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After receiving a number of non-binding offers for the acquisition of the companies Ledo plus, Ledo Čitluk and Frikom, forming together with several smaller affiliated companies the Frozen Food Business Group, Fortenova Group have decided to move forward to the next phase of the sales process by inviting a select number of bidders to start due diligence.
“The market test has confirmed that there is strong international interest among potential investors in our Frozen Food business. The qualified non-binding offers come from companies with outstanding investment and operational track record. We are glad that we will be entering due diligence process with some extremely strong potential partners”, said James Pearson, Fortenova Group’s Chief Financial Officer.
“Our ultimate goal, over and above maximising value, remains to be selection of a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group. Even though we are entering the due diligence phase now, completion of the process still depends on finding the partner who will recognize the full value and potential of this business and its people”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors. “In order to proactively achieve our targeted capital structure via deleveraging the company, Fortenova Group is ready to dispose of only one segment of the core business, which potentially would be the Frozen Food Business Group. I expect the due diligence process to be completed by the end of this year and we will continue to keep our people and the market informed of further developments in a timely manner”, concluded Peruško.”
Belje plus, part of the Fortenova Group, and MEGGLE Croatia reached and signed an agreement on the purchase of the assets of the MEGGLE dairy in Osijek. By purchasing MEGGLE’s property and production line – with the intention to commence own production as of 1st January 2021 – Belje will preserve the long-standing tradition of milk production in that part of Slavonia.
With the start of the production in Osijek Belje will purchase a certain quantity of milk from MEGGLE’s present contractors, while the need for employees is still under review, with around 100 people expected to be employed.
Fortenova Group already accounts for around 10 per cent of the total milk quantity produced in Croatia, which is around 5 per cent of the local needs. Most of the milk produced at Belje is used for the production of ABC cheese, with its annual production currently at the level of 3,700 tonnes, while plans have been developed for the significant expansion of its portfolio.
“We are happy with the agreement reached and with having closed the sale of MEGGLE’s assets in Osijek, as well as with Belje’s decision to produce on that location following our withdrawal. After having made the final decision on closing down our production in Croatia, the MEGGLE Group has exerted maximum efforts to find a buyer for the assets in order for as many of our employees as possible to have new employment after 31st December and for our contractors not to have any standstill in the purchase of milk. Until the end of the year MEGGLE shall continue to restructure its operations, in accordance with the agreement reached with the trade unions, while meeting all the assumed obligations in time and in full”, said Marjan Vučak, President of the Management Board of MEGGLE Croatia.
“The MEGGLE Group is aware of how important it is to preserve the milk production in Osijek, which is why we had delayed our decision for as long as this was possible and we are glad that with the new owner it will be continued after all. Over all these years Meggle has been a socially sensitive and responsible employer and a reliable business partner. Having reached this agreement with Fortenova Group confirms that we have continued to behave that way in this restructuring process, too, and we shall keep operating according to the same principles going forward”, said Matthias Oettel, CEO of the MEGGLE Group.
“Fortenova Group has continuously worked on further improving the value and strengthening the portfolio of its brands. In order to utilise all potentials of ABC fresh cream cheese, which is one of the strongest regional brands and one of our strongest export products, Belje needs additional production capacities and MEGGLE’s withdrawal enabled us to secure them within short time. With the Osijek plant we have secured the prerequisites for the development of new products, made of local raw material, of premium quality and higher added value. With this move we shall continue to work on the preservation and further growth of the local agricultural production, which along with saving existing and opening new jobs is of great significance for Slavonia and the broader community. Fortenova Group views its operations in the long term and we are currently preparing the company for operations in the period following the crisis in order to have as strong as possible a lever for growth once the recovery starts, with this transaction to be entirely financed from our operations” – said Fabris Peruško, Chief Executive Officer of Fortenova Group.
