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21 <td width="50%"></td>
22 <td width="50%"><img src="../images/icon_clip.gif" alt="Pliva Clippings" WIDTH="100" HEIGHT="97"></td>
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66 </table>
67 <p><br>
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69 <td width="60%" valign="top">
70 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><b>For
71 immediate release<o:p>
72 </o:p>
73 <br>
74 16 September, 1999</b><br>
75 <br>
76 <b>PLIVA Group Results for H1 1999<o:p>
77 </o:p>
78 <br>
79 PLIVA’s Vision:</b><o:p>
80 </o:p>
81 </font></span></p>
82 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">To
83 be a pharmaceutical company creating superior and innovative solutions to
84 customer needs, by competing in the global market.<o:p>
85 </o:p>
86 </font></span></p>
87 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">HIGHLIGHTS:<o:p>
88 </o:p>
89 </font></span></p>
90 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">•
91 Overall revenue growth of 8% to HRK 1,983m<br>
92 • International revenue growth of 13% to HRK 1,194m<br>
93 • Strong increase in royalty revenue of 74%<br>
94 • Operating profit rose by 6% to HRK 652m<br>
95 • R&amp;D expenditure increased by 43% (7.4% of Healthcare sales)<br>
96 • Net income decreased by 7% to HRK 377m<br>
97 • Strong financial position<br>
98 • Focus on Pharmaceuticals<br>
99 • Divestment of Foodstuffs and Cosmetics businesses in progress<br>
100 • Two acquisitions in Pharmaceuticals area - Farmacom and Mixis<br>
101 • Two research agreements signed - with Glaxo Wellcome and Althexis<br>
102 • Strong investment activities continue<o:p>
103 </o:p>
104 </font></span></p>
105 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Despite
106 challenges in the operating environment (Kosovo crisis, the introduction
107 of<span style="mso-spacerun: yes">&nbsp; </span>a reference price system
108 and illiquidity in the Croatian health-care sector, introduction of a new
109 health-care system in Poland and the continuation of the Russian crisis),
110 PLIVA achieved good results in the first six months. Turnover rose to HRK
111 1,983 m., 8% higher than last year, with 60 % of this amount coming from
112 international markets. Gross profit increased by 10 % to HRK 1,324 m. in
113 the first half of the year, while operating profit went up by 6 % to HRK
114 652 m. However, net profit fell by 7% to HRK 377 m. due to financing costs
115 and negative exchange rate differentials which were significantly higher
116 than last year, and also significant costs related to restructuring
117 processes.<o:p>
118 </o:p>
119 </font></span></p>
120 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">PLIVA’s
121 restructuring activities continued during the first half of 1999. Going
122 forward, PLIVA will be focused on pharmaceutical business. The PLIVA XXI
123 project has resulted in the development of a new organisational structure,
124 systems and processes that will support PLIVA’s strategy to achieve
125 competitive advantages in the global pharmaceutical market. As part of the
126 restructuring processes, some services were separated into a company
127 called Adria servis d.o.o. This company, with 172 employees transferred
128 from the parent company, will offer its services to PLIVA, but also to
129 other companies. During the first half of the year Foodstuffs has been
130 reorganised towards becoming an independent company.<o:p>
131 </o:p>
132 </font></span></p>
133 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">PLIVA
134 is continuously confirming its focus on research and development, and has
135 accordingly increased its expenditures in this area by 43% in comparison
136 to the same period last year.<o:p>
137 </o:p>
138 </font></span></p>
139 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">The
140 main research events during the first half of 1999 were the signing of
141 collaboration agreements in the research and development of new broad
142 spectrum antibiotics with Glaxo Wellcome and Althexis, as well as the
143 acquisition of the biotech company MIXIS Genetics which has cutting-edge
144 proprietary technology in biodiversity.<o:p>
145 </o:p>
146 </font></span></p>
147 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Commenting
148 on the business results, Mr. &AElig;eljko »ovi&Ecirc;, President of the
149 Management Board said:<o:p>
150 </o:p>
151 </font></span></p>
152 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">“We
153 expect continual consolidation in our key markets and believe this will
154 contribute to the continuous growth of PLIVA in the future. In addition,
155 the PLIVA XXI project has defined the strategic guidelines of the
156 company’s future expansion and development. PLIVA is focused on
157 pharmaceuticals and on continuing to offer superior and innovative
158 solutions to its customers in the global marketplace to ensure long-term
159 value creation for shareholders.”<o:p>
160 </o:p>
161 </font></span></p>
162 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.
163 REVENUE<o:p>
164 </o:p>
165 </font></span></p>
166 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">In
167 the first half of 1999, PLIVA’s revenue increased by 7.9% over the same
168 period last year to HRK 1,983 m. <o:p>
169 </o:p>
170 </font></span></p>
171 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Royalty
172 revenue increased by 73.7 % and ammounted to HRK 398 m., or 20.0% of total
173 PLIVAGroup revenue.<o:p>
174 </o:p>
175 </font></span></p>
176 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.1.
177 Revenue by Region<br>
178 Domestic Sales<o:p>
179 </o:p>
180 </font></span></p>
181 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Despite
182 the introduction of a reference price system in the Croatian market at the
183 beginning of the year, which on average reduced the price of PLIVA’s
184 drugs by 5%, and liquidity problems in the Croatian health-care sector,
185 PLIVA has maintained its leading position in Croatia. Sales in Croatia
186 increased by 1.2%, totalling HRK 789 m. This was achieved by the
187 successful introduction of new products and from increased sales volume.
188 Revenues from Croatia accounted for 40% of PLIVA Group’s revenue; 22% of
189 PLIVA Group revenue was financed by the Croatian Health-care Fund.<o:p>
190 </o:p>
191 </font></span></p>
192 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">International
193 Revenue<o:p>
194 </o:p>
195 </font></span></p>
196 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Revenues
197 from international markets increased by 12.8% to HRK 1,194 m.<o:p>
198 </o:p>
199 </font></span></p>
200 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Revenues
201 in the Americas and Western Europe totalled HRK 668 m. and contributed 56%
202 to international revenue. The higher revenues from North and South America
203 were the result of royalty increases and increase an in Azithromycin
204 export sales to the USA. <o:p>
205 </o:p>
206 </font></span></p>
207 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Sales
208 in Poland, our single largest international market, amounted to HRK 252
209 m., contributing 21.1% to international revenue and 12.7% of total
210 revenue. PLIVA sales in Poland went up by 5.4% compared to the first six
211 months of 1998. Reform of the health-care system at the beginning of the
212 year caused a decline in the Polish drug market in the first quarter of
213 1999 compared to the last quarter of 1998. We believe this to be a
214 short-term effect and the Polish market is still the most attractive
215 market in the region. <o:p>
216 </o:p>
217 </font></span></p>
218 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Sales
219 in Russia were HRK 28.5 m., which represented 1.4% of PLIVA Group’s
220 revenue. The Russian crisis in August 1998 that resulted in a collapse of
221 the drug market has continued, which explains the drop in sales in
222 comparison to the same period last year. <o:p>
223 </o:p>
224 </font></span></p>
225 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Particularly
226 positive sales results were achieved in Bosnia and Herzegovina, Macedonia
227 and in Hungary.<o:p>
228 </o:p>
229 </font></span></p>
230 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.2.
