Savola Group · TADAWUL:2050
Savola — HSBC Investors Conference May 16 - 17, 2010
48 slides from Savola's conference presentation, April 2010
Slide 1: Savola Group Investor Presentation
Savola Group Investor Presentation April 2010
Slide 2: Contents
2 Contents • Overview • Strategy and Growth • Savola Blue Oceans • Financial Highlights and projections • Intellectual Assets
Slide 3: Overview
3 Where we are now, and how we got here OVERVIEW
Slide 4: Group Snapshot
4 Group Snapshot • Listed on the Saudi stock exchange • Diversified shareholder base1 • Operations covering foods, retail, – Government [GOSI+PIF] plastics/packaging, real estate, and strategic 15% investments – Sh Mohammed Al Essa • Ranked among the Top 10 diversified 12% business conglomerates in
Slide 5: Savola Share price movement
5 Savola Share price movement
Slide 6: Group Structure
6 Group Structure Savola Group Foods sector Retail Sector Plastics Real Estate Investments Oils Hyper-Panda Rigid Kinan Herfy Sugar Panda Film KEC Joussor Ambient/ Retail real KAEC Intaj Non-impulse1 estate Strategic Investment in Tameer Swicorp Almarai Land bank Note 1 – Greenfield Pasta project in
Slide 7: History… the stages of development
7 History… the stages of development • Established in 1979 with paid up capital of SR 40m 1979 – 1990 Foundation and • Focus on development of Edible oils Development • Obtained 70% of the Saudi edible oil market by 1991 • Entered into the packaging sector through Plastics, flexible, carton and Glas
Slide 8: Foods sector – Oil business
8 Foods sector – Oil business Mkt Share 60% Saudi Holding 95.2% • Established in 1979 Mkt Share 42% • Manufacturing facilities in Egypt Holding 95.2% 8 countries across the MENACA region Mkt Share 20% Turkey Holding 95.2% • Exports to 30 countries with strong marketing and Mkt Share 40% distribution
Slide 9: Foods sector – Sugar business
9 Foods sector – Sugar business • Established in 1997 • Raw Cane Refineries in Saudi and Egypt[operational from Q1 2008] • Exports to Sudan, East Africa, Oil Saudi Levant, GCC, Sudan and Yemen • Top brands such as Al Osra, Egypt Foods sector Sugar [Cane] Ziadah, Safa Ambient/ Egypt • Raw Cane refini
Slide 10: Retail sector
10 Retail sector • Operates in two formats – Supermarkets [1,800m2~2,500m2] – Hypermarkets [7,000m2~12,000m2] • Established in 1998; acquired by Savola in 1998, to represent the retail arm of the Group Accolades and awards • Widespread branch network of • Best “Innovative store” award 81 supermarket
Slide 11: Plastics sector
11 Plastics sector • Established in 1980 • 5 manufacturing facilities in Saudi Arabia and 1 in Egypt • Exports to 22 countries worldwide • Product range comprises of Film, Savola Plastics packaging materials, bottles, closures, Jeddah Rigid pre-forms, industrial containers and New Marina crates Plas
Slide 12: Real Estate sector
12 Real Estate sector • Major investor in Kinan, one of the leading real estate property developers in the Kingdom Landbank • Kinan won the “Best real estate developer” award from Kinan Affordable Euromoney in 2006 Real Estate sector Holding 30% housing • Founding partner in the Tameer Knowledge Eco
Slide 13: Geographical footprint
13 Geographical footprint Markets with manufacturing facilities Markets with local marketing and distribution Targeted new markets
Slide 14: Strategy and Growth
14 Where we want to go, and how we will get there STRATEGY AND GROWTH
Slide 15: Business performance in 2009
15 Business performance in 2009 • Buying out minorities • Distribution network • Acquiring or merging with • Repeatable success formula competitors • Branding power • Organic expansion • Operations excellence • Profitability enhancement • Logistics infrastructure and cost rationalization • Scale of
Slide 16: Focused on buying out minorities in core sectors & acquired competition
16 Focused on buying out minorities in core sectors & acquired competition Acquiring Additional 5% Acquired Acquired the Acquired Tate and stake in minority minority Assets and Lyle’s Savola Foods shareholdings shareholdings operations of shareholding company to of New of Afia Egypt Saudi Géant in s