“The acquisition of Meggle’s assets and the development of new products can be an additional encouragement to increase the quantities of milk produced and for small producers to invest in dairy cow farms in Croatia. This would certainly have a positive effect on the change of trends, after this year the long-lasting decline in milk quantities produced in Croatia has finally been stopped. The dairy industry is one of the major focus areas of the 2020-2025 strategy in Fortenova Group’s Agriculture Division, and the Belje food industry will be the platform on which the development in that segment will gain momentum” – says Andrej Dean, President of the Management Board of Belje.
The transaction will be carried out once all the required regulatory approvals are in place.
Fortenova Group and the world’s leading integrated tourism group TUI, one of the partners in the current ownership structure of Karisma Hotels Adriatic (KHA), achieved an agreement whereby TUI acquires the 33.3 per cent stake owned by Fortenova Group in this holding company, which manages the Koločep Hotels, the Živogošće Hotels and the company Adriasense Zagreb.
The total capacity includes three modern, refurbished four-star hotels with 589 rooms. KHA had almost 350,000 overnight stays in its facilities last year, and the guests were mostly from the United Kingdom, Germany, Scandinavia and France.
„As already communicated, Fortenova Group has a clear strategy of focusing on its core businesses in retail, food and agriculture and having an overall less complex group, which will enable it to generate better returns as we move forward. We have therefore been looking to find the right partners to take forward our businesses in the tourism sector. As one of our partners in the KHA ownership structure, TUI was the natural choice for the execution of this transaction, given that – apart from the fact that the group’s international tour operator business has brought the majority of guests to the hotels and camps – it also knows KHA’s operations and, even more importantly, has a clear vision for the future for this business, which is exceptionally important for us. ” – said James Pearson, Chief Financial Officer of Fortenova Group.
The transaction will be formally closed once the Market Competition Agency approves the concentration of KHA with TUI.
On Tuesday, 29th September 2020, the process of registering the company Idea and its affiliated companies in Serbia to Fortenova Group was concluded. The procedure of transferring Idea’s assets from Agrokor to Fortenova Group has thus been formally completed.
Fortenova Group has received a number of non-binding offers for the acquisition of the companies Ledo plus, Ledo Čitluk and Frikom, forming together with several smaller affiliated companies the Frozen Food Business Group, which operates within Fortenova Group’s Food Division.
“Over the last few years, and again in recent weeks, there has been occasional comment and discussion in regards to offers being made for various Fortenova Group’s assets. Whilst this interest reflects the strength of our business, brands and management it obviously creates uncertainty and concern for our employees. We will therefore aim to quickly review the offers received and decide whether to move forward with one or more of them. Our aim is for this decision to be taken by mid-October, which will then be communicated first to our employees and then announced to the public. Our ultimate goal, subject to achieving a satisfactory price, is to select a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group and completion of the process depends on finding such partner”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors.
“With our clear strategy to financially strengthen the company in mind, a sale of the Frozen Food Business Group, if concluded, would result in a reduction of debt that would transform the financial position of the overall Fortenova Group. This would then allow full investment in the remaining businesses to drive their future growth. The Executive Directors and the Board will review the offers received and will quickly take a decision on how to move forward”, said James Pearson, Fortenova Group’s Chief Financial Officer.
“To proactively achieve our targeted capital structure via deleveraging the company, we are ready to dispose of only one segment of the core business which potentially with these offers would be the Frozen Food Business Group. Beyond this, the divestment of our non-core operations in order to focus on the core business will be continued”, concluded Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors.
The European Commission has cleared the intention of concentration whereby Fortenova Group acquires control over Poslovni sistemi Mercator, Ljubljana.
For the territories of Serbia, Bosnia and Herzegovina, Montenegro and North Macedonia the concentration was filed with the competent local market competition regulators and all national authorities except for the Competition Commission of the Republic of Serbia have now approved the concentration.
