"MEKOM" AD:
Investment
Presentation
January 2008
Table of contents
I.
Executive Summary
3
II.
"Mekom" AD’s Products and Markets
5
III.
"Mekom" AD’s History and Performance
20
IV.
Development Plan and Financial Projections
28
V.
Investment Case
33
VI.
Public Offering Details
37
VII.
Contacts
39
I.
Executive Summary
Executive Summary


"Mekom" AD is the biggest and most modern meat producer in Bulgaria

On the domestic market, "Mekom" AD is a market leader in the upper meat product segments –
boiled-smoked and raw-dried sausages

The company is fully integrated – from breeding of its own products to slaughtering and meat
processing

"Mekom" AD is known for its innovative products, such as products from ostrich, buffalo, or rabbit
meat

The company recently consolidated ownership in 12 daughter companies in order to simplify
organizational structure and eliminate inter-company dealing

"Mekom" AD has the ambition and the potential to become a regional leader – the proceeds from
the IPO will support its regional expansion plans and continued development of the Bulgarian
market

"Mekom" AD aims to raise a minimum of BGN 22 million through its IPO in order to support its
investment program

The expected free-float of the company after the IPO is 16.67%
"Mekom" AD is the only Bulgarian company with all feasible certificates for exports to the EU.
"Mekom" AD is the biggest Bulgarian meat exporter and sells its products in 11 European countries
4
II.
"Mekom" AD’s Products and Markets
"Mekom" AD is a leading meat producing and meat processing
company in Bulgaria and one of the biggest and most modern on the
Balkans

"Mekom" AD was established in 1906 in the town
of Silistra, north-east Bulgaria

"Mekom" AD is the largest integrated meat
processing company in Bulgaria

The company is the only Bulgarian meat producer
certified in category "A" for export to EU countries
and has some of the largest and most modern
production facilities on the Balkans

The company has a closed production cycle – from
supply of live animals, to own breeding farms,
slaughter houses, and processed meat production
lines

The company has experienced management and
specialists and employs more than 500 people
"Mekom" AD’s main plant in Silistra
6
"Mekom" AD is the only Bulgarian company with certificate type "A"
for export to the EU

"Mekom" AD is the first meat company in Bulgaria to introduce the HACCP system for quality control

The company has introduced a system for full traceability of products – any product on the shelves can
be traced back to the original live animal source

"Mekom" AD is the only Bulgarian producer with type "A" export license – for all kinds of meat
(except pigs), durable boiled-smoked sausages, raw-dried sausages, and delicatessen
in 2002
 The only exception is pigs due to EU ban on pig export from the region
"Mekom" AD’s main licenses
Approval No:
BG1901021
BG 1901021
Company
City
Mecom Ltd. Silistra
Mecom Ltd Silistra
Activities
Type of animals
Comments
CP, CS, SH
B, C, O, P, R, E, rba
Durable boiled-smoked sausage Raw-dried sausage
1, 3, T
delicatessen
Source: "Mekom" AD, EU
Legend:
CP: Cutting plant; CS: Cold store; SH: Slaughterhouse;
B: Bovine meat; C: Caprine meat; O: Ovine meat; P: Pig meat; R: Ratites; E: Equidae; Rba: Rabbit
7
"Mekom" AD has a well-diversified product portfolio

"Mekom" AD has a diversified product portfolio in three basic lines of
products – processed meat products, meat carcasses, and live animals
 "Mekom" AD produces an entire range of processed meat
products:
 Short-lived products – sausages, frankfurters, minced meats,
etc. ("Kamchia", "Hamburgski")
 Durable boiled-smoked sausages – various kinds of salami
("Durostorum", "Bourgas", "Bai Ganyo")
 Raw-dried sausages – different kinds of loukanka and sudzuk
("Karlovska", "Srebarna", "Trapezitsa")
 Hams, delicatessen, others
 Chilled/Frozen meat and meat carcasses
 Lamb, pork, buffalo, beef, cow, rabbit, ostrich
 Live animals
 The company breeds and sells its patented breed of pigs called
"Silistra Hybrid"

"Mekom" AD is also exclusive distributor for Bulgaria for the products of
Italian company "Montana" for proscuitto and other specialized raw-dried
products, which the company does not produce itself
8
"Mekom" AD is the biggest Bulgarian exporter of meat and meat
products

"Mekom" AD is Bulgaria’s largest exporter of meat
and meat products. The company has the following
export market shares for Bulgaria:
 More than 55% of the total sheep and goat
export
 More than 85% of the total beef and buffalo
export
 More than 90% of the total rabbit meat export
 More than 60% of sub-products and
delicatessen
 100% of ostrich meat
"Mekom" AD’s European markets
Sweden
Finland
Norway
Estonia
Latvia
Lithuania
Denmark
R.S.F.S.R.
Ireland
Netherlands
Belarus
U.K.
Germany
Poland
Belgium

The company exports its products to 11 European
countries

Slovakia
Moldova
Austria
Romania
Croatia
Monaco
Spain
Hungary
Slovenia
Switzerland
Corsica
As of mid 2007, "Mekom" AD is the only Bulgarian
meat company licensed to export cold-cuts, ostrich,
rabbit and beef meat to EU countries
Czech
France
Portugal

Ukraine
Luxembourg
Bosnia
Serbia
Bulgaria
Italy
Macedonia
Montenegro
Turkey
Sardinia
Albania
Malta
Greece
Cyprus
"Mekom" AD’s processed meat products are sold in
supermarkets in Germany, Spain, Switzerland,
Romania, and the U.K.
9
In Bulgaria, "Mekom" AD is positioned in the upper segments for
processed meat products


"Mekom" AD has a market share of more than
14% in the most expensive segment of durable
raw-dried products (lukanka, sudzhuk)
The company has a market share of more than
10% in the segment of boiled-smoked sausages

"Mekom" AD has an approximate market share
of 4% in the segment of short-lived sausages
products

"Mekom" AD is a leading supplier of chilled and
frozen meat and carcass meat for the Bulgarian
market

The company is an absolute leader in the
segment for chilled/frozen lamb meat

"Mekom" AD is also the key producer for Billa’s
range of "Clever" meat products
Relative price index of processed meat products
in Bulgaria
BGN/kg
Short-lived products
Durable boiled-smoked sausages
Raw-dried sausages
15
8
4
Source: "Mekom" AD; Bulgarian Association
of Meat producers
10
"Mekom" AD has invested in world-class production capacity

"Mekom" AD has world-class slaughter lines
with below capacities:
 Lamb – 500 lambs/hour
 Pigs – 150 pigs/hour
 Calves – 40 calves/hour
 Buffaloes – 40 buffalos/hour
 Rabbits – 600-1,000 rabbits/hour
 Ostrich – 35-45 ostriches/hour

"Mekom" AD has a full equipment line for the
production of all types of sausages with daily
capacity of 150 tons

The company has freezers with total capacity of
3,200 tons

"Mekom" AD also has its own electricity supply
units, as well as a new waste disposal and
management unit
"Mekom" AD’s slaughter-lines
and processed meat facilities
11
"Mekom" AD has developed a patented breed of pigs called "Silistra
Hybrid"

"Mekom" AD has developed a patented unique breed of pigs,
called "Silistra Hybrid"

The synthetic line is created under the method of the
complex, reproducing, politype cross-breeding. This type of
breeding combines the positive qualities of four breeds, with
the maximum participation of Pietrain breed

The breed has the following characteristics:
 High fertility – 12-15 pigs per delivery
 Relatively large size at birth – 1.4-1.5 kg/pig at birth
 Low level of fat – 8%
 Large amount of red meat – 75-80% of body mass
 Quick growth – age of reaching 100 kg is 5.5 months

