Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Investor Presentation (August 2015)
51 slides from Sonae Sgps Sa's investor presentation, August 2015
Slide 1: Investor Presentation August 2015
INVESTOR PRESENTATION August 2015
Slide 2: 1. Sonae Overview
Slide 3: History
1. SONAE OVERVIEW History | DEVELOPMENT IN THE SECTOR START-UP OF THE BUSINESS AND VERTICAL INTEGRATION | a 2 Foundation of Sonae - Belmiro de Azevedo was hired Diversification of Sonae, through the Sociedade Nacional de (1965) acquisition of NOVOPAN Estratificados (18"" (particleboard manufacturing
Slide 4: History
1. SONAE OVERVIEW History DIVERSIFICATION THROUGH ACQUISITIONS AND THE SET UP OF NEW BUSINESSES Launch of Sonae in the capital markets (1983) Set up of Modelo Continente Hipermercados SARL (with the French group Promodés as joint shareholder) Opening of the 1s Hypermarket in Portugal: Continente (19
Slide 5: History
1. SONAE OVERVIEW History DIVERSIFICATION THROUGH ACQUISITIONS AND THE SET UP OF NEW BUSINESSES Launch of the newspaper Publico (1990) Set up of Sonae Distribuigao Brasil Sonae Industria acquires a controlling position in Tafisa (1993 - wood panels) Set up of Sonae Tourism Lo) Sonae: the 1st Portugu
Slide 6: History
1. SONAE OVERVIEW History DEVELOPMENT OF STRATEGIC BUSINESSES INTERNATIONAL GROWTH AND EXPANSION INTO TELECOMMUNICATIONS AND REORGANISATION OF THE BUSINESS PORTFOLIO technologies Sonae Sierra opens AlgarveShopping Sonaecom takeover bid for PT and PT Multimédia (2005) WeDo (business assurance company
Slide 7: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO SONAE E.VENTURES ECOMMERCE RETAL ENERGIZER Launch of the new corporate identity Creation of a concept for franchising supermarkets (Meu Worten acquires 7 PC City stores in Spain Super) International expansion
Slide 8: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO Roll-out of new store concepts for Worten, Sport Zone, MO and Sport Zone opens first international store in franchising (Ceuta, Zippy Spain) Sonaecom launches a tender offer for the acquisition of a Launch of
Slide 9: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO Meu Super reaches 150 stores in 1Q15 Sport Zone enters the Indian market Belmiro de Azevedo announces the decision of not being a candidate to Sonae’s Board of Directors elected in 2015. Paulo de Azevedo beco
Slide 10: Group structure
1. SONAE OVERVIEW Group structure MARKET LEADERIN PORTUGAL IN FOOD AND SPECIALISED RETAIL FORMATS BOARD CONTROL OF SHOPPING CENTRES AND TELECOMMUNICATIONS BUSINESSES ~ SONAE SONAE MC SONAE SR SONAE RP SONAE IM SONAE SIERRA Modelo Continente ed Retail Investment Properties Management 100% 100% 100% 1
Slide 11: Shareholdings
1, SONAE OVERVIEW Shareholdings A STABLE SHAREHOLDER srs STRUCTURE Reference shareholder, FREE FLOAT OF CIRCA com 40% 52.6% Efanor, a family holding Norges company Bank’) - - 2.0% ndaca 1 BPI stake includes Equity swap Beranlo of circa122 million Sonae shares 25% (-6% of share capital) Bestinver 2.4
Slide 12: Group breakdown
1. SONAE OVERVIEW Group breakdown BREAKDOWN PER BUSINESS Turnover breakdown (1H15) % Total Turnover 24% 68% = Sonae MC mSonae SR m= Sonae RP © Sonae IM (incl. SSI and Media) ay TURNOVER UNDERLYING EBITDA MARGIN ME % Turnover 1H14 1H15 2014 2,306 2,329 7.6% 9 1H15 Sonae IM INVESTED CAPITAL UNDERLYING
Slide 13: Corporate strategy
1. SONAE OVERVIEW Corporate strategy VALUE CREATION CORPORATE STRATEGIC PILLARS THROUGH INTERNATIONAL EXPANSION Expansion AND THE STRENGTHENING + NEWGROWTH AVENUES + ADOPTTHEMOST APPROPRIATE —- INNOVATE + PROFIT FROM “WORLD CLASS” INVESTMENT STYLE + GENERATE NEW BUSINESSES OF THE CORE COMPETENCIES -
