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Zentiva N.V. (ZEND)

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Monday 28 February, 2005

Zentiva N.V.

Final Results

Zentiva N.V.
28 February 2005

ZENTIVA N.V. 2004
FULL YEAR RESULTS & REPORT



Zentiva's focused branded generics strategy continues to deliver growth and
enhanced margins



28th February 2005




I      2004 FULL YEAR FINANCIAL HIGHLIGHTS





•   Total sales up 11.2% from 2003PF to CZK 10,674m

    -  8.0% sales growth in Czech Republic

    -  126.8% and 43.8% sales growth in Poland and Russia respectively

    -  Slovakian market continued to stabilize



•   Gross profit margin of 60.3% versus 57.7% for 2003PF



•   Net profit up 48.8% to CZK 1,613 m from 2003PF

    -  Represents diluted EPS of CZK 43.82 ($ 1.71)(3) (5)



•   Net profit growth, excluding one-off impact of the sale of product
    know-how was 35.6 %



•   Free cash flow before acquisitions in 2004 was CZK 1,355 m
    representing EBIT to cash conversion of 53.6%





Jiri Michal, Chairman and CEO said:



'I am pleased with the excellent results that Zentiva has reported for 2004.
These figures clearly highlight how we have leveraged the acquisition and
integration of Slovakofarma to drive the successful expansion of our business in
Central and Eastern Europe. The growth that we have achieved in both Poland and
Russia has been particularly gratifying, as has our performance in Slovakia
against a background of difficult market conditions.



Our on-going success is based on our focus on the primary care segment of each
of the markets in which we operate and our ability to manage our product
portfolio and development pipeline so that we can provide as many patients as
possible with modern cost-effective healthcare. During the course of 2004 we
have organised our production capacity so that we now have an efficient platform
to support our ambitious growth targets.



Looking ahead I am confident that by extending our primary care focussed
strategy to more markets in Central and Eastern Europe, Zentiva can continue to
generate attractive returns for its shareholders.'



(CZKm)                   Twelve Months to 31st December 2004
                              2004            2003           2004 vs. 2003   2003PF(1)      2004 vs. 2003PF
Total Sales                    10,673.8        7,571.1           41.0%        9,600.5           11.2%
Gross Profit                    6,438.5        4,526.2           42.3%        5,542.0           16.2%
EBITDA                          3,091.7        2,193.7           40.9%        2,576.8           20.0%
EBIT                            2,530.8        1,828.3           38.4%        2.117.9           19.5%
PBT and Min. Int.               2,361.3        1,506.6           56.7%        1.747.0           35.2%
Net Profit (2)                  1,613.1          903.5           78.5%        1,083.8           48.8%
Net Profit pre GW (2)           1,540.6          881.0           74.9%        1,014.5           51.9%
EPS Basic(CZK) (3)                44.91          24.29           84.9%            n/a             n/a
EPS Diluted (CZK) (4)             43.82          22.48           94.9%            n/a             n/a
EPS Diluted (US$)(5)               1.71           0.88           94.3%            n/a             n/a




(1)     Pro forma for acquisition and consolidation of Slovakofarma

(2)     Includes one-off impact of sale of know-how of CZK 187.6 million, which
is approx. CZK 143.6 million after tax impact

(3)     Basic EPS is calculated by dividing net profit for the period (after
deducting preference dividends) by the weighted average number of ordinary
shares outstanding during the period (adjusted for share split in both periods
reported).

(4)     Diluted EPS is calculated by dividing net profit for the period (after
deducting preference dividends) by weighted average number of shares outstanding
during the period which are adjusted for effect of dilutive potential shares
(adjusted for share split in both periods reported).

(5)     For EPS convenience translation to USD the average exchange rate for
2004 of 25.701 CZK/USD was used



II     GROUP STRATEGY



Zentiva's strategy for profitable growth is based on:



•    Developing and launching self developed modern branded generics into
     the key therapeutic areas of the primary care market including 
     cardiovascular, CNS, pain management and urology;

•    Working in the countries in which we operate to develop the primary
     care sector of the market;

•    Expanding our geographic reach into markets such as Poland and
     Russia where pharmaceutical consumption is rising rapidly from a 
     relatively low base and

•    A continual focus on cost competitiveness and efficient business
     processes.


Sales


Zentiva's total net sales grew by 11.2% in 2004 to CZK 10,673.8 million in
comparison to the full year 2003PF figures.  Total sales growth was 9.2%
excluding the one-off impact of CZK 187.6 million which was due to the sale of
know-how following an antimonopoly ruling post the acquisition of Slovakofarma.
This non-recurring item is accounted for in Other Sales/Deductions. The key
factor behind Zentiva's growth in 2004 was the success of our branded
prescription pharmaceuticals business with sales increasing by 10.4% due to the
significant growth of our modern branded product portfolio. During the third
quarter the Company recorded significantly higher sales of the products, for
which the know-how will be disposed of due to the ruling of the anti-monopoly
authorities. This was the result of higher demand from wholesalers in order to
secure the stocks needed to cover the period of the transfer of marketing
approvals. As a consequence of this additional wholesaler demand in Q3, sales of
these products were significantly lower in Q4.



