Press room

11^th Annual General Meeting of Shareholders of Krka

Otočec, 6 July 2006 – Today at 12.00 (local time), the 11th Annual General Meeting of shareholders of the pharmaceutical company was held at Hotel Šport, Otočec ob Krki. Present shareholders represented 37.18% of the company’s share capital. This year the gross dividend will be 1,650 SIT. Jože Colarič, President of the Management Board and Chief Executive informed the participants about the sales results for the first six months of 2006. In this period the Krka Group sales were up 25% compared to the same period last year. The Krka Group recorded sales of SIT 82.3 billion, and the Krka Company of SIT 72.8 billion (23% growth). The first evaluation of business performance of the Krka Group and of the Krka Company for the first half of 2006 shows a two-digit growth rate compared to the results in the same period last year. The business results for the first half of 2006 will be published at the beginning of August 2006.

At the General Meeting the Management Board presented information to the shareholders about the Annual Report, the Auditors report and the Supervisory Board’s report on the 2005 Annual Report verification and confirmation. Jože Colarič, President of the Management Board and Chief Executive also informed the participants about the sales results for the first half of 2006.

The shareholders adopted the motion of the Management Board and the Supervisory Board on accumulated 2005 net profit appropriation at the level of SIT 20,255,287,402. They allocated, out of this sum SIT 5,576,917,500 to dividends, SIT 7,312,000,711 to other reserves from profit, and SIT 7,312,000,711 to be carried forward to the following year. A resolution was adopted that SIT 54,368,480 would be paid out to the Supervisory Board as participation in profit. The Management Board and the Supervisory Board were discharged from liability for performing their respective duties for the year 2005.

The shareholders will be paid out a gross dividend of SIT 1,650 per share. The payout of dividends will commence 60 days from the day of the 11th Annual General Meeting date. The shareholders’ records at the KDD - Central Securities Clearing Corporation, Ljubljana with shareholders’ record date of 11 July 2006 will be applied.

At the Annual General Meeting the shareholders discussed and took decisions about attendance fee and remuneration to members of the Supervisory Board in accordance with the Criteria for membership, work and remuneration of supervisory boards adopted by the Association of Supervisory Board Members. The amount of attendance fee was adopted for participation at the Supervisory Board meetings, namely in the amount of SIT 154,839 to President of the Supervisory Board and SIT 116,129 to members of the Supervisory Board. The proposal for attendance fee related to participation at meetings of the Supervisory Board Committee was also adopted as follows: SIT 116,129 to President of the Committee, SIT 77,419 to members of the Committee, and SIT 77,419 to President of the Supervisory Board for his/her participation at meetings of the Supervisory Boards Committees. The proposal for monthly remuneration related to engagement in the Supervisory Board was also adopted as follows: SIT 505,047 to President of the Supervisory Board, SIT 483,245 to Deputy President of the Supervisory Board, SIT 439,161 to President of the Committee, and SIT 395,317 SIT to member of the Supervisory Board. The attendance fee amounts will be applied starting on the day of the Annual General Meeting, and the monthly remuneration will be applied starting on 1 January 2006. All amounts are gross amounts.

KPMG Slovenija, podjetje za revidiranje, d. o. o., Ljubljana was appointed as auditor of the company for the financial year 2006. A resolution was also adopted that starting from 1 January 2006, the Annual Report of the company Krka, tovarna zdravil, d. d., Novo mesto will be prepared in accordance with the International Financial Reporting Standards.

Sales for first six months of 2006

Krka Group sales of SIT 82.3 billion represent an increase of 25% over the results in the half of 2005. The largest, 38% sales growth, was achieved in the Region East Europe, whereas among product groups, the prescription pharmaceuticals are by far the most important in terms of absolute value as well as in terms of growth rate. On the markets outside Slovenia, Krka Group recorded sales of SIT 69.7 billion, which is 84.7% of overall sales.

Sales by regions
In the first six months of this year the Region East Europe sold products worth SIT 23.5 billion, which is an increase of SIT 6.4 billion over the results in the same period last year. Within this region which represents a 28.5% share of overall sales, the most important market still remains the Russian Federation, generating SIT 17.6 billion in sales (44% growth rate).
Exports to the markets of Central Europe recorded the growth of 31%, reaching the figure of SIT 20.5 billion, which means almost 25% of overall Group’s sales. The sales in Hungary doubled, those in Lithuania rose by 38%, and in Poland by 37 % with the sales worth SIT 11.8 billion, meaning 58% of the region’s sales.
The region of South-East Europe sold products and services worth SIT 13.3 billion (19% growth), with Croatia being the largest market in this region with SIT 5.2 billion. The highest sales growth in the region (by 61%) was recorded in Rumania, where in the first half of 2006 the sales were worth SIT 3.3 billion.
The sales on West Europe and Overseas markets recorded an increase of 36% on the results achieved in the first six months of 2005. They reached the figure of SIT 12.4 billion, which represents 15.1% of overall sales, mainly thanks to higher sales of prescription pharmaceuticals in West Europe.
The Slovenian market holds 15.3% share of overall sales and generated SIT 12.6 billion sales revenues.

Sales by product groups
The prescription pharmaceuticals with an 81.6% share in overall Group sales represent the most important product group. In the first six months of this year they generated sales of SIT 67.1 billion, which is SIT 14.5 billion more than in the same period last year (28% growth). The self-medication products which recorded a 15% growth, reached the figure of SIT 7.9 billion, while the sales of cosmetic products generated SIT 1.3 billion sales revenues, which is an increase of 19% over the first six months in 2005. The sales of animal health products reached the figure of SIT 2.9 billion (20% growth). The Terme Krka Group generated SIT 3.1 billion sales revenues from services sold in the field of health-resort activities, which is an increase of 13% over the results in the same period last year.

Investments

The Krka Group allocated SIT 10 billion to investments in the first six months of this year. The construction of the new chemical synthesis plant for the production of active pharmaceutical ingredients, which is currently the most important investment project, is expected to be completed in autumn this year.

Employees

At the end of June the Krka Group employs 5489 people, 2971 of which are employed in the Krka Company in Slovenia, 1112 in representative offices abroad, 766 in companies abroad and 640 in the Terme Krka Group. In the first six months of this year the number of employees in the Krka Group has increased by 5.1%, which means 265 persons, of which the number of employees abroad counts 234 persons more than at the end of 2005.