Slide 14: Strategy reflected in each retail business
1. SONAE OVERVIEW Strategy CORPORATE STRATEGY REFLECTED IN EACH RETAIL BUSINESS STRATEGY SONAE MC FOCUS ON LEADERSHIP AND PROFITABILITY + Consolidate market leadership + Grow convenience channel + Explore new adjacent business opportunities + Continue to implement efficiency projects + Look for inte
Slide 15: House of Brands
1. SONAE OVERVIEW House of Brands SONAE’S MISSION IS TO CREATE MORE THAN MORE THAN REPRESENTING = REPRESENTING LONG-TERM ECONOMIC AND SOCIAL 80 90.000 42% 28% VALUE, TAKING THE BENEFITS OF RETAIL BRANDS PRODUCTS PROGRESS AND INNOVATION TO A OF SONAE MC OF SONAE SR GROWING NUMBER OF PEOPLE ~-WERE BOR
Slide 16: 2. Operational Review
Slide 17: Strengthening of leading position in food retail market
— =M -<6 ad STRENGTHENING OF LEADING POSITION IN FOQD RETAIL MARKET, WHILE PROTECTING PROFITABILITY
Slide 18: A leading brand in Portugal
2. OPERATIONAL REVIEW - SONAE MC A leading brand in Portugal EXPOSURE TO DIVERSE FOOD FORMATS SINGLE BRANDING OF SONAE MC STORES UNDER “CONTINENTE” COMPLETED DURING 2011 CONTINENT i‘ CONTINENTE CONTINENTE continente MODELO BOMDIA ceaTncots HYPERS SUPERS SUPERS Considered over the last 13 years as on
Slide 19: Retail area
2. OPERATIONAL REVIEW - SONAE MC Retail area 646,000 sqm OF RETAIL SPACE, MAINLY DISTRIBUTED BETWEEN HYPERS AND SUPERS * Mainly parapharmacies and coffee shops Lo) SONAE MC RETAIL SPACE BY FORMAT (1H15) STORES (total= 482) ‘0 O00 sqm (total=597 thousand) 278 284 241 121 40 | 43 45 30 . & - & oo Cont
Slide 20: Loyalty card
2. OPERATIONAL REVIEW - SONAE MC Loyalty card PERFORMANCE LEVERAGES ON THE VALUE AND SUCESS OF THE LOYALTY PROGRAM aoe SE A DIFFERENTIATING TOOL AMONG RETAILERS IN THE PORTUGUESE MARKET SUPERIOR CUSTOMER INSIGHT IN PORTUGAL * Targeted promotions, with discounts provided as “credit” in repeated purch
Slide 21: E-commerce
2. OPERATIONAL REVIEW - SONAE MC MC E-commerce website A renewed user experience: new stores, new navigation & new services! Sales caGR: +11% 2014 Deliveries >450.000 2014 Registered users caGR:+135% 2014: >350.000 Buying users cacR: +15% 2014: >60.000 Pageviews >120M ) 2014 =
Slide 22: Mobile experience
2. OPERATIONAL REVIEW - SONAE MC Mobile experience Wifi 7 - | © Vor 6s cated eb istas Continente.pt Te . i : APP Continente Qe orks Apr 2014 i) Porto @Aveito Or Card omnes Frocsovs ous ecastiotencs ores @sartarem @Poraieare oe ‘conmnente @setiba — Evora ee = APP Yammi APP Listas Chas e Oct2014 Jul 2
Slide 23: New adjacent business opportunities: Meu Super franchising
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE ON KNOW-HOW IN RETAIL FRANCHISING Mleu Meu Super reaches 162 stores super in the end of June 2015 Franchised local food retail stores Convenience stores, located in residential areas - sales area between 150sqm and 500sqm
Slide 24: New adjacent business opportunities: Well's
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities OWN STORES and FRANCHISING Wells SAUDE-OPTICA Health and well-being + Parapharmacy, beauty products, health and well-being care + Eye glasses and optical services Additional services *Spa * Cosmetic + Nutrition + Dental care + Orth
Slide 25: New adjacent business opportunities
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE ON KNOW-HOW IN RETAIL Coffee shops and small Book shops, stationery Products and services snack-bars and tobacco for dogs and cats * Typically next to Sonae MC +269 sqm of average store + extensive multi-brand range of sup
Slide 26: Private label
