Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Sonae — Investor Presentation (June 2016)
54 slides from Sonae Sgps Sa's investor presentation, June 2016
Slide 1: Investor Presentation June 2016
INVESTOR PRESENTATION June 2016
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) * Inauguration of Porto Sheraton Hotel and acquisition of STAR (travel agency) + Set up of Modelo Continente Hipermercados SARL (with the French group Promo
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 Distribuicao Brasil * Sonae Industria acquires a controlling position in Tafisa (1993 - wood panels) * Set up of Sonae Tourism Lo) Sonae: the 1st
Slide 6: History
1. SONAE OVERVIEW History DEVELOPMENT OF STRATEGIC BUSINESSES INTERNATIONAL GROWTH AND EXPANSION INTO TELECOMMUNICATIONS AND REORGANISATION OF THE BUSINESS PORTFOLIO technologies WeDo (business assurance company) commercial launching + Sonaecom takeover bid for PT and PT Multimédia (2006) Launch of
Slide 7: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO + Launch of the new corporate identity * Creation of a concept for franchising supermarkets + International expansion of several brands from Sonae (Meu Super) (Zippy, Worten, Sport Zone, Berg, Deeply, ...) fo
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 +
Slide 9: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO + Sport Zone enters the Indian market Paulo de Azevedo becomes Chairman and Co-CEO of Sonae. Angelo Paupério is elected as Co-CEO Continente celebrates 30 years + Sonae RP concludes sale and leaseback transac
Slide 10: History
1. SONAE OVERVIEW History INTERNATIONAL GROWTH AND REORGANISATION OF THE BUSINESS PORTFOLIO + Sonae MC ends 1Q16 with 211 Meu Super stores + Sonae RP concludes 3 sale and leaseback transactions amounting to 230 ME + Sonae Sierra sells 25% of Sierra Portugal Fund to Madison International Realty + Son
Slide 11: Group structure
1, SONAE OVERVIEW Group stucture PORTFOLIO OF BUSINESSES WITH LEADING POSITIONS IN EACH SECTOR 2 set inch, Samet octet j y oo SS £ ‘ * Participation held through Sonaecom . OV) « PNWRRY - i
Slide 12: Corporate strategy
1, SONAE OVERVIEW Corporate strategy VALUE CREATION ; _ through Sonae’s 3 ee: Diversification | ae : : . : . of Investment f= Exceptional strategic pillars A Expansion J : q Assets and Competencies i WINNING THE CORE is at the ey 4 e) LOSAN cornerstone of our ¥ @ulabox * a ed 4 i elergoneenergias st
Slide 13: 1 Includes N O S and Sonae Sierra stake.
1Includes N O S and Sonae Sierra stake.
Slide 14: 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 L1% 28% VALUE, TAKING THE BENEFITS OF RETAIL BRANDS PRODUCTS 0 Ae] PROGRESS AND INNOVATION TO A OF SONAE MC OF SONAE SR GROWING NUMBEROF PEOPLE WERE BO
Slide 15: Operational Review
Slide 16: Strengthening of leading position in food retail market
— =M -<6 ad STRENGTHENING OF LEADING POSITION IN FOQD RETAIL MARKET, WHILE PROTECTING PROFITABILITY
Slide 17: Sonae MC: A leading brand in Portugal
2. OPERATIONAL REVIEW - SONAE MC A leading brand in Portugal CONTINENTE Considered over the last 13 years as one of the most trusted brands in Portugal by consumers (survey “Trusted brands” carried out by Reader's Digest) ~ EXPOSURE TO DIVERSE FOOD FORMATS SINGLE BRANDING OF SONAE MC STORES UNDER “C
Slide 18: Sonae MC: Retail area