In 2004, Zentiva's business in the Czech and Slovak Republics developed in line
with the retail market in both countries.  In these two markets, Zentiva's
strategy is continuing to prove very successful with the strong momentum behind
the Company's key promoted brands being offset by declining sales of older
non-promoted products, as well as the products covered by the anti-monopoly
ruling.



Sales grew by 126.8% in Poland and 43.8% in Russia in 2004, relative to 2003 on
a pro forma basis. This rapid growth is a result of our strategy of
strengthening our position in these attractive new markets by focusing on
certain of our key promoted brands.



The strategic focus on promoted branded pharmaceutical products meant that this
key product group continued to increase its contribution to Zentiva's overall
sales. These products are characterized by fast growth and relatively higher
margins. The sales of our top fifteen products represented 37.2% of total sales
in 2004 (2003PF: 29.0%) highlighting our success in driving sales growth through
our portfolio of promoted brands. In Poland and Russia our business is largely
based on promoted branded products, while in Slovakia we continued to modernize
our portfolio with new promoted brands in response to significant changes in the
overall market environment.





Zentiva's Top Rx and CHC Brands


Brand                 Pharmaceutical        Therapeutic Category        2004       2003PF(1)     2004 vs.
                      Compound                                                                    2003PF
                                                                       (CZK m)       (CZK m)
Helicid               omeprazole            Alimentary                   571.2         307.1         86.0%
Simvacard             simvastatin           Cardiovascular               412.8         341.9         20.7%
Ibalgin               ibuprofen             Musculo-skeletal             381.1         356.6          6.9%
Agen                  amlodipine            Cardiovascular               342.5         252.9         35.4%
Agapurin              pentoxyphylline       Cardiovascular               329.5         338.8         -2.7%
Penester              finasteride           Genito urinary               300.4         121.4        147.4%
Enelbin               naftidrofuryl         Cardiovascular               223.2         216.2          3.3%
Pinosol               herbal                Respiratory                  219.0         148.7         47.3%
Citalec               citalopram            CNS                          208.8         119.9         74.2%
Lozap                 losartan              Cardiovascular               180.4          46.6        287.2%
Zoxon                 doxazosin             Genito urinary               179.5          97.2         84.7%
Paralen               paracetamol           Analgetics                   176.2         165.7          6.4%
Zodac                 cetirizine            Respiratory                  163.9         145.9         12.3%
Mycomax               fluconazole           Anti-fungal                  143.4         113.1         26.8%
Ramil                 ramipril              Cardiovascular               137.5          15.2        804.3%





Sales by Geography


(CZKm)                       Three Months to December 31        Twelve Months to December 31
                             2004       2003PF      2004 vs.    2004         2003PF      2004 vs.
                                                    2003PF                               2003PF
Pharmaceuticals              2,617.3    2,552.2     2.6%        9,961.2      9,122.8     9.2%
       Czech Republic        1,518.2    1,489.9     1.9%        5,904.8      5,465.5     8.0%
       Slovak Republic         516.4      619.3   (16.6%)       2,229.0      2,377.0    (6.3%)
       Poland                  240.8      122.7    96.3%          786.1        346.6   126.8%
       Russia                  147.2      111.5    32.0%          438.7        305.1    43.8%
       Other                   194.7      208.8    (6.8%)         602.6        628.6    (4.1%)
API                            115.0      100.0    15.0%          339.1        428.4   (20.6%)
Other Sales/Deductions*         96.9       13.2   634.1%          373.4         49.3   657.4%
Total Sales                  2,829.2    2,665.4     6.1%       10,673.8      9,600.5    11.2%

Note: * includes Contract manufacturing sales, Services, Deductions and sale of
know-how



Czech Republic



In the Czech Republic Zentiva's business performed approximately in line with
the retail market during the course of 2004 with sales increasing by 8.0%
compared to 2003PF. This figure was the result of significant sales gains for
our higher margin promoted prescription brands being partially offset by lower
sales of our non promoted products. Sales were also hit by the lower revenues
from our products which were the subject of the anti-monopoly ruling in Q4.
Within our promoted brands good sales growth was achieved by the cardiovascular
products Simvacard (simvastatin), Lozap (losartan), Agen (amlodipine) and Ramil
(ramipril) as well as the anti-ulcer drug Helicid (omeprazole). The
anti-depressant Citalec (citalopram) also showed strong sales growth in the
second half of 2004 following liberalization of the active molecule by the
health authorities, which allowed primary care practitioners to start to
prescribe the product to a much wider patient population.





Slovakia



In Slovakia, Zentiva's business performed well against a difficult market
background. Slovakian sales fell by only 6.3% in 2004 versus 2003 on a proforma
basis. In the fourth quarter 2004, sales fell by 16.6% due a significant decline
in the products, which are being disposed as a result of the anti-monopoly
ruling. The decline also reflects the very strong sales that were achieved in
the final quarter of 2003, following the reimbursement/pricing changes that took
place in this market.



The Slovakian market has been under pressure in 2004 following the introduction
of the new pricing/reimbursement regulations in Q4 2003. These new regulations
led to a decline in the overall market in 2004 as the prices of modern therapies
were reduced in response to the introduction of a reference price system. In
addition, the introduction of a fixed co-payment for prescribed medicines and
doctor visits led to a significant reduction in the number of doctor visits,
which in turn resulted in a marked decline in the volume of old products being
sold.