231 Revenue by Businesses Segment<o:p>
232 </o:p>
233 </font></span></p>
234 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Revenue
235 from “core business” (Pharmaceuticals, Bulk Pharmaceuticals and
236 royalties) increased 8.8% to HRK 1,615 m. or 81.5% of total revenue.
237 Animal Health and Agrochemicals accounted for 6.2% of total revenue, and
238 Foodstuffs and Cosmetics and Hygiene Products accounted for 11.2%<br>
239 Pharmaceuticals<o:p>
240 </o:p>
241 </font></span></p>
242 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Pharmaceuticals
243 sales were HRK 947 m. or 2.9% lower than during the first half of last
244 year. <o:p>
245 </o:p>
246 </font></span></p>
247 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Domestic
248 sales were HRK 522 m., an increase of 2.9% over the previous year. The
249 strong domestic performance was attributed to increased marketing
250 activities, the introduction of new products and increased sales volume.<o:p>
251 </o:p>
252 </font></span></p>
253 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">International
254 sales amounted to HRK 425 m., a 9.2% decrease on the previous year. This
255 drop was primarily caused by the Russian crises and sales of Sumamed
256 imitations on the unregulated Russian and Chinese markets. Due to its
257 decreased international sales, Sumamed recorded HRK 116 m. of sales, a
258 17.4% drop in total sales compared to the previous year.<o:p>
259 </o:p>
260 </font></span></p>
261 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Bulk
262 Pharmaceuticals<o:p>
263 </o:p>
264 </font></span></p>
265 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">The
266 total sales of Bulk Pharmaceuticals accounted for 13.6% of total revenue
267 and amounted to HRK 270 m. or 3.6% less than the previous year.
268 Azithromycin revenue, which accounts for 77% of total sales of this
269 business segment, reached a total of HRK 207 m. or a drop of 8.7%.<o:p>
270 </o:p>
271 </font></span></p>
272 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Animal
273 Health and Agrochemicals<o:p>
274 </o:p>
275 </font></span></p>
276 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Animal
277 Health and Agrochemicals accounted for 6.2% of PLIVA’s total revenue, or
278 HRK 123 m. A sales increase was recorded both in domestic (5.7%) and
279 international (8.8%) markets. 35% of total sales are generated on
280 international markets.<br>
281 Foodstuffs and Cosmetics and Hygiene Products<o:p>
282 </o:p>
283 </font></span></p>
284 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">The
285 sales of Foodstuffs and Cosmetics and Hygiene Products amounted to HRK 223
286 m. or 11.2% of PLIVA’s total revenue. PLIVA, as defined by the PLIVA XXI
287 project, will be focussed on pharmaceuticals going forward. Consequently,
288 the decision to divest the Foodstuffs and Cosmetics and Hygiene Products
289 businesses was made earlier this year. The selection of relevant partners
290 is underway. <o:p>
291 </o:p>
292 </font></span></p>
293 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2.
294 PROFITABILITY<o:p>
295 </o:p>
296 </font></span></p>
297 <p class="MsoNormal" align="center"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Key
298 Financial Indicators</font></span></p>
299 <p class="MsoNormal" align="right"><span style="font-family:
300 TIMES"><font face="Arial" size="2" color="#000080">HRK m<o:p>
301 </o:p>
302 </font></span></p>
303 <table border="0" width="100%" cellpadding="0" cellspacing="0">
304 <tr>
305 <td width="176"></td>
306 <td width="67" align="center">
307 <p align="left"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">I-VI
308 ‘98<span style="mso-tab-count:1">&nbsp; </span></font></span></td>
309 <td width="65" align="center">
310 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>I-VI
311 ‘99</font><span style="mso-tab-count:1"></span></span></td>
312 <td width="82" align="center">
313 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Change<span style="font-family: TIMES">
314 %</span></font></span></td>
315 <td width="214" colspan="3">
316 <p align="center"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Rate</font></span></td>
317 </tr>
318 <tr>
319 <td width="176"></td>
320 <td width="67"></td>
321 <td width="65"></td>
322 <td width="82"></td>
323 <td align="center" width="65">
324 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>I-VI
325 ‘98</font></span></td>
326 <td align="center" width="68">
327 <p align="left"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">I-XII
328 ‘98</font><span style="mso-tab-count:1"></span></span></td>
329 <td align="center" width="77">
330 <p align="left"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">I-VI
331 ‘99</font></span></td>
332 </tr>
333 <tr>
334 <td width="176"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">GROSS
335 PROFIT</font></span></td>
336 <td width="67"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.199<span style="mso-tab-count:1">&nbsp;
337 </span></font></span></td>
338 <td width="65"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.324</font><span style="mso-tab-count:
339 1"></span></span></td>
340 <td width="82"><span style="font-family:TIMES"><span style="mso-tab-count:
341 1"></span><font face="Arial" size="2" color="#000080">+10.4</font><span style="mso-tab-count:1"></span></span></td>
342 <td width="65"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">65.3</font></span></td>
343 <td width="68"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">65.3<span style="mso-tab-count:
344 1"> </span></font></span></td>
345 <td width="77"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">66.8</font></span></td>
346 </tr>
347 <tr>
348 <td width="176"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">EBIT</font><span style="mso-tab-count:1"></span></span></td>
349 <td width="67"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">615<span style="mso-tab-count:1">
350 </span></font></span></td>
351 <td width="65"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">652<span style="mso-tab-count:
352 1"> </span></font></span></td>
353 <td width="82"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">+6.0<span style="mso-tab-count:1">
354 </span></font></span></td>
355 <td width="65"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">33.5<span style="mso-tab-count:1">
356 </span></font></span></td>
357 <td width="68"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">30.2</font></span></td>
358 <td width="77"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">32.9</font></span></td>
359 </tr>
360 <tr>
361 <td width="176"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">FIN.
