Savola Group · TADAWUL:2050
Savola — Non-Deal Roadshow (October 2011)
43 slides from Savola's roadshow presentation, October 2011
Slide 1: Investors Presentation October 2011
Investors Presentation October 2011
Slide 2: Contents
Contents 1. Overview 2. Strategy and Growth 3. Financial Highlights and Projections 4. Our Intellectual Assets Appendix – Quarterly results 2
Slide 3: Overview
Where we are now, and how we got here OVERVIEW 3
Slide 4: Group snapshot
Group snapshot Savola today • Listed on the Saudi stock exchange • Sales of SAR 21 billion in 2010, SAR 17 billion in 2009 • One of the largest players in a fast growing region and SAR 13.8 billion in 2008 • Leading brands • Net Profit of SAR 887 million in 2010 and SAR 951 million in 2009 • Modern
Slide 5: History – Key stages of development
History – Key stages of development One of the top food, retail and packaging companies Today in the region Acquisition of Giant and Géant by Panda 2008 - 09 Acquisition of Yudum in Turkey Formed Kinan in 2005 and disposed 70% stake in 2007 2004 - 07 Acquired oil business in Iran 1998 Entry into ret
Slide 6: Group structure
Group structure Savola Group Foods Sector Retail Sector Plastics Sector Investments Total Revenue SAR 12.1 billion SAR 8.1 billion SAR 0.9 billion SAR 21.1 billion Percentage of Revenue Super and Oils Plastics, Hyper 4.2% Sugar New Formats Pasta Retail, 38.7% Foods, Stake in 57.5% Almarai 6
Slide 7: Foods sector - Oil business
Foods sector - Oil business Overview Current markets • Established in 1979 • Manufacturing facilities in 8 countries Kazakhstan • Exports to 30 countries with strong marketing and Turkey distribution capabilities primarily in the GCC, CIS Morocco Iran Algeria Egypt Saudi and African regions Arabia •
Slide 8: Foods sector – Sugar business
Foods sector – Sugar business Overview Current markets • Established in 1997 • Strategic partnership with Tate and Lyle, England • Raw Cane Refineries in Saudi and Egypt Egypt Saudi Arabia • Exports to Sudan, East Africa, Levant, GCC, Sudan and Yemen • Top brands such as Al Osra, Ziadah, Safa Key ma
Slide 9: Retail sector
Retail sector Overview Current markets • Operates in two formats • Supermarkets [1,800m2 ~2,500m2] • Hypermarkets [7,000m2 ~12,000m2] Lebanon Distribution Center • Established in 1998; acquired by Savola in 1998, to represent the retail arm of the Group • Widespread branch network of 87 supermarkets
Slide 10: Plastics sector
Plastics sector Overview Current markets • Established in 1980 • 4 manufacturing facilities in Saudi Arabia and 2 in Egypt Egypt Saudi Arabia • Exports to 15 countries worldwide • Product range comprises of film, packaging materials, bottles, closures, pre-forms, industrial containers and crates Key
Slide 11: Strategy and Growth
Where we want to go, and how we will get there STRATEGY AND GROWTH 11
Slide 12: Holding structure
Holding structure Focused Growth Autonomy and Accountability Mergers and acquisitions Each sector to be managed independently Organic expansion Governance system Profitability enhancement and cost rationalization + Management structures Entering new categories Moving away from non-core investments H
Slide 13: Multiple growth opportunities
Multiple growth opportunities Food Oil Sugar New Categories Cost saving Large scale initiatives Beet play Enter new Enter new categories Increase categories exports e.g. Pasta Launch value added B2B Launch new and B2C oil products products Continue stronghold on Further strengthen hold on KSA establ
Slide 14: Multiple growth opportunities
Multiple growth opportunities Retail Plastics Organic growth Increase volume (Maturity of to benefit from hypermarkets) scale Regional Increase growth exports New formats New products Further strengthen hold on KSA Increase market share locally market Growth expected to continue in the future in the
Slide 15: Savola Foods – a regional leader
Savola Foods – a regional leader SF History and Sales Evolution (SAR) • Large player 12.1 Bn • Business expertise – B2B, B2C, Exports, 10.2 Bn Value addition 7.6 Bn • Distribution network 5.9 Bn • Repeatable success formula 4.4 Bn Yudum acquisition in Turkey • Branding power • Operations Sime Oils m