The breed "Silistra Hybrid" has won several gold medals at
various national and international fairs and competitions
The patent for "Silistra Hybrid"
12
"Mekom" AD breeds its own animals and has well-established
relationships with suppliers, which minimizes raw-materials risk

Pigs – "Mekom" AD has its own complex with 35,000
pigs capacity and 2,000 sows "Silistra Hybrid".
Currently, "Mekom" AD imports pig meat from the EU
and has a developed network in Bulgaria

Sheep/lamb – "Mekom" AD breeds on average
35,000-45,000 animals and has a developed sourcing
network in Bulgaria, Romania and Macedonia

Calves and buffaloes – "Mekom" AD breeds
approximately 2,000 buffaloes and 3,000-4,000 calves

Rabbits – "Mekom" AD buys rabbits from private
local producers in Bulgaria and Romania

Ostriches – "Mekom" AD buys ostriches from private
local producers in Bulgaria and Romania
Buffaloes bred in "Mekom" AD’s buffalo
complex
13
"Mekom" AD has an extensive distribution network in Bulgaria and
abroad

"Mekom" AD owns 85 specialized freezer trucks and 24 trucks for the transportation of live animals
Distribution channel
Retail Chains
Distributors
Own stores
Direct sales to
customers
Online store
"Mekom" AD’s advantages





"Mekom" AD has long-term contracts with the biggest retail chains in Bulgaria –
Billa, Kaufland, Picadilly, Hit, etc.
On the Romanian market, "Mekom" AD works with Metro, Billa, Real, G Market.
Recently, "Mekom" AD was selected to supply the entire OMV petrol retail
network in Romania with meat products
In Bulgaria, "Mekom" AD has distributors in all major Bulgarian cities who
deliver to smaller stores, restaurants, hotels, others
"Mekom" AD also works with distributors in Spain, Germany, Switzerland,
France, England, and other countries
"Mekom" AD has exclusive own stores in Silistra and Sofia and rents stores in
Blagoevgrad and Plovdiv

"Mekom" AD sells directly to certain large customers in Bulgaria and abroad

The company is in the process of developing an online store that will serve
customers in Bulgaria and abroad
14
"Mekom" AD has an experienced management team

Stefan Raichev is the President of the company and the major shareholder. He has worked in the
company since 1980, starting as a production engineer and rising to a CEO position. Mr. Raichev
privatized the company in 1998. In 2005, he was chosen for the Businessman of the Year in Bulgaria

Margarita Stoyanova is a member of the Board of Directors and an executive director. She has
extensive financial and accounting experience and is in charge of the overall financial and strategic
management of the company

Ivelin Nikolov is a member of the Board of Directors and in charge of marketing and trade activities.
Mr. Nikolov has prior experience with multinational FMCG companies in Bulgaria

Daniel Krumov is a member of the Board of Directors with prior experience in banking. Mr. Krumov
is responsible for capital budgeting and financial management

Dragomir Dimitrov is a member of the Board of Directors and an executive director. He has good
knowledge in the field of national and international business
15
The Bulgarian meat market has a significant growth potential
The Bulgarian meat market grew by ~14% in the
last few years…
…and is expected to continue to grow due to low
starting base of meat consumption
Meat product sales in Bulgaria
Thousands of tons
Per capita meat consumption
In kg per person (2005)
+14%
59,854
85
75
64,766
65
46
50,729
Short-lived
products
44,244
Durable boiled- 28,554
Smoked products
Durable boiledSmoked and
Smoked products
33,486
40,783
46,757
Pork
Beef
8,027
8,001
9,350
8,005
7,663
9,242
9,721
10,004
2002
2003
2004
2005
Source: Bulgarian Association of Meat Producers

44
32
Lamb
Poultry
24
10
4
2
8
Bulgaria
2
9
11
6
15
22
22
4
12
Romania
Czech
Republic
Serbia
Source: CEEC Agri Policy Report; USDA Foreign Agri Service
Consumption of meat products in Bulgaria will continue to grow on the
basis of increasing purchasing power of the population and shift to
processed meat products
16
The number of meat processing companies on the Bulgarian market is
decreasing