362 EXP. &amp; FOR.GAINS/LOSSES</font><span style="mso-tab-count:1"></span></span></td>
363 <td width="67" valign="bottom"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">29</font></span></td>
364 <td width="65" valign="bottom"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-81</font></span></td>
365 <td width="82" valign="bottom"><font face="Arial" size="2" color="#000080">-</font></td>
366 <td width="65" valign="bottom"><font face="Arial" size="2" color="#000080">-</font></td>
367 <td width="68" valign="bottom"><font face="Arial" size="2" color="#000080">-</font></td>
368 <td width="77" valign="bottom"><font face="Arial" size="2" color="#000080">-</font></td>
369 </tr>
370 <tr>
371 <td width="176"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">NET
372 PROFIT<span style="mso-tab-count:1"> </span></font></span></td>
373 <td width="67"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">408</font><span style="mso-tab-count:1"></span></span></td>
374 <td width="65"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">37</font></span></td>
375 <td width="82"><span style="font-family:TIMES"><span style="mso-tab-count:
376 1"></span><font face="Arial" size="2" color="#000080">-7.4</font></span></td>
377 <td width="65"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">22.2</font><span style="mso-tab-count:1"></span></span></td>
378 <td width="68"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">19.3</font><span style="mso-tab-count:
379 1"></span></span></td>
380 <td width="77"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">19.0</font></span></td>
381 </tr>
382 </table>
383 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Gross
384 profit<o:p>
385 </o:p>
386 </font></span></p>
387 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">HRK
388 1,324.3 m. of gross profit was recorded in the first half of 1999, with a
389 higher profit margin of 66.8%, primarily attributed to the faster growth
390 of royalties. Costs of goods sold grew by 3.1%, primarily as a result of
391 higher expenses for depreciation and salaries.<o:p>
392 </o:p>
393 </font></span></p>
394 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Earnings
395 before interest and taxes (EBIT)<o:p>
396 </o:p>
397 </font></span></p>
398 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Earnings
399 before interest and taxes (EBIT) amounted to HRK 652.4 m., which is 6%
400 higher than last year. PLIVA’s EBIT margin of 32.9% represented a
401 decrease compared to the same period last year (33.5%), but was higher
402 than that recorded for the whole year in 1998 (30.2%). The EBIT margin has
403 fallen due to the faster growth in selling, general and administrative
404 expenses (11.5%), and in research and development expenses (43%, or 7.4%
405 of total health-care sales) in comparison to growth in revenue. Selling,
406 general and administrative costs increased mainly because of depreciation,
407 salaries, as well as larger investments in marketing activities in Poland.<o:p>
408 </o:p>
409 </font></span></p>
410 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Earnings
411 before taxes (EBT)<o:p>
412 </o:p>
413 </font></span></p>
414 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Earnings
415 before taxes (EBT) amounted to HRK 571.4 m., an 11.4% decrease compared to
416 the first six months last year, largely as a result of foreign exchange
417 losses and interest expenses, amounting to a total of HRK 81 m, while in
418 the same period last year HRK 29 m. gains were recorded.<o:p>
419 </o:p>
420 </font></span></p>
421 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Apart
422 from depreciation costs, the strong investment cycle generated interest
423 expenses against loans used for financing investments. Also, PLIVA
424 Group’s foreign currency exchange loss of HRK 62.1 m. was due mainly to
425 PLIVA’s long-term loans which have currency clause or are received in
426 foreign currencies.<o:p>
427 </o:p>
428 </font></span></p>
429 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Net
430 profit<o:p>
431 </o:p>
432 </font></span></p>
433 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Net
434 profit of PLIVA Group in the first half of 1999 amounted to HRK 377.3 m.,
435 7.4% lower than the same period in 1998. Net profit margin went down from
436 22.2% in the first six months of 1998 and 19.3% for the whole year to
437 19.0% for the first half of 1999.<o:p>
438 </o:p>
439 </font></span></p>
440 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.
441 FINANCIAL POSITION<o:p>
442 </o:p>
443 </font></span></p>
444 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">PLIVA
445 maintained a very strong financial position, despite numerous difficulties
446 in our operating environment. Continued deferred payments in Croatia
447 decreased PLIVA’s cash in-flow and increased our need for external
448 financing. PLIVA satisfied this through short-term sources such as
449 commercial paper programmes, both on the European and Croatian market.<o:p>
450 </o:p>
451 </font></span></p>
452 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">The
453 29.3% growth in short-term receivables caused a growth in short-term debts
454 by 37.8%.<o:p>
455 </o:p>
456 </font></span></p>
457 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Net
458 working capital increased by 16.4% and amounted to HRK 1.61 billion.
459 Current liquidity ratio went down from 2.74 to 2.47.<o:p>
460 </o:p>
461 </font></span></p>
462 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">PLIVA
463 Group assets were HRK 6.14 billion, representing a 14.8% increase in
464 comparison to the beginning of the year.<o:p>
465 </o:p>
466 </font></span></p>
467 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">The
468 66.5% contribution of the Group’s own funds continue to account for a
469 high percentage of total resources.<o:p>
470 </o:p>
471 </font></span></p>
472 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.
473 INVESTMENTS<o:p>
474 </o:p>
475 </font></span></p>
476 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
477 investments of PLIVA Group amounted to HRK 367.8 m., of which tangible
478 assets accounted for HRK 307.8 m. or 84%.<br>
479 The largest individual investment was the investment in the construction
480 of a plant for solid oral dosage forms in Zagreb which totalled HRK 90.5
481 m. The completion of the plant is anticipated for next year. This
482 state-of-the-art plant will enable PLIVA to launch its products in even
483 the most demanding markets. Total investments in tangible assets of PLIVA
484 Krakow amounted to HRK 25 m. The introduction of SAP R/3 in the first half
485 of 1999 required an investment of HRK 22.9 m.<o:p>
486 </o:p>
487 </font></span></p>
488 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">HRK
489 7.3 m. was invested in the construction of a modern Research Institute
490 which is a large strategic investment for PLIVA.<o:p>
491 </o:p>
492 </font></span></p>
493 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">This
494 year, PLIVA has also made two capital investments to further develop the
495 pharmaceuticals business: Farmacom in Krakow (amounted to HRK 35.8m) in
496 order to strengthen PLIVA’s production of syrups, and Mixis Genetics
497 (amounted to HRK 24.2 m), which made PLIVA the owner of several patents in
498 the field of biodiversity.<o:p>
499 </o:p>
500 </font></span></p>
501 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">5.
502 IT TECHNOLOGY<o:p>
503 </o:p>
504 </font></span></p>
505 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">New
506 IT system (SAP R/3)<o:p>
507 </o:p>
508 </font></span></p>
509 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Since
510 July 1999, PLIVA d.d. has implemented 8 functional modules of the SAP R/3
511 system. With the implementation of SAP R/3 the company has advanced its
512 efforts in response to the Y2K issue, and will ensure an overall stability
513 of its operations during transition to the year 2000.<o:p>
514 </o:p>
515 </font></span></p>
516 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Y2K
517 Project<o:p>
518 </o:p>
519 </font></span></p>
520 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Upgrading
521 incompatible systems is underway and systems that have been upgraded and
522 adjusted are being tested. 95% system compatibility is expected by the end
523 of September, and the rest will be adjusted in time as well.<o:p>
524 </o:p>
525 </font></span></p>
526 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">To
527 avoid the negative impact of external factors (compatibility of PLIVA’s
528 business partners) a back-up plan has commenced for solving the Y2K
529 problem which will ensure the uninterrupted flow of PLIVA’s business
530 operations in the year 2000.<o:p>
531 </o:p>
532 </font></span></p>
533 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">6.