Zentiva has used these changed regulations to improve the product mix of its
Slovakian business by promoting its modern brands more aggressively while at the
same time reducing the marketing support for its older and less profitable
products/therapies. In 2004, Zentiva's promoted prescription brands saw growth
of over 20% despite the overall market decline.



An increasing proportion of Zentiva's sales in Slovakia came from new products
in the CNS and cardiovascular areas. Among the top products was the
anti-depressant Citalec (citalopram), which continued its strong growth
following its introduction in 2003. Other products which made a significant
impact on 2004 sales growth included the cardiovascular products Agen
(amlodipine), while GP liberalization helped the anti-ulcer drug Helicid
(omeprazole) and the respiratory drug Zodac (cetirizine) in the final months of
the year as they benefited from access to the wider primary care market from
July 1, 2004.



Poland



With growth of 126.8%, Poland was Zentiva's fastest growing market in 2004.
Zentiva was the fastest growing pharmaceutical company within the top 50
pharmaceutical companies in Poland in 2004. (Source: IMS as at December 2004).
This performance was driven by three of our promoted brands, the anti-ulcer drug
Helicid (omeprazole) and the urology products Penester (finasteride) and Zoxon
(doxazosine) - which are amongst Zentiva's top fifteen selling products
globally.



Zentiva's success in Poland has been driven by its significant investment in
sales and marketing in combination with its focus on a limited number of key
areas of the primary care market. The success that Zentiva has enjoyed with
Helicid (omeprazole) has made the company the number one player in volumes in
Proton Pump Inhibitor segment, an important segment of the primary care market.
Zentiva has also become market leader in volumes treatment of BHP



Russia



The Russian region continued to perform strongly with total sales of
pharmaceutical products growing by 43.8 % in 2004 compared to 2003PF. The new
management team has driven sales by improving the promotion of existing products
such as Pinosol (nasal decongestant), the anti-fungal agent.  Mycomax
(fluconazole) and Alprostan (alprostadil): Sales have also grown due to the
launch of new brandeds such as Simvacard (simvastatin) and Zoxon (doxazosine).



Russian sales rose by 32% in the fourth quarter as the infrastructure
investments made in 2004, including expanded sales force  and new distribution
center, started to have positive impact.





Sales by Product Group


(CZKm)                       Three Months to December 31        Twelve Months  to Decmber 31
                             (unaudited)                        (unaudited)
                             2004       2003PF      2004 vs.    2004         2003PF      2004 vs.
                                                    2003PF                               2003PF
Pharmaceuticals              2,617.3    2,552.2     2.6%        9,961.2      9,122.8      9.2%
       Prescription          2,178.4    2,093.1     4.1%        8,274.4      7,492.7     10.4%
       CHC                     438.9      459.2     4.4%        1,686.8      1,630.2      3.5%
API                            115.0      100.0    15.0%          339.1        428.4    (20.6%)
Other Sales/Deductions*         96.9       13.2   634.1%          373.4         49.3    657.4%
Total Sales                  2,829.2    2,665.4     6.1%       10,673.8      9,600.5     11.2%

Note: * includes Contract manufacturing sales, Services and deductions, and
know-how







Branded Prescription Pharmaceutical Products



In 2004, Zentiva's branded prescription pharmaceuticals achieved sales growth of
10.4% as a result of the strong performances Poland and Russia and continued
growth in the Czech Republic. In Slovakia, sales of the Company's branded
prescription products declined due to the changes to the market's reimbursement/
pricing system implemented in late 2003. However, encouragingly, our promoted
branded portfolio did well in 2004 and we expect this trend to continue in 2005.
In all of its core markets Zentiva focuses on commercializing the best modern
treatments across a range of key therapeutic groups in the primary care sector.
The brands which have delivered the fastest growth in 2004 include the
anti-hypertensive Lozap (losartan), the anti-ulcer drug Helicid (omeprazole),
the cardiovascular drugs Agen (amlodipine) and Ramil (ramipril), as well as the
urology drug Penester (finasteride).





Branded CHC Pharmaceutical Products



Zentiva's CHC products play an integral role in the Company's strategy as they
act as a key point of contact between the company and the pharmacist, who plays
an important role in the dispensing of branded prescription generic products.
The CHC business consists of branded pharmaceutical products available
over-the-counter that do not require a doctor's prescription to be purchased in
a pharmacy or other outlet selling CHC medications. Over the course of 2004
products such as Pinosol (nasal decongestant), Calibrum (multivitamin) and
Modafen (ibuprofen and pseudoephedrine) performed well, helping Zentiva achieve
sales growth of 3.5% for this product category.





API



Third party API (Active Pharmaceutical Ingredient) sales for 2004 were CZK
339.1million, a decrease of 20.6% compared to 2003 on a pro forma basis. The
fall in reported API sales is due to Zentiva focusing more of its production of
APIs for internal requirements to secure supply and improve gross margins. In
addition, some deliveries to third parties that were previously supplied in API
form are now being delivered in final dosage form and therefore are accounted
for as contract manufacturing.  The weak US dollar has also negatively impacted
API sales in 2004.  In the fourth quarter, API sales increased by 15% to CZK
115.0 million due to the delivery of a successful tender order to India .





