Obour Land for Food Industries Analyst Highlights Presentation

Obour Land For Food Industries Analyst Highlights Presentation

March 2017 Disclaimer

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3 Table of Contents

I. Industry Overview

II. Obour Land In Depth

III. Historical Financials and Business Plan

IV. Contact IR

4 I. Industry Overview Egypt Boasts a Highly Supportive Demographic Profile and Resilient Consumption Patterns

Population in Perspective (mn) Egypt Population Age Brackets - 2014 Urban Population Growth (mn, %) Private Consumption (EGP bn)

100 3.5% 2.3% 3.1% 39 2.3% 2.5% 89 2.2% ▲16% 90 2.9% 2.9%

2.8% 3.0% 2.1% 78 1.9% 2,000 80 1,894 2.6% 38

65 Yrs + 2.0%

1,800 2.5% 55-64 Yrs 5% 70 2.2% 1,623 7% 1,600 2.0% 2.0% 37 1,450

2.0% 1.5% 1.7% 1,400 0-14 Yrs 1,193

1,200 1.4% 32% 36 1,035 40 1.5% 25-54 Yrs 39

40 1,000 35 34 1.0% 1.0% 311.0% 1.0% 38% 38 800 35

30 0.9% 1.0% 37 36 600 20 0.5%

34 35 400 11 10 0.5% 10 7 6 200 5 4 4 2 15-24 Yrs 0 0.0% 18% 33 0.0% - 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Population (mn) 2015-20 CAGR (%)

GDP Per Capita (2015-2020 CAGR) Disposable Income (EGP bn) Expenditure Brackets Consumption (% GDP)

8% ▲7% 8% > EGP 12K

7% 230 221 EGP 8K-12K 5% < EGP 3K

100% 95% 214 213 7% 20% 89%

6% 210 90% 84% 82% 80% 78% 5% 5% 5% 185 EGP 6K-8K 80% 5% 190 12% 4% 70% 171 4% 4% 59% 4% 56% 56% 3% 3% 170 60% 3% 48% 3% 3% EGP 5K-6K 50% 3% 150 12% EGP 3K-4K 2% 40% 25% 29%

2% 130 30%

EGP 4K-5K 20% 1% 110

20% 10%

0% 90 0%

2010 2011 2012 2013 2014 Egypt Turkey MoroccoSaudiUnited Arabia Arab EmiratesQatar

Libya

Qatar

Egypt

Kuwait

Turkey

Algeria

Nigeria

Tunisia

Morocco Lebanon

% 2010-2014 CAGR 6

SouthAfrica SaudiArabia

Source: Euromonitor, IMF, World Bank and CAPMAS UnitedArab Emirates Cheese Market Overview

. Cheese is an Cheese Market Size (EGP mn) Cheese Consumption per Capita (Kg) Egyptian household staple and an affordable source of ▲13% 16.00 protein and as 14,000 12,930 13.8 14.00 such, Egypt’s 12,000 11,022 cheese per capita 12.00 consumption is 9,801 10,000 9.4 above the world 8,742 10.00 7,758

average 8,000 6,927 8.00

. Unprocessed soft 6,000 5.7 6.00 5.1 cheese remains the

4,000 3.5 largest and the 4.00 3.0 fastest growing 2.5 2.3 2.3 1.6 2,000 subcategory in the 2.00 cheese market

0 - France Italy USA Egypt Turkey Saudi Arabia South Africa UAE Algeria Morocco 2010 2011 2012 2013 2014 2015

% 2010-2015 CAGR

Cheese Market Value Breakdown by Type (%) Growth by Cheese Type (2010-2015 Value CAGR) (%)

5,084 5,837 2,008 12,930 2010 2015

16% 20% 19% 17% 18% 16% 13% 14% 12% 45% 12% 10%

52% 10%

31% 6% 39% 4%

0% Unprocessed Hard Cheese Unprocessed Soft Cheese Processed Cheese Unprocessed Soft Unprocessed Hard Processed Cheese Total Cheese Cheese Cheese

