Romanian Nuts, Seeds and Ecological Foods Companies

Corporate Finance Consulting

Private Equity
Warsaw, March 28, 2008

www.cet.co.uk

Central Europe Trust Company Limited Belgrade - Bucharest - Budapest - London - Moscow - Prague - Warsaw - Zagreb

Contents page

1 2

Romania - Country Overview Romanian Nuts and Seeds Market

Introduction Ecological Foods - Overview Market Players Potential Acquisition Targets

Next Steps

P1

Section

Country Overview

P2

Country overview Romania

Population: Major Cities:

22.28 million (July 2007est.) Bucharest (1.9 mln); Iasi (0.31 mln); Constanta (0.3 mln); Cluj-Napoca (0.3 mln); Timisoara (0.3 mln); Galati (0.29 mln); Craiova (0.29 mln); Brasov (0.28 mln)

Economic Overview

Romania, which joined the European Union on 1st January 2007, began the transition from Communism in 1989. The country emerged in 2000 from a three-year recession thanks to strong demand in the EU export markets. Domestic consumption and investment have influenced GDP growth in recent years. Romania experienced a real GDP growth of 5.2% in 2005, that grew further to 5.6% in 2006 and to 5.9% in 2007 (est.) The industrial production index increase was estimated for 8% y/y for the end of 2007 - growth in exports reached 11,7% in Jan-Sep. period of 2007. During the period Jan-Sep. 2007, industrial production increased by 5.8% in comparison to the same period of 2006. The increase was mainly due to manufacturing (+6.7%), mining and quarrying (+0.8%). The electric and thermal energy, gas and water sector experienced a 1.0% decrease The Romanian currency appreciation against both the Euro and the US dollar keeps a steady range. Estimation for 2008 and 2009 is RON 3.37 and 3.25 respectively to Euro 1 2007 follows a successful 2006 - the seventh year of uninterrupted economic growth, though accompanied by a widening current account deficit Total government debt stands as one of the lowest levels in Europe - approximately 18.7% of the GDP, as of the end of 2007 (est.), less than half of the EU-25 average of 60% (of GDP) Romanian unemployment rate is decreasing steadily reaching an average of 4.5% in 2007 (est.)

P3 Source: National Institute of Statistics, The World Bank, Eurostat, INS, Ernst&Young, CET

Country overview Cont.

Romania borders with Ukraine to the North, the Moldova Republic and Black Sea to the East, Bulgaria to the South and Hungary and Serbia to the West
Location Total size Number of regions Capital Total population Structure President (5 year term) Parliament SE of Central Europe 238,391 sq. km (12th position in Europe) 42 counties (including Bucharest, the capital city) Bucharest 22.28 million (July 2007 est.) Republic Traian Basescu (Democratic Party, elected by end 2004 for a 5 yrs mandate) Romanias Parliament has 469 members (332 seats in the Chamber of Deputies and 137 seats in the Senate), elected for a 4 years term Calin Popescu Tariceanu (Liberal Party), elected by end 2004 for a 4 yrs mandate OECD, NATO (since 2004), United Nations Organization, Council of Europe, WTO, IMF, IBRD, EBRD, CEFTA EU member since January 2007

Prime Minister CRs membership

Climate

Continental climate with 4 distinguished seasons including hot summers and winters with lots of snow. Temperatures are characteristic for the continental climate
Romanian 89.5%, Hungarian 6.6%, Gypsies 2.5%, Ukrainian 0.3%, German 0.3%, Russian 0.2%, Turkish 0.2%, other 0.4% Romanian is the official language, many (especially young) people speak an additional language (usually English).
P4

Characteristic of population Language

Source: National Institute of Statistics, CET

Country overview Cont.

Romania has become a full member of the EU as of January 2007

History and culture

Romania was formed by blending incumbent Balkan inhabitants (the Thracians) with the Romans ; Romanian language belongs to the Romance language group Romanias current territory includes 3 historical provinces (Muntenia, Moldavia and Transylvania) which evolved into stand-alone independent states and followed a similar history, periods of independence alternating with periods of domination by neighbouring empires (Austrian, Turkish, Russian) The Great Union of 1918 brought all three Romanian provinces into a national state, whose population is 90% Romanian

Following Russian occupation in 1944, a communist regime came to power and survived until the December 1989 Revolution, which marked the return of Romania into the European democracies
After 1989 Romania passed through a turbulent and painful transition period, marked by deep reaching transformation in the economy and society. Macroeconomic stability has been re-established starting late 1990s Romania joined NATO in 2004 and the EU in 2007

Source: CET P5

Country overview Cont.

Romania is a multi-polar country, with several significant urban and industrial centres beside the capital city of Bucharest
Ukraine
BOTOSANI

Hungary

Moldavia
SATU MARE MARE MURES Suceava SUCEAVA SALAJ BIHOR CLUJ BITRISTA NASAUD NEAMT

Main industrial centres are clustered around the large towns: Bucharest (1.9 million) Iasi (0.3 million)

Iasi

Constanta (0.3 million)

Timisoara (0.3 million) Galati (0.29 million) Craiova (0.29 million) Brasov (0.28 million) Cluj Napoca (0.30 million) Braila (0.21 million) Bucharest alone accounts for app. 18% of Romanias GDP
Serbia Timisoara
TIMIS ARAD