534 OWNERSHIP STRUCTURE AND SHARE PRICE MOVEMENT<o:p>
535 </o:p>
536 </font></span></p>
537 <p class="MsoNormal"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">At
538 the beginning of 1999 the PLIVA d.d. share price on the Zagreb Stock
539 Exchange was HRK 522 while on the London Stock Exchange it amounted to USD
540 16.12 per GDR. At the end of January, the price in Zagreb was HRK 603 per
541 share, while in London it was USD 18.78 per GDR (+16.5% over the beginning
542 of the month). This was followed by a price correction at the end of
543 February to HRK 565 (USD 16.85 per GDR), and in mid March the share price
544 recovered to HRK 630 (USD 18.75 per GDR). The end of June saw a share
545 price of HRK 550 in Zagreb and USD 15.15 per GDR in London. <o:p>
546 </o:p>
547 </font></span></p>
548 <table border="0" cellpadding="0" cellspacing="0" width="100%">
549 <tr>
550 <td width="50%"><span style="font-family:
551 TIMES"><font face="Arial" size="2" color="#000080">PLIVA Group</font><span style="mso-tab-count:1"></span></span></td>
552 <td width="50%">
553 <p align="right"><span style="font-family:
554 TIMES"><font face="Arial" size="2" color="#000080">(Unaudited)</font></span></td>
555 </tr>
556 </table>
557 <p class="MsoNormal" align="center" style="text-align:center;tab-stops:right 283.5pt 326.05pt 389.85pt 425.25pt"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">BALANCE
558 SHEET (IAS)<o:p>
559 </o:p>
560 </font></span></p>
561 <table border="0" cellpadding="0" cellspacing="0" width="100%">
562 <tr>
563 <td width="49%"></td>
564 <td width="29%" colspan="2">
565 <p align="center"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">31
566 December 1998</font><span style="mso-tab-count:1"></span></span></td>
567 <td width="40%" colspan="2">
568 <p align="center"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">30
569 June 1999</font></span></td>
570 </tr>
571 <tr>
572 <td width="49%"></td>
573 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">000
574 HRK</font></span></td>
575 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">%</font></span></td>
576 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">000
577 HRK</font></span></td>
578 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">%</font></span></td>
579 </tr>
580 <tr>
581 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">ASSETS</font></span></td>
582 <td width="14%"></td>
583 <td width="15%"></td>
584 <td width="14%"></td>
585 <td width="26%"></td>
586 </tr>
587 <tr>
588 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Non-Current
589 Assets</font></span></td>
590 <td width="14%"></td>
591 <td width="15%"></td>
592 <td width="14%"></td>
593 <td width="26%"></td>
594 </tr>
595 <tr>
596 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Goodwill<span style="mso-tab-count:1">
597 </span></font></span></td>
598 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">430,277</font><span style="mso-tab-count:1"></span></span></td>
599 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">8.0</font><span style="mso-tab-count:
600 1"></span></span></td>
601 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">426,048</font></span></td>
602 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>6.9</font></span></td>
603 </tr>
604 <tr>
605 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Investments</font></span></td>
606 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">245,299</font></span></td>
607 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.6</font></span></td>
608 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">256,874</font><span style="mso-tab-count:1"></span></span></td>
609 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.2</font></span></td>
610 </tr>
611 <tr>
612 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Long-term
613 receivables</font><span style="mso-tab-count:1"></span></span></td>
614 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">236,615</font><span style="mso-tab-count:1"></span></span></td>
615 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">4.4</font><span style="mso-tab-count:
616 1"></span></span></td>
617 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">243,189</font></span></td>
618 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.0</font></span></td>
619 </tr>
620 <tr>
621 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Tangible
622 fixed assets</font><span style="mso-tab-count:1"></span></span></td>
623 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,252,226</font></span></td>
624 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">42.1</font></span></td>
625 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,500,954</font></span></td>
626 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">40.8</font></span></td>
627 </tr>
628 <tr>
629 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
630 non-current assets</font><span style="mso-tab-count:
631 1"></span></span></td>
632 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3,164,417<span style="mso-tab-count:1">
633 </span></font></span></td>
634 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">59.2</font><span style="mso-tab-count:1"></span></span></td>
635 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3,427,065</font><span style="mso-tab-count:
636 1"></span></span></td>
637 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">55.8</font></span></td>
638 </tr>
639 <tr>
640 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Current
641 assets</font></span></td>
642 <td width="14%"></td>
643 <td width="15%"></td>
644 <td width="14%"></td>
645 <td width="26%"></td>
646 </tr>
647 <tr>
648 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Inventories</font><span style="mso-tab-count:1"></span></span></td>
649 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">592,045</font></span></td>
650 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">11.1<span style="mso-tab-count:
651 1"> </span></font></span></td>
652 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">650,019</font></span></td>
653 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">10.6</font></span></td>
654 </tr>
655 <tr>
656 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Marketable
657 securities</font></span></td>
658 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">195,974</font><span style="mso-tab-count:1"></span></span></td>
659 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.7</font></span></td>
660 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:
661 1"></span><font face="Arial" size="2" color="#000080">158,931</font></span></td>
662 <td width="26%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">2.6</font></span></td>
663 </tr>
664 <tr>
665 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Acccounts
666 receivable</font><span style="mso-tab-count:1"></span></span></td>
667 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,146,328</font><span style="mso-tab-count:1"></span></span></td>
668 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">21.4</font></span></td>
669 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,481,979</font><span style="mso-tab-count:1"></span></span></td>
670 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">24.1</font></span></td>
671 </tr>
672 <tr>
673 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Short-term
674 loans</font><span style="mso-tab-count:1"></span></span></td>
675 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">83,456</font></span></td>
676 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">1.6</font><span style="mso-tab-count:
677 1"></span></span></td>
678 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">146,784<span style="mso-tab-count:1">
679 </span></font></span></td>
680 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2.4</font></span></td>
681 </tr>
682 <tr>
683 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Cash
684 and cash equivalents</font></span></td>
685 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">164,054<span style="mso-tab-count:1">
686 </span></font></span></td>
687 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.1<span style="mso-tab-count:1">
688 </span></font></span></td>
689 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">272,397</font></span></td>
690 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.4</font></span></td>
691 </tr>
692 <tr>
693 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
694 current assets</font><span style="mso-tab-count:1"></span></span></td>
695 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,181,857<span style="mso-tab-count:1">
696 </span></font></span></td>
697 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">40.8<span style="mso-tab-count:
698 1"> </span></font></span></td>
699 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,710,110<span style="mso-tab-count:1">
700 </span></font></span></td>
701 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">44.2</font></span></td>
702 </tr>
703 <tr>
704 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
705 assets<span style="mso-tab-count:1"> </span></font></span></td>
706 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">5,346,274<span style="mso-tab-count:1">&nbsp;
707 </span></font></span></td>
708 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">100.0</font><span style="mso-tab-count:
709 1"></span></span></td>
710 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">6,137,175<span style="mso-tab-count:1">
711 </span></font></span></td>
712 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">100.0</font></span></td>
713 </tr>
714 <tr>
715 <td width="100%" colspan="5"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">LIABILITIES
716 AND SHAREHOLDERS’ EQUITY</font></span></td>
717 </tr>
718 <tr>
719 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Long-term
720 liabilities</font></span></td>
721 <td width="14%"></td>
722 <td width="15%"></td>
723 <td width="14%"></td>
724 <td width="26%"></td>
725 </tr>
726 <tr>
727 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Long-term
728 debt<span style="mso-tab-count:1"> </span></font></span></td>
729 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">760,800<span style="mso-tab-count:1">
730 </span></font></span></td>
731 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">14.2<span style="mso-tab-count:
732 1"> </span></font></span></td>
733 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">813,989</font></span></td>
734 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">13.3</font></span></td>
735 </tr>
736 <tr>
737 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Long-term
738 provisions</font><span style="mso-tab-count:1"></span></span></td>
739 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">22,253<span style="mso-tab-count:1">
740 </span></font></span></td>
741 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.4<span style="mso-tab-count:
742 1"> </span></font></span></td>
743 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">22,506</font><span style="mso-tab-count:1"></span></span></td>
744 <td width="26%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">0.4</font></span></td>
745 </tr>
746 <tr>
747 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
748 long-term liabilities<span style="mso-tab-count:
749 1"> </span></font></span></td>
750 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">783,053</font></span></td>
751 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">14.6</font></span></td>
752 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">836,495<span style="mso-tab-count:
753 1"> </span></font></span></td>
754 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">13.6</font></span></td>
755 </tr>
756 <tr>
757 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Current
758 liabilities</font></span></td>
759 <td width="14%"></td>
760 <td width="15%"></td>
761 <td width="14%"></td>
762 <td width="26%"></td>
763 </tr>
764 <tr>
765 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Accounts
766 payable</font></span></td>
767 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">455,771</font><span style="mso-tab-count:1"></span></span></td>
768 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>8.5<span style="mso-tab-count:
769 1"> </span></font></span></td>
770 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">477,373</font><span style="mso-tab-count:1"></span></span></td>
771 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">7.8</font></span></td>
772 </tr>
773 <tr>
774 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Bank
775 loans</font><span style="mso-tab-count:1"></span></span></td>
776 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">200,335<span style="mso-tab-count:1">
777 </span></font></span></td>
778 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.7<span style="mso-tab-count:
779 1"> </span></font></span></td>
780 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">268,985</font></span></td>
781 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4.4</font></span></td>
782 </tr>
783 <tr>
784 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Commercial
785 papers</font><span style="mso-tab-count:1"></span></span></td>
786 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">81,988</font></span></td>
787 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.5<span style="mso-tab-count:
788 1"> </span></font></span></td>
789 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:
790 1"></span><font face="Arial" size="2" color="#000080">135,064<span style="mso-tab-count:1">
791 </span></font></span></td>
792 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2.2</font></span></td>
793 </tr>
794 <tr>
795 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Taxes
796 and contributions</font></span></td>
797 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">6,448</font><span style="mso-tab-count:1"></span></span></td>
798 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>0.1</font></span></td>
799 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">11,801</font></span></td>
800 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.2</font></span></td>
801 </tr>
802 <tr>
803 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Dividends
804 payable</font><span style="mso-tab-count:1"></span></span></td>
805 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">16</font></span></td>
806 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.0<span style="mso-tab-count:
807 1"> </span></font></span></td>
808 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">144,451</font></span></td>
809 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2.4</font></span></td>
810 </tr>
811 <tr>
812 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Current
813 portion of long-term debt</font></span></td>
814 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">51,612</font></span></td>
815 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.0<span style="mso-tab-count:1">
816 </span></font></span></td>
817 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">59,255</font></span></td>
818 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.0</font></span></td>
819 </tr>
820 <tr>
821 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
822 current liabilities<span style="mso-tab-count:
823 1"> </span></font></span></td>
824 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:
825 1"></span><font face="Arial" size="2" color="#000080">796,170</font><span style="mso-tab-count:1"></span></span></td>
826 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">14.9</font><span style="mso-tab-count:1"></span></span></td>
827 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,096,929<span style="mso-tab-count:
828 1"> </span></font></span></td>
829 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">17.9</font></span></td>
830 </tr>
831 <tr>
832 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
833 liabilities</font><span style="mso-tab-count:1"></span></span></td>
834 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,579,223</font></span></td>
835 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">29.5<span style="mso-tab-count:
836 1"> </span></font></span></td>
837 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,933,424</font><span style="mso-tab-count:1"></span></span></td>
838 <td width="26%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">31.5</font></span></td>
839 </tr>
840 <tr>
841 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Shareholders’
842 e<o:p>
843 quity</font></span></td>
844 <td width="14%"></td>
845 <td width="15%"></td>
846 <td width="14%"></td>
847 <td width="26%"></td>
848 </tr>
849 <tr>
850 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Share
851 capital</font><span style="mso-tab-count:1"></span></span></td>
852 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,020,940<span style="mso-tab-count:1">
853 </span></font></span></td>
854 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">37.8</font></span></td>
855 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2,020,940</font><span style="mso-tab-count:1"></span></span></td>
856 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">32.9</font></span></td>
857 </tr>
858 <tr>
859 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Capital
860 gain<span style="mso-tab-count:1"> </span></font></span></td>
861 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">23,516</font></span></td>
862 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.4</font></span></td>
863 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">163,525</font><span style="mso-tab-count:1"></span></span></td>
864 <td width="26%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">2.7</font></span></td>
865 </tr>
866 <tr>
867 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Treasury
868 shares</font></span></td>
869 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">-55,839</font></span></td>
870 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">1.0<span style="mso-tab-count:
871 1"> </span></font></span></td>
872 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-29,641</font></span></td>
873 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.5</font></span></td>
874 </tr>
875 <tr>
876 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Capital
877 reserves<span style="mso-tab-count:1"> </span>60,762</font><span style="mso-tab-count:1"></span></span></td>
878 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">60,762<span style="mso-tab-count:1">
879 </span></font></span></td>
880 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">1.1</font><span style="mso-tab-count:
881 1"></span></span></td>
882 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:
883 1"></span><font face="Arial" size="2" color="#000080">60,762</font></span></td>
884 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.0</font></span></td>
885 </tr>
886 <tr>
887 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Statutory
888 reserves<span style="mso-tab-count:1"> </span></font></span></td>
889 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">98,722</font><span style="mso-tab-count:1"></span></span></td>
890 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.8</font><span style="mso-tab-count:
891 1"></span></span></td>
892 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">98,722<span style="mso-tab-count:1">
893 </span></font></span></td>
894 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.6</font></span></td>
895 </tr>
896 <tr>
897 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Retained
898 profit</font><span style="mso-tab-count:1"></span></span></td>
899 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">1,514,638</font><span style="mso-tab-count:1"></span></span></td>
900 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">28.3</font><span style="mso-tab-count:
901 1"></span></span></td>
902 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,370,187<span style="mso-tab-count:1">
903 </span></font></span></td>
904 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">22.3</font></span></td>
905 </tr>
906 <tr>
907 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Profit
908 of the current year</font></span></td>
909 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:
910 1"></span><font face="Arial" size="2" color="#000080">0</font><span style="mso-tab-count:1"></span></span></td>
911 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">0.0</font><span style="mso-tab-count:1"></span></span></td>
912 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">377,330</font><span style="mso-tab-count:
913 1"></span></span></td>
914 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">6.1</font></span></td>
915 </tr>
916 <tr>
917 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Foreign
918 currency translation differences</font></span></td>
919 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-8,128<span style="mso-tab-count:1">
920 </span></font></span></td>
921 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.2</font></span></td>
922 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">17,832</font><span style="mso-tab-count:
923 1"></span></span></td>
924 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-0.3</font></span></td>
925 </tr>
926 <tr>
927 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
928 shareholders’ equity</font></span></td>
929 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3,654,611</font></span></td>
930 <td width="15%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">68.4</font></span></td>
931 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">4,079,657<span style="mso-tab-count:
932 1"> </span></font></span></td>
933 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">66.5</font></span></td>
934 </tr>
935 <tr>
936 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Minority
937 interests</font></span></td>
938 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">112,440</font></span></td>
939 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">2.1</font><span style="mso-tab-count:
940 1"></span></span></td>
941 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">124,094<span style="mso-tab-count:1">
942 </span></font></span></td>
943 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>2.0</font></span></td>
944 </tr>
945 <tr>
946 <td width="49%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Total
947 liabilities and shareholder’s equity</font><span style="mso-tab-count:1"></span></span></td>
948 <td width="14%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">5,346,274</font></span></td>
949 <td width="15%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">100.0</font><span style="mso-tab-count:1"></span></span></td>
950 <td width="14%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">6,137,175</font><span style="mso-tab-count:1"></span></span></td>
951 <td width="26%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">100.0</font></span></td>
952 </tr>
953 </table>
954 <p class="MsoNormal" style="tab-stops:right 425.25pt">&nbsp;</p>
955 <table border="0" cellpadding="0" cellspacing="0" width="100%">
956 <tr>
957 <td width="50%"><span style="font-family:
958 TIMES"><font face="Arial" size="2" color="#000080">PLIVA Group</font><span style="mso-tab-count:1"></span></span></td>
959 <td width="50%">
960 <p align="right"><span style="font-family:
961 TIMES"><font face="Arial" size="2" color="#000080">(Unaudited)</font></span></td>
962 </tr>
963 </table>
964 <p class="MsoNormal" align="center" style="text-align:center;tab-stops:right 283.5pt 326.05pt 389.85pt 425.25pt"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">PROFIT
965 AND LOSS ACCOUNT<o:p>
966 </o:p>
967 </font></span></p>
968 <table border="0" cellpadding="0" cellspacing="0" width="100%">
969 <tr>
970 <td width="45%"></td>
971 <td colspan="2" width="11%" valign="top">
972 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Jan.-June
973 1998</font></span></td>
974 <td colspan="2" width="11%" valign="top">
975 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Jan.-June
976 1999.</font></span></td>
977 <td width="11%" valign="top">
978 <p align="left"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">%
979 change</font></span></td>
980 </tr>
981 <tr>
982 <td width="45%"></td>
983 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">000
984 HRK</font></span></td>
985 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">%</font></span></td>
986 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">000
987 HRK</font></span></td>
988 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">%</font></span></td>
989 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">99/98</font></span></td>
990 </tr>
991 <tr>
992 <td width="45%"><br>
993 </td>
994 <td width="12%"></td>
995 <td width="10%"></td>
996 <td width="12%"></td>
997 <td width="10%"></td>
998 <td width="11%"></td>
999 </tr>
1000 <tr>
1001 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Turnover</font><span style="mso-tab-count:1"></span></span></td>
1002 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,838,052<span style="mso-tab-count:1">
1003 </span></font></span></td>
1004 <td width="10%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">100.0<span style="mso-tab-count:
1005 1"> </span></font></span></td>
1006 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,982,762</font></span></td>
1007 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">100.0</font><span style="mso-tab-count:1"></span></span></td>
1008 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">7.9</font></span></td>
1009 </tr>
1010 <tr>
1011 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Costs
1012 of goods sold<span style="mso-tab-count:1"> </span></font></span></td>
1013 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">638,677</font></span></td>
1014 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">34.7<span style="mso-tab-count:
1015 1"> </span></font></span></td>
1016 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">658,477</font><span style="mso-tab-count:1"></span></span></td>
1017 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">33.2</font><span style="mso-tab-count:1"></span></span></td>
1018 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3<o:p>
1019 .1</font></span></td>
1020 </tr>
1021 <tr>
1022 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Gross
1023 profit</font><span style="mso-tab-count:1"></span></span></td>
1024 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,199,375</font><span style="mso-tab-count:1"></span></span></td>
1025 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">65.3</font><span style="mso-tab-count:
1026 1"></span></span></td>
1027 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,324,285</font></span></td>
1028 <td width="10%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">66.8</font></span></td>
1029 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">10.4</font></span></td>
1030 </tr>
1031 <tr>
1032 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Selling,
1033 general and administrative expenses</font></span></td>
1034 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">499,841</font></span></td>
1035 <td width="10%"><span style="font-family:TIMES"><span style="mso-tab-count:
1036 1"></span><font face="Arial" size="2" color="#000080">27.2</font><span style="mso-tab-count:1"></span></span></td>
1037 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">557,258</font><span style="mso-tab-count:1"></span></span></td>
1038 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">28.1</font></span></td>
1039 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">11.5</font></span></td>
1040 </tr>
1041 <tr>
1042 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Research
1043 and development expenses</font><span style="mso-tab-count:1"></span></span></td>
1044 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">69,062</font></span></td>