Recently, a lot of meat processing companies in Bulgaria have been closed due to their inability to
meet EU production requirements

Since 2004, the number of meat producing and meat processing companies has decreased almost
two-fold

"Mekom" AD is well-positioned to capitalize on the trend of meat factories closure in Bulgaria
Number of meat processing companies in Bulgaria
Company
Meat producing companies for red meat
Meat producing companies for white meat
Meat processing
Minced meat
Total
Dec-04
195
60
213
144
612
Dec-05
178
59
213
144
594
Apr-07
81
42
163
63
349
Source: Bulgarian Association of Meat Producers
17
The Romanian meat market holds significant growth potential

Meat producing and processing has increased on average by 4.2% per year from 2000 to 2005 and
reached 1.5 million tons – 40.1% is pork, 26.6% is poultry, 25.3% is beef, and 7.5% is lamb


The Romanian market is relatively consolidated as the five biggest producers form 40% of the sales
In 2005, per capita meat consumption was 64.6 kg (10% more than in 2004)
 Consumption of pork is the biggest – 32 kg/person, followed by poultry with 21.2 kg/person,
lamb with 1.8 kg/person. Consumption of meat products is 8-9 kg/person


In 2007, there is an increased demand for more expensive products of better quality
It is expected that the Romanian meat market will continue to grow with the general increase of
purchasing power in the country

"Mekom" AD is well positioned to grow its sales on the Romanian market:
 The company already sells in Metro, Real, Billa, and other chains
 "Mekom" AD recently signed an agreement to supply all OMV petrol stations
in Romania with meat products
 "Mekom" AD has strong positions in the upper segments of meat products,
where there is less competition from local and international producers
 "Mekom" AD’s geographic position in Silistra provides it with a logistical
advantage
18
"Mekom" AD is well positioned to exploit the trends in the EU lamb
market


The EU is a net importer of lamb with average imports of 260,000 tons per year
Consumption is unlikely to see high increases, but the demand in Southern European countries (Italy,
Greece, Spain, Croatia) cannot be met with local production
 Lamb production in countries, such as France, Ireland and England has decreased in recent years
 Southern countries do not import lamb from producers like the UK and France, because of the
method of lambs slaughtering
 Local production is insufficient to meet demand

"Mekom" AD is the largest exporter of lamb in the region and will continue to hold strong positions
Lamb Consumption Forecast for EU - 25, 2007 – 2012
Kg/person
Production (net)
EU 15
EU-N10*
Import
Export
Consumption
Per capita consumption
EU 15
EU-N10*
2007
1,041
1,027
14
263
4
2008
1,040
1,026
14
263
4
2009
1,038
1,024
14
263
4
2010
1,034
1,020
14
264
4
2011
1,030
1,016
14
265
4
2012
1,025
1,014
11
266
4
1,299
2.8
3.3
0.2
1,299
2.8
3.3
0.2
1,298
2.8
3.3
0.2
1,294
2.8
3.3
0.2
1,291
2.8
3.3
0.2
1,288
2.8
3.2
0.2
*EU-N10 10 New Member states; Source: Directorate General for Agriculture and Rural Development
19
III.
"Mekom" AD’s History and Performance
"Mekom" AD completed consolidation of 12 related companies to
become a fully integrated meat producer

Previously, the operations of the company were spread among 12 different companies for
administrative reasons. Still, "Mekom" AD was the holder of all patents and trademarks