Other Sales/Deductions



During 2004, other sales/deductions grew 657.4% to CZK 373.4 million when
compared to 2003 on a pro forma basis. This growth was significantly impacted by
the inclusion of non-recurring extraordinary sales of CZK 187.6 million of
know-how in the second half of 2004 following an antimonopoly ruling related to
the acquisition of Slovakofarma.  Further contributors to the increase in this
sales category in 2004 have been the shift to contract manufacturing in lieu of
third party API sales as well as a delivery of a large contract manufacturing
order in the early part of the year.  The growth in contract manufacturing sales
is offset by higher deductions to distributors in 2004 due to increased sales in
Poland and Russia, where deductions are a more common feature of the sales
process than in either the Czech Republic or Slovakia.  In the fourth quarter,
sales in this category amounted to CZK96.9 million, a figure which includes CZK
116.7million from the sale of know how outlined previously.





III    RESEARCH AND DEVELOPMENT





Introduction



Zentiva's strategy of growing its business via its own self developed promoted
brands mean that new product development is a key determinant of the company's
success.



In recent years Zentiva has been investing in its Research and Development
capability in order to provide the new branded products needed by its growing
sales and marketing organization.



Given Zentiva's primary care focus, its product pipeline is centred on the
therapeutic areas mainly treated in primary care, e.g. the cardiovascular and
CNS therapeutic areas.





New Registrations



The company received 38 new registrations during the course of 2004 of which 12
came in the final quarter. These include registrations of line extensions to
existing products and registrations in new core markets. In 2004 Zentiva
received first time registrations for the molecules mirtazapin, tiaprid and
Diane 35 oral contraceptive equivalent, with atorvastatin and meloxicam being
approved in Q4.



The figures set out below for Zentiva's registration pipeline covers only the
Company's core markets Czech Republic, Slovakia, Poland and Russia.





Marketing Authorization Applications



The company submitted a total of 120 marketing authorization applications during
2004, of which 44 were made in the final quarter.  These include 8 new generic
molecules of which three are ranked in the top 50 global products based on
originator sales in 2003 (Source: Med Ad News, May 2004).



As of December 31st, 2004, the Company had a total of 147 registration
applications pending for the sale of pharmaceutical products, which includes the
registration of new products, the registration of existing products in new
countries, and line extensions on existing products.







IV   MANAGEMENT'S DISCUSSION & ANALYSIS





Sales



During 2004, the company's sales increased 11.2% to CZK 10,673.8 million from
2003PF sales of CZK 9,600.5 million. This reflects the continued growth in sales
of our modern, actively promoted products in the Czech Republic and Slovakia and
the fast growth of our Polish and Russian businesses. Excluding the
extraordinary sales of CZK 187.6 million of know-how in the second half of 2004,
sales would have increased 9.2%, to CZK 10,486.2 million in 2004. In the fourth
quarter, sales rose by 6.1% to CZK 2,829.2 million. This slower sales growth was
due to the negative impact of the lower sales of the products to be sold as a
result of the anti-monopoly ruling, with approximately an extra CZK 50 million
sales of these products being achieved In the 3rd Quarter, and the comparison
with the strong performance that was recorded in Slovakia in the final quarter
of 2003.





Gross Profit



Our gross profit increased by 16.2% in 2004 to CZK 6,438.5 million. Gross margin
improved to 60.3% from 57.7% 2003PF.  This improvement in gross margin is due to
a number of factors including the modernization of our product portfolio,
improved sourcing of raw materials, and most importantly the increasing
proportion of sales of high margin promoted brands. The lower gross margin seen
in the fourth quarter, 56.4%, was due to the higher proportion of typically
lower margin products (e.g. antibiotics) sold during this period and certain
provisions relating to inventory write-offs and the depreciation of fixed
assets.





V    OPERATING EXPENSES





Sales & Marketing



The company's sales and marketing expenses increased by 18.4% to CZK
2,051.7million from CZK 1,733.2 million 2003PF.  This higher expenditure is due
to a significant expansion of Zentiva's commercial activities in Poland; hiring
of the new management team and expansion of commercial operations in Russia; and
increased direct marketing expenses to support promoted products in the Czech
and Slovak markets. Sales and marketing expenses in the fourth quarter amounted
to CZK 729.9 million, a 19.3% increase reflecting the high level of spending on
promotional activities that takes place towards the end of the year.





Research & Development



The company's research and development expenses declined 6.2% to CZK 437.8
million in 2004 from CZK 466.8million in 2003PF.  The products that emerge from
Zentiva's research and development continue to be a key driver of the Company's
growth. During 2004 a number of new projects were initiated, which in
conjunction with the significant pipeline of products already under development
led to an increase in R&D personnel expenses. However these additional expenses
were more than offset by elimination of a number of duplicate projects resulting
from the acquisition of Slovakofarma.  In the 4th quarter R&D spending declined
by 21.5% to CZK 115.2 million due to the much higher levels of expenditure in
the final quarter of 2003 following  the completion of the acquisition of
Slovakofarma. The lower level of spending in the final quarter of 2004 reflects
the synergies that have been achieved in the R&D organization as well as the
deferment of some expenditure into the early part of 2005.