“We are pleased with the decision of the European Commission to approve the transfer of Mercator from Agrokor to Fortenova Group has been given. We expect that the approval from the Serbian Commission will follow shortly. This has paved the way for the transfer of Mercator to be realized by the end of this year and for Fortenova Group’s retail as of 2021 to start acting on the market as a common, regional group, whose operations are in the interest of all stakeholders – from employees through suppliers and shareholders to the entire economic environment, both in the national states and regionwide” – said Fabris Peruško, Chief Executive Officer of Fortenova Group commenting on the EC decision.
“A strong owner will enable Mercator’s further growth and development, and support Mercator’s strategic projects, including the 130-million-euro investment into a new logistics centre in Ljubljana,” added Tomislav Čizmić, President of the Management Board of Mercator.
Fortenova Group d.d. and Osijek Koteks d.d., a leading Croatian construction company, finalised an agreement whereby Osijek Koteks has acquired Projektgradnja plus d.o.o., a fully owned subsidiary of Fortenova. Osijek Koteks was selected as the best bidder through a competitive sale process managed by Fortenova and Deloitte Croatia as the exclusive financial advisor to Fortenova.
By closing this transaction, Fortenova Group continues towards its aim to focus on three core segments of retail, food and agriculture. Since the start of the sale process approximately a year ago, Fortenova Group has also divested its subsidiary Rivijera, which manages the Triestina camp in Ičići near Opatija, as well as minority stakes in ID Riva Tours and Gulliver putovanja. ID Riva Tours is a German tour operator organising trips to Croatia, with offices in Poreč, Žminj, Rijeka, Zadar and Trogir, while Gulliver putovanja is one of Croatia’s leading destination management companies in the majority ownership of the global tour operator TUI.
James Pearson, Fortenova Group’s Chief Financial Officer, emphasized on this occasion the importance of the company’s focus on core business: “I would first of all like to thank all the employees of Projektgradnja, and Rivijera, for their skills, dedication and hard work while they were part of the Fortenova Group. We now wish them the best with their new partners and hopefully, much deserved success in the future. For Fortenova, these four transactions, along with others we expect to make in the coming months, allow the Group to make good progress in moving towards its previously announced focus on three core divisions of retail, food and agriculture. The aim is to have a sharper focus on these three divisions and have an overall less complex Group to enable us to deliver better returns as we go forward.”
As part of the sale process for all these businesses Fortenova Group was focused on finding buyers who share Fortenova’s vision of developing the acquired businesses for the benefit of their employees, partners and other stakeholders. As a result of this transaction, Projektgradnja gained a strategic partner who will improve and strengthen its operations, and secure its long-term prospects. At the same time, Osijek Koteks will complement its portfolio which mainly consists of civil engineering and construction material production with building construction projects, and strengthen its overall expertise in civil engineering by taking over some 200 Projektgradnja’s construction experts. It is worth noticing that Projektgradnja executed some of the largest and most complex construction projects in Croatia, and is well qualified to perform all kinds of construction works. Over the last four and a half years Projektgradnja completed 69 projects with the total value of more than EUR 173 million.
Over the first six months of 2020 the Group thus generated consolidated revenues of almost HRK 10 billion (9,910 million) and consolidated EBITDA of HRK 531.9 million. The consolidated results pertain to Fortenova grupa d.d. and its 95 subsidiaries, without Mercator, the transfer whereof to Fortenova grupa d.d. is expected by the end of the year. A strong cash position of HRK 1.5 billion on its accounts and stronger market shares were the features that Fortenova Group concluded its operations with in the first half of 2020.
According to non-consolidated indicators, the core businesses non-consolidated net sales revenues for the period were 4.3 per cent lower than in 2019, which was expected in view of the global economic lockdown that marked the H1/2020 operations due to measures introduced to prevent the spread of COVID-19, and EBITDA was improved by almost 3 per cent against the same period of 2019.
