedure in Agrokor has been closed and Agrokor d.d. has been erased from the Court Registry.

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