General & Administrative



The company's general and administrative expenses increased 15.9% from CZK
1,224.1million in 2003PF to CZK 1,418.2million in 2004. A significant part of
this increase was due to CZK 90 million in non-recurring charges arising from
the IPO process General and administrative expenses were also affected by the
costs associated with the Company optimizing its management and remuneration
structures. Higher expenses resulted from recruitment costs, bonuses and
severance payments to a number of senior managers who were replaced by more
internationally experienced executives.  In the fourth quarter of 2004 general
and administrative expanses fell by 39.1% to CZK 219.8 million due to tight cost
controls and a number of one-off items relating to bad debt provisions and a
change of business structure in Ukraine and Uzbekistan. Together these one-offs
amounted to less than CZK 100 million.





EBIT



The company's EBIT increased 19.5% to CZK 2,530.8 million in 2004 from CZK
2,117.9 million in 2003PF. EBIT margin increased to 23.7% in 2004 from 22.1% in
2003PF as a result of the gross margin improvement being offset by higher
marketing expenses to support the positive product mix change, new marketing
initiatives, and by higher administrative expenses (including IPO costs). In the
fourth quarter Zentiva's EBIT increased by 34.5% to CZK 530.6 million, as
profits were boosted by lower general and administration expenses and research
spending as well as the positive impact of the sale of know how.





Net Interest



The company's net interest expenses decreased by CZK 154.4million, a decrease of
68.1% to CZK 72.3million in 2004 from CZK 226.7million in 2003PF, primarily due
to a reduced level of outstanding loans. Additionally, Zentiva refinanced some
higher-cost debt with lower-cost bank debt. The proceeds from the IPO, which led
to a substantial decrease in net debt from the end of June, 2004 resulted in
significantly lower interest expenses in the second half of 2004. In the fourth
quarter interest expense fell to just CZK 3.2 million, due to the impact of the
Company's debt reduction post the IPO and its on-going cash flow generation.





Profit before taxes and minority interest



The company's profit before tax and minority interest increased 35.2% to CZK
2,361.3 million in 2004 from CZK 1,747.0million in 2003PF. The increase is due
to higher EBIT, lower net interest, and reduced levels of other financial
expenses comprising mainly of foreign currency losses.





Tax



The company's tax charges increased by 9.4% to CZK 681.5 million in 2004 from
CZK 623.2 million in 2003PF, principally reflecting higher profit before tax.
The effective tax rate decreased to 28.9% in 2004 from 35.7% in 2003PF as a
result lower nominal income tax rates in Slovakia, Poland and Czech Republic and
a higher proportion of profits being generated in lower tax environment
countries.  In the fourth quarter, the effective tax rate was 12.2% due to a
re-assessment of the Company's tax liabilities at the year end.





Net Profit



The company's net profit increased to CZK 1,613.1 million in 2004 from CZK
1,083.8m in  2003PF, representing an increase of 48.8%. Eliminating the after
tax impact of one-off CZK 143.6 million due to the sale of know-how, net income
grew 35.6%. The improvement principally reflects the improvement in the
company's operating profitability described above, together with lower financial
and tax charges.





Balance Sheet



Net proceeds from the IPO were CZK 1,941 million after deducting underwriting
discounts and commissions and estimated offering expenses having effect on
equity. In addition the company raised CZK 584million from key employees through
the subscription cost for the employee share ownership program. Combined, the
proceeds represent additional cash to company of CZK 2,525 million. Together
with the free cash flow generated by the company during the rest of 2004, has
enabled Zentiva to move into a net cash position of CZK 170.4 million at the end
of 2004 compared to a net debt position of CZK 3,618.6 million at the end of
2003. The net cash /equity ratio is 2.6% at the end of December 2004.



Cash Flow



During 2004 Zentiva generated CZK 1,355 million in free cash before
acquisitions, representing 53.6% EBIT conversion.





Capital Expenditures



The Company's capital expenditures reached CZK 722.9 million during 2004,
representing 6.8% of sales. This is in line with the projection that we made at
the time of the nine month results.



During 2004, we successfully completed an investment in our Hlohovec facilities
to facilitate the production of soft gelatine capsules. This new facility allows
us to reduce our reliance on external suppliers for this type of final dosage
form.  Production in this facility commenced on 1 July 2004. In the third
quarter of 2004, the company started reconstruction of its old administrative
building in Prague.





Working Capital



Working capital has increased by CZK 67 million in 2004 mainly due to higher
accounts receivable and inventories in line with growth of the business.





Change in functional currency of Zentiva N.V.



Up until 30 June 2004 the functional currency of Zentiva N.V. was the Euro (EUR)
while the Czech Crown (CZK) was selected as the presentational currency for the
whole group. There was little to choose between CZK and EUR in meeting the
definition of Zentiva N.V.'s functional currency in these prior periods. The
Initial Public Offering (IPO) that occurred on 28 June 2004 resulted in a
primary listing of Zentiva N.V's shares in Prague (in CZK) and a secondary
listing in London. The IPO process in Prague resulted in a change of
circumstances and as per the definition of IAS 21 this has resulted in a change
in the functional currency of Zentiva N.V. to the CZK from the EUR. This change
is also supported by the Company's management who believe that having the CZK as
the functional currency of the group and its parent most accurately represents
the economic effects of the underlying transactions, events and conditions.  As
a result the functional currency of Zentiva N.V. was changed from EUR to CZK as
of 1st July 2004.







