NOVITET, Novi Sad

Interexport, Ltd.
PRIVATE AND CONFIDENTIAL
NOVITET, Novi Sad
Company Profile
Investment Opportunity
The Privatization Agency of the Republic of Serbia intends to sell 70% of the total socially owned
capital in NOVITET Textile Company, Novi Sad. Up to 15% of socially owned capital is reserved
for a free of charge transfer to the Company employees and the remainder (at least 15%) shall be
distributed to citizens through the Privatization Registry in accordance with the Law on
Privatization.
The Consortium of Meinl Capital Advisors AG and Interexport, Ltd. was appointed advisor to the
Privatization Agency of the Republic of Serbia through a public tender. The privatization
procedure currently envisage a trade sale/purchase of the 70% stake of the Company share
capital through a public tender that shall be open to all investors, including strategic investors or
consortia of strategic, financial and/or local investors. Information Memoranda and Tender
Documentation will be available to investors in early September 2002.
The Company
.
producer of women’s ready-to-wear garments,
mostly heavy woolens: coats, jackets and suits,
skirts, and raincoats; small production of men’s
woolen garments
located in Novi Sad, capital of Vojvodina, 90 km
North of Belgrade – highway and rail access to
Belgrade and Hungary
founded in 1947 as garment producer and retailer
“a socially owned enterprise”, consisting of 100%
socially owned share capital
strong management team
about 750 employees
ISO 9001 certified
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Interexport, Ltd.
PRIVATE AND CONFIDENTIAL
Sales by major
products:
Product 000 EUR 000 EUR 000 EUR
2000 1999 1998
1. Women's suits € 1,350 € 3,600 € 4,350
2. Women's jackets € 1,250 € 2,550 € 1,850
3. Women's coats € 1,300 € 2,200 € 2,450
4. Women's garments € 950 € 1,750 € 1,850
5. Women's pants € 759 € 2,950 € 2,950
6. Women's cordons € 650 € 2,650 € 3,350
Total: € 3,100 € 13,250 € 15,500
Novitet has a wide range of ready to wear products (mostly heavy garments),
with the main products being women’s coats, raincoats, jackets, blouses,
suits, and skirts. There is also a small production of men’s coats and jackets.
Novitet is very well known for production of women’s coats and skirts, the
annual output capacity of which is 160.000 and 120.000 pieces respectively
on a one shift per day basis.
Output:
Product Unit Year 2000 Year 1999 Year 1998
1. Clothes piece 90,045 79,231 76,689
2. Samples piece 812 666 673
3. Exports piece 44,812 45,148 34,674
Capacities:
Production Line Capacity Utilization
1, Men's shirts, women's blouses & light garments 79,974,972 71%
2. Men's shirts and pyjamas 48,573,756 63%
3. Mini Plants 63,047,754 17%
4. Cotton Mill 332,660 70%
Capacity by plant location:
Production Line Capacity Utilization
1. Novi Sad (1998) 337,200 73.8%
2. Senta (1999) 107,904 61.4%
3. Kisac (2000) 94,416 54.3%
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Interexport, Ltd.
PRIVATE AND CONFIDENTIAL
Major Fixed Assets:
List of main fixed assets Surface area in m2 Constructed
1. Store in Novi Sad 196 N/A
2. Store in Novi Sad 516 N/A
3. Production department in Senta 720 1987
4. Production department in Kisac 1,632 1978
5. Production department in Novi Sad 7,239 1962
Total Surface area of all buildings in m2 18,647
Important equipment
& production lines:
Equipment & Production Lines Type-model Year Activated
1. Equipment for ready-made clothing in
Senta N/A 1987
2. Equipment for ready-made clothing in N/A
Kisac
1978
4. Sewing machine N/A 1962
Market Position:
Novitet has always been a very important exporter of Yugoslavian made
garments. Since 1998, a large percentage of the company’s sales have been to
the domestic market, in large part due to the punitive sanctions levied on
Yugoslavia. In terms of distribution channels, 94.3% of their production has been
sold through their 17 retail stores in 13 cities throughout Serbia, with the
remainder being sold through wholesale and direct channels.
The trademark “Novitet” is well known thorughout Serbia and also in international
markets.
Workforce: The Company employs 751 people, of whom 81% are between the ages of 35
and 55.
Wages for Serbian textile workers, among the best trained in the world, are
currently ranked among the lowest globally and, depending on the region,
currently average between 50 EUR and 150 EUR per month. Wages at Novitet,
located in the northern part of Serbia, are 125 EUR / month.
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Interexport, Ltd.
Indicative Financial Statements
PRIVATE AND CONFIDENTIAL
The Yugoslav economy has experienced high inflation since 1992 but with a reducing trend since
the hyperinflation of 1993-94. Exchange rates have been stable since 2000.
