I NV ESTO R P RES ENTAT I ON A s a t 3 0 J u n e 2 0 1 8 - PowerPoint PPT Presentation

www.mepco.biz I NV ESTO R P RES ENTAT I ON A s a t 3 0 J u n e 2 0 1 8

Disclaimer This presentation is prepared by MEPCO and contains basic information about Company activity as of the latest published results. The information is presented in summary rather than detailed form. This information, including any forward-looking statements, should not be taken as basis for investment recommendation/solicitation for any of the Company’s tradable securities. While management has made every effort to present a fair view of MEPCO’s operational and financial performance in this presentation; it is important to note that expectations about the future results that come in light of prevailing operational, financial and market conditions may change in the future. Management does not recommend using such forward looking statements in financial modeling or investment decision making. It thus takes no liability to explain differences between future actual results and what was stated in the course of this presentation. IR Presentation | 31 March 2018 Page| 2

CORPORATE & OPERATIONAL REVIEW

Shareholding structure and share information Share Information Shareholding structure Market Tadawul, Saudi Arabia Currency SAR ISIN code SA13Q050IP16 Listing date 3 May 2015 Financial year end 31 December Abdulkadir Al Muhaidib & 23.2% Authorized capital (SAR) 500,000,000 Sons Co. Lafana Holding Issued shares 50,000,000 48.8% Abdullah AlMuammar Paid capital (SAR) 500,000,000 18.4% Par value (SAR) 10.00 Free Float 9.5% Free float shares 24,400,000 (as at 07 August 2018) Percentage of foreign ownership 1.91% (as at 07 August 2018) IR Presentation | 31 March 2018 Page| 4

Management Najib Fakih Ibrahim – President, WASCO Sami Al Safran – CEO • Over 37 years of industry experience • Over 25 years of professional experience • 15 years of experience in waste management • 19 years in the paper industry • 20 years of experience with Savola Group • Chemical Engineering graduate of King Fahd University • Chemical Engineering graduate of KFUPM of Petroleum & Minerals (KFUPM) Abdul Razik Askalani – Plant Manager Mohamed Saleh Darweesh – CFO • Over 28 years of relevant experience • Over 25 years of experience in financial management • 14 years of experience with MEPCO • Doctorate in Finance, USA • Graduated with a BSc in Geo-Chemistry • Certified Public Accountant (CPA), California, USA Ahmad El Fazary – Chief Commercial Officer Wadia Malibari – COO • Over 12 years of international marketing experience • Over 25 years of experience • 5 years of experience at MEPCO • 10 years of experience with MEPCO and WASCO • Post-Graduate diploma in International Trading • Qualified Chemical Engineer with an MBA IR Presentation | 31 March 2018 Page| 5

Core strengths Sales growth of 700% in 15 years 80% of raw materials sourced by subsidiary Raw material sourcing  One of the largest and fastest growing paper manufacturers in the region  High level of vertical integration, driving industry-leading efficiency  Consistently lower production costs than the industry average  Conversion Strong financial performance since inception  Production Highly-experienced management team IR Presentation | 31 March 2018 Page| 6

Benefits of recycling paper Recycling paper has a quantifiable impact Energy Forest Pollution on the global conservation conservation reduction environment and on industry, replacing • Uses 28-70% less • Preserves natural • Reduces the need polluting energy ecosystems for landfills and manufacturing incinerators processes with • Uses less water renewable, greener • Prevents water • Puts industrial and more efficient pollution waste water to technology, while good use allowing forests to thrive and grow IR Presentation | 31 March 2018 Page| 7

This is how the story begins… IR Presentation | 31 March 2018 Page| 8

Overview of operations Plant Utilities Installed capacity 475,000 tons In-house power plant 48 MW Total lines 3 Grid connection 7 MW Total plant investment SAR 1,774 million Captive power generated 40 MW Total production and Captive water supplied 6,000 m3/day storage sites (Jeddah) 471,000 sq. m IR Presentation | 31 March 2018 Page| 9

Products Category Product description End use MEPLINER Outer & inner layers of a carton box Corrugating medium layer of a MEPFLUTE Consumer goods packaging carton box Containerboard Industrial goods Corrugating medium layer of a MEPCHEM carton box, chemically treated Carton boxes for logistics MEPKRAFT Outer & inner layers of a carton box Food and fresh produce Product lines packaging MEPWHITE Outer & inner layers of a carton box Mixture of MEPFLUTE & MEPLINER MEPDUAL Outer & inner layers of a carton box Paper tube or core used in textile, Film/tape/label cores MEPCORE paper or other reels Textile and paper roll cores Layers of linerboard bonded to a Interior wall linings MEPGYPSUM gypsum plaster core forming a Gypsum board wallboard Layers of laminates applied in Wood furniture, flooring, and MEPLAMINATE finishing surfaces of furniture industrial films IR Presentation | 31 March 2018 Page| 10

Fifteen-year growth story IR Presentation | 31 March 2018 Page| 11

Sustainable operating model Environmental sustainability ◉ Environmental and economic sustainability is the heart of MEPCO’s operating model ◉ Captive power generation ensures low cost and efficiency for manufacturing plant Agility to prioritise Vertically domestic and/or integrated ◉ Captive waste water treatment dramatically reduces export markets operations strain on local water supply ◉ WASCO provides raw material availability and logistical convenience for MEPCO Effective and industry-leading cost control IR Presentation | 31 March 2018 Page| 12

Localized raw materials sourcing MEPCO secures consistent supply of raw materials through its subsidiary WASCO WASCO is the largest recyclable paper collector in the MENA region, collecting over 40% of KSA’s waste paper through 23 hubs WASCO collects about half a million tons of waste material WASCO expects further increases in collection once regulations for waste management are in place Sources of RCP include 9 leased landfills, third-party landfills, converting businesses, printing companies, supermarkets, shopping centres and others IR Presentation | 31 March 2018 Page| 13

Localized raw materials sourcing WASCO RCP sources RCP collection in Saudi Arabia (tons/year) WASCO Non WASCO Contracted Landfill 429 suppliers 480 391 475 27% 26% 352 337 336 277 220 263 Direct 600 581 540 Collection 535 525 506 494 383 380 47% 237 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: MEPCO management IR Presentation | 31 March 2018 Page| 14

Boosting cost competitiveness MEPCO has achieved cost efficiency by: Localized RCP collection Localised RCP Collection Strategically located water treatment plant with efficient water collection Self generated power Efficient logistics infrastructure supported by centralized plant location (near Jeddah Port) Customised in-house production of chemicals Continuous operational improvement programmes IR Presentation | 31 March 2018 Page| 15

Potential growth avenues DESCRIPTION STRATEGY Backward Focus on growing backward integration of WASCO’s operations integration Strategic Expansion Focus on core business by building scale of of core operations, improving efficiencies and and/or diversifying products & markets operations opportunistic growth A successful, progressive, Corporate and Social Forward Responsibility programme provides the driving integration engine of our business model IR Presentation | 31 March 2018 Page| 16

Alignment with Vision 2030 ◉ MEPCO provides tangible social and economic benefit by adding value to the economy through business revenues, social investments, job opportunities, and improving environmental awareness through programmes, campaigns and community initiatives Vision 2030 is a plan to reduce Saudi Arabia's dependence on oil, diversify its economy, ◉ Our commercial and CSR programmes are aligned, and are aligned with and develop public service sectors such as the agenda of Saudi Vision 2030 health, education, infrastructure, recreation, and tourism. Goals include reinforcing economic and investment activities, ◉ Most of MEPCO’s business processes and operations are in line with increasing non-oil industry trade between Vision 2030. Being an eco-friendly company and generating foreign countries through goods and consumer revenue for Saudi Arabia are both important factors in the new economic products, and increasing government agenda spending on the military, manufacturing equipment and ammunitions. IR Presentation | 31 March 2018 Page| 17