2015 Total Value (EGP mn)

7 Source: Euromonitor Cheese Market Categories

Soft Unprocessed Cheese (White Cheese) Hard Unprocessed Cheese Processed Cheese

. Natural/white cheese; fastest growing . Most popular segment . Niche product, targeting consumers with category . Artisanal production westernized eating habits . Prepared with natural ingredients . Distinctive smell, varying according to . 51% natural cheese, includes (fresh/powder milk), hence perceived as stage of age preservatives, salt and artificial healthy . Has several forms including: Roumy, ingredients Description . Targets the mass market due to Gouda, Cheddar, Emmental, among . Characterized as less fatty and salty than affordability and product varieties others other cheeses . Multipurpose product used as snack or . Premium pricing due to lower mass main meal component appeal . Popular for sandwiches and as a cooking ingredient

▲19% ▲10% ▲12%

5,837 2,400 2,008 5,500 4,137 5,084 5,130 2,200 5,000 Market Value and Growth Profile 2,000 5,500 4,702 4,500 3,518 1,756 4,313 1,800 1,581 4,000 3,007 5,000 3,927 3,500 2,555 1,600 1,422 (EGP mn, %) 2,175 4,500 3,598 1,276 3,000 1,154 1,400 4,000 2,500

3,500 1,200 2,000

1,500 3,000 1,000 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 . Artisanal production (plastic tubs/buckets . Blocks . Triangles, jars (glass & plastic) only) . Slices . Organized production (carton packs, . Shredded Product types/Packaging plastic tubs/buckets)

. Traditional/unorganized grocery retail . Both traditional and modern outlets and . Largely limited to modern retail outlets as outlets dominate require special storage section it typically requires refrigeration in . Modern trade penetration is low (no transport and storage access to remote areas, etc) . Accordingly, segment’s growth is Sales Channels . Tubs/buckets mainly limited modern trade constrained by under penetration of due to refrigeration needs, restricting their organized retailers but that could change growth as modern trade chains expand . Carton packs (no refrigeration, longer shelf life) driving growth

. Local labs especially for Roumy, and Key Players other imported brands such as Frico

% 2010-2015 CAGR 8 Source: Euromonitor White Cheese Market Competitive Landscape

. Obour Land is the White Cheese Market – Competitive Landscape fastest growing Carton Pack 9M 16 White white cheese Company Brands Overview producer in Egypt, Market Share1 (%) Cheese Sales Value growing its market share in the carton Established in 1997, Obour Land is a leading producer of white cheese offering 27 different SKUs with an extensive distribution network supported by a fleet of pack from 23% in 39% EGP 1,054mn 2013 to 39% as of 201 vehicles and 10 distribution centers. The Company has a total head count of 9M 16 1,361 employees

Established in 1990, Domty offers a wide range of products and flavors, with a family of nearly 200 SKUs. Domty boasts a distribution fleet of 327 trucks operating from 27 sub strategically located distribution hubs across the country. 43% EGP 981mn Domty was listed on EGX and started trading on March 22nd, 2016 with a current market capitalization of EGP 1,283mn

Greenland Group for Food Industries was founded in Egypt in 1995 and was acquired by the Americana Group in 2005. Greenland was the uncontested market leader in the white cheese market in 2007 with a total market share of 5% NA 43%, however, the company did not adapt to the changing consumer preferences, and hence lost market share to Obour Land and Domty

Founded in 1985, Arab Dairy has grown to become a major exporter of cheese to the Middle East offering 24 SKUs. In 1995, the company started the production of Panda Feta plastic tubs. In 1998, the company introduced Panda 6% EGP 422mn2 and Dairy Feta cheese and Panda Istanbully cheese in Tetra Pak packages. The company was acquired by Pioneers Holding in 2015

Best Cheese Company was founded in 1995 and has grown to be one of the largest processed cheese manufacturers in Egypt. The company produces processed cheese including the Teama Milk and President brands, as well as 18 2% NA private label brands spread across the Middle East. The company operates as a subsidiary of Lactalis International

Source: Nielsen Retail Audit, Company financials 9 1 9M 16 market share by value 2 Revenues include processed cheese revenues Nielsen’s retail audit does not include plastic tubs sales in the calculation of market shares, in addition they track sales only in large supermarkets / hypermarkets, therefore some of the companies’ sales are not accounted for II. Obour Land In Depth A. Production Location and Facility Overview