With the legal restructuring, the daughter companies will be a part of the "Mekom" AD, so that the
company operates as a whole and inter-company dealings are eliminated
Galina Raicheva
Stefan Raichev
99%
0.5%
Margarita Stoyanova
0.5%
Mekom AD
Agrospektar Invest AD
Kremonini AD
Silistra Hybrid OOD
Rusgal OOD
Ronex 2000 OOD
OMV OOD
DrustarBV OOD
SVI OOD
Select OOD
99%
98%
97.32%
99%
80%
98%
Interfoods AD
Mekom OOD
DMK 2003 OOD
80%
99.33%
99%
99%
88%
96%
21
"Mekom" AD’s sales have doubled in the past three years
~70% of "Mekom" AD’s sales are from exports…
Sales and Exports*
BGN ‘000
Total Sales
Exports
+44%
53,476
17,377
Sales portfolio, end 2006
%
Processed
products Live animals (export)
(export)
Processed products
5%
1%
36,270
35,444
26,727
The company
hashas
managed
to diversify
sales
…The
company
a diversified
salesitsportfolio
23,726
20%
(BG)
Chilled/frozen
9% meat (BG)
4%
2004
2005
Source: "Mekom" AD


2006
Chilled/
frozen meat
(export)
62%
Live animals (BG)
Source: "Mekom" AD
"Mekom" AD has well-diversified product portfolio across products and geographic
markets
The established products and markets base provides for further diversified growth
* All results are on pro-forma, consolidated basis
22
"Mekom" AD has grown significantly in the past few years
"Mekom" AD’s pro-forma consolidated Income Statement
Indicator (in BGN '000)
Revenues
Cost of goods sold
Gross margin
Operating expenses
EBITDA
Depreciation and amortization
EBIT
Financial revenues/expenses, net
Earnings before taxes
Tax expenses
Net Profit



2004
26 727
(17 968)
8 759
(3 175)
5 584
(2 640)
2 944
(1 747)
1 197
(230)
967
2005
35 444
(23 493)
11 951
(4 452)
7 499
(3 087)
4 412
(2 249)
2 163
(307)
1 856
2006
53 476
(39 272)
14 204
(5 449)
8 755
(3 461)
5 294
(2 475)
2 819
(368)
2 451
30 June 07
30 830
(23 916)
6 914
(2 524)
4 390
(1 663)
2 727
(931)
1 796
1 796
30 Sept. 07
54 142
(41 575)
12 567
(5 221)
7 346
(2 495)
4 852
(1 397)
3 455
3 455
"Mekom" AD’s revenues have almost doubled in the past three years
Net profit has increased more than 2.5x by end of 2006
Results for the 9 months of 2007 are with more than 10% better than forecasted for the period
23
"Mekom" AD’s balance sheet
"Mekom" AD’s pro-forma consolidated Balance Sheet
Category (in BGN 000)
2004
2005
2006
30 June 07
30 Sept. 07
ASSETS
Long-term assets
Fixed tangible assets
Biological assets (main herd)
Expense for acquiring long-term intangible assets
Long-term receivables
Intangible assets
Total long-term assets
30 885
1 112
38 201
1 619
33 653
1 881
32 670
2 064
427
9
32 433
290
5
40 115
184
4
35 722
166
5
34 905
30 878
2 232
1 184
29
5
34
328
68 656
Short-term assets
Inventory
Trade receivables
Cash and equivalents
Total short-term assets
8 893
1 805
1 098
11 796
13 086
3 370
1 095
17 551
18 573
5 939
2 774
27 286
19 213
4 483
1 198
24 894
20 933
3 649
2 386
26 968
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity
Shareholder capital
Reserves
Retained earnings
Current year profit/loss
Total shareholders' equity
44 229
57 666
63 008
59 799
61 296
2 500
1 820
510
967
5 797
2 500
2 259
1 023
1 856
7 638
2 500
2 793
2 150
2 451
9 894
2 500
3 138
4 596
1 796
12 030
3 231
3 081
4 596
3 455
14 363
Long-term liabilities
Loans
Deferred liabilities
Financial leasing
Financing
Other long-term liabilities
23 631
16 866
28 197
18 057
208
35 885
19 672
262
6 695
70
9 486
446
24 142
12 614
261
740
10 527
10 035
5 916
27 314
16 355
301
559
9 814
285
Total Current liabilities
Loans payable
14 801
4 205
21 831
4 786
28 972
10 367
11 884
3 732
19 619
184
LIABILITIES AND STOCKHOLDERS' EQUITY
44 229
57 666
63 008
59 799
61 296
24
Description of companies controlled by "Mekom" AD
Company
Brief Description