Slide 16: Savola Foods - Strategic direction
Savola Foods - Strategic direction Strategic Direction Description Rationale Achieve business sustainability Focus on markets that contribute the most to Savola’s profits through portfolio diversification De-prioritize markets where Savola has formidable challenges instead of upstream integrat
Slide 17: Savola Foods - Future roadmap
Savola Foods - Future roadmap Strategic Guidelines Oil Arabia Ensure dominance and sustain stable long-term growth Established Egypt Launch value added B2B and B2C oil products Markets Iran Continue to focus on growth Algeria Manage with the core markets as the business requires Oil
Slide 18: Savola Foods - Future roadmap: Category Prioritization
Savola Foods - Future roadmap Category Prioritization 2015 Profit Pool 2015 Profit Pool vs. Coherence with Savola (SR Mn) 4,500 Prime Opportunities De-prioritized categories Flour Rice 2,000 Rice Pasta 1,500 1,000 Coffee Rice Canned beans Tea Pasta 500 Tea Tea Herbs & spices Flour Pulses Pulses Cann
Slide 19: Savola Foods – Pasta acquisition
Savola Foods – Pasta acquisition Acquisition Overview • El Maleka and El Farasha Companies • Total annual capacity of around 120,000 tons • Main brand Maleka is the largest brand in Egypt • Market share of over 30% • Acquired 78% of the shareholding with transaction value of around SAR 349 million (
Slide 20: Panda – a regional giant
Panda – a regional giant • Largest and fastest growing Strong growth in sales retailer in the country (SAR millions) Acquisition of Géant • Well established brand name with Acquisition of Giant equity in produce, trust and value stores 127 for money • Indigenous brand, sensitive to 31% CAGR 85 local
Slide 21: Under penetrated grocery retail market
Under penetrated grocery retail market Growing Grocery retail market in Saudi Super/Hypermarkets gaining market share [SR b] • The Saudi grocery market 25% 27% 115 22% is witnessing strong growth which is 92 79 84 15% expected to continue 12% 6% • Within the grocery market, super and hypermarkets ar
Slide 22: Regional retail opportunities
Regional retail opportunities Market size and penetration Significant potential in the MENA markets 319 58% 36% 33% 30% 24% 17% 13% 14% 8% 7% 5% 0% 2% 2% 0% 0% 2% 118 111 94 72 45 36 23 21 20 19 15 11 9 8 8 4 Grocery retail sales [2008] in SR b Modern grocery sales penetration Many of the regional m
Slide 23: Savola Plastics, a regional leader
Savola Plastics, a regional leader • SPD is focused on building a well- Strong growth in profitability (SAR millions) positioned rigid plastic packaging business and a high-volume 30% CAGR 100 export-driven flexible plastics 87 packaging business 57 • SPD operates in Saudi Arabia and 40 36 Egypt and
Slide 24: Savola Plastics: Market Dynamics
Savola Plastics, a regional leader • Surplus PE and PET capacity in MEAF will give SPD an opportunity to develop stronger bargaining power Low Resin Cost Market Dynamics • Highly fragmented market Low Delivered • China is 5-7% more than KSA with significant growth & Egypt in terms of total Cost pote
Slide 25: Investment portfolio
Investment portfolio All numbers are in SAR millions unless stated otherwise Book Value 27 116 3,712 209 384 Listed 231 Land entities 583 142 22 346 Financial Other 210 Services and 636 Kinan or Funds managed 806 by Kinan Ownership % N/A 80% 49% 11.4% 2.4% 5% 30% 30% 58% 14% 15% 5% Diversified portf
Slide 26: Our investments
Our investments Investment portfolio • Current portfolio of ~ SR3.6b book value • To be exited over time at optimal terms • Timing and Mechanics for exit to be determined • Herfy IPO’ed in January 2010, with valuation of SR 1.38b; proceeds generated for Savola from IPO ~SR280m • Retail real estate a
Slide 27: Financial Highlights and Projections
What we got, and what we plan to get FINANCIAL HIGHLIGHTS AND PROJECTIONS 27
Slide 28: Financial results - Revenue
Financial results - Revenue SAR millions Revenue - 2010 884 73 21,029 8,192 24% 100% 33% 39% 4% 0% 5,023 Herfy was not consolidated in Others includes HQ 7,004 2010 costs, eliminations and Franchising Revenue growth of Oil Sugar Retail Packaging Others Total around 18% contributed Revenue - 2009 751
Slide 29: Financial results - Profitability
Financial results - Profitability SAR millions Net Profits - 2010 100% 43% 12% 15% 13% 11% 7% 4% -4% 241 Impairment of 36 (39) (195) SAR 165 million 61 Net operating 100 profit of SAR 270 112 382 Net of capital 887 933 million gain from Herfy IPO of SAR 195 129 million 105 Adjusted profit Net Profit
Slide 30: Income statement by segments – Full year 2010
Income statement by segments Full year 2010 (all figures are in SAR millions) Segment Wise Financials 2010 2009 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 6,014 1,033 628 147 705 4,924 880 511 244 576 Oil-Start-up Markets* 989 124
Slide 31: Income statement by segments – Year to date 2011
Income statement by segments Year to date 2011 (all figures are in SAR millions) Segment Wise Financials YTD September 2011 YTD September 2010 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 6,033 822 447 184 512 4,419 731 426 239 525 O
Slide 32: Diminished reliance on capital gains
Diminished reliance on capital gains SAR millions Projected net profit excluding capital gains 97 660 753 933 1,000 855 488 477 496 -294 -46 2006 2007 2008 2009 2010 2011P Income from Core operations Capital gains - net 32
Slide 33: Our Intellectual Assets
Its all about people, people, people OUR INTELLECTUAL ASSETS 33
Slide 34: Our ethics principles
Our ethics principles • Amanah: Particular obligation to be truthful with the people who have entrusted us with their investments i.e. our shareholders. مجاهدة أمانة Mujahadah Amanah • Taqwa: Act with integrity in our relationships with external parties e.g., our customers. • Birr: To have genui
Slide 35: Our values framework
Our values framework • Tawado: Viewing achievements without arrogance. • Iq’tida: Accepting that we are continually Tawado learning. 1 • Azm: Being persistent, even in the face of Ihsan Al-Dhan adversity. Mu’azarah Iq’tida It’qan Qabool • It’qan: Maintaining high standards and 2 4 striving for conti
Slide 36: Savola's balanced way
Savola’s balanced way • We will continue to adhere to our ethics and values framework Amanah • We will ensure that we build a live, (Honesty) inspiring model of our ethics and values Shareholder for the future generations of Savola Taqwa Birr (Empathy) (Fairness) • We will continue to maintain good
Slide 37: Recognition for the Groups intangible assets
Recognition for the Groups intangible assets • Savola Group has been ranked No. 2 among Arab World public listed companies in Corporate Governance and Transparency based on the new index launched by Standard & Poor’s and Hawkamah Institute and funded by IFC. The ranking is based on Environmental, so
Slide 38: We are a responsible corporate citizen
We are a responsible corporate citizen 38 38
Slide 39: Appendix – Quarterly Results
Appendix QUARTERLY RESULTS 39
Slide 40: Segment Wise Financials Q1 and Q2 2011
(all figures are in SAR millions) Segment Wise Financials Q1 2011 Q2 2011 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 1,853 271 150 67 172 2,069 285 155 44 177 Oil-Start-up Markets* 252 23 1 (1) 8 308 36 6 4 15 Total Oil 2,105 294 1
Slide 41: Segment Wise Financials Q3 2011
(all figures are in SAR millions) Segment Wise Financials Q3 2011 Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 2,111 266 143 74 163 Oil-Start-up Markets* 387 62 28 15 36 Total Oil 2,498 328 171 89 199 Sugar 1,570 124 94 50 116 Total Foods 4,068 452 265 139 315 Retail KSA 2,310
Slide 42: Thank you
THANK YOU 42
Slide 43: Disclaimer
Disclaimer This Presentation (“Presentation”), dated October 2011, has been prepared by Savola Group (“Savola’’), and is based on the business plan and related information of Savola Group (“Savola” or the “Company”). The Presentation does not constitute or form part of and should not be construed as