Cluj Napoca
ALBA

MURES

HARGHITA BACAU

VASLUI

COVASNA SIBIU HUNEDOARA BRASOV VRANCEA

Galati

Brasov
ARGES BUZAU PRAHOVA

Ukraine

CARAS SEVERIN

GORJ

VILCEA

Braila
IALOMITA

TULCEA

Pitesti
MEHEDINTI DIMBOVITA

Craiova
DOLJ OLT TELEORMAN

BUCHAREST
GIURGIU CALARASI

Constanta
CONSTANTA

Black Sea

Bulgaria

Romania is divided into 41 counties and 1 municipality*: Alba, Arad, Arges, Bacau, Bihor, Bistrita-Nasaud, Botosani, Braila, Brasov, Bucuresti (Bucharest)*, Buzau, Calarasi, Caras-Severin, Cluj, Constanta, Covasna, Dimbovita, Dolj, Galati, Gorj, Giurgiu, Harghita, Hunedoara, Ialomita, Iasi, Ilfov, Maramures, Mehedinti, Mures, Neamt, Olt, Prahova, Salaj, Satu Mare, Sibiu, Suceava, Teleorman, Timis, Tulcea, Vaslui, Vilcea, Vrancea
Source: National Institute of Statistics, CET P6

Country Overview Population structure

The total population in Romania exceeds 22 million. Romanian society is considered to be young in comparison to other European countries
Population by sex and age in July 2005

Total population of Romania has fallen 2.6% since its peak in 1988. The population is expected to continue falling for the next decade due to net emigration and low birth rates Romanian society is quite young. However, the proportion of retired people is rising In 2007 there were 10.8 million males and 11.4 million females living in Romania The birth rate is estimated births/1,000 population for 2007 at 10.67

P7 Source: National Institute of Statistics

Country overview Macroeconomic indicators

Romanian economy has been growing over the last 7 years with GDP growth of above 5% and decreasing unemployment
Macroeconomic indicators 2000 - 2007

2000 Population (mln) 23.21

2001 22.46

2002 22.43

2003 21.77

2004 21.71

2005 21.66

2006 21.61

2007** 22.28

GDP growth (%)

GDP (Euro bn) current p. GDP per capita (Euro)

2.1
40 1,776

5.7
45 2,028

5.1
44 2,009

5.2
48 2,194

8.4
56 2,541

5.2
84 3,851

5.6
91 4,286

5.9
109 5,107

CPI inflation (%)*

Unemployment (%) Foreign trade balance (Euro m) Current Account/GDP (%) Net FDI (Euro m)

40.7
10.5 -2,008 - 4.0 1,134

30.3
8.8 -3,759 - 5.5 1,320

17.8
8.4 -2,628 - 3.3 1,095

14.1
7.4 -3,201 - 6.0 1,764

9.3
6.3 -3,905 - 7.5 3,734

8.6
5.9 -6,587 - 8.7 5,457

4.8
5.2

6.6
4.5

-8,935 app. -14,901 (Jan-Sep. 2007) -10.0 8,663 -12.0 app. 6,526
(Jan-Nov 2007)

* Annual growth as compared to preceding year-end ** Estimates Source: National Institute of Statistics, IMF, Romanian Agency for Foreign Investment , Central Bank of Romania, ABN AMRO Romania, World Bank P8

Country overview Unemployment

Unemployment rate in Romania decreases steadily year by year reaching 4.5% on average in 2007
Registered unemployment rate in Romania in 1998 - 2007 %
14 12 10 8 6 4 2 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 est. 11,8 10,5 8,8 8,4 7,4 6,3 5,9 5,2

Unemployment rate by region, average in 2006

3.6%

6.1%

6.2%
4,5

4.0% 6.3% 6.9%

South West Unemployment over 6.2% between 5.0 6.2% below 5% South

5.6%

Bucharest and Ilfov

2.3%

Unemployment level in Romania decreased from 11.8% in 1998 to 4.5 % in 2007

Region of Bucharest and Ilfov has the lowest unemployment rate in the region of 2.3% as 90% of the area is urbanization The highest unemployment rate can be noticed in the South-West (6.9%) and the South (6.3%) regions, except region of Bucharest and Ilfov
Source: National Institute of Statistics, CET P9

Country Overview FDI

FDI has grown sharply over last several years as Romania approached and entered the EU

The evolution of FDI in Romania between 2000 - 2008

Euro million

10 000 8 000 6 000 4 000 2 000 0

2000 2001 2002 2003 2004 2005

8 663 6 526 5 457 3 734 1 310 1 764 7 030

1 134

1 095

2006

2007 (Jan-Sep)

2008 (Forecast)

Major Deals

SNP Petrom (2004) 51% equity was sold by the Ministry of Economy to Austrian OMV for Euro 1,500 million
BCR (2006) 61.8% equity sold by National Privatization Agency to Austrian Erste Bank for Euro 3,751 million Electrica Muntenia Sud (2006) 67.5% equity sold by the Ministry of Economy to Italian ENEL for Euro 820 million

Source: National Institute of Statistics, ABN AMRO Romania, CET

P10

Country Overview FDI Cont.

Romania has become an attractive place for investments for large international companies
Top 10 foreign investors in Romania

No. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Company AUTOMOBILE-DACIA SA MITTAL STEEL GALAI SA A&D PHARMA HOLDINGS SRL ROMPETROL RAFINARE SA TELEMOBIL SA COSMOTE ROMANIAN MOBILE TELECOMMUNICATIONS SA HIPROMA SA KAUFLAND ROMANIA SCS RAIFFEISEN BANK SA

Investing Company RENAULT SA MITTAL STEEL HOLDING AG A&D PHARMA HOLDINGS NV HE ROMPETROL GROUP N.V. INQUAM (ROMANIA) SA COSMOTE MOBILE TELECOMMUNICATIONS SA BEARBULL SAS SC KAUFLAND RUMANIEN WARENHANDEL GMBH RAIFFEISEN INTERNATIONAL BANK - HOLDING AG

Country France Switzerland Holland Holland Great Britain Greece France Germany Austria

Activity Automotive Steel production Pharmaceuticals Oil processing Telecommunications Telecommunications Retailing Retailing Banking

10.

MECHEL CAMPIA TURZII SA

MECHEL INTERNATIONAL HOLDINGS AG

Switzerland

Metalurgy

According to the Romanian market experts, since the 1990s, Romania has been shaping itself as an important emerging market in the CEE region to receive important inflows of FDI Therefore, the investment model and industries have undergone a number of changes along with the evolution of Romania's business environment In recent years, foreign investors entering Romania have oriented their investments towards mass consumers through the service industry, IT and communication, R&D and technical innovation
Source: Romanian Agency for Foreign Investment P11

Country Overview FDI Cont.

FDI is dominated by telecom, services and trade FDI by Industry
FDI in Romania by industry No. of projects Telecommunications Services Trade Wood processing Machine building Energy sector Constructions and constructions materials Electronics and Electrical Engineering Metallurgy 62 69 97 22 44 25 42 16 19 Project value (USD million) 1,457 811 737 657 693 509 366 232 234 Project value (app. Euro million) 990 551 501 447 471 346 249 158 159 Project value (%)
Others, 14.21%

Share of FDI value in Romania by industry

22.01 12.26 11.13 10.15 9.94 7.7 5.55 3.51 3.54

Metallurgy , 3.54% Electronics and Electrical Engineering, 3.51% Constructions, 5.55% Energy sector, 7.70%

Telecom, 22.01%

Serv ices, 12.26%

Machine building, 9.94%

Trade, 11.13% Wood processing, 10.15%

USD/Euro exchange rate year end 2007 = 1.471

Source: National Institute of Statistics, National Trade Register Office, CET

P12

Country Overview FDI Cont.

GDP and FDI have an uneven geographic distribution across Romania

As for the regional spread, most FDI projects were registered in: Bucuresti-Ilfov Development Region - 298 projects, with an aggregate value of app. Euro 2.78 billion, of which app. Euro 1.97 billion were foreign investments Central Development Region (counties Alba, Brasov, Covasna, Harghita, Mures, Sibiu) 81 investment projects, with an aggregate value of app. Euro 660,77 million, of which app. Euro 446.63 million were foreign investment Southern Muntenia Development Region (counties Arges, Calarasi, Dambovita, Giurgiu) - 40 projects, with an aggregate value of app. Euro 412.64 million, of which app. Euro 329.71 million were foreign investment

As for the country of origin, foreign investors that registered larger investment projects in excess of app. Euro 0.68 million are coming from the Netherlands, with app. Euro 1.02 billion, representing over 22% of total FDI, followed by Austria with app. Euro 430.99 million, representing over 10% FDI, from Germany with app. Euro 430.99 million, representing over 9% and from France, with app. Euro 344.66 million, representing over 7% of the total investment Bucharest will register in 2008 a GDP per capita of Euro 11,700, double the national average; other regions per capita GDP will be as follows: W (Euro 6,500), NE (Euro 3,800), SE (Euro 4,800), S (Euro 4,650), SW (Euro 4,750), NW (Euro 5,200), Central (Euro 6,150) Romanias NE region has one of the lowest regional per capita GDP in the EU-27

Source: National Institute of Statistics, CET

P13

Transport and Logistic Infrastructure

P14

Transport and Logistic Infrastructure Roads, Motorways

Romania is located in the South - Eastern part of Europe. It is one of the major crossroads for international economic exchange in Europe
Road System
Planned motorways projects

Road system in Romania is still developing Currently Romania has the least developed motorway network among all the European Union members, with only 239 km in use as of January 2007. This is due to the fact that before 1989 rail, air, and marine transport were preferred. Since 1989 little progress was made However, in recent years a master plan for the national motorway network has been developed, and work has begun around the country, which will result in significant changes by 2015
Roads in Romania

Source: The World Bank, CET

P15

Transport and Logistic Infrastructure Airports

When compared to the other Eastern European countries, Romania has a well developed airport infrastructure
Airports in Romania

Air Transport There are 17 commercial airports in Romania: Arad International Airport Bacau International Airport Baia Mare Airport Bucharest / Baneasa Bucharest / Otopeni Caransebes Airport Constanta "Mihail Kogalniceanu" International Airport Cluj-Napoca International Airport Craiova Airport Iasi Oradea International Airport Satu Mare International Airport Sibiu International Airport Suceava Airport Targu-Mures International Airport Timisoara International Airport Tulcea Airport The largest airports are located in Bucharest, Timisoara and ClujNapoca

Baia Mare
Satu Mare

Suceava

Caransebes

Airport

International airports are managed by entities owned by the Ministry of Transports, Constructions and Tourism. The other airports (serving only national air traffic) are owned by local public companies
The national airline, TAROM, is fully state owned and there are no current prospects for its privatization

Source: The World Bank, CET

P16

Transport and Logistic Infrastructure Railways

Romanias railway network seems to be quite well developed connecting all the main cities and smaller towns
Railway network in Romania

Railways In 2006 the railway network in Romania comprised 11,385 km of track, of which 60 km are broad gauge (1.524 m), 10,898 km are standard gauge (1.435 m) and 427 km are narrow gauge (0.760m) 3,888 km of the Romanian rail is electrified Total transportation by rail constitutes about 45% of all passenger and freight movement in Romania In terms of size and scale of operations, railways are comparable with larger EU railways. However, as in other centrally planned economies, Romanian railways had very short lengths of haul, averaging only 250 km

Source: The World Bank, Romanian Agency for Foreign Investment, CET

P17

Transport and Logistic Infrastructure River and Sea Transport

The longest river in Romania the Danube is an important water route for domestic shipping, as well as international trade
River and Sea Transport
Main ports in Romania

Romania has an opening to the Black Sea The largest port of Romania and also the largest Black Sea port with a traffic of over 80 million tons per year is Constanta. Other ports on the Black Sea are: Mangalia and Sulina The most important river in Romania is Danube. After entering the country in the southwest at Bazias, the Danube flows some 1,000 kilometres through or along Romanian territory