VI   DIVIDEND PAYMENT FOR 2004





It is Zentiva's intention to pay a dividend for the 2004 financial year.
Zentiva's dividend policy is to target a dividend payment equal to 15-20% of the
Company's consolidated net earnings. The Board's dividend proposal for 2004,
which needs to be approved at the Annual General Meeting, will be announced in
April 2005.







VII  ONE-OFF FACTORS IMPACTING 2004 FULL YEAR FIGURES





Zentiva's full year results in 2004 were impacted by a number of one-off non
recurring items. These included:



•    The costs associated with Zentiva's IPO which totalled CZK 90
     million in 2004,



•    The positive impact of the amortization of negative goodwill which
     increased profits by CZK 72.5 million in 2004.  Due to changes in accounting
     policies this benefit will not be seen in 2005.



•    The positive impact to profits which resulted from the sale of know
     how due to the ruling of the anti-monopoly authorities. In 2004 the sale of this
     know how led to a one off boost to Zentiva's profits of CZK 187.6 million. In
     2005, Zentiva expects to gradually compensate for the  sales lost as a result of
     the disposal of the products derived from this know how by continuing to pursue
     our strategy of promoting our brands to the primary care sector.





VIII    FINANCIAL OUTLOOK FOR 2005





Zentiva expects to deliver a solid performance in 2005. In Czech and Slovak
markets our performance will be driven by the strong growth of our promoted
higher margin modern brands which will more than offset the declines in the
non-promoted portfolio and the recently disposed of  'anti-monopoly' products.
Sales in both Poland and Russia are expected to grow at much higher rates as we
expand our sales capability into additional key therapeutic areas of the primary
care market and launch new Zentiva branded products.



As in 2004, we expect to improve margins due to positive changes in product mix
and further expense efficiencies while at the same time continuing our
investment in both sales and marketing.



Zentiva's net income in 2005 is forecast to be in line with the current market
expectations.



IX   LICENSES AND INDUSTRIAL PROPERTY


Licenses Disposed


A ruling by the antimonopoly authorities in Czech Republic and Slovakia has
obliged Zentiva to sell a series of products (mainly for the treatment of the
pain and disorders of the musculo-skeletal systems) together with their
trademarks and to transfer the marketing approvals and manufacturing of these
products to third parties.  As a result of these contracts Zentiva has recorded
a non-recurring income of CZK 187.6 million in the second half of 2004 As
anticipated due to the need for wholesalers to maintain stocks of these products
during the transfer of marketing approvals, this transaction has had limited
revenue impact in 2004 overall. The company also disposed of certain licenses in
non-core countries.


Licenses Acquired



During the third quarter of 2004 Zentiva entered into an agreement with Welding
covering licensing-in of sumatriptan, a drug used for migraine treatment. The
license for Pericor (perindopril) was extended to cover a new formulation.





Patents Obtained



During the third quarter of 2004, Zentiva obtained three patents in the Czech
Republic, two for the targeted cytostatic treatment using carriers and one for a
new glimepiride manufacturing process.  Glimepiride is an important antidiabetic
drug. In Slovakia, Zentiva obtained two patents, one product patent for a new
drug for the treatment of hyperlipidemia and the other for a tramadol
manufacturing process. Tramadol is a potent drug for pain treatment. During the
first six months of 2004, Zentiva obtained a Czech manufacturing patent for
omeprazole, and Czech process patents for tolterodine, rivastigmine and
zaleplon. Czech product patents were granted for an anti-stress vitamin drug, a
cold remedy and a special form of risedronate. In Slovakia, Zentiva obtained
process patents for the manufacture of terbinafine and tramadol.

Trademarks Obtained



The trademark 'Epiral' was obtained in the Czech Republic in the third quarter
as a reference country enabling international application/registration in a
number of other countries. The 'Zentiva' trademark was granted in Austria,
Denmark and Armenia. Eight other trademarks for key pipeline products were
granted in several countries during the first six months of 2004.


X    SHAREHOLDER STRUCTURE



11,500,000 shares were sold during the IPO to institutional investors. Our
existing shareholder structure is given below.




Shareholder                         Shares (m)                   Ownership (%)
Warburg Pincus                      20.54                        53.9%
Management and employees             5.25                        13.8%
Other private shareholders           0.84                         2.2%
Free float                          11.50                        30.2%
Total                               38.14                       100.0%




XI   CORPORATE GOVERNANCE



January 2004 - Leciva a.s. changed its trading name to Zentiva, a.s. (with a
registered office in Prague), Slovakofarma a.s. changed its trading name to
Zentiva, a.s. (with a registered office in Hlohovec)

March 2004 - Extraordinary Shareholders' Meeting of Zentiva, a.s. (Hlohovec)
approved termination of share listing and trading on the Bratislava Stock
Exchange

May 2004 - Zentiva B.V. converted into Zentiva N.V.

June 2004 - The Shareholders' Meeting of Zentiva, a.s. (Prague) approved changes
in the Board of Directors (H. Makansi and N. Lowcock were replaced with P.
Neuwirth and L. Ramneborn). The Shareholders' Meeting of Zentiva, a.s.
(Hlohovec), approved changes in the Board of Directors (H. Jandikova and N.
Lowcock were replaced with L. Herdova and P. Sulc). The Shareholders' Meeting
acknowledged changes in the company's Supervisory Board: L. Herdova resigned and
was replaced by K. Foltanek.

Q2 2004  Zentiva N.V. increased its stake in Zentiva a.s. (Hlohovec) to 89.5%,
up 4.2% from 85.3% as of March 31, 2004

Q3 2004)- Zentiva N.V. increased its stake in Zentiva a.s. (Hlohovec) to 90.7%
up 1.2% from 89.5% as of September 30, 2004.




XII  BOARD STRUCTURE AS OF 31ST DECEMBER 2004



Zentiva N.V.


Board of Directors: Jiri Michal, Nicholas Lowcock, Petr Sulc, Bradley Wilson,
Lamberto Palla, Jan H. Scholts



XIII    METHOD OF CONSOLIDATION



The consolidated financial statements comprise the financial statements of
Zentiva N.V. and its subsidiaries. Subsidiaries are consolidated from the date
on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group. Group companies are
those companies in which the parent company has a controlling financial interest
through direct and indirect ownership of a majority voting interest or effective
managerial and contractual control. The subsidiaries held or acquired
exclusively with a view to subsequent resale are excluded from consolidation and
are included as available-for-sale investments and measured at fair value where
this can be reliably measured or at cost less impairment losses where fair value
cannot be reliably measured. All material inter-company accounts and
transactions have been eliminated in consolidation. The equity and net income
attributable to minority interests are shown as separate items in the
consolidated financial statements.



XIV    CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED
       31ST DECEMBER 2004 AND 2003



Unaudited financial statements in accordance with IFRS


(All figures in CZK '000)                    Twelve month period ending
                                                (Unaudited)          (Audited)       (Unaudited) Proforma
                                                 31st December        31st December   31st December 2003
                                                     2004                 2003
Total Sales                                        10,673,801             7,571,107            9,600,494
Costs of goods sold                                (4,235,268)           (3,044,944)          (4,058,480)

Gross profit                                        6,438,533             4,526,163            5,542,014

Sales and marketing expenses                       (2,051,695)           (1,325,758)          (1,733,194)
General and administrative income/                 (1,418,223)           (1,030,142)          (1,224,137)
(expenses)
Research and development                             (437,826)             (341,955)            (466,792)

Profit from operating activities                    2,530,789             1,828,308            2,117,891

Interest income                                        28,834                18,376               30,796
Interest expenses                                    (101,123)             (225,233)            (257,524)
Financial income/(expenses), net                      (97,241)             (114,817)            (144,169)

Profit before taxes and minority interest           2,361,259             1,506,634            1,746,994

Income tax expense                                   (681,506)             (589,850)            (623,209)

Net profit before minority interest                 1,679,753               916,784            1,123,785

Minority interest                                     (66,698)              (13,260)             (40,000)

NET PROFIT                                          1,613,055               903,524            1,083,785


Earning per Share (in CZK per Share): Basic             44.19                 24.29
(1)
Earning per Share (in CZK per Share):                   43.82                 22.48
Diluted(2)



(1) Basic EPS is calculated by dividing net profit for the period (after
deducting preference dividends) by the weighted average number of ordinary
shares outstanding during the period (adjusted for share split in both periods
reported).

(2) Diluted EPS is calculated by dividing net profit for the period (after
deducting preference dividends) by weighted average number of shares outstanding
during the period which are adjusted for effect of dilutive potential shares
(adjusted for share split in both periods reported).






XV     CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTH

          PERIOD ENDED 31st December 2004 AND 2003



Unaudited financial statements in accordance with IFRS


 (All figures in CZK '000)                                        Three month period ending
                                                 (Unaudited)          (Unaudited)          (Unaudited) Proforma
                                            31st December 2004     31st December 2003       31st December 2003
Total Sales                                         2,829,248            2,668,883             2,665,359
Costs of goods sold                                (1,223,708)          (1,153,117)           (1,150,906)

Gross profit                                        1,595,540            1,515,766             1,514,453

Sales and marketing expenses                         (729,867)            (612,294)             (611,953)
General and administrative income/                   (219,827)            (362,920)             (361,257)
(expenses)
Research and development                             (115,217)            (147,127)             (146,736)

Profit from operating activities                      530,629              393,425               394,507

Interest income                                         3,445               11,490                11,479
Interest expenses                                      (6,651)             (30,011)              (30,072)
Financial income/(expenses), net                      (51,797)             (32,406)              (32,023)

Profit before taxes and minority interest             457,626              342,498               343,891

Income tax expense                                    (58,177)            (116,757)             (116,526)

Net profit before minority interest                   417,449              225,741               227,365

Minority interest                                       1,208               (8,437)              (10,632)

NET PROFIT                                            418,657              217,304               216,733




XVI                  CONSOLIDATED BALANCE SHEETS AS AT 31ST DECEMBER 2004 AND
2003



Financial statements in accordance with IFRS

(All figures in CZK '000)
Balance Sheets as at                                  (Unaudited)               (Audited)
                                                    31st December 2004        31st December 2003
Assets
Non-Current Assets
Property, Plant & Equipment, net                      4,471,005                 4,363,055
Intangible Assets, net                                  246,602                   212,732
Investments                                              29,020                    49,739
Long Term Receivables                                    11,719                     3,824
Deferred Tax Asset                                       77,592                    76,141
Goodwill/(Negative Goodwill)                         (1,182,350)               (1,157,608)
Total Non-Current Assets                              3,653,588                 3,547,883