2. OPERATIONAL REVIEW - SONAE MC Retail area 685,000 sqm SONAE MC RETAIL SPACE BY FORMAT (1016) OF RETAIL SPACE, “STORES(toui-s6)tst*~S~S 000 sqm (total=630 thousand) otal= sqm (total=630 thousani MAINLY 297 230 DISTRIBUTED 246 BETWEEN HYPERS AND SUPERS - 41 55 Pe 33 * Mainly parapharmacies a C Mode
Slide 19: Sonae MC: Market share growth
2. OPERATIONAL REVIEW - SONAE MC Market share growth LEADERSHIP IN THE PORTUGUESE FOOD RETAIL MARKET FOOD RETAIL MARKET SHARES (1016) CONTINENTE Hae Sonae MC 2ndPlayer —3rdPlayer «= 4th Player = SthPlayer ~—&th Player Information as of March 2016, according to Homescan Nielsen, Public Information an
Slide 20: Sonae MC: Continente loyalty card
2. OPERATIONAL REVIEW - SONAE MC Continente Loyalty card PERFORMANCE LEVERAGES ON THE VALUE AND SUCESS OF THE LOYALTY PROGRAM Seas A DIFFERENTIATING TOOL AMONG RETAILER IN THE PORTUGUESE MARKET SUPERIOR CUSTOMER INSIGHT IN PORTUGAL * Targeted promotions, with discounts provided as “credit” in repeat
Slide 21: Cartão Universo
2. OPERATIONAL REVIEW - SONAE MC & 2=MC Cartao INNOVATIVE PRQJECT THAT AGGREGATES THE VARIOUS Universo LOYALTY AND PAYMENT CARDS OF SONAE BUSINESSES LAUNCHED IN UNIVERSALLY ACCEPTED MASTERCARD WITH NO ANNUAL FEES NOVEMBER 2015 NEW LOYALTY * Innovative open loop payment and loyalty card FEATURES - Di
Slide 22: Sonae MC: E-commerce website
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 23: Sonae MC: Mobile experience
2. OPERATIONAL REVIEW - SONAE MC Mobile experience Wi-fi 7 - | Var dtatee eb istas Continente.pt Te . i : APP Continente Qe orks April 2014 i) Porto @Aveito Or Card omnes Precis ous ecastos0 ores @sartarem @Poraieare oe ‘conmnente @setiba — Evora ee = APP Yammi APP Listas Chas e Oct2014 Jul 2014 —_—
Slide 24: New adjacent business opportunities: Meu Super
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE Mileu Meu Super reaches 211 stores Ae Ow super in the end of March 2016 FRANCHISING + Franchised local food retail stores Number of stores * Convenience stores, located in residential areas: sales 205 211 (total of = 36k s
Slide 25: 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 + Ortho
Slide 26: 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 +250 sqm of average store + extensive multi-brand range of sup
Slide 27: Private label
2. OPERATIONAL REVIEW - SONAE MC Private label PERFORMANCE # OWN REFERENCES AND % FMCG SALES REFLECTS —_— THE STRONG OWN LABEL PROGRAMME IS MANAGED INTERNALLY AND CONTINUOUS AND NOW COMPRISES MOST PRODUCT CATEGORIES INVESTMENT INVESTMENT IN OWN BRANDS IN PRIVATE LABEL a + Broadening of private label
Slide 28: Sonae MC: Profitable growth
2. OPERATIONAL REVIEW - SONAE MC Profitable growth GROWING MARKET 1Q16 TURNOVER GROWING by 4.6% y.0.y. thanks to store network expansion and a large number of SHARE, WHILE measures aimed at reinforcing the value proposition of REINFORCING Sonae MC, whilst improving price perception so as to be REFER
Slide 29: International expansion and consolidation of market leadership in Portugal
2. OPERATIONAL REVIEW - SR ~ INTERNATIONAL EXPANSION AND CONSOLIDATION OF MARKET LEADERSHIP INPORTUGAL 29
Slide 30: 1,439 3 54 479 4 1 352 5 2 348 3 1 269 39
181 119 658 48 69 1,439 82 66 799 34 33 967 3 1 11 1 1 24 113 54 479 4 1 352 5 2 348 3 1 269 39 12 301 23 7 286 17 4 256 29 5 186 10 3 345 415 251 119 113 58 14
Slide 31: Sonae SR: Number of stores and main financial indicators