Interfoods AD


Mekom OOD
DMK 2003
OOD



Ronex 2000
OOD


The company buys and slaughters cattle, horses and ostriches. It produces
short-lived products, raw-dried and durable smoked-boiled products, as
well as fresh and frozen meat
The company was founded in 1998. It realized BGN 372,000 net profit in
2006
The company’s main activities are sheep and goat slaughtering, and lamb
export
The company was founded in 2001. It realized BGN 94,000 net profit in
2006
The company’s main activity is transport. It owns 99 distribution trucks,
85 of which are specially equipped to transport frozen meat products. The
company also has 24 vehicles for transporting live animals
The company was founded in 1999. It realized BGN 470,000 net profit in
2006
The company breeds and fattens sheep. It imports lamb from Romania
and exports to the EU
The company was founded in 1999. It realized BGN 70,000 net profit in
2006
25
Description of companies controlled by "Mekom" AD
Company
Brief Description

Rusgal OOD
Drustar BV
OOD
Kremonini AD
Agrospektar
Invest AD



The company breeds and fattens sheep and calves. It also breeds buffaloes
for milk
The company was founded in 2002. It realized BGN 78,000 net profit in
2006
The breeds and fattens sheep. It buys and slaughters sheep, and sells lamb
meat
The company was founded in 2004. It realized BGN 8,000 net profit in
2006


The company’s main activity is pig breeding
The company was founded in 1992. It realized BGN 177,000 net profit in
2006


The company’s main activity is pig breeding
The company was founded in 2000. It realized BGN 256,000 net profit in
2006
26
Description of companies controlled by "Mekom" AD
Company
Silistra Hybrid
OOD
Brief Description
 The company breeds its special brand of pigs called "Silistra Hybrid"
 The company was founded in 2001. It realized BGN 89,000 net profit in
2006
 The main activity of the company is pig breeding. Currently, it is also
SVI OOD


Select OOD
OMV OOD



investing in a facility for breeding milk buffaloes
The company was founded in 2002. It realized BGN 10,000 net profit in
2006
The company’s main activity is sheep and goat breeding. It exports lamb
meat to the EU
The company was founded in 2003. It realized BGN 341,000 net profit in
2006
The company buys, fattens and sells lamb
The company was founded in 2003. It realized BGN 55,000 net profit in
2006
27
IV.
Development Plan
In Bulgaria, "Mekom" AD will invest in marketing, distribution, and
internal improvements

The company’s investments in Bulgaria will be in three main directions:




Additional investment in sausage production facilities (processing, drying facilities)
Increased investment in marketing and trade
Investment in distribution to enable better reach of furthest parts of Bulgaria
Internal operations improvements (ERP system, process improvements, personnel training,
organizational changes)
29
"Mekom" AD is well-positioned to enter the Romanian market

"Mekom" AD is located within 200 km of 10 million
Romanian consumers (Brasov, Bucharest, Constanta,
Brailla, other)

The company has established relationships with retail
chains in Romania, which will ease the distribution of its
products on the Romanian market

Most Romanian meat producers have difficulties meeting
EU requirements, which creates a market niche that
"Mekom" AD can take an advantage of. Recently,
"Mekom" AD has been selected to supply all OMV
stations in Romania

"Mekom" AD has an established brand name in the coldcuts segment in Romania, where it has been present for 2
years already

The company will invest in additional marketing and
distribution to establish a stronger presence on the
Romanian market
"Mekom" AD’s geographic positioning
relative to the Romanian market
Brasov
Braila
200 km
Bucharest
Constanta
Silistra
30
"Mekom" AD has the opportunity to acquire a smaller meat producer in
the Western Balkans

"Mekom" AD sells its products in Croatia and
has an established supplies network in
Macedonia