Sulina
Orsova Drobeta Turnu-Severin Cernavoda Oltenita Calarasi Turnu Mgurele

All of the country's rivers are tributaries of the Danube, either directly or indirectly. The most important of these rivers are the Mures River, the Olt River, the Prut, the Siret River, the Ialomita River, the Somes River, and the Arges River
The main ports on the Danube are: Orsova, Drobeta-Turnu Severin, Turnu Magurele, Giurgiu, Oltenita, Calarasi, Cernavoda. Three ports - Braila, Galati and Tulcea - are both river and sea ports The Danube is Romania's most important river, not only for transportation, but also for the production of hydroelectric power. One of Europe's largest hydroelectric stations is located at the Iron Gates, where the Danube surges through the Carpathian gorges. An obvious problem with the use of the Danube for inland transportation is its remoteness from most of the major industrial centres

Main ports

Source: CET

P18

Administrative Environment

P19

Administrative Environment Regions

Romania is made up of eight regions. Gross average salary amounted to Euro 267 in 2005, reached Euro 326 in 2006 and is expected at the level of Euro 350 in 2007
Includes 6 counties (Maramures, Bistrita Nasaud, Salaj, Cluj, Bihor, Satu - Mare) Population: Average salary*: % of total population: Urbanisation: 2.7 million 218.9 12% 52.8% Includes 6 counties (Botosani, Iasi, Vaslui, Bacau, Neamt, Suceava) Population: Average salary*: % of total population: Urbanisation: 3.7 million 216.1 17% 43.6%

North-West North-West

North-East

North-East

Includes 6 counties (Mures, Harghita, Covasna, Brasov, Sibiu, Alba)

Central Central West West

Includes 6 counties (Galati, Tulcea, Constanta, Braila, Buzau, Vrancea)

Population: Average salary*: % of total population: Urbanisation:

2.6 million 231.5 12% 60%

South-East
South South South-West South-West South-East

Population: Average salary: salary*: % of total population: Urbanisation:

2.8 million 193.7 $ 178 13% 55.5%

Includes 4 counties (Hunedoara, Caras Severin, Timisoara, Arad)

Includes Bucharest and the Ilfov Includes Bucharest and the Ilfov Agriculture Sector Agriculture Sector Includes 5 counties (Valcea, Olt, Dolj, Mehedinti, Gorj) Population: Average salary: salary*: % of total population: Urbanisation: 2.3 million 256.4 $ 312.8 11% 47.2% Includes 7 counties (Prahova, Ialomita, Calarasi, Giurgiu, Teleorman, Arges, Dambovita) Population: Average salary*: % of total population: Urbanisation: 3.3 million 221.9 15% 41.4% Population: Population: 2.3 million 2.3 million Average salary*: Average salary: $ 464.3 380.5 % of total population: 11% % of total population: 11% Urbanisation: Urbanisation: 90.6% 90.6%

Population: Average salary*: % of total population: Urbanisation:

* 2005 data

1.9 million 242.3 9% 63.7%

In 2005 gross average salary reached its highest level in the Bucharest / Ilfov region Euro 380.5. This region is expected to be a salary leader in 2007 and the following years. The poorest region as far as the gross average salary is concern is the South-East Region reaching Euro 193.7 in 2005
Source: National Institute of Statistics, CET P20

Administrative Environment Corporate Legal Environment

There are several available legal forms to start business activities in Romania. For significant operations, however, only limited liability company and joint stock company should be considered
Foreign investors may set up various forms of business activities: 1. Limited Liability Company 2. Joint Stock Company 3. Representative Office 4. Branches of foreign legal entities 5. Partnership 6. Consortium 7. Trust 8. European Economic Interest Grouping

Numbers of days taken by official procedures to start business

Romania 11

Limited Liability Company is the most commonly used form of business activities for local and foreign investors. The reasons are: comparably low administrative requirements greater flexibility compared to other types of companies and low initial capital requirements

However, the number of joint-stock companies is also increasing in Romania

Source: Romanian Agency for Foreign Investment, Ernst&Young, ANEIR- Foreign Trade Promotion Centre P21

Administrative Environment Taxation of Corporations

Taxation in Romania is significantly below the Western European levels and one of the lowest in CEE
Corporate Income Tax Rate Data for year 2007

France

33.3%

Germany

25.0%

Czech Republic

24.0%
(21% as of January 1st, 2008)

Poland

19.0%

Slovakia

19.0%

Hungary

16.0%

Romania

16.0%

Source: OECD, Eurostat, The World Bank Group

P22

Administrative Environment Taxation of Corporations Cont.

To influence country development Romania offers very low CIT supplemented by certain types of tax incentives
Corporate Income Tax CIT 16% Except for corporate income tax there are other taxes of importance for corporations: Capital Gains Tax included in ordinary profit and taxed at 16% Dividend Tax 10% Withholding Tax 20% on gambling proceeds obtained by nonresidents, 16% withholding tax on other revenues derived from Romania Local Taxes and Other Taxes like: Building Tax Land Tax Health Tax Types of tax incentives Loans with preferential interest (i.e. interest subsidised up to 30% by the state) Loans guaranteed by the state (up to 80%) Free access to utilities Right to use properties from the private domain of the state or of the local authorities Subsidies Exemptions, reductions and postponement of local taxes Other tax incentives such as: offset of fiscal loss with profit obtained from investment in the next 5 years, accelerated depreciation for equipment/installations necessary for the investment
Source: Romanian Agency for Foreign Investment P23

The following entities are liable for corporate income tax: Romanian companies Foreign companies doing business in Romania through permanent presence Foreign companies and non-resident individuals doing business in Romania through a joint venture Foreign companies which derive revenues from real estate transactions or from transactions with shares of a Romanian company Romanian individuals who form joint ventures with Romanian companies, for revenues derived in or outside Romania

Administrative Environment Industrial Parks

Industrial parks in Romania have been promoted through government ordinance in July 2002, as the authorities showed serious commitment to boosting business investments into the Romania
There are 31 industrial parks in Romania

