Most Proposals Approved at Shareholders' Meeting

3. 7. 2001

Ljubljana, July 3rd – The Fourteenth Shareholders’ Meeting convened today at the Lek d.d. headquarters. Shareholders attending the meeting represented 58.42% of the total issued share capital. The majority of shareholders gave a vote of confidence to the Lek Board of Management and the Supervisory Board by adopting the business report and the profit distribution proposal for the year 2000.

Shareholders covered numerous issues at today’s meeting: the business performance report for 2000, the profit distribution proposal and statute changes. The options plan for the members of the Supervisory Board was also discussed, the auditor for the year 2001 was selected and new members of the Supervisory Board were announced.

Metod Dragonja, the president of Lek’s Board of Management, presented in great detail the business report for the year 2000. He emphasized that Lek in the year 2000 achieved its projected business objectives and showed improvements in key business indicators. Lek’s sales totaled SIT 54.9 billion, representing an 18% growth from the previous year. Sales increased across all sectors, but the largest, a 25.5% growth, was marked by the pharmaceuticals division. Sales revenues grew by 18.9%, denominated in tolars, or 8.4% in Euros. Earnings per share were reported at SIT 2,911, an increase of 80% from the previous year. The shareholders adopted Lek’s business report for the year 2000.

The key challenges for the year 2001 were identified as the following: a 15% growth in sales, increased profit margins, improved effectiveness of our research and development activities, consolidation of Lek’s position as a leader in the Central and Eastern Europe markets, and further growth of our strategic products. The president of the Management Board stressed the importance of the company maintaining a balanced presence in all key geographical areas. Such balance is one of the primary strategic objectives of Lek and is necessary to reduce the risks certain market pose. Lek’s growth in strategic markets is also due to Lek’s external expansion plans, which involve acquisitions of other pharmaceutical companies. This strengthens Lek’s market share and projects a new and broader strategic presence in these markets. It also helps Lek establish and consolidate its position as a local pharmaceutical manufacturer, as well as a leading pharmaceutical company offering a wide array of generic drugs.

This year Lek prepared a plan to increase its market capitalization. However, conditions on international capital markets in the first half of the year were unfavorable. The project is developed to the point that it can be completed in two months following the adoption of a final decision to go ahead with the plan. The goals of the plan remain in effect and Lek will endeavor, depending on capital market shifts, to list its shares on the London market by the end of the year.

Lek’s shareholders adopted the proposed profit distribution for the year 2000. Lek’s net profit amounted to SIT 5.6 billion. This amount will be distributed as follows: SIT 1.86 billion as dividends, SIT 106 billion for the profit sharing scheme, while the rest of the profit will remain undistributed.

A dividend per A- and B- class shares is SIT 950; a preferential dividend per B- class share is SIT 180. The dividends will be paid at the latest, sixty days following the shareholders’ meeting.

The assembly did not approve the changes in the statute as it was worded. The proposal did not have enough support.

The shareholders voted in favor of the proposal for the options plan for the members of the Supervisory Board. The shareholders supported the Supervisory Board’s proposal to select KPMG Slovenia d.o.o., Ljubljana as auditor for the business year 2001.

The shareholders’ meeting ended with the announcement of the new members of the Supervisory Board, both of whom represent the employees. At its ninth annual meeting on April 24th 2001, the Employees’ Council elected Tone Dragar and Andrej Drčar to serve a four-year term as new members on the Lek Supervisory Board.

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This press release contains statements and conclusions based on projections of Lek’s future business operations. These estimates are derived from the best information currently available. In case these forecasts prove unreliable, the actual results could prove different from those projected

For additional information, please contact

Katarina Klemenc, Head of the Public Relations Department, Lek d.d., to the phone number: (01) 580 22 43