1045 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.8</font><span style="mso-tab-count:1"></span></span></td>
1046 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">99,043<span style="mso-tab-count:1">
1047 </span></font></span></td>
1048 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">5.0</font><span style="mso-tab-count:
1049 1"></span></span></td>
1050 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">43.4</font></span></td>
1051 </tr>
1052 <tr>
1053 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Exceptional
1054 provisions</font><span style="mso-tab-count:
1055 1"></span></span></td>
1056 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:
1057 1"></span><font face="Arial" size="2" color="#000080">0<span style="mso-tab-count:1">
1058 </span></font></span></td>
1059 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.0</font></span></td>
1060 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>0</font><span style="mso-tab-count:
1061 1"></span></span></td>
1062 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.0</font></span></td>
1063 <td width="11%"><span style="font-family: TIMES"><font face="Arial" size="2" color="#000080">-</font></span></td>
1064 </tr>
1065 <tr>
1066 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Goodwill
1067 amortisation</font><span style="mso-tab-count:1"></span></span></td>
1068 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">15,086</font></span></td>
1069 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.8</font></span></td>
1070 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:
1071 1"></span><font face="Arial" size="2" color="#000080">15,546</font></span></td>
1072 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.8</font></span></td>
1073 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3.0</font></span></td>
1074 </tr>
1075 <tr>
1076 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Earnings
1077 before interest and taxes</font></span></td>
1078 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">615,386</font></span></td>
1079 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">33.5</font></span></td>
1080 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">652,438</font></span></td>
1081 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">32.9</font><span style="mso-tab-count:1"></span></span></td>
1082 <td width="11%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">6.0</font></span></td>
1083 </tr>
1084 <tr>
1085 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Financial
1086 income/expenses<span style="mso-tab-count:
1087 1"> </span></font></span></td>
1088 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-1,681</font></span></td>
1089 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-0.1</font></span></td>
1090 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-18,965</font></span></td>
1091 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.0</font></span></td>
1092 <td width="11%"><span style="font-family: TIMES"><font face="Arial" size="2" color="#000080">-</font></span></td>
1093 </tr>
1094 <tr>
1095 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Foreign
1096 currency exchange gains/losses</font></span></td>
1097 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">30,964</font></span></td>
1098 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1.7</font></span></td>
1099 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-62,123</font></span></td>
1100 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-3.1</font><span style="mso-tab-count:
1101 1"></span></span></td>
1102 <td width="11%"><span style="font-family: TIMES"><font face="Arial" size="2" color="#000080">-</font></span></td>
1103 </tr>
1104 <tr>
1105 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Profit
1106 before taxes and contributions</font><span style="mso-tab-count:1"></span></span></td>
1107 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">644,669</font></span></td>
1108 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">35.1</font><span style="mso-tab-count:1"></span></span></td>
1109 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">571,350</font><span style="mso-tab-count:1"></span></span></td>
1110 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">28.8</font><span style="mso-tab-count:
1111 1"></span></span></td>
1112 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-11.4</font></span></td>
1113 </tr>
1114 <tr>
1115 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Taxes
1116 and contributions</font></span></td>
1117 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:
1118 1"></span><font face="Arial" size="2" color="#000080">228,505</font><span style="mso-tab-count:1"></span></span></td>
1119 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">12.4</font></span></td>
1120 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">187,770</font><span style="mso-tab-count:
1121 1"></span></span></td>
1122 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">9.5</font></span></td>
1123 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-17</o:p>
1124 .<o:p>
1125 8</font></span></td>
1126 </tr>
1127 <tr>
1128 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Profit
1129 after tax</font><span style="mso-tab-count:1"></span></span></td>
1130 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">416,164</font></span></td>
1131 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">22.6</font></span></td>
1132 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">383,580</font></span></td>
1133 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">19.3</font><span style="mso-tab-count:1"></span></span></td>
1134 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-7.8</font></span></td>
1135 </tr>
1136 <tr>
1137 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Minority
1138 interests</font></span></td>
1139 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>8,486</font></span></td>
1140 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.5</font></span></td>
1141 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:
1142 1"></span><font face="Arial" size="2" color="#000080">6,251</font></span></td>
1143 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0.3</font><span style="mso-tab-count:1"></span></span></td>
1144 <td width="11%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-26.3</font></span></td>
1145 </tr>
1146 <tr>
1147 <td width="45%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Net
1148 profit<span style="mso-tab-count:1"> </span></font></span></td>
1149 <td width="12%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">407,678</font></span></td>
1150 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">22.2</font><span style="mso-tab-count:
1151 1"></span></span></td>
1152 <td width="12%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">377,329</font></span></td>
1153 <td width="10%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">19.0</font></span></td>
1154 <td width="11%"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">-7.4</font></span></td>
1155 </tr>
1156 </table>
1157 <p class="MsoNormal" style="tab-stops: right 425.25pt">&nbsp;</p>
1158 <table border="0" cellpadding="0" cellspacing="0" width="100%">
1159 <tr>
1160 <td width="50%"><span style="font-family:
1161 TIMES"><font face="Arial" size="2" color="#000080">PLIVA Group</font></span></td>
1162 <td width="50%">
1163 <p align="right"><span style="font-family:
1164 TIMES"><font face="Arial" size="2" color="#000080">(Unaudited)</font></span></td>
1165 </tr>
1166 </table>
1167 <p class="MsoNormal" align="center" style="text-align:center;tab-stops:right 283.5pt 326.05pt 389.85pt 425.25pt"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">CASH
1168 FLOW STATEMENT</font></span></p>
1169 <table border="0" cellpadding="0" cellspacing="0" width="100%">
1170 <tr>
1171 <td width="50%"></td>
1172 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Jan.-June
1173 1998</font></span></td>
1174 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Jan.-June
1175 1999</font></span></td>
1176 </tr>
1177 <tr>
1178 <td width="50%"></td>
1179 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">000
1180 HRK<span style="mso-tab-count:1"> </span></font></span></td>
1181 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">000
1182 HRK<span style="mso-tab-count:1"> </span></font></span></td>
1183 </tr>
1184 <tr>
1185 <td width="50%" colspan="3"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><br>
1186 CASH FLOW FROM OPERATING ACTIVITIES<br>
1187 </font></span></td>
1188 </tr>
1189 <tr>
1190 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Cash
1191 receipts from customers</font><span style="mso-tab-count:
1192 1"></span></span></td>
1193 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,573,011<span style="mso-tab-count:1">
1194 </span></font></span></td>
1195 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,704,136</font></span></td>
1196 </tr>
1197 <tr>
1198 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Cash
1199 paid to suppliers and employees</font></span></td>
1200 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:
1201 1"></span><font face="Arial" size="2" color="#000080">1,573,011</font><span style="mso-tab-count:1"></span></span></td>
1202 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,704,136</font></span></td>
