Savola Group Investor Presentation April 2010
2 Contents • Overview • Strategy and Growth • Savola Blue Oceans • Financial Highlights and projections • Intellectual Assets
3 Where we are now, and how we got here OVERVIEW
4 Group Snapshot • • Listed on the Saudi stock exchange Diversified shareholder base 1 • – Government [GOSI+PIF] Operations covering foods, retail, plastics/packaging, real estate, and strategic 15% investments – Sh Mohammed Al Essa • Ranked among the Top 10 diversified 12% business conglomerates in Saudi Arabia – Al Muhaidib family 10% • Market Capitalization of ~ SAR 18 Billion 1 – Sh Abdullah Alrabiea 9% • Sales of SAR 17 Billion in 2009; SAR 13.8 – General Public 54% Billionin 2008; SAR 10.4 Billion in 2007 • Net Profit of SAR 951 Million in 2009 • Regional footprint spread across the MENACA region • Workforce of more than 16,000 employees spread across the region • More than 160,000 shareholders Note 1: as of February 15 2010
5 Savola Share price movement
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 estate Non-impulse 1 Strategic Tameer Swicorp Investment in Almarai Land bank Note 1 – Greenfield Pasta project in Egypt
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 Glass • Acquisition of 40% of Almarai, the leading dairy company in the Kingdom 1991 – 1998 • Growth and Entered the Sugar refining sector through a Greenfield project in Jeddah diversification program • Several Greenfield projects including dates, chocolate, tin- plate….etc • Merger of Savola Egypt with Sime Egypt • Entry into the retail sector through the merger with Azizia Panda • Focusing on improving profitability of core businesses 1998 - 2002 • Business Consolidation Divestment of non-strategic/non-lucrative businesses • Restructured the Group into autonomous divisions, with a holding HQ • Focusing on Growth and maximization of shareholder value 2003 - 2007 • Segregated the real estate assets from the retail business by forming Kinan Focus on Growth • Adjusted strategic investment portfolio through the divestment of the holding in EFC,IPO of Almarai, disposal of 70% stake in Kinan through a private placement Savola is now focusing its efforts on strong growth in its core sectors, Savola is now focusing its efforts on strong growth in its core sectors, through organic and bolt through organic and bolt-on acquisitions on acquisitions
8 Foods sector – Oil business Mkt Share 60% Saudi Holding 95.2% • Established in 1979 • Manufacturing facilities in Mkt Share 42% Egypt Holding 95.2% 8 countries across the MENACA region Mkt Share 20% • Exports to 30 countries Turkey Holding 95.2% with strong marketing and distribution capabilities Mkt Share 40% Iran Holding 76% primarily in the GCC, CIS and African regions Oils Mkt Share 20% • Top brands such as Afia, Kazakhstan Holding 85.7% Arabi, Rawaby, Ladan, Foods sector Sugar Yudum Mkt Share 15% Morocco Holding 95.4% • Production capacity of Ambient/ over 1.5 million MT pa Non-impulse 1 Mkt Share 15% • Sudan Internationally recognized Holding 95.4% production and quality awards including ISO 9002 Mkt Share 27% Algeria Holding 95.4% and MRP2 Note 1 – Greenfield Pasta project in Egypt
9 Foods sector – Sugar business • Established in 1997 • Raw Cane Refineries in Saudi and Egypt[operational from Q1 2008] • Exports to Sudan, East Africa, Levant, GCC, Sudan and Yemen Saudi Oil • Top brands such as Al Osra, Egypt Ziadah, Safa Foods sector Sugar [Cane] • Raw Cane refining capacity of Egypt Ambient/ 2.0 million MT pa [Beet] 1 Non-impulse • Ranked amongst the top three buyers of raw sugar and Jeddah is in top three refineries in the world Note 1 – GreenfieldBeet Sugar project in Egypt is currently beingconstructed
10 Retail sector • Operates in two formats – Supermarkets [1,800m 2 ~2,500m 2 ] – Hypermarkets [7,000m 2 ~12,000m 2 ] • Established in 1998; acquired by Savola in 1998, to represent the retail arm of the Group • Accolades and awards Widespread branch network of • 81 supermarkets and 33 Best “Innovative store” award hypermarkets in Saudi (Dubai Shopping Festival) • • Total selling area of 405,051m 2 Best “Retail Employer” Award (Saudi Arabia) • Expansion plans are to operate • 120 Supermarkets and 40 Best “Hypermarket in the Middle Hypermarkets by 2012 in Saudi East” award Arabia • Fastest growing
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, packaging materials, bottles, closures, Savola Plastics Jeddah pre-forms, industrial containers and Rigid crates New Marina Egypt Plastics sector • Production capacity of 100k MT pa – Al Sharq 56kMT at Savola Packaging Rigid/Film Riyadh – 26kMT at Al Sharq – 18kMT at New Marina • Expansion plans to increase capacities of Plants in Saudi and Egypt • Winner of the King Abdulaziz Quality Award
12 Real Estate sector • Major investor in Kinan, one of the leading real estate property developers in the Kingdom • Kinan won the “Best real estate Landbank developer” award from Euromoney in 2006 Kinan Affordable Holding 30% housing • Founding partner in the Real Estate sector Knowledge Economic City, Tameer Jordan Madinah and King Abdullah Holding 5% Economic City Rabigh King Abdullah Economic City • Other investments Total land bank of 6.5 million m 2 Holding 2.4% [including jointly owned with Knowledge Kinan] Economic City • Holding 18% Currently focusing on residential real estate developments with a portfolio of commercial property developments
13 Geographical footprint Markets with manufacturing facilities Markets with manufacturing facilities Markets with local marketing and distribution Markets with local marketing and distribution Targeted new markets Targeted new markets
14 Where we want to go, and how we will get there STRATEGY AND GROWTH
15 Business performance in 2009 • Distribution network • Buying out minorities • Repeatable success formula • Acquiring or merging with • Branding power competitors • Operations excellence • Organic expansion • Logistics infrastructure • Profitability enhancement • Scale of buying and cost rationalization • Geographical footprint • Moving away from non-core • Market and consumer investments knowledge • Inspiring culture
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 sugar reach 90% Marina Egypt business Acquisitions of more than SR 1.2 billion SR 1.2 billion
17 We continued to grow organically Number of Panda stores Foods sector Sales Volume Total Capital Expenditure of around SR 700 million SR 700 million
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 billion SR 2.3 billion in market share 2009 Allowed the Group to free up cash from working capital
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 SR 550 million
20 Grew our income from core operations
21 Diminished our reliance on capital gains 61% 57% 10%
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 Cash inflows from growth in the Group’s • Operations core sectors with 2.3 • Exiting non-core 0.6 continued distribution investments of dividends in spite of Utilization Utilization the financial crisis • Buying out minorities 1.2 and competition • Capital expenditure 0.7 • Dividend payments 0.5
23 There's a lot more room for us to grow in our core sectors THE SAVOLA BLUE OCEANS
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 knowledge • Inspiring culture
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