Production Facilities Overview

Area 12 Area 13 Area 14 Area 15 Area 16 Area 14 (2) Area 7&8

Acquisition Date 2007 2011 2013 1998 2012 2015 2015

Land Area (sqm) 3,060 3,060 3,060 3,060 3,060 5,000 6,112

BUA (sqm) 6,512 7,704 6,453 5,738 4,251 3,074 7,102

Status Fully utilized Under-utilized Under construction Under construction Under construction Under construction Under construction

Head office + four production lines Being revamped to Eight production Will be utilized for of soft cheese 80g, be utilized for the Ground floor is used Ground floor is used Ground floor is used Usage lines of soft cheese the production of 125g & 250g + three production of as storage space as storage space as storage space 125g, 250g & 500g juices and fresh milk new production lines spreadable cheese of soft cheese

Obour City Location Plants Location

7 & 8

12 13 14 15 16

14 (2)

11 Production Value Chain

1 2

Planning Raw Material Procurement

. A diversified list of suppliers is used for main raw . In light of the monthly sales targets set by the senior material requirements in order to limit concentration management, the Company formulates a production plan risk and ensure better raw material quality/cost Raw Material efficiency, hence enabling the Company to mitigate . Strategic as well as safety stocks of each material are Planning Procurement determined to provide the Company with the flexibility to fluctuations in raw material prices respond to changes in the demand pattern without any interruption to production operations

6 3

Warehousing Inspection Warehousing Inspection . The products are then transported to the . The inspection process occurs simultaneously Company’s warehouses with the ongoing purchasing process . In the local market, products are distributed to . Materials are inspected according to the consumers through any one of the Company’s Company’s internal standards as well as strict distribution channels international quality standards . Any raw material items below set standards are returned to their respective suppliers Raw Material Inventory Production Management 5 4 Production Raw Material Inventory Management

. An experienced and highly trained production team . Following inspection, raw materials are transferred to thoroughly monitors the entire production process to storage warehouses ensure minimal waste levels and uniformity of final . Raw materials are then allocated to the production process products depending on the anticipated demand . The production process has proven to be efficient in . Usage patterns are calculated based on a thorough reaching final product quality with minimal human historical trend analysis that combines both financial and intervention operational parameters

12 Production Process

White Cheese Production Process

1 2 3 4 5 First Round of Receiving Raw Materials Raw Materials Inspection Powder Milk Mixing Homogenization Pasteurization

. Obour Land imports skimmed milk . The Company operates two . Skimmed milk powder is then . Input mixture is pumped into . Within 15 seconds, powder, milk protein concentrate laboratories, chemical lab and mixed with milk protein tanks to homogenize the temperature in tanks is raised and natural butter, the main raw microbiology lab, for quality concentrate, natural butter, mixture through the breakdown to 85 degrees Celsius to kill all materials used in the production inspection of raw materials vegetable oil and water at a and spread of fat the bacteria that could spoil the process using the sampling method regulated temperature to form cheese input mixture used in the production process . The standard temperature for pasteurization is 72 degrees . Concentration of each raw Celsius, however, the material in input mixture would Company raises it to 85 as a vary in accordance to the type measure of precaution of final white cheese product

6 7 8 9 10 11 Second Round of Cooling & Ultrafiltration Additives Packaging Incubation Pasteurization Distribution

. Water is separated . A second round of . Salt, calcium and . Tetra Pak supplies the . Cheese sold in plastic . Final product cheese is through filters and pasteurization takes potassium are added to packaging materials used tubs is cut into smaller cooled in fridges with a disposed of, to produce a place in order to ensure the mixture; additionally, for carton pack products pieces, filled into trays, temperature of 3 – 5 concentrated mixture no bacteria remains in glucono delta lactone is and placed in degrees Celsius awaiting the mixture used to reduce the temperature controlled distribution mixture’s pH levels to incubators for four hours create the acidic taste of cheese

There are three quality check points throughout the process in addition to quality checks of random samples on various production lines at ten minute intervals; following the production of each batch, all machines and tanks are cleansed to eliminate any leftover bacteria

13 Manufacturing Operations at a Glance

Tetra Pak Ties Production Volumes (ktpa)2

. Relaxed Payment Terms for Equipment: Obour Land enjoys 33.0 36.0 47.3 51.9 11.3 14.1 1.8 4.1 4.1 95.6 107.9 preferential terms on equipment purchased such as installments over 4- 60% 73% 69% 85% 85% 90% 15% 88% 83% 69% 80% 5 years