1203 </tr>
1204 <tr>
1205 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Cash
1206 paid to suppliers and employees</font></span></td>
1207 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-1,183,050</font></span></td>
1208 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,279,385</font></span></td>
1209 </tr>
1210 <tr>
1211 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Cash
1212 generated from operations</font></span></td>
1213 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">389,961</font></span></td>
1214 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">424,751</font></span></td>
1215 </tr>
1216 <tr>
1217 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">nterest
1218 received</font></span></td>
1219 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">14,071</font><span style="mso-tab-count:1"></span></span></td>
1220 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">17,018
1221 </font></span></td>
1222 </tr>
1223 <tr>
1224 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Dividends
1225 received</font></span></td>
1226 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,289</font><span style="mso-tab-count:1"></span></span></td>
1227 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">3,452
1228 </font></span></td>
1229 </tr>
1230 <tr>
1231 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Interest
1232 paid</font><span style="mso-tab-count:1"></span></span></td>
1233 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">-19,839</font></span></td>
1234 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-39,435</font></span></td>
1235 </tr>
1236 <tr>
1237 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Taxes
1238 and contributions</font></span></td>
1239 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-153,985</font></span></td>
1240 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-239,442
1241 </font></span></td>
1242 </tr>
1243 <tr>
1244 <td width="50%"></td>
1245 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">231,497</font></span></td>
1246 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><span style="mso-tab-count:1">&nbsp;</span>166,344</font></span></td>
1247 </tr>
1248 <tr>
1249 <td width="50%" colspan="3"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080"><br>
1250 CASH FLOW FROM INVESTING ACTIVITIES<br>
1251 </font></span></td>
1252 </tr>
1253 <tr>
1254 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Purchase
1255 of tangible assets</font></span></td>
1256 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-202,994</font></span></td>
1257 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-320,493</font></span></td>
1258 </tr>
1259 <tr>
1260 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Proceeds
1261 from sale of equipment<span style="mso-tab-count:1"> </span></font></span></td>
1262 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">5,030</font><span style="mso-tab-count:
1263 1"></span></span></td>
1264 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">232</font></span></td>
1265 </tr>
1266 <tr>
1267 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Investments
1268 in long-term receivables</font><span style="mso-tab-count:1"></span></span></td>
1269 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-12,394</font></span></td>
1270 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-6,574
1271 </font></span></td>
1272 </tr>
1273 <tr>
1274 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Investments
1275 in subsidiaries and other companies</font></span></td>
1276 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-48,933</font></span></td>
1277 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-11,575</font></span></td>
1278 </tr>
1279 <tr>
1280 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Acquisition/sales
1281 of marketable securities</font><span style="mso-tab-count:1"></span></span></td>
1282 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-140,847</font></span></td>
1283 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">37,043</font></span></td>
1284 </tr>
1285 <tr>
1286 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Short-term
1287 loans</font></span></td>
1288 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">1,382</font></span></td>
1289 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">-63,328</font></span></td>
1290 </tr>
1291 <tr>
1292 <td width="50%"></td>
1293 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-398,756</font></span></td>
1294 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-364,695</font></span></td>
1295 </tr>
1296 <tr>
1297 <td width="50%" colspan="3"><font face="Arial" size="2" color="#000080"><br>
1298 <span style="font-family:TIMES">CASH FLOW FROM FINANCING ACTIVITIES<br>
1299 </span></font></td>
1300 </tr>
1301 <tr>
1302 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Long-term
1303 loans</font></span></td>
1304 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">404,969<span style="mso-tab-count:1">
1305 </span></font></span></td>
1306 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">61,085
1307 </font></span></td>
1308 </tr>
1309 <tr>
1310 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Short-term
1311 loans / Commercial papers</font><span style="mso-tab-count:1"></span></span></td>
1312 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">30,000</font></span></td>
1313 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">121,726</font></span></td>
1314 </tr>
1315 <tr>
1316 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Treasury
1317 shares</font><span style="mso-tab-count:1"></span></span></td>
1318 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-71,954</font><span style="mso-tab-count:1"></span></span></td>
1319 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">166,207</font></span></td>
1320 </tr>
1321 <tr>
1322 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Dividends
1323 paid</font></span></td>
1324 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-63,434</font><span style="mso-tab-count:1"></span></span></td>
1325 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">0</font></span></td>
1326 </tr>
1327 <tr>
1328 <td width="50%"></td>
1329 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">299,581</font></span></td>
1330 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">349,018</font></span></td>
1331 </tr>
1332 <tr>
1333 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">Effect
1334 of exchange rate fluctuations</font></span></td>
1335 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">35,646</font></span></td>
1336 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">-42,324
1337 </font></span></td>
1338 </tr>
1339 <tr>
1340 <td width="50%"></td>
1341 <td width="25%" align="right"></td>
1342 <td width="25%" align="right"></td>
1343 </tr>
1344 <tr>
1345 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">NET
1346 CASH FLOW</font><span style="mso-tab-count:1"></span></span></td>
1347 <td width="25%" align="right"><span style="font-family:TIMES"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">167,968</font></span></td>
1348 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">108,343</font></span></td>
1349 </tr>
1350 <tr>
1351 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">CASH
1352 AND CASH EQUIVALENTS</font></span></td>
1353 <td width="25%" align="right"></td>
1354 <td width="25%" align="right"></td>
1355 </tr>
1356 <tr>
1357 <td width="50%"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">AT
1358 THE BEGINNING OF THE PERIOD</font></span></td>
1359 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">145,534</font></span></td>
1360 <td width="25%" align="right"><span style="font-family:TIMES"><font face="Arial" size="2" color="#000080">164,054</font></span></td>
1361 </tr>
1362 <tr>
1363 <td width="50%"><span style="font-size:12.0pt;mso-bidi-font-size:10.0pt;font-family:TIMES;
1364 mso-fareast-font-family:&quot;Times New Roman&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
1365 mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"><font face="Arial" size="2" color="#000080">AT
1366 THE END OF THE PERIOD</font><span style="mso-tab-count:1"></span></span></td>
1367 <td width="25%" align="right"><span style="font-size:12.0pt;mso-bidi-font-size:10.0pt;font-family:TIMES;
1368 mso-fareast-font-family:&quot;Times New Roman&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
1369 mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">313,502</font></span></td>
1370 <td width="25%" align="right"><span style="font-size:12.0pt;mso-bidi-font-size:10.0pt;font-family:TIMES;
1371 mso-fareast-font-family:&quot;Times New Roman&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
1372 mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"><span style="mso-tab-count:1"></span><font face="Arial" size="2" color="#000080">272,397</font></span></td>
1373 </tr>
1374 </table>
1375 <p ALIGN="JUSTIFY"><font FACE="Arial"><a href="news_clip.htm"><small>Back
1376 to the news page</small></a></font></p>
1377 <p ALIGN="JUSTIFY"><font face="Arial" size="2" color="#000080">&nbsp;</font></td>
1378 <td width="15%"></td>
1379 </tr>
1380 </table>
1381
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1383
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