2. OPERATIONAL REVIEW - SONAE MC Private label PERFORMANCE REFLECTS THE STRONG AND CONTINUOUS INVESTMENT IN PRIVATE LABEL ry a) Exported to Cape Verde, Timor, Macau, China, Sao Tome and Principe, Cyprus, Slovenia, Spain, Republic of the Congo, Oman and Philippines # OWN REFERENCES AND % FMCG SALES 2
Slide 27: Profitable growth
2. OPERATIONAL REVIEW - SONAE MC Profitable growth GROWING MARKET SHARE, WHILE REINFORCING REFERENCE PROFITABILITY CONTINENTE 1H15 TURNOVER GROWING by 0.4% y.o.y. thanks to a high variety of products available to consumers, a very effective promotional activity, and with focus in continuous improvem
Slide 28: Operational Review - SR: International expansion and market leadership
2. OPERATIONAL REVIEW - SR ~ INTERNATIONAL EXPANSION AND CONSOLIDATION OF MARKET LEADERSHIP INPORTUGAL 28
Slide 29: 1,545 6 2 412 3 1 418 2 1 364 38 12 319 35
185 124 668 44 68 1,545 81 66 819 35 35 991 1 0 9 113 56 492 6 2 412 3 1 418 2 1 364 38 12 319 35 10 291 15 4 269 32 6 184 417 258 120 115 53 12
Slide 30: Main financial indicators
2. OPERATIONAL REVIEW - SR Main financial indicators “LL” sales trend - Portugal 1Q13.—2Q13.—3Q13——4Q13 -5.0% -110% -20% 49% 1q144 2014 3Q14 —4ql4 60% 126% 70% -08% 1Q15 2Q15 2.2% 45% “LL” sales trend - International 10132013 3Q13 —4Q13 -170% -120% -50% 57% 1q144 2014 = 3014 = 4Ql4 70% 38% -3.0% -3.
Slide 31: International expansion
2. OPERATIONAL REVIEW - SR International Expansion INTERNATIONALI- SATION MOSTLY BASED ON NEW EXPANSION MODELS: JOINT-VENTURES FRANCHISING WHOLESALE 58 franchising stores outside Portugal ~ FRANCHISING CONTRACTS 22 COUNTRIES Armenia Ceuta Azerbaijan India Chile Portugal Dominican Rep Ecuador Georgia
Slide 32: Operational Review - RP: Active management of retail real estate assets
2. OPERATIONAL REVIEW - RP ACTIVE MANAGEMENT OF RETAIL REAL ESTATE ASSETS 32
Slide 33: Assets portfolio
2. OPERATIONAL REVIEW - RP Assets Portfolio Properties anchored by CONTINENTE Properties are presented as factions in Shopping Centres (24 of our 40 hypermarkets) or stand alone stores (average store size: 7.1 thousand sqm). Stores are located strategically in highly populated areas In the case of s
Slide 34: Strategy of asset monetisation
2. OPERATIONAL REVIEW - RP Strategy of Asset Monetisation GROSS BOOK VALUE (1H15) 1.43 billion Euros 3% 3% 14% 2% 30% =Continente =Continente Modelo =Continente Bom Dia Logistics & Offices Others ) - Assets W/out Income (Fis oma organised by anchor SOMLE RP From 2010 to 2011 Sonae completed 8 sale &
Slide 35: Freehold level
2. OPERATIONAL REVIEW- RP SOMA RP Sonae Freehold Level Despite the FOOD RETAIL GENERAL RETAIL SONAE MC . . % of space owned freehold % of space owned freehold transactions carried , P 63% freehold out over the last year Sonae retail real as SR estate level of 29% freehold freehold as of 1H15 Hyperma
Slide 36: Equity consolidated businesses
4. EQUITY CONSOLIDATED BUSINESSES SONAE SIERRA (Shopping Centres) 50% ownership NOS (Telecoms) Ownership through Sonaecom
Slide 37: Sonae Sierra: Resilient performance
3, EQUITY CONSOLIDATED BUSINESSES Resilient Performance A SELF SUSTAINABLE COMPANY WITH INCREASING EXPOSURE TO EMERGING MARKETS IN 1H15*: + Occupancy rate = 95.8% + Overall tenant sales increased by 1.8% y.0.y, (1.6% in Europe and 7.4%, in local currency, in Brazil) + Positive LfL in Europe (2.8%) a
Slide 38: Strategy of recycling capital and services provision
3. EQUITY CONSOLIDATED BUSINESSES Strategy of Recycling Capital and Services Provision TO GROW IN EMERGING MARKETS AND SERVICES BUSINESS Recycle capital from mature, non-controlled assets to other projects with development potential REDUCING THE EXPOSURE STRENGHTENING OF TO MATURE ASSETS Munster (Ge
Slide 39: NOS PSI20
175 165 155 145 135 125 115 105 95 85 75 NOS PSI20