. Packaging material rebates: Obour 100.0 Land receives discounts on packaging material volume procured. These rebates amounted to 15.6% of the total 90.0 86.7 Tetra Pak expenditure in 2015

. Cash discount: Obour Land receives a 80.0 discount for early payment for

packaging materials procured; the 70.0 65.7 Company has been increasing cash purchases to benefit from this discount

60.0 . Growth support: The Company negotiates packaging material discount

50.0 arrangements at the time it purchases a 44.4 new machine from Tetra Pak. These

discount arrangements are generally 40.0 linked to the volume of packaging 32.7 material to be procured for use in the machine, and are typically negotiated 30.0 26.1 separately for each machine. Any such 19.9

discount arrangements would reduce 20.0 cost of sales 12.6 9.6 . Marketing support: Obour Land 10.0 receives annual marketing support from 3.6 3.4 Tetra Pak to support its marketing - 0.3 - campaigns of Tetra Pak packaged 500g 250g 125g 80g Plastic Tubs Total Unprocessed Cheese products. This support is based on a percentage of the marketing budget 2014 2015 Weighted Max Capacity1 (ktpa) Weighted Utilization Rate

1 Weighted maximum capacity is calculated assuming that no. of working days per year is 300 and number of working hours per day is 20 and is weighted by the number of operational months 2 Excludes line 12, which was introduced in July 2016 14 II. Obour Land In Depth B. Marketing Strategy Marketing Strategy Overview (1/2)

Strategic Guidelines Commercial Strategy

Adapting to Structural Shifts Brand Development Product Development Pricing Promotion in the Market Strong Brand Equity New Sizes Strong Ability to Adjust Pricing Advertising Strategy . Obour Land seeks to . Obour Land is one of the most . Offering packages smaller . The Company adopts pricing . The Company focuses on continuously understand recognized brands in the local than the industry norm, strategy, whereby it prices its spending efficiently by keeping the wider market landscape market, boasting one of the 80gm SKU, helps the products at a premium to its costs in line with market average, and adapt to the rapidly highest awareness levels Company price products competitors, capitalizing on without sacrificing exposure. This changing consumer more efficiently, its premium quality product is done through directing preferences . The Company has been capitalizing on the “on the offering and its robust brand marketing communication at investing in advertising go” consumption trend equity to implement its long targeted segments, thus . The Company sets high- campaigns to cement the term strategy of profitable maximizing cost efficiency level marketing guidelines brand in consumers’ minds New Flavors growth that govern its marketing . Obour Land continuously . Obour Land maintains a strong mix . Additionally, it continuously researches flavors to level of advertising to increase adapts to the market’s needs, reach an optimum product brand awareness and adds Diversification introducing its carton pack mix that suits consumer product or promotion specific product line in 2007 to preferences advertising . Obour Land relies on its capitalize on the increasing management’s extensive hygiene awareness, enabling New Products expertise in the F&B market it to hold and maintain a . The Company is investing and seeks to diversify from leading market position its core cheese products in new subcategories of the cheese market and enter into . Moreover, the Company is in (mozzarella and complimentary product the process of introducing spreadable cheese) and segments / markets that new product packaging can leverage existing is venturing into new platforms product categories (juice and milk)

16 Marketing Strategy Overview (2/2)

Communication Channels

. Obour Land adopts an efficient communication Obour Land launches large and extensive marketing campaigns, mainly using above the line (“ATL”) and below the line (“BTL”) communication strategy enabling it to channels complemented by social media campaigns and sponsorships, to maintain strong brand awareness and loyalty among consumers strengthen its brand positioning and maintain Above The Line Media Campaigns Below The Line Media Campaigns a high level of awareness of its . The Company regularly engages with reputable advertising . In an effort to raise awareness of existing products and introduce products agencies to launch ATL media campaigns, including television, new products, the Company engages in one on one media . The Company radio, internet and print advertisements, that target a wide campaigns using BTL activities covering on the ground presence consolidates all its consumer audience and activations where customers receive brochures and free products under the samples of products “Obour Land” brand TV Ads Print Ads Activations in Sports Clubs name to maximize scale . All communication channels used target A, B and C income brackets

Sponsorship Social Media “Moving Billboards”