Industrial parks represent a defined area where a company carries out economic activities, scientific research and/or technological development activities to capitalize on the human and material potential of the area The setting up of industrial parks is based on a partnership between central and local public authorities, companies, research and development institutes and other interested partners Industrial parks are defined as special regime areas that offer financial and fiscal facilities to Romanian and foreign companies involved in manufacturing operations and related services

Industrial park

The authority in charge of giving the goahead for the creation of industrial parks is the Regional National Development Agency (RNDA), which is also responsible for the management and distribution of funds to promote investments into these areas

Most of the industrial parks in Romania are located in South, Central and North-East parts of the country
Source: ANEIR- Foreign Trade Promotion Centre P24

Section

Romanian Nuts and Seeds Market

P25

Introduction

P26

Romanian Nuts and Seeds Market Introduction

CET made an initial research in Romania, screening nut and seeds market as well as ecological foods market
1
Initial screening of the Romanian nut and seeds market Overview of ecological foods market in Romania

Initial screening of market players: The Nut Company / Flipper (Tunari) Best Foods (Bucharest) Granex (Bucharest) Depal (Bucharest, Valcea) Elite Romania / Strauss Romania (Bucharest) Alka (Bucharest) Caliprix (Bucharest) Standard Nutricia (Bucharest, Voluntari) Natura land (Oras Pantelimon) Sano Vita (Pausesti Maglasi)

Most market players are located in the Southern parts of the country, around the capital city

Valcea Pausesti Maglasi Tunari Oras Pantelimon

Bucharest
Voluntari

First initial selection of potential acquisition targets: Alka (Bucharest) Caliprix (Bucharest) Standard Nutricia (Bucharest, Voluntari)

Source: CET

P27

Romanian Nuts and Seeds Market Introduction Cont.

For the past several years Romania has been enjoying dynamic growth in almost all aspects of its business activity, especially within the food industry
Romania has fertile soil, good climate, vast farming regions and large agricultural production potential. Romania also has a network of grain facilities inherited from the communist era Grain originating from the Black Sea region is an increasingly important part of global trade, and Romania takes advantage in this trend Sunflowers are Romanias main oilseed crop, with annual production area varying from 800,000 to 1 million hectares, app. 15% of crops are exported, most of it to France
Romanias supply and uses of major crops: 2005-06 market year (1,000 metric tonnes)* Crop Wheat Maize Barley Sunflower Production 5,900 10,300 1,100 1,300 Consumption 5,600 10,700 960 1,200 Exports 455 300 270 200

* Grain stocks add to total supplies available for consumption

According to the industry experts, Romanias mass grocery retail (MGR) sector has been one of the most dynamic in the Central and Eastern European region, with total sector sales expected to reach Euro 3.61billion by 2011, representing a growth rate of 179.5% between 2006 and 2011. In 2006 the market was estimated to be worth app. Euro 1.29 million

According to MEMRB a market research company the Romanian Fast Moving Consumer Goods (FMCG) market in 2006 grew 12.10% by volume and 29,40% by value. In the food market the growth was 20.20% by volume and 35.40% by value, while for non-food products growth was 12.40% by volume and 32.10% by value.
Furthermore, Euromonitor International predicts that Romania is expected to continue to experience excellent growth rates for food and beverages through 2011

Source: National Institute of Statistics, MEMBR, Euromonitor International, CET

P28

Romanian Nuts and Seeds Market Introduction Cont.

Due to the consumers interest in diversified quality food as well as the populations increasing purchasing power, the domestic nut market is growing steadily
The Romanian nut market is dynamic as to the types of products, as each year new products are introduced in order to satisfy the consumers demand for diversity. There is an increasing market for unsorted, healthier nuts, frequently combined in various muesli types of foods Out of all nuts the Romanians prefer hazelnuts, which recorded sales over 1,600 tons in the period 2005-2006, followed by peanuts with sales of more 221 tons, and pistachio with 153 tons The domestic peanuts, hazelnuts, seeds and snacks consumption is also heavily influenced by the fast growth in the beer market* - from Euro 243 million in 2006 to an estimated Euro 310 million in 2007. Such increase has been partly due to a warmer summer and also thanks to costumers shifting from hard liqueurs and wines to beer Main nut producers in Romania are Nut Company, Best Foods, Granex and Alka The nuts market is dominated by 9 brands accounting for over 90% market share. These market brand leaders are: Fiesta, Felix, Flipper (Nut Company, Romania), Standard & Snacks (Standard Nutricia, Romania), Best (Best Foods, Romania), Depal (Depal, Romania), Mogyi (Mogyi, Hungary), Grivas (Grivas Family, Greece) and Harley

Romanian nut market has been hurt by over-supply and low prices, the same as the global market. Annual global output is at app. 210,000 tonnes/year. The nuts global price depreciation was severe from 3.2 Euro/kg in 2005 to only 1.3 Euro/kg in 2006 consequently bringing many nuts farmers close to bankruptcy. In Romania 70-80% of nut supplies originate from Turkey, a country close to Romania and enjoying traditional trade ties.
The other nuts producers present on the Romanian market are Italy, Spain and the US
* Domestic annual per capita beer consumption has increased from 52 litres in 2002 to 66 litres in 2005 , 77 litres in 2006 and 89 litres in 2007. More than 68% of beer sales are from retail shops and most likely consumed at home, possibly accompanied with seeds, peanuts or other snacks

Source: National Institute of Statistics, AC Nielsen, CET

P29

Ecological Foods - Overview

P30

Ecological Foods - Overview

Romanias export of organic products reached Euro 75 million in 2007, forecasts for this year estimate growth of over Euro 100 million
Romania exported almost 95% of its organic vegetable production and 20% of its animal origin products. Half of the total exports consisted of walnuts, berries, mushrooms and cereals There were more than 3,400 ecological producers registered in Romania in 2007, almost 21% more than in 2005 Currently total farmland dedicated to ecological agriculture amounts to slightly more than 170,000 ha; Romania's organic farmers are exporting 70% of their produce

Overall ecological products market in Romania is very small due to the relatively high prices of these products, limited purchasing power of the Romanians, lack of awareness and to the fact that almost every citizen has relatives in the country side, where everyone cultivates vegetables
Only 1% of the Romanian consumers include ecological products in their daily and / or weekly food provisions However, according to the market experts, a number of factors suggest that the domestic market will grow rapidly over the next five years. Currently, demand for organic food is strongest in urban areas and will grow as the rural population continues to move to the cities where better employment opportunities are offered. Also, as the economy continues to grow and standards of living rise, demand for organic products is expected to follow trends similar to the growth patterns experienced in the Western Europe markets Current best seller of ecological products in Romania are ecological sugar and oat bread

Source: National Institute of Statistics, Romanian Agency for Foreign Investment, CET

P31

Market Players

P32

Market Players Nuts and Seeds Market Flipper

Tunari

Company: Flipper / Nut Company

Contact details
Soseaua de Centur, no.28 Comuna Tunari, Ilfov County, Tel.: +40 21 266 5020, Fax: +40 21 266 5120 email: office@fiesta.ro Nut Company of Dutch origin Ownership status The Nut Company acquired Romanian company Flipper Conimpex SRL, (Turkish owners, led by Hage Yasin), holder of the Fiesta peanuts brand. Nut Company paid app. Euro 7 million for 40% of Flipper and uses Flipper as a Romanian platform to market both its leading brand Felix as well as its local brands (Fiesta) N/A Peanuts, peanut products and other types of nuts

Year of establishment Main products Main brand (if any) Financials

Felix, Flipper and local brand Fiesta Recently 2 new Felix brands were launched in the Romanian market: Honey Peanuts and Paprika Peanuts

Turnover 2006 slightly more than Euro 8 million Production facility in Tunari has processing capacity of 20 tonnes/day of peanuts, hazelnuts, pistachio, seeds, raisins According to the company, today Felix is the European market leader in the nuts market. The Nut Company has five operating companies: Felix in Germany, Imko in The Netherlands, Benoit in France, Felix Polska in Poland and Flipper in Romania. With this geographical structure they can easily supply any customer in Europe

Others

Source: Romanian Agency for Foreign Investment, company websites, CET

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Market Players Nuts and Seeds Market Best Foods

Bucharest

Company: Best Foods Productions

Contact details Ownership status Year of establishment Main products Main brand (if any) Financials Str. Moineti, nr. 55, Sector 6,Bucharest, Tel.+40 21 444 9942-5, Fax: +40 21 444 9946 E-mail: info@bestfoods-ltd.com Private person, Mr. ondas Ohonos (of Greek origin) Founded in 1994 in Romania, by Mr. ondas Ohonos - having already a large market share in extruded snacks in Greece, he moved his operations to Romania to follow the changes of the new European market Cake bars, Swiss rolls, potato chips, extruded snacks peanuts and peanuts paste (for professional buyers) Best (peanuts), Jumbo (chips), Lotto (chip sticks), N/A Others More than 50% of the production is exported to the European markets According to the company, along with American Snacks, its sister company in Greece, Best Foods Productions controls a large market share in the Balkans; they also have a subsidiary in Bulgaria The company owns one of the largest industrial facilities in Romania; the facility is equipped with state-of-the-art equipment The set goal for the company is to become a market leader of extruded snacks on the Romanian market and to expand its operations steadily They are certified for ISO 9001:2000 and HACCP

Source: Romanian Agency for Foreign Investment, company websites, CET

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Market Players Nuts and Seeds Market Granex

Bucharest

Company: Granex
Contact details Ownership status Year of establishment Main products Main brand (if any) Financials Str. Danubiu, nr. 12, Bucharest, Tel.: +40 73 148 6718 Website: http://www.granex.net JSC Granex (Lithuanian origin) Almost recently end of 2007 Sunflower seeds, pumpkin seeds, pistachio, peanuts and hazelnuts, micro popcorn, dried fruits and kozinaki (a sweet snack produced either of sunflower nuclei or sesame seeds which are glued with caramel mass) Yes mainly for sunflower seeds products N/A
Granex was established in Lithuania and operates in Central and Eastern Europe also has its subsidiary in Latvia and Estoni They are engaged in roasting, packaging and selling of may types of seeds and nuts According to the company, they export their production to more than ten European countries In 2004 JSC "Granex" has increased its activities by supplying raw material to wholesale and production companies

Others

Source: Romanian Agency for Foreign Investment, company websites, CET

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Market Players Nuts and Seeds Market Depal

DEPAL *
Valcea Bucharest

Company: Depal
Contact details Ownership status Year of establishment Main products Main brand (if any) Financials Others Rm Valcea Ferdinand 50, Rm Valcea, Valcea Private limited liability. company 1993 Peanuts Depal Average annual sales: Euro 1.7 3.4 million
Company factory is located in Bucharest; floor size is between 1,000-3,000 square meters

Company is certified with HACCP

*company logo is not available

Source: CET

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Market Players Nuts and Seeds Market Strauss