While net sales revenues in the Retail & Wholesale and Food segments dropped by 3.9 per cent and 8.3 per cent, respectively, total revenues in agriculture grew by six per cent due to the increase in pig prices. Agriculture segment also features excellent EBITDA growth rate of 41.5 per cent in H1/2020 against the previous year. Retail EBITDA grew by HRK 37 million, with the major positive effect accounted for by Q1/2020 and the implementation of measures taken to adjust operations to COVID-19 circumstances. The lockdown conditions were mostly reflected in the Food operations, particularly the segment that primarily leans on the HORECA channel and tourist flows, resulting in a drop of EBITDA by 11.5 per cent compared to the same period of 2019 though market shares increased in oil, beverages and frozen food and business in Serbia performed well.
“Given the impact of COVID-19 on the first half of 2020, we are very satisfied with our operations. When it comes to our consumers and the community in which we operate, the most important thing was to keep the supply chain running without interruption and to protect the safety of our employees and our customers, and when it comes to the position of Fortenova Group – to reduce the negative effects of the crisis as much as possible by implementing measures intended to adapt our operations and to manage liquidity reserves as firmly as possible, which we have successfully done, as shown by the six-months results. The period also featured very positive steps in the process of transferring Mercator and Dijamant to Fortenova Group and optimism regarding the results of the tourist season, which was way better than expected” – said Fabris Peruško, Chief Executive Officer of Fortenova Group at the presentation of the H12020 business results to DR Holders, i.e. owners of the company.
Commenting on the financial results of H12020, James Pearson, Executive Director for Finance of Fortenova Group, said that “in view of the negative impact of COVID-19 we have managed our cash and profitability very well”, stating further: “Fortenova Group now has a very clear and agreed strategy to deliver financial health of the Group. This we will continue to deliver on and we expect to fully comply to our lender requirements going forward”.
Seized Mercator shares have to be returned to Agrokor
The Supreme Court of the Republic of Slovenia passed a judgement pursuant to which the shares of Mercator, that were by decision of the Public Competition Agency of the Republic of Slovenia (Javna agencija Republike Slovenije za varstvo konkurence – AVK) temporarily seized late last year, have to be returned to Agrokor without delay.
The State Attorney’s Office of the Republic of Slovenia had filed a request for the protection of lawfulness with the Supreme Court of the Republic of Slovenia whereby the State Attorney’s Office essentially stated that the Slovenian AVK, by seizing the Mercator shares from Agrokor, had acted unlawfully. With its final and non-appealable judgement the Supreme Court has confirmed such claim and changed AVK’s decision, thus halting the procedure that AVK had brought against Agrokor, in which the Mercator shares were seized. The Supreme Court has thus enabled Agrokor to freely dispose of the shares.
The Supreme Court declared the seizure of shares to be unlawful, argueing that AVK had no legal grounds to issue a ruling to seize the shares. In particular, Item 5 of Art. 201 of the Slovenian Misdemeanor Act stipulates that the decision to seize property can be made if there is a »concern that the perpetrator may hide or travel abroad during the infringement proceedings or prior to the execution of the decision«. The Supreme Court established that it was conceptually impossible for a legal person to »hide, travel to an unknown location or abroad« and that there were no substantive legal grounds to seize the shares from Agrokor. The judgement indicates that, by passing the unlawful seizure decision, AVT completely wrongfully applied Art. 201 of the Slovenian Misdemeanor Act, the goal and intention whereof solely apply to natural persons for whom there is a possibility to »hide or travel to an unknown location«. For those reasons, the Supreme Courts states, Mercator shares have to be returned to Agrokor without any further delay.
This judgement of the Supreme Court provides for the return of property to Agrokor slightly more than a month after the Court Okrajno sodišče of Ljubljana already altered AVK’s decision on the amount of the fine and reduced the original amount of as much as EUR 53.9m to EUR 1m, explaining that not having reported the concentration was not the result of the »intention to bypass the concentration filing in order to cause possible harmful effects on market competition«, but was rather »the result of negligence of the responsible person Ivica Todorić«. Due to the fact that the court has not accepted all arguments, Agrokor appealed against this decision to the High Court of Ljubljana and has continued to apply legal means to refute the argumentation used by AVK in establishing the alleged breach of provisions.