. Obour Land sponsors one of the most . Obour Land has an active Facebook . Obour Land’s trucks are considered to viewed sports events in Egypt, the account, with more than 157K likes, be a source of communication to Egyptian Football Cup, which has which it utilizes to maintain its customer consumers as they are used as moving substantially raised awareness as it is relationships and raise awareness about billboards depicting pictures of the now called the Obour Land Cup new promotions and products Company’s different product offerings . In 2016, Obour Land started sponsoring the Egyptian Premier League

Obour Land Cup & Egyptian Premier League Facebook Page Distribution Vehicles

17 II. Obour Land In Depth C. Sales & Distribution Sales Channels

. Obour Land’s Sales Breakdown by Channel Branches Overview management controls the pricing of its # of Storage Capacity products through: 100% # 3% 3% 3% Branch Sales 5% Fleet # Carton # Plastic - Down payments by 90% Rep Packs Tubs wholesalers to lock 27% 26% 80% 29% in prices 37% Al Sharkeya 13 13 3,500 350 70% Al Mansourah 5 5 3,350 400 - All wholesalers

60% have to sign a Kafr Al Sheikh 3 3 2,400 125 contract at the 50% Company’s Al Beheira 6 6 4,320 600 premises 40% 71% 70% 66% Al Menoufeya 5 5 4,000 500 - Manages pricing 30% 60% Tanta 6 6 1,800 250 regionally by 20% controlling Menya 5 5 3,500 220 quantities supplied 10% to retailers through 0% Assiut 6 6 2,000 525 sales 2013 2014 2015 9M 2016 representatives and Alexandria 19 19 5,000 2,200 branches Wholesalers Retailers Key Accounts 6th of October 18 18 18,000 600 The Company Sales Average - Overview 1 minimizes sales Channel Discount Total 86 86 47,870 5,770 through chains and Wholesalers, representing the Company’s hyper markets, indirect sales, purchase the products from Maximum Handling Capacity which typically Wholesalers 5% # Fleet Obour Land’s production facility and sell (Tons/Day) command high them to smaller groceries and supermarkets discounts and credit ▲12% ▲12%

terms, attracting 650 605 605 210 201 201 traders who stock Retailers represent the sales carried out by 191 600 555

190 up at deep the Company’s sales representatives who 550 Retailers 2% 479 discounts and distribute the products through the 170 161 500

manipulate the Company’s branches spread across Egypt 450 150

price of the product 400

130 in the market Key accounts represent the chains and 350

110 hypermarkets and makes up the smallest 300

90 Key 250 contribution of the Company’s sales as it 10% Accounts implements a strict policy to control products’ 2013 2014 2015 9M 2016 2013 2014 2015 9M 2016 pricing and to sell on a cash basis 19 % 2013-2015 CAGR 1 Average discount offered to each sales channel Sales Division Structure

Sales Division Structure Key Responsibilities Sales Support Functions

Customer Service Representative . The Company’s sales division is headed by the steering committee which sets sales targets and plans of the Company and establishes performance goals for the department on a regular basis . Obour Land also employs two customer service representatives in charge of client Development and Planning Committee . Obour Land has 10 branches spread across Egypt, specifically in Al Sharkeya, Al management whereby they ensure Composed of the Chairman, CEO, and Mansourah, Kafr El Sheikh, Al Beheira, Al Menoufeya, Tanta, Menya, Assiut, customer satisfaction and efficient delivery th General Manager of the Production Facility Alexandria and 6 of October, excluding the production facility in Obour city of products . These branches successfully directly distribute the Company’s products to 23 of . They also address clients’ questions and Egypt’s governorates; the remaining four (Suhag, Luxor, Aswan and North Sinai) concerns, resolve any issues, and are serviced through indirectly through retailers communicate major issues to the sales director of the respective branch

. A dedicated sales director oversees the Company’s sales operations, Sales Director (11) communicates the overall sales strategy and supervises the realization of the sales plan and the profitability objectives GPS Tracker

. A regional manager is assigned to the Delta region and another to the Upper Egypt Regional Manager (21) . The Company utilizes two GPS tracking region who are in charge of implementing the sales plan communicated to them systems, one for the direct distribution vehicles in Cairo and one for the vehicles in the 22 other governorates . Each region is split into two areas and each area is managed by an area manager Area Manager (41) who reports to his respective regional manