Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Sonae — Investor Presentation (May 2014)
40 slides from Sonae Sgps Sa's investor presentation, May 16, 2014
Slide 1: Investor Presentation, 16 May 2014
INVESTOR PRESENTATION 16 May 2014
Slide 2: 1. Sonae Overview
Slide 3: Group Structure
1. SONAE OVERVIEW Group Structure A RETAIL COMPANY SONAE with 2 core 100% 100% 100% 50% 89.9% ° SONAE MC SONAE SR SONAE RP SONAE SIERRA SONAECOM pa rtnerships Food Retail Specialised Retail Shopping Telco Retail Properties Centres * Market leader in Portugal Sports goods, Retail real Shopping centre
Slide 4: Shareholdings
1. SONAE OVERVIEW Shareholdings A STABLE SHAREHOLDER STRUCTURE Reference shareholder, Efanor, a family holding company NYX NYSE EURONEXT 1S) FREE FLOAT Others ms OF CIRCA Efanor 52.68% 40 % Norges Bank 2.01% Fundacgao Berardo “BPI stake includes Equity swap Bestinver of circa123 million Sonae shares
Slide 5: Group Breakdown
1. SONAE OVERVIEW Group Breakdown BREAKDOWN PER BUSINESS Turnover breakdown (1014) % Total Turnover (1Q14) m Sonae MC = Sonae SR Sonae RP = Sonae Investment Management (incl. SSI and Media) UNDERLYING EBITDA MARGIN % Turnover 1013 PF Sonae 5.7% Sonae MC 5.2% Sonae SR 42% Sonae RP 89.2% Investment Ma
Slide 6: Corporate Strategy
1. SONAE OVERVIEW Corporate Strategy VALUE CREATION THROUGH INTERNATIONAL EXPANSION AND THE STRENGTHENING OF THE CORE BUSINESSES 1S) CORPORATE STRATEGIC PILLARS INTERNATIONAL DIVERSIFY LEVERAGE EXPANSION INVESTMENT STYLE EXCEPTIONAL ASSETS AND COMPETENCIES + NEW GROWTH AVENUES + ADOPT THE MOST APPRO
Slide 7: 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 8: 2. Operational Review
Slide 9: Strengthening of leading position in food retail market, while protecting profitability
STRENGTHENING OF LEADING POSITION IN FOOD RETAIL MARKET, WHILE PROTECTING PROFITABILITY
Slide 10: Sonae MC: A Leading Brand in Portugal
2. OPERATIONAL REVIEW - SONAE MC A LEADING BRAND INPORTUGAL CONTINENTE Considered over the last 13 years, 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 “CON
Slide 11: Retail Area
2. OPERATIONAL REVIEW - SONAE MC Retail Area 615,000 M2 SONAE MC RETAIL SPACE BY FORMAT (1014) OF RETAIL SPACE, STORES (total= 465) ‘O00 M? (total=584 thousand) DISTRIBUTED 385 BETWEEN HYPERS AND SUPERS 28 * Mainly parapharmacy - -. a i = and coffee shops Continente C.Modelo CC. Bom Dia Other* Conti
Slide 12: Market Share Growth
2. OPERATIONAL REVIEW - SONAE MC Market Share Growth REINFORCEMENT FOOD RETAIL MARKET SHARES - 1Q14 OF LEADERSHIP IN THE PORTUGUESE FOOD RETAIL on MARKET aie t “ -O.7pp O.4pp -O.3pp Pioge Source: Homescan Nielsen, cumulative YTDevolution - 23'" Feb 2014 SONAE MC LfL SALES increasing by 3.6% y.0.y. i
Slide 13: Market share chart 2007-2013
95% 90% 85% 80% 75% 2007 2008 2009 2010 2011 2012 2013
Slide 14: E-commerce and online offer
>15% Orthopedy Contact Lenses Supplements annual growth ~500.000 deliveries/year ~30.000 SKUs Mattresses Tickets ~550.000 Registered users >50.000 Buying users/year School Books >100 M Pageviews/year
Slide 15: Store formats and sales area
• (total of ≈ 16k m2 sales area) •
Slide 16: New adjacent business opportunities
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE ON KNOW-HOW Wella IN RETAIL Coffee shops and small Health and well-being snack-bars + Typically next to Sonae MC : Parapharmacy| beauty supers products, health and well-being care + Eye glasses and optical services + Varie