Fabris Peruško, Chief Executive Officer of Fortenova Group, to which the Mercator shares are to be transferred, said: »We welcome the judgement of the Supreme Court, which shows that by protecting lawfulness, key institutions also improve the investment climate in Slovenia. We expect for the free disposal of shares to be made possible within shortest time and are still planning to realize the transfer of Mercator shares to Fortenova Group by the end of this year.«
Peruško also used the occasion to reiterate that transferring Mercator to Fortenova Group as soon as possible was primarily in the direct interest of Slovenia’s largest retail chain, its suppliers and the entire economic environment in Slovenia. »Due to its multiplying effect on the economy, Mercator is a company of systemic importance for the Slovenian economy. By the transfer from Agrokor, a company in bankruptcy, Mercator will find itself in the ownership of the stable and capital-strong Fortenova Group, whose ultimate goal is to make Mercator a strong local-supplier-oriented regional retailer«, Peruško said, concluding: »As already stated several times, in Mercator as part of Fortenova Group the entire Slovenian economy will gain a financially strong and stable partner and buyer of its goods. The cooperation with local suppliers and the maintenance and development of shorter supply chains is one of the key determinants of Fortenova Group’s regional retail development strategy and constitutes an important competitive advantage. After the Mercator shares are transferred to Fortenova Group, the local suppliers can therefore continue to count on their position at Mercator.«
14 July 2020 – Fortenova Group’s DR Holders have today at the General Assembly meeting voted in favor of changes in the Group’s Board of Directors by adopting the resolution to approve the acceptance of resignations of two of its members – Mr. Alexander Torbakhov and Mr. Paul Foley.
Mr. Torbakhov’s resignation has been prompted by the fact that he has been appointed the CEO of a major Russian telecommunications company VimpelCom.
Mr. Foley has decided to focus cooperation with Fortenova Group fully on its retail operations through the roles of a member of Supervisory Boards of Mercator in Slovenia and Konzum plus in Croatia, that he already holds. Mr. Foley is also expected to become the Chairman of the Supervisory Board of Konzum, thus putting to best use his lifelong experience in the retail industry.
Last year, marked by increasing revenue and adjusted EDITDA, ends with strong cash position while Q1 2020 shows best results in the past three years
In presenting the results of last year’s operations to its DR holders, Fortenova Group highlighted the growth of both most important performance indicators in 2019 – total revenue and EBITDA, accompanied by building strong liquidity reserves due to which it entered the year 2020 with a cash position of HRK 1.6bn.
The pro forma consolidated total revenue of Fortenova grupa d.d. in 2019 reached almost HRK 24 billion (23,946 million), with consolidated adjusted EBITDA amounting to almost HRK 1.7bn (1,662 million). Given that Fortenova grupa d.d. has been operational since 1st April 2019, the presented results are the pro forma consolidated results of Fortenova grupa d.d. and the 102 companies, net of Mercator, the transfer of which to Fortenova grupa d.d. is not yet completed.
The Core segments, which include the results of 17 core companies of Fortenova grupa d.d., companies from the business areas of Retail and Wholesale, Food and Agriculture, generated a total of HRK 24,805 million in unconsolidated revenues in 2019, or a growth of 3.6 % against the year 2018. At the same time unconsolidated EBITDA of the Core segments saw a year-on-year growth of 13 % and amounted to HRK 1,917 million.
All Fortenova grupa d.d. Core segments experienced total revenue growth in 2019 – Retail and Wholesale of 3%, while both Food and Agriculture generated 4% higher revenues than in the year 2018. Total revenues generated in Retail and Wholesale amounted to HRK 13,934 million, in Food HRK 8,267 million and in Agriculture HRK 2,604 million.
Having maintained the same level of EBITDA as in the previous year, with HRK 1,132 million realized in 2019 the Food Business segment made the largest contribution to the Group total. The highest positive effect on total revenue growth in Food was accounted for by the edible oils and meat divisions.
The highest growth of revenue and EBITDA in the Retail and Wholesale business area was accounted for by Konzum, whose EBITDA in 2019 outperformed the one from the previous year by 25.5 %. Total revenues generated by Croatia’s largest retail chain in 2019 grew by 4.5%, in spite of the fact that it had a lower number of stores than in the previous year. In the Agriculture segment the increase in revenue was mostly accounted for by PIK Vinkovci, while the highest growth of profits in 2019, was generated at Belje with HRK 62 million.
Fortenova grupa d.d. was able to continue the favourable operating trends in Q12020, with consolidated revenues, net of Mercator, amounting to HRK 4.814 million, while adjusted consolidated EBITDA for the period amounted to HRK 93.6 million.
At the same time, in Q12020 the Core segments generated unconsolidated total revenue growth of 8 %, while the unconsolidated EBITDA for the quarter amounted to HRK 245 million or 90 % more compared to the results generated by Agrokor d.d. in the period preceding the Settlement Plan implementation.
„The growth of all key performance indicators, particularly EBITDA, as well as the fact that we secured a smooth operational continuity, have proved that the numerous transformational processes that have been taking place at Fortenova grupa with a view to achieving significant cost control and improving efficiency, have borne fruit. Furthermore, as already known, over the course of 2019 the company refinanced its SPFA debt, implemented changes in organisation and governance and obtained a new capital and ownership structure. At the same time, Fortenova Group has been settling all its liabilities regularly and without exception and entered the year 2020 with a very strong cash position of HRK 1,635 million on its accounts. Hence the measures taken by the Group at the end of Q12020 in order to adjust its operations to the impact of the COVID-19 crisis were primarily directed at maintaining its strong liquidity and employment in order for the Fortenova grupa to be ready to move on once the crisis is over” – said Fabris Peruško, CEO of Fortenova Group at the presentation of the 2019 results to the holders of Depositary Receipt s, ie. the owners of the company.
The website http://nekretnine.fortenovagrupa.hr features almost 200 properties worth more than HRK 139 million
Fortenova Group has refreshed the offer at its specialized website for selling properties http://nekretnine.fortenovagrupa.hr to include more than 50 new properties located all across Croatia. The offer still includes various property types: residential, commercial, agricultural and building land. Those are non-core properties owned by Fortenova Group’s operating companies. Thus the overall portfolio offered on that website comprises almost 200 properties worth more than HRK 139 million in total. As a new feature, all properties offered have additionally been designated with special boards on site with the required contacts in order to make the divestment process as efficient as possible.
The website http://nekretnine.fortenovagrupa.hr features a detailed description of the condition of each property offered for sale as well as the terms of disposal, along with the initial price and instructions on how to submit bids for a specific property. In addition, it is possible to tour and view commercial facilities subject to prior notice. There is also a special telephone line under the number +385 99 531 4000, where additional information can be obtained. Binding bids for purchasing properties shall be received until 31st May 2020.
The bids are to be submitted in binding form and must contain the name of the natural person or firm name of the legal person, PIN/IIN (OIB), contact, proof of residence or registered seat of the bidder, designation of the property (property ID listed with each individual advertisement starting with „AGNE-____“) for which the bidder submits the bid in writing, the offered amount of the sale-purchase price in kuna that must be higher than the stated initial sale-purchase price, proof of security deposit payment, IBAN for possible security deposit repayment, statement of the bidder on acceptance of the terms and conditions of the sale-purchase agreement, signature of the bidder and a list of appendices submitted with the bid. The bidders should deliver the written bid in a closed envelope to the address: FORTENOVA GRUPA d.d., Marijana Čavića 1, 10 000 Zagreb, with the remark – „Bid for the purchase of the property – ID No. AGNE-______, Asset Management Department of the Group“. All details regarding the conditions of sale can also be found at the following link: http://nekretnine.fortenovagrupa.hr/hr/uvjeti/.
The list of properties offered for sale shall continue to be updated regularly and the website will soon be supplemented to include new content and new properties.