Current Assets
Inventory                                             1,985,565                 1,908,267
Accounts Receivables, Net                             2,856,080                 2,566,769
Prepayments and Other Current Assets                    148,916                   159,752
Cash and Cash Equivalents                               470,380                   692,171
Total Current Assets                                  5,460,941                 5,326,959
Total Assets                                          9,114,529                 8,874,842

Liabilities and Equity
Equity
Share Capital                                            12,112                     2,556
Share Premium                                         2,514,784                        --
Retained Earnings                                     3,814,495                 2,230,710
Cumulative Translation Adjustment                       239,299                   173,829
Total Equity                                          6,580,690                 2,407,095
Minority Interest                                       396,665                   558,597

Non-Current Liabilities
Obligations Under Capital Lease                           1,458                       783
Interest Bearing Loans and Borrowing                           -                1,101,623
Provisions and Other Long Term                           47,980                    42,540
Liabilities
Deferred Income Tax Liability                             7,132                     4,616
Total Non-Current Liabilities                            56,570                 1,149,562

Current Liabilities
Accounts Payables                                     1,184,574                   884,927
Other Taxes Payables                                     39,718                    23,727
Related Party Payables                                         -                  295,401
Accruals and Other Current Liabilities                  332,847                   360,679
Current Tax Accrual                                     204,911                   230,372
Overdraft and Short Term Notes                          300,024                 2,913,732
Dividends Payable                                        16,726                    34,447
Current Capital Lease Obligation                          1,804                    16,303
Total Current Liabilities                             2,080,604                 4,759,588

Total Liabilities and Equity                          9,114,529                 8,874,842


XVII   CONSOLIDATED CASH FLOWS FOR THE TWELVE MONTH PERIOD ENDED

          31st DECEMBER 2004 AND 2003

Financial statements in accordance with IFRS

(All figures in CZK '000)                                                              Year ending
                                                                                 (Unaudited)             (Audited)
                                                                               31st December 2004    31st December 2003
Cash flows from operating activities
Net profit before income taxes                                                      2,361,259               1,506,634
Adjustment for:
Depreciation, amortization expense and impairment                                     560,874                 365,388
Net finance costs                                                                      72,289                 200,718
(Gain)/loss on disposal of property, plant and equipment                               13,324                  (5,545)
Other non-cash gains/charges, net                                                     (15,028)                (23,007)

Operating cash flows before working capital changes                                 2,992,718               2,044,188

Changes in:
Accounts receivables                                                                 (350,457)               (179,184)
Inventory                                                                             (77,298)                130,410
Accounts payables                                                                     261,003                 223,359
Other assets                                                                           10,835                  37,211
Other liabilities and provisions                                                      (36,881)                (33,072)

Cash generated from operations                                                      2,799,920               2,222,912

Interest paid                                                                        (101,123)               (189,085)
Income taxes paid                                                                    (706,967)               (441,525)

Net cash flows from operating activities                                            1,991,830               1,592,302

Cash flows from investing activities:
Purchase of fixed assets and intangible assets                                       (722,904)               (470,735)
Proceeds from disposal of property, plant and equipment                                39,269                  25,801
Change in available-for-sale financial assets                                          20,719                  12,697
Change in long-term receivables                                                        (7,895)                  8,499
Acquisitions, net of cash acquired                                                   (108,296)             (1,292,271)
Dividends received                                                                      5,388                        -
Interest received                                                                      28,834                  18,376

Net cash flows used in investing activities                                          (744,885)             (1,697,633)

Cash flows from (used in) financing activities:
Proceeds from issue of share capital                                                2,210,395                        -
Proceeds from borrowings                                                              212,301               2,552,806
Repayment of borrowings                                                            (3,927,632)             (1,949,674)
Dividends paid                                                                               -                 (9,928)
Net cash flows from/(used in) financing activities                                 (1,504,936)                593,204

Net increase/(decrease) in cash and cash equivalents                                 (257,991)                487,873
Net foreign exchange difference                                                        36,199                  22,442
Cash and cash equivalents at the beginning of the period                              692,171                 181,856
Cash and cash equivavelnts at the end of the period                                   470,380                 692,171

Free cash flow YTD (before acquisitions)                                            1,355,241               1,186,940



XVIII    NEXT RESULTS ANNOUNCEMENT IS SCHEDULED FOR APRIL 28, 2005



Contacts

Company Contacts

                     Petr Sulc                                Alexander Marcek
                     Chief Financial Officer                  Corporate Finance Director
                     Tel: +420 267 242 737                    Tel: +420 267 243 745
                     petr.sulc@zentiva.cz                     alexander.marcek@zentiva.cz


                     Investor Relations                       Vera Kudynova
                     Tel: +420 267 243 888                    PR Manager
                     Fax: +420 272 702 869                    Tel: +420 267 242 312
                     Investor.relations@zentiva.cz            vera.kudynova@zentiva.cz




Media Contacts       Citigate Dewe Rogerson
                     Ogilvy PR
                     Tel: +44 (0)20 7638 9571
                     Tel: +420 2 2199 8111
                     David Dible
                     david.dible@citigatedr.co.uk
                     Chris Gardner
                     chris.gardner@citigatedr.co.uk
                     Sarah Gestetner
                     sarah.gestetner@citigatedr.co.uk











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