2. OPERATIONAL REVIEW - SR SOMA SR Number Main financial of stores indicators Portugal TURNOVER Worten (M€) EBITDA Worten (M€) 891 4 STORES 415 including 13 under franchising S. AREA 251k sqm 0 2015 1015 1016 2015 1Q15 1016 International TURNOVER S&F (M€) EBITDA S&F (ME) Worten Spain 48 403 Sport Zo
Slide 32: International Expansion
2. OPERATIONAL REVIEW - SR International Expansion INTERNATIONALI- SATION MOSTLY BASED ON NEW EXPANSION MODELS: JOINT-VENTURES FRANCHISING WHOLESALE 67 franchising stores outside Portugal ~ FRANCHISING CONTRACTS 24 COUNTRIES Armenia Azerbaijan Chile Dominican Rep Ecuador Egypt Georgia Jordan Kurdist
Slide 33: Salsa acquisition
Salsa ACQUISITION OF AN INTERNATIONALLY RENOWNED JEANSWEAR BRAND This acquisition brings to SONAE... + Astrong brand with proven international track record 3 party distribution + Reinforcement of internal competencies, namely textile product innovation and t \ 1 ' | * Strong growth potential with re
Slide 34: Active management of retail real estate assets
2. OPERATIONAL REVIEW - RP ACTIVE MANAGEMENT OF RETAIL REAL ESTATE ASSETS 34
Slide 35: Sonae RP: Assets Portfolio
2. OPERATIONAL REVIEW - RP Assets Portfolio Properties anchored by CONTINENTE Properties are presented as factions in Shopping Centres (22 of our 41 hypermarkets) or stand alone stores. Stores are located strategically in highly populated areas. In the case of stand alone stores, the building genera
Slide 36: Strategy of Asset Monetisation
2. OPERATIONAL REVIEW - RP Strategy of Asset Monetisation GROSS BOOK VALUE (1016) 1.33 billion Euros 2%3% 16% 4% 30% =Continente mContinente Modelo =Continente Bom Dia Logistics & Offices Others ) Assets W/out Income (co organised by anchor SOMLE RP From 2010 to 2011 Sonae completed 8 sale & leaseba
Slide 37: Sonae Freehold Level
2. OPERATIONAL REVIEW - RP Sonae Freehold Level Following the transactions carried out over the last quarters Sonae retail real estate level of freehold as of 1Q16 was significantly reduced 1) FOOD RETAIL % of space owned freehold 120% 100% 80% Average: 40% 60% 40% 20% 0% GENERAL RETAIL % of space o
Slide 38: Equity Consolidated Businesses
4. EQUITY CONSOLIDATED BUSINESSES SONAE SIERRA (Shopping Centres) 50% ownership NOS (Telecoms) Ownership through Sonaecom
Slide 39: Sonae Sierra: Resilient Performance
3, EQUITY CONSOLIDATED BUSINESSES Resilient Performance A SELF SUSTAINABLE COMPANY WITH INCREASING EXPOSURE TO EMERGING MARKETS IN 1Q16*: + Occupancy rate = 95.0% + Tenant sales increased by 4.0% y.o.y. in Europe and decreased by 25.3% in Brazil (decreasing by 0.1% y.o.y. in local currency) + Positi
Slide 40: Strategy of Recycling Capital and Services Provision
3. EQUITY CONSOLIDATED BUSINESSES Strategy of Recycling Capital and Services Provision TO GROW TO MATURE ASSETS IN EMERGING Munster (Germany) 2012 MARKETS Parque Principado (Spain) 2013 ANDSERVICES — emmy LeT Ital BUSINESS os ne Recucle capital from yore em Pomel 2015 Zubiarte (S 2015 mature non-con
Slide 41: NOS: Value Creation
3, EQUITY CONSOLIDATED BUSINESSES ha Value CONSOLIDATION UNLOCKED A SIGNIFICANT NZ > Creation VALUE CREATION On May 16" 2014, NOS was August 27% 2013: ZON OPTIMUS (NOS) was created NOS market performance launched, a single brand for all segments and for all services, replacing ZON OPTIMUS. NOS stron
Slide 42: Recent Financial Performance
Slide 43: Overview
4. RECENT FINANCIAL PERFORMANCE Overview Resilient Efficiency gains allowing for turnover performance reference operating profitability KEY FINANCIALS 1Q16 TURNOVER UNDERLYING EBITDA UNDERLYING EBITDA Mg. TOTAL NET DEBT 1.22bn 46m 3.8% 1.5lbn
Slide 44: Turnover
4. RECENT FINANCIAL PERFORMANCE Turnover CONSOLIDATED ... BENEFITING FROM THE POSITIVE CONTRIBUTIONS OF TURNOVER SONAE MC and SONAE SR GREW by 6.0% TO €1.22 BN IN CONSOLIDATED TURNOVER TURNOVER PER BUSINESS (ME) 1016 ion curos 4.821 4.974 5.014 SONAE A SONAERP 32 24 22h. 6% SONAE IM 60 57 5. 2014 20
Slide 45: EBITDA
4. RECENT FINANCIAL PERFORMANCE EBITDA IN A DIFFICULT .. SUPPORTED BY THE IMPLEMENTATION OF OPERATIONAL MACRO EFFICIENCY PROGRAMMES ENVIRONMENT, UNDERLYING EBITDA UNDERLYING EBITDA PER BUSINESS (M€) GROUP S Million Euros UNDERLYING — igi _1016_you EBITDA REACHES 278 380 SONAEMC a 33 oo 33 a “16% 331
Slide 46: Capital Structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure Net Financial Debt 1016 MC, SR and IM 648 Holding & Other 646 Sonae IM 12 TOTAL FINANCIAL NET DEBT =—1,306 All refinancing needs for next 18 months already secured ay FINANCIAL NET DEBT LTE spectrum From 2Q13 to 2Q14 total payment by decline of €571
Slide 47: Capital Structure: Convertible Bonds
4. RECENT FINANCIAL PERFORMANCE Capital Structure COVERTIBLE BONDS June 42014 . Sonae issued €210.5 M 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 48: Capital Structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure AN APPROPRIATE — RETAIL HOLDING & OTHER CAPITAL NET DEBT/REC. EBITDA LOAN -TO-VALUE() STRUCTURE IN EACH BUSINESS TO SUPPORT ACTIVITIES AND INVESTMENTS , “13m 13% wa =" | ine 2013 1014 1H14 9M14 2014 1015 IHL5 9M15 2015 1016 WW14 1414 9M14 2014 1015 1
Slide 49: 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 OBJECTIVE 3.85 cents 5.5% AN eee DIVIDEND PER SHARE 2015 DIVIDEND YIELD SHAREHOLDER REMUNE
Slide 50: Valuation
4. RECENT FINANCIAL PERFORMANCE Valuation SIGNIFICANT DISCOUNT VS “SUM- OF-THE-PARTS” VALUATION SONAE Market Valuation (€M) €1.69 Sonae MC enterprise value 1649 Sonae SR enterprise value 656 Worten 35 SONAE NAV per share Sports & Fashion 331 Sonae RP (invested capital @ book value) 879 Retail busine
Slide 51: Valuation: analyst coverage
4. RECENT FINANCIAL PERFORMANCE Valuation SONAE IS ACTIVELY BROKER Date Recommendation Price Target Average price BPI Jun 16 Buy 120 COVERED BY . Cana bl |! j unlé | _____ Buy ee a 150 — target of £1.37 7 SELL SIDE Equita Mayl6_ Buy-BestPicks 140 Haitong Aprlé Buy 135 + 25.1% EQUITY ANALYSTS —_Fiden
Slide 52: Shareholdings
4. RECENT FINANCIAL PERFORMANCE Shareholdings A STABLE SHAREHOLDER STRUCTURE FREE FLOAT OF CIRCA sx 40% ») BPI stake includes Equity swap Fundag3o of circa119 million Sonae shares Berardo (~6% of share capital) 25% BPH 8.9% Reference shareholder, Efanor, a family holding company i EURONEXT SHARE CAP
Slide 53: Conclusion
CONCLUSION AN ATTRACTIVE * Growing leading market positions in Portugal, while protecting INVESTMENT operational profitability OPPORTUNITY * An internationalisation strategy based on a “capital light” approach, enabling future growth and value creation * Significant deleveraging made possible by org
Slide 54: Contacts
INVESTOR PRESENTATION June 2016 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 the