Inflation rate YUM/DEM YUM/EUR
Year (%) (official) (official)
1998 44.3 6 11.77
1999 50.1 6 22
2000 113.3 30 58.67
2001 38.7 30 59.7
2002 20.0** N/A 30.56***
The table shows development of inflation and
exchange rates* since 1997:
* Inflation measured by the CPI according to
the official Government statistic and the
official exchange rates for major currencies
used in the translation of balance sheet items
denominated in foreign currencies at the yearend.
** Government predicted rate of inflation
*** Official rate of exchange on July 31, 2002
The financial statements as presented below are not in conformity with IAS. The accounts have
been converted into EURO by applying different procedures such as: historical cost convention
(non-monetary items restated from the beginning of the period or from the dates of their purchase
by applying retail price index); corresponding figures for the previous reporting period
denominated in dinars (YUM) are not restated by applying a retail price index; expenses are
presented by using a classification based on the nature of expenses. These statements should be
considered as indicative only.
Income Statement
Average exchange rate YUM/EUR 59.71 50.50 26.29
in EURO '000 2001 2000 1999
Total Revenue 5667 3928 5812
Revaluations 575 721 1186
Gross operating profit 6243 4649 7007
Costs of materials, supplies and services 3291 2373 2607
Labour costs 619 623 619
Depreciation 167 225 758
Other costs 498 674 697
Profit from operations 1667 754 2327
Financial income / expenses, net (102) 76 (340)
Extraordinary income / expenses (286) 36 (1016)
Profit before tax 1279 866 970
Income tax expenses 4 2 2
Profit / Loss after tax 1274 863 968
Adjustments, net (1256) (854) (962)
Net profit after adjustment 18 9 6
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Interexport, Ltd.
PRIVATE AND CONFIDENTIAL
Balance Sheet
End of year exchange rate YUM/EUR 59.71 58.68 41.07
in EURO '000 2001 2000 1999
Intangible assets 22 19 0
Fixed assets 3077 1802 7150
Investments 53 34 54
Total Long-term assets 3152 1855 7205
Current assets 3629 3039 4248
Total assets 6787 4900 11468
Social capital 5190 3476 9628
Total Equity 5230 2958 4517
Total Liabilities 1483 1278 1449
Toal Equity and Liabilities 6787 4900 11468
Privatization Plans
The Privatization Agency of the Republic of Serbia intends to sell 70% of the socially owned
capital in Novitet to qualified strategic and/or financial investors. The sale will be through a
strucutured tender process in accordinace with the Law on Privatization. Under the Law, up to
15% of the remainder will be distributed free of charge to the company’s employees, while at
least 15% will be offered to the public by the Privatization Agency.
A consortium of Meinl Capital Advisors AG and InterExport, Ltd. was appointed as exclusive sellside
advisor to the Privatization Agency of the Republic of Serbia for the privatization of six textile
companies, including Novitet. The Advisor is currently preparing a due diligence report; based on
its conclusions, a privatization strategy will be submitted for approval to the authorities and further
implemented.
Tentative Calendar (liable to change)
‣ September, 2002 – The official invitation for tender is to be published, with tender documents
to be made available to all interested investors.
‣ Sept - Oct, 2002 – Interested investors perform their own due diligence; data rooms will be
opened at all factories.
‣ November, 2002 – Deadline for submitting bids.
‣ November to December, 2002 – A qualified bidder is invited to start negotiations.
‣ December, 2002 – Final negotiations with the Selected Bidder and conclusion of Share Sale
and Purchase Agreement
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Interexport, Ltd.
PRIVATE AND CONFIDENTIAL
Other Information
‣ Any interested investor may send a non-binding letter of interest. Upon signing of a confidentiality
declaration, preliminary on-site visits may be organized for the investor.
‣ All communication or inquiries related to the present documentation or the privatization of Novitet
should be directed to the Consortium. The Company shall not be contacted without prior consent
of the Consortium or the Privatization Agency of the Republic of Serbia.
Contacts: Meinl Capital Advisors – InterExport Consortium
Peter Gumpel Ljiljana Milosavljevic Cook Aleksandar Milosavljevic-Cook
Chairman Vice President Managing Director
Meinl Capital Advisors AG InterExport, Ltd InterExport, Ltd
Jasomirgottstrasse 6 31 Makedonska ul., 4 th sprat 11 Kennedy Road
A-1010 Vienna / Wien 11000 Beograd Cambridge, MA 02138-3352
Austria Yugoslavia U.S.A.
Tel: 43.1.531.88.750 Tel: 381.11.3373.562 Tel: 617.899.0647
Fax: 43.1.531.88.777 Fax: 381.11.3373.567 Fax: 617.497.0928
E-mail: gumpel@meinlbank.com E-mail: ljiljanacook@aol.com E-mail: C02138@aol.com
Disclaimer
This document, prepared with the assistance of the Privatization Agency of the Republic of Serbia
and the Company, is based on information provided by the Company that we believe to be
reliable. However there are no assurances or guaranties that this information is complete and/or
accurate.
Potential investors are recommended to carry out independent investigations and to review and
retain their own advisers in all stages and aspects of the transaction.
All information contained in this document is confidential and is not to reproduced or distributed to
third parties.
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