Bucharest

Company: Elite Romania / Strauss Romania

Contact details Ownership status Year of establishment Main products Main brand (if any) Financials 54-56 Theodor Pallady Bvd., Bucharest, Tel.: +40 21 272 1500, Fax: +40 21 272 1580 email: office@strauss-group.ro Elite International (now Strauss Coffee BV, part of Strauss Group of Israeli origin as of 2007) N/A Peanuts and sunflower and pumpkin seeds / coffee Delis N/A Coffee producer Elite International entered the peanut and roasted seeds market in 2004, launching its Delis products line, following investment in a new production facility in Bucharest The Delis line was released in 2004 and includes processed peanuts and sunflower and pumpkin seeds According to the Elites General Manager Eli Rachmut, the company planed to gain 20% market share by the end of 2004. However, this was never confirmed Elite counts on the awareness of its coffee brands which enjoy almost 50% market share in two brands on the coffee market: Elite (coffee) and Elite Cappuccino The latest news as of February 6, 2008 presents however further change in the Elites strategy: Finally, we want to focus on the coffee segment in Romania, particularly on premium products. We will also sell the Delis range, after we gave up Merlin biscuits last year said Matanya Schwartz, general manager of Strauss Romania Strauss Romania will launch a new brand on the coffee premium segment according to Mr Schwartz premium coffee accounts for around 1.5%-2% of the Romanian coffee market In the first nine months of 2007, Elite Romania held the leading position on the coffee market, with a 43% share of the total market of roasted and ground coffee, according to company data
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Others

Source: Romanian Agency for Foreign Investment, Zirul Financiar, company websites, CET

Market Players Ecological Foods Natura Land

There are only two main ecological foods producers in Romania, one with entirely Romanian capital and one operating in partnership with Australian healthy food company

Oras Pantelimon

Company: S.C. Natura Land SRL

Contact details Ownership status Year of establishment Main products Main brand (if any) Financials Others Str. Biruintei no 98, Oras Pantelimon, Ilfov, Postal code 077145, Tel.: +40 21 352 4366, Fax.: +40 21 352 9495, Mobil : +40 744 631 632 email: office@naturaland.ro; naturaland@rdslink.ro Romanian capital 2001 Ecological sugar, vegetal milk, ecological bread, natural tea, ecological sweets, natural oil and ecological eggs N/A N/A The company is the biggest producer of ecological food in Romania, with more then 50% market share

Source: Romanian Agency for Foreign Investment, company websites, CET

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Market Players Ecological Foods Sano Vita

Sano Vita has a partnership with Sanitarium, an Australian healthy food company

Pausesti Maglasi

Company: Sano Vita

Contact details Ownership status Year of establishment Main products Main brand (if any) Financials Rm. Vilcea, loc Pausesti Maglasi, Tel.: +40 250 776 333, Fax: +40 250 776 680 email: office@sanovita.ro Romanian privately owned company; have a partnership with Sanitarium, an Australian healthy food company 1995 started as a small warehouse Cereals, drayed fruits, nuts and seeds Also raw sugar, brown and parboiled rice, tapioca pearls and sea salt They have 160 types of products certified by ISO 9001 and ISO 22000

The Sano Vita Muesli - muesli with fruits, muesli with nuts, muesli instant N/A After 12 years of operations the company owns a full production line, packing and distribution network and operates several warehouses in different parts of the country

Others

Source: Romanian Agency for Foreign Investment, company websites, CET

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Potential Acquisition Targets

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Potential Acquisition Targets Alka

Bucharest

Company: Alka Grup

Contact details Ownership status Year of establishment Main products 76-86 Straulesti St, district 1, Bucharest, Tel.: +40 21 668 4949, Fax: +40 21 668 5740 email: desk@alkaco.com N/A 1994 - first company in the group was established, Alka Co., which represented the investment of app. Euro 4.42 million Wafers, sunflower seeds, pistachio, pumpkin seeds, coffee and biscuits Nutlilne - is one of the main brands on the Romanian nuts market. Nutline brand was created in 1998 and consists an extended line of premium products in the dry fruit snacks segment, from sun flower seeds to various types to pumpkin seeds, peeled seeds and mixes of peanuts, almonds, caju (cashew nuts), pistachio and other dry fruits Zeo vanila and cocoa flavoured biscuits with chocolate coating, addressed to children having attractive shape; launched in 2001 Dr Krantz - premium classic nutritious biscuits n two flavours vanilla and cocoa both coated and uncoated; launched in 2001 Others Gold Mocca (coffee), Alfers (wafers), 630 persons 4 divisions, covers the entire FMCG business cycle: from research to development, from production to distribution Alka has quality control system which is compliant with SR EN ISO 9001:2001 and favorably approved in 2005 by SIMTEX-OC

Main brand (if any)

Employment Operations

P41 Source: Romanian Agency for Foreign Investment, company websites, CET

Potential Acquisition Targets Alka

Company: Alka Grup, cont.

Geographical coverage Market In-house sales force focuses on the big cities 8 regional centres Bucharest, Pitesti, Ploiesti, Craiova, Constanta, Timisoara, Cluj, Bacau and covers 8,000 stores; the 8 locations are also logistic centres that continuously serve the entire country In the remaining areas the distribution is managed through local partners Currently, Alka Grup distribution covers a client base of approximately 20,000 stores and includes both inhouse force as well as external partners All segments of Alkas production received major investments in technology and research Alka Grups structure covers all the necessary business areas: research, production, packaging and distribution Alka Groups vision: Be recognized as the innovative market leader, developing our brands globally and truly satisfying our customers and consumers Alka Groups mission: We, Alka, put soul in everything we do; we constantly anticipate consumer needs offering the right products to reach a state of well being

Other

P42 Source: Romanian Agency for Foreign Investment, company websites, CET

Potential Acquisition Targets... Alka Cont.