Slide 17: Private Label
2. OPERATIONAL REVIEW - SONAE MC Private Exported to Cape Verde, Timor and Thailand 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 INVEST MENT IN OWN BRANDS + Broade
Slide 18: Profitable growth
2. OPERATIONAL REVIEW - SONAE MC Profitable growth GROWING MARKET 1014 TURNOVER GROWING 1.7% Y.OY. 1014 Underlying EBITDA margin of 4.4% SHARE. WHILE This growth was achieved despite disadvantageous The same level reached in 112 (also without Easter ’ seasonality Easter effect, coupled with the high
Slide 19: Macro and market data (IMF, World Bank)
• • • • • • • • • • (*) Source: IMF – World Economic Outlook and World Bank
Slide 20: International expansion and consolidation of market leadership in Portugal
4 i \ G iss) INTERNATIONAL EXPANSION AND CONSOLIDATION OF MARKET LEADERSHIP INPORTUGAL
Slide 21: Store and sales area table
183 128 699 43 78 1,805 77 65 839 33 37 1,132 113 56 500 9 4 402 3 1 254 37 12 332 40 12 308 11 3 310 7 1 168 3 1 203 19 4 227 410 261 125 131 43 10
Slide 22: Operational Review - SR
2. OPERATIONAL REVIEW - SR Constrained discretionary consumption in Iberia “LfL’ sales trend - Portugal 1013 2013 «3013 =4Q13 -5% -11% -2h% 5% 1Q14 6% “LfL’ sales trend - International 1013. 2013 =3Q13 4Q13 17% -12% = =-5% 5% 1Q14 7% —~ TURNOVER Portugal (M €) EBITDA Portugal (M€) 874 877 39 4 it) F
Slide 23: International Expansion
2. OPERATIONAL REVIEW - SR International Expansion INTERNATIONALI- ZATION MOSTLY BASED ON NEW Worten Canary Islands EXPANSION MODELS: SportZone Canary Islands Zippy Middle East MO Canary Islands JOINT-VENTURES AND FRANCHISING To be... > 22 COUNTRIES FRANCHISING CONTRACTS JOINT-VENTURES Zippy Canary
Slide 24: Active management of retail real estate assets
2. OPERATIONAL REVIEW ACTIVE MANAGEMENT OF RETAIL REAL ESTATE : ASSETS 24
Slide 25: Retail Properties
2. OPERATIONAL REVIEW - RP Retail Properties REAL ESTATE SEEN AS A “DEFENSIVE SUPPORT” FOR VALUATION OF RETALIERS IN AN UNCERTAIN ECONOMIC ENVIRONMENT —~ £00 RETAIL % of space owned freehold 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Barclays Capital, April 2014 Sector: 50% Mt. GENERAL RETA
Slide 26: Assets Portfolio
2. OPERATIONAL REVIEW - RP Assets Portfolio FOCUSED ON THE MANAGEMENT AND ENHANCEMENT OF RETAIL REAL ESTATE ASSETS IN SUPPORT OF CORE BUSINESSES INVESTED CAPITAL (FY13) 1.3 billion Euros (Net book value) ™Sonae MC mSonae SR BLogistics and Offices Third Parties (commercial galleries) Expansion HYPERM
Slide 27: 3. Core Partnerships
4. CORE PARTNERSHIPS SONAE SIERRA (Shopping Centres) 50% ownership - Equity Consolidated SONAECOM / ZON OPTIMUS (elecomsy) 89% ownership - Equity Consolidated iN AN
Slide 28: Sonae Sierra: Resilient Performance
3. CORE PARTNERSHIPS - SONAE SIERRA Resilient Performance t mania A SELF INTERNATIONAL SHOPPING CENTRE ro DOWN | SUSTAINABLE © WITHGROSVENOR nn ‘Asetsownedand a - With presence in Portugal, Brazil, Spain, Italy, 9 a Germany, Greece and Romania (100% basis) WITH INCREASING Stakes in 47 Shopping centr
Slide 29: Sonae Sierra: Growth Avenues
3. CORE PARTNERSHIPS - SONAE SIERRA Growth Avenues GROW IN EMERGENT MARKETS AND SERVICES BUSINESS IPO of Sonae Sierra Brazil completed during 2011: ~33% of share capital, raising equity for future developments in the region GROW IN PROMISING MARKETS: * Focus on controlling dominant shopping centres
Slide 30: Sonaecom: Value Creation
3. CORE PARTNERSHIPS - SONAECOM Value Creation *On February 20% 2014: Following Sonaecom’s voluntary tender offer for the acquisition of own shares (price equivalent to €2.45 per Sonaecom share, to be composed of ZON OPTIMUS shares with a price of €5.08), Sonaecom’s direct participation in ZON OPTIM
Slide 31: 4. Recent Financial Performance
Slide 32: Overview: Key Financials 2013
4.RECENT FINANCIAL PERFORMANCE Overview Turnover sustained by Efficiency gains allowing for market share gains increased operational profitability KEY FINANCIALS 2013 TURNOVER UNDERLYING EBITDA UNDERLYING EBITDA Mg. NETDEBT 4.82bn 378m 78% — -597 Moy ) ho) * Includes the deconsolidation of approx. 4
Slide 33: Turnover
4. RECENT FINANCIAL PERFORMANCE Turnover DESPITE THE SHARP. THANKS TO MARKET SHARE GAINS DECLINE IN PRIVATE CONSUMPTION FELT IN IBERIA CONSOLIDATED TURNOVER TURNOVER PER BUSINESS CONSOLIDATED MilfonEwros TURNOVER aero nel 1913 1Q14 Var. GREW SONAE 10851126 4% SONAE MC 774 787 2% TO €1.13 Bn in1Q14 S
Slide 34: EBITDA
4.RECENT FINANCIAL PERFORMANCE Ebitda IN A DIFFICULT _.. SUPPORTED BY THE IMPLEMENTATION OF OPERATIONAL MACRO EFFICIENCY PROGRAMMES ENVIRONMENT, eee GROUP'’S UNDERLYING EBITDA UNDERLYING EBITDA UNDERLYING on EBITDA REACHES 30 _ ig 1a Va €60 M in 1Q14 SONAE MC 40 35-13% SONAE SR -ll -4 61% SONAE RP 2
Slide 35: Capital Structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure FINANCIAL NET DEBT LTEspectrum tb , Sonsecomn 83 ME From 1Q13 to 1Q14 total decline of — 582 ME including 430ME due to 1] 4 q 8 M _— 2.265 \ the deconsolidation of Optimus with refinancing needs secured to the end of 2015 1214 Iq 2g 3Qu gues im2 gla
Slide 36: Capital Structure by business
4.RECENT FINANCIAL PERFORMANCE Capital Structure AN APPROPRIATE CAPITAL STRUCTURE IN EACH BUSINESS TO SUPPORT ACTIVITIES AND INVESTMENTS RETAIL NET DEBT/REC. EBITDA 36 31 31 28 28 28 ; ‘ : 20 2m 26 20 Fyll 1gl2 1Hl2 9Ml2 FYl2 113 1Hl3 9M13 FY13) 1014 HOLDING LOAN-TO-VALUE) 2% 19% 19% 18% 18% 17% 17%
Slide 37: Shareholder Remuneration
4.RECENT FINANCIAL PERFORMANCE Shareholder Remuneration DIVIDEND PAYER The resilience of the cash flows generated gives confidence ONAREGULAR © onthe ability to maintain shareholder remuneration policy BASIS 0 0 OBJECTIVE 3.48 cents 5.3% 46% TO MAINTAIN DIVIDEND PER DIVIDEND YIELD ~— PAY-OUT RATIO A
Slide 38: Valuation
4.RECENT FINANCIAL PERFORMANCE Valuation DESPITE POSITIVE PERFORMANCE IN 2013, STILL SIGNIFICANT DISCOUNT VS “SUM- OF-THE-PARTS"” VALUATION Material share price over performance during 2013 +52.7% €2.1bn €0.55 2013 FY share price SONAEMCEVbased Market value of Core appreciation on European food Part
Slide 39: Conclusion: An Attractive Investment Opportunity
CONCLUSION AN ATTRACTIVE INVESTMENT OPPORTUNITY Growing leading market positions in Portugal, while protecting operational profitability An internationalisation strategy based on a “capital light” approach, enabling future growth and value creation Significant deleveraging made possible by organic c
Slide 40: Contacts
INVESTOR PRESENTATION May 2014 CONTACTS: Patricia Vieira Pinto Investor Relations Officer investor.relations@sonae.pt Tel.: + 35122 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 sy