Slide 40: 4. Recent Financial Performance
Slide 41: Overview
4. RECENT FINANCIAL PERFORMANCE Overview Turnover sustained by Efficiency gains allowing for market share gains increased operational profitability KEY FINANCIALS 1H15 TURNOVER UNDERLYING EBITDA UNDERLYING EBITDA Mg. TOTAL NET DEBT 2.33bn 132m 5.7% — -75Myos- >) an “Includes the payment of over 100
Slide 42: Turnover
4. RECENT FINANCIAL PERFORMANCE Turnover CONSOLIDATED . THANKS TO THE POSITIVE CONTRIBUTIONS OF ALL BUSINESSES TURNOVER GREW 1.0% TO €2.53 BN IN 1H15 CONSOLIDATED TURNOVER TURNOVER PER BUSINESS (ME) WITH ALL Mon ares 1HL4 HIS yoy. BUSINESSES SONAE 2,306 2,329 mes CONTRIBUTING _ SONAESH ‘ogee POSITIV
Slide 43: EBITDA
4. RECENT FINANCIAL PERFORMANCE EBITDA INA DIFFICULT —_... SUPPORTED BY THE IMPLEMENTATION OF OPERATIONAL MACRO EFFICIENCY PROGRAMMES SOUPS ENT, UNDERLYING EBITDA UNDERLYING EBITDA PER BUSINESS (M€) UNDERLYING SONAE re EBITDA REACHES SONAESH a ase . 380 y €132M in 1H15 ui SOME 5 582% UNDERLYING EBIT
Slide 44: Capital structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure FINANCIAL NET DEBT Net Financial Debt 1H15 LTE spectrum Retail Units 757 payment by From 2Q13 to 2Q14 total decline a Sonaecom: 83 ME of 571 ME including 430M€ due Holding & Other 601 to the deconsolidation of Sonae IM 45 \ Optimus TOTAL FINANCIAL NE
Slide 45: Capital structure: convertible bonds
4. RECENT FINANCIAL PERFORMANCE Capital Structure COVERTIBLE BONDS June 42014 . Sonae issued 210.5 ME in 210.5 ME convertible bonds * 122 million shares Initial conversion price 1.726 €/share Premium 35% Maturity 5 years- redeemed at par at maturity Coupon 1.625% per annum, payable semi-annually in
Slide 46: Capital structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure AN APPROPRIATE — RETAIL HOLDING CAPITAL NET DEBT/REC. EBITDA LOAN -TO-VALUE®) STRUCTURE IN EACH BUSINESS 18% / 16% TO SUPPORT vlan 1% : ACTIVITIES AND 10% 1% INVESTMENTS “WWE M3 2015 1014 HIG NG 2014 NS THIS “M3 9MI3 2013 104 Mle “gw 2014 1015 HIS” (
Slide 47: Shareholder remuneration
4. RECENT FINANCIAL PERFORMANCE Shareholder Remuneration DIVIDEND PAYER The resilience of the cash flows generated gives confidence ON AREGULAR © onthe ability to maintain shareholder remuneration policy BASIS ry 0 OBJECTIVE 3.65 cents 5.6% 58% TO MAINTAIN DIVIDEND PER DIVIDEND YIELD ~—PAY-OUT RATIO
Slide 48: Valuation
4. RECENT FINANCIAL PERFORMANCE Valuation SIGNIFICANT DISCOUNT VS “SUM- OF-THE-PARTS” VALUATION SONAE Market Valuation (€M) €2.02 Sonae MC enterprise value 1971 Sonae SR enterprise value 745 Specialised Retail - Portugal 632 SONAE NAV per share Specialised Retail - Spain (invested capital @ book val
Slide 49: Valuation
4. RECENT FINANCIAL PERFORMANCE Valuation MATERIAL SHARE PRICE PERFORMANCE IN 1H15 + 15.0% 1H15 share price appreciation Currently, Sonae is actively followed by 6 Sell side analysts BROKER Date Recommendation Price Target Average price target of Fidentiis Aug 15 Buy 1820 £1.65 3 . BPI June 15 Core
Slide 50: Conclusion
CONCLUSION AN ATTRACTIVE ; . a. ; INVESTMENT * Growing leading market positions in Portugal, while protecting OPPORTUNITY operational profitability ¢ An internationalisation strategy based on a “capital light” approach, enabling future growth and value creation & * Significant deleveraging made poss
Slide 51: Contacts
INVESTOR PRESENTATION August 2015 CONTACTS: Patricia Vieira Pinto Head of Investor Relations investor.relations@sonae.pt Tel.: + 351 22 010 4794 www.sonae.pt SONAE is listed on the Euronext Stock Exchange. Information may also be accessed on Reuters under the symbol SONP.IN and on Bloomberg under th