Alka Grup financials

RON
2005 Fixed Assets Current Assets, of which Inventories Cash & Equivalent Accounts Receivable Total Equity Share Capital Total Liabilities 18,306,744 22,010,395 11,052,418 870,731 10,087,246 12,821,681 7,955,941 27,547,394 2006 17,349,048 22,479,096 9,310,286 298,497 12,870,313 12,209,538 7,955,941 27,857,146 2005

Euro
2006/2005 (%) 2006 4,922,414 6,377,953 2,641,591 84,692 3,651,671 3,464,190 2,257,325 7,903,858 -2.57% 5.00% -13.40% -64.76% 31.17% -2.10% 2.81% 3.96% 5,052,366 6,074,514 3,050,289 240,308 2,783,917 3,538,577 2,195,711 7,602,637

Turnover
Total Revenues Total Expenses Net Profit

42,660,882
47,506,715 48,656,654 (1,149,939)

43,633,964
44,961,675 45,026,207 (64,532)

11,773,716
13,111,088 13,428,452 (317,365)

12,380,186
12,756,895 12,775,204 (18,310)

5.15%
-2.70% -4.86% decrease of loss

Source: CET

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Potential Acquisition Targets Caliprix

Caliprix *
Bucharest

Company: Caliprix
Contact details Ownership status Year of establishment Main products Main brand (if any) Employment Sos. Berceni, No. 104 Bucharest, Sector 4, Tel.: +40 21 224 3782 Fax: +4 021/2243249 Caliprix is a subsidiary of Bitar International holding company (Romanian origin), with activities in most East European countries and the Middle East N/A

One of the main local rice traders The company has a factory in Bucharest of over 7,000 sq. m, including space for storing and packaging the products it markets under the brand Caliprix, mainly rice, beans, sugar, lentil and popcorn

Caliprix 50-100 employees in Caliprix; 500-1000 employees in the entire Bitar holding According to the company manager: The rice market has become saturated in Romania, that is why we want to develop other segments of the business The company invested Euro 500,000 in a modern peanut roasting facility located in Bucharest - total surface area of 700 sq. metres According to the company, it has a 45% of the rice market share Caliprixs main competitor in the Romanian rice market is Atifco, with the two companies holding together app. 80%of the rice market in Romania

Operations

Market

*company logo is not available Source: Romanian Agency for Foreign Investment, company websites, CET P44

Potential Acquisition Targets Caliprix Cont.

Caliprix financials

RON 2005 Fixed Assets Current Assets, of which Inventories Cash & Equivalent Accounts Receivable Total Equity Share Capital Total Liabilities Turnover Total Revenues Total Expenses Gross Profit Net Profit 719,043 10,274,160 3,351,822 1,039,796 5,882,542 1,372,583 0 9,078,405 38,579,909 41,271,078 39,618,212 1,652,866 1,372,453 2006 930,567 12,940,873 4,692,383 811,119 7,437,371 2,192,704 200 11,699,714 38,272,524 40,080,487 39,029,368 1,051,119 820,120 2005

Euro 2006 264,028 3,671,690 1,331,361 230,137 2,110,192 622,132 3,319,539 10,858,994 11,371,964 11,073,732 298,232 232,691 198,444 2,835,503 925,049 286,967 1,623,487 378,811 0 2,505,493 10,647,433 11,390,152 10,933,988 456,164 378,775

2006/2005 (%) 33.05% 29.49% 43.92% -19.80% 29.98% 64.23% 32.49% 1.99% -0.16% 1.28% -34.62% -38.57%

57 increase from 0

Source: CET

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Potential Acquisition Targets Standard Nutricia

Bucharest Voluntari

Company: Standard Nutricia

Contact details 7, Fabrica de Glucoza, et.2, sec.2, Bucharest, Tel: +40 21 232 5202 /232 52 92, Fax: +40 21 232 2696 email: headquarters@standardsnacks.ro

Ownership status
Year of establishment

100% Romanian equity

Established in 1995; entered roasted nuts and peanuts market in 1997 Products range include extruded snacks with different flavours - salted and flavoured, expanded chips - roasted and salted, flavoured peanuts, salted and flavoured popcorn, mini-sticks, pretzels, biscuits crackers, cereals for breakfast, popcorn grains, sunflower and pumpkin seeds. Standard Nutricia produces and distributes more than 25 different varieties of products under a range of private and branded labels Standard Peanuts, Bazzaconi, Fish chips , Zoo chips, Anemieks, Rontzy and Smiley Chips

Main products

Main brand (if any)

Employment
Operations

Employs a workforce of 1,400 persons, of which 35% directly in manufacturing

Modern plant commissioned in 2003 in Voluntari, near Bucharest

Source: Romanian Agency for Foreign Investment, company websites, CET

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Potential Acquisition Targets Standard Nutricia Cont.

Company: Standard Nutricia, cont.

Geographical coverage Own distribution fleet of 150 vans, 20 long haul trucks and 450 cars giving national distribution coverage (34 subsidiaries all over Romania) In the last years, Standard Nutricia started to export its products to the European countries. It set up subsidiaries in Serbia, Monte-Negro and Bulgaria. It also co-operates with Hungarian, Greek and Moldavian distributors in order to introduce its products in these countries as well According to the company, Standard Nutricia is market leader in domestic snacks having 25% of the nut market share; 55% in direct extruded snacks and around 30% in biscuits crackers To adapt to the Romanian economic trends, Standard Nutricia is focusing increasingly on production. Its business activity is represented by the production and distribution of snacks products

Market

Other

Source: Romanian Agency for Foreign Investment, company websites, CET

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Section

Next Steps

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Next Steps
Next Steps

CET may support Bakalland in further identification of market / industry trends on the Romanian market
CET could develop market entry strategy for the Romanian market CET could identify and select potential acquisition targets based on Bakallands requirements CET could organise and participate in Bakallands site visits / meetings with short listed targeted entities CET could assists and support Bakalland in negotiation process with the most attractive selected acquisition targets CET could maintain open communication lines with selected targets using CET Warsaw and CET Bucharest offices CET may provide other support as needed by Bakalland

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CENTRAL EUROPE TRUST POLSKA Sp. z o.o. ul. Ks. I. Skorupki 5 00-546 Warszawa Poland Tel. (0048-22) 583 68 50/51 Fax. (0048-22) 583 68 49 E-mail: cet_office@cet.com.pl

CENTRAL EUROPE TRUST COMPANY LTD. Marble Arch Tower 55 Bryanston Street London W1H 7 LZ Tel. (0044-20) 72 58 71 00 Fax.(00-4420) 72 58 71 01 www.cet.co.uk

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