Slide 17: We continued to grow organically
17 We continued to grow organically Foods sector Sales Volume Number of Panda stores Total Capital Expenditure of around SR 700 million
Slide 18: What we did right in 2008
18 What we did right in 2008 • Prudent provision policy Relieved the Group from in 2008 resulted in Carrying over priced releasing a substantial inventories amount of cash • Cash flow from Enabled the Group to competitively operations exceeded a price its products, growing sales and record SR 2.3 bi
Slide 19: Exited from non-core investments
19 Exited from non-core investments Total liquidation of Sale and Lease back portfolio in the of Panda real estate Saudi Stock assets – Central exchange warehouse sold for SR 299m with a LT leaseback agreement Cash released amounted to SR 550 million
Slide 20: Grew our income from core operations
20 Grew our income from core operations
Slide 21: Diminished our reliance on capital gains
21 Diminished our reliance on capital gains 57% 61% 10%
Slide 22: And all this freed up cash
22 And all this freed up cash • Freeing cash flow Cash flow and its utilization Description Amount in contributed in SR Billions accelerating sustainable Cash inflows from growth in the Group’s core sectors with • Operations 2.3 • Exiting non-core 0.6 continued distribution investments of dividends
Slide 23: The Savola Blue Oceans
23 There's a lot more room for us to grow in our core sectors THE SAVOLA BLUE OCEANS
Slide 24: Savola Foods – a regional leader
24 Savola Foods – a regional leader • Largest player • Business expertise – B2B, B2C, Exports, Value addition • Distribution network • Repeatable success formula • Branding power • Operations excellence • Logistics infrastructure • Scale of buying • Geographical footprint • Market and consumer knowl
Slide 25: Potential profit pools
25 Potential profit pools Oil business Sugar Business Emerging businesses Egypt Beet Algeria 200 Beet market deficit 1m MT Sudan 100 Assumed Profit/MT US$ 200 Morocco 150 [currently US$ 380] Turkey 100 Profit Pool SR 0.7b Pakistan 150 Sudan Cane TOTAL SR 700m Cane market deficit 1m MT Mature busines
Slide 26: Panda – a regional giant
26 Panda – a regional giant • Largest and fastest growing retailer in the country • Well established brand name with equity in produce, trust and value for money • Indigenous brand, sensitive to local customs and culture • Modern supply chain infrastructure • High geographical penetration; the only
Slide 27: Under penetrated grocery Retail market
27 Under penetrated grocery Retail market • The Saudi grocery market is witnessing strong growth which is expected to continue • Within the grocery market, super and hypermarkets are gaining market share • In spite of strong growth, super and hypermarkets are still underpenetrated , compared to othe
Slide 28: Retail potential profit pool
28 Retail potential profit pool Potential profit for Panda in Saudi by 2015 • Total grocery SR 140b [currently SR 96b] • Modern retail @ 50% SR 70b • Profitability 5.5%~6.0% • Potential profit @ 40% market share SR 1.5b
Slide 29: Regional Retail opportunities: Market size and penetration
29 Regional Retail opportunities Market size and penetration
Slide 30: Savola Plastics, a regional leader
30 Savola Plastics, a regional leader
Slide 31: A booming Saudi real estate market
31 A booming Saudi real estate market Growth drivers Saudi Real Estate Projected growth • Strong population • Highly fragmented • Through 2010, forecast growth market in its early real estate development • Reduction in household stages of development at US$ 130 b size from the current • Few players
Slide 32: Kinan – strategic focus on residential
32 Kinan – strategic focus on residential • Kinan will focus on residential developments with a significant residential component – The first 3 million m2 fully serviced residential community in North East Jeddah “Masharef” – More than 8,000 villas, duplexes and apartments of various sizes – The fir
Slide 33: Knowledge Economic City (KEC)
33 Knowledge Economic City (KEC) • Land size 4.8m m2;5km from the Holy Mosque • Founder shareholder contributions SR 2.3b; IPO proceeds SR 1b expected in H1 2010 • Master planned community • Adjacent to railway station • Modern infrastructure • Lifestyle development with necessary amenities [shoppin
Slide 34: Our other investments
34 Our other investments Investment portfolio • Current portfolio of ~ SR4b equity • 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 estat
Slide 35: Financial Highlights and Projections
35 What we got, and what we plan to get FINANCIAL HIGHLIGHTS AND PROJECTIONS
Slide 36: Strong financial muscle
36 Strong financial muscle in SR millions 2005 2006 2007 2008 2009 2010 Q1 Cash 265 2,894 335 605 1,091 634 Short term investments 329 24 947 148 - - Total Current Assets 2,944 5,854 3,711 4,717 5,634 5,281 Fixed Assets & other non-cur. assets 5,174 5,421 7,879 9,829 11,623 12,204 Total assets 8,117
Slide 37: Net Income
37 Net Income 1400 + 1200 - £ 1000 - 2 660 753 = 800 - c “% 600 - £ 2 400 - ra) A388 477 496 £ 200 - = 3 0 T T T 1 -294 -200 -~ FY 2006 FY 2007 FY FY2009 YTDQ12010 Dp AED ADD ADD 4D & Income from Core operations _™ Capital gains - net
Slide 38: Comparative Income statement by Business segment in SRm
38 Comparative Income statement by Business segment in SRm Q1 2010 2009 2008 2007 Business Gross Oper Gross Oper Gross Oper Gross Oper Sales Sales Sales Sales segment profit Income profit Income profit Income profit Income Total Foods 2,744 353 231 9,351 1,403 860 7,027 534 101 5,766 799 447 13% 8%
Slide 39: Comparative Income statement by Business segment in SRm [contd]
39 Comparative Income statement by Business segment in SRm [contd] Q1 2010 2009 2008 2007 Business Gross Oper. Gross Oper. Gross Oper. Gross Oper. Sales Sales Sales Sales segment profit Income profit Income profit Income profit Income Total Retail 1,849 406 37 7,359 1,405 73 5,611 1,014 128 3,816 68
Slide 40: 2010 projections
40 2010 projections • The groups net income SR target before capital gains and exceptional 920 m items for 2010 • The groups net income SR target before capital gains and exceptional 205 m items target for the Second Quarter 2010 Target for • Foods SR 450m 2010 by • Retail SR 190m • Plastics SR 120m
Slide 41: Our Intellectual Assets
41 Its all about people, people, people OUR INTELLECTUAL ASSETS
Slide 42: Savola’s Balanced Way
42 Savola’s Balanced Way • We will continue to adhere to our ethics and values framework • We will ensure that Amanah (Responsibility) we build a live, Shareholder inspiring model ofour ethics andvalues for Taqwa Birr the future generations (Empathy) (Fairness) of Savola Community Employee • We will
Slide 43: Recap of management voting January 28, 2009
43 Recap of management voting January 28, 2009 • Question asked – Was the Groups decision to take the write offs in 2008, in line with its Ethics and Values? 86% agreed that we did the right thing Agree includes those who agree and strongly agree; Disagree includes those who disagree and strongly di
Slide 44: Recognition for the Groups intangible assets
44 Recognition for the Groups intangible assets • Savola winning Best Workplace Practices Award (IIR) • Savola recognized as the leading Saudi listed company in Corporate Governance standards and ranked 14th amongst 581 Gulf publicly listed companies (Hawkamah) • Savola winning Transparency Award am
Slide 45: We are a responsible corporate citizen
45 We are a responsible corporate citizen
Slide 46: Contact Details and Disclaimer
46 The small print CONTACT DETAILS AND DISCLAIMER
Slide 47: Disclaimer
47 Disclaimer The information contained in this document ("Presentation") has been prepared by The Savola Group Company (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. While the information contained herein has been prepared in goo
Slide 48: Thank You
48 THANK YOU May 24, 2010
Savola Group — HSBC Investors Conference May 16 - 17, 2010 on 6ix