An acquisition in Macedonia or Serbia will allow
the company to:
"Mekom" AD’s presence and potential markets
in South East Europe
 Acquire local brands and expands its sales
presence
 Find additional placement for some of its
existing processed meat products and
"Silistra Hybrid" pigs
 Expand its supply network for lamb
 Avoid duties for sales to Croatia and other
Western Balkan countries
Markets, where "Mekom" AD
is present
Target priority market
Potential market
31
"Mekom" AD’s base investment plan
Investment Area
Amount (leva)
Details/Timing
Modernization and expansion of meat
processing facilities
4,000,000
Investi in additional capacity for meat processing 2008
Marketing, distribution – Bulgaria
2,000,000
Invest in marketing and merchandising. Additional
investments in distribution - 2008/9
Romanian market entry
5,000,000
Expansion of the "Silistra Hybrid" facilities
3,000,000
Invest in marketing research, advertising and trade
spend. Build own distrubution center and/or
contract out local distributors - 2008/9
Invest in additional buildings and renovation for
better breeding of animals - 2008
Purchase of a meat company on the Western
Balkans
7,000,000
Acquire a target meat processing company in the
Western Balkans - 2008
Investments in organizational improvements
(IT, process improvements, training)
1,000,000
Investing in processes and personnel (ERP systems,
processes, training, recruitment)
Total
22,000,000

"Mekom" AD investment plan will enable it to strengthen its position on the Bulgarian
market, as well as establish itself as a regional leader
32
V.
Investment Case
"Mekom" AD foresees strong income and balance sheet growth on the
basis of regional expansion (1/2)
"Mekom" AD forecast Income Statement
Category (BGN '000)
Sales
Cost of goods sold
Gross profit
Gross profit margin
Marketing and distribution expenses
Administrative expenses
Other expenses
EBITDA
EBITDA margin
Depreciation and amortization
EBIT
EBIT margin
Interest income/expense
PBT
Tax expense
Net Profit
Net profit margin

2007
2008
2009
2010
2011
2012
64,410
84,896
116,093
147,669
181,420
212,400
(46,819)
17,592
27%
(3,902)
(3,016)
(1,158)
9,516
15%
(3,714)
5,803
9%
(1,073)
4,730
(473)
4,257
7%
(61,114)
23,782
28%
(7,143)
(3,975)
(1,526)
11,138
13%
(4,704)
6,434
8%
(563)
5,871
(587)
5,284
6%
(83,019)
33,073
28%
(9,033)
(5,436)
(2,087)
16,518
14%
(4,812)
11,706
10%
(568)
11,138
(1,114)
10,025
9%
(104,720)
42,949
29%
(9,945)
(6,915)
(2,655)
23,434
16%
(4,889)
18,545
13%
(4)
18,540
(1,854)
16,686
11%
(127,756)
53,665
30%
(12,990)
(8,495)
(3,261)
28,918
16%
(4,967)
23,951
13%
548
24,499
(2,450)
22,049
12%
(148,308)
64,092
30%
(14,867)
(9,946)
(3,818)
35,461
17%
(5,044)
30,417
14%
1,689
32,106
(3,211)
28,895
14%
"Mekom" AD is on track to beat its 2007 forecasts
34
"Mekom" AD foresees strong income and balance sheet growth on the
basis of regional expansion (2/2)
"Mekom" AD forecast Balance Sheet
Category (BGN '000)
ASSETS
Long-term assets
Land
Buildings
Machinery and equipment
Transportation vehicles
Animals
Others
Short-term assets
Inventory
Trade receivables
Cash and equivalents
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Equity capital
Long-term liabilities
Long-term bank debt
Other long-term liabilities
Revenue receivable
Short-term assets
Short-term bank debt
Trade paybles
Other short-term liabilities
LIABILITIES AND STOCKHOLDERS' EQUITY
2007
2008
2009
2010
2011
2012
774
41,780
21,336
3,980
3,198
2,500
774
40,828
27,313
3,624
3,198
2,275
774
39,847
27,100
3,481
3,198
2,050
774
38,116
26,848
3,301
3,198
1,825
774
36,385
26,555
3,083
3,198
1,600
774
34,654
26,222
2,827
3,198
1,375
19,404
5,758
2,973
101,702
25,329
7,589
21,180
132,110
34,407
10,378
35,781
157,017
43,401
13,201
55,347
186,010
52,949
16,218
81,601
222,362
61,467
18,988
119,634
269,138
57,671
73,637
83,662
100,348
122,398
151,293
8,307
700
7,266
6,000
1,500
11,783
11,500
2,000
12,533
14,500
2,500
13,283
19,000
2,500
14,533
28,000
2,500
15,783
10,376
16,034
1,348
101,702
16,500
20,929
1,760
132,110
16,500
28,431
2,391
157,017
16,500
35,863
3,016
186,010
16,500
43,752
3,679
222,362
16,500
50,790
4,271
269,138
35
Key assumptions for the forecast financial statements
Bulgarian market
Export markets

The Bulgarian meat market is expected to continue
to grow at 10-15% per year in the next 3 years and
to slow down to the level of GDP growth thereafter

"Mekom" AD’s market share in the short-lived
products segment is expected to stay constant i.e.
the company will target to grow with the market at
a minimum
Romania
 "Mekom" AD’s sales are expected to grow
relatively fast on the basis of investment in
marketing and distribution. Overall sales are
expected to reach ~50% of Bulgarian levels by
the year 2012


"Mekom" AD’s market shares in the boiled-smoked
and raw-dried segments are expected to rise by 3%
per year for the next few years on the basis of:
 Increased marketing and trade
 Introduction of new products
 Further penetration of the retail chains in
Bulgaria (where "Mekom" AD is traditionally
strong)
 Improved distribution and allowances for
main distributors
 Decrease of the number of meat processing
factories, due to EU requirements
Sales of live "Silistra Hybrid" pigs are expected to
grow by 20% annually for the next 4 years, based
on additional investments and possibility to export
to EU countries
Other Exports
 Lamb exports are expected to continue to
grow strongly by 20-30% for the next 2-3
years and then subside to growth levels of 5
10%. The growth will be on the basis of
increased supply of own and purchased lambs

Exports of meat products are expected to rise
by 100-200% (starting from low levels) as the
company continues to invest in trade spend in
Western Europe
Western Balkans
 The revenue forecast assumes the acquisition
of a meat producer in the Western Balkans
36
VI.
Public Offering Details
Public offering details

The number of shares offered for sale – 10,682,800 shares with BGN 1 nominal value; all of the shares
are ordinary, dematerialized, freely transferable, registered in the Central Depositary

Each ordinary share gives its holder the right to 1 (one) vote in the General Meeting of Shareholders, as
well as right to dividend upon profit distribution and right to liquidation quota

Minimum issue value per share – BGN 2.20

The final offering price per share will be determined by the "book building" method

The period, when purchase orders could be submitted – January 21, January 22, January 23, 2008
from 9.00h t0 16.00h

The purchase orders are to be sent in sealed envelope to UBB on the following address: 5 Sveta Sofia Str
and in Microsoft Excel format to the following e-mail: stambolieva_a@ubb.bg

Announcement date of the final offering price and allocation – January 24, 2008, till the end of the day

Date of payment– January 29, 2008
38
VII.
Contacts
Contact Details
United Bulgarian Bank AD
5 Sveta Nedelya Street
1040 Sofia
Contact person: Ms. Svetlana Koeva
Telephone: +359 2 8113756
Fax: +359 2 8113759
E-mail: koeva_s@ubb.bg
Allianz Bulgaria AD
79 Mariya Louiza Boulevard
1202 Sofia
Contact person: Mr. Georgi Kisov
Telephone: +359 2 9215405, 481
Fax: +359 2 9818564
E-mail: g.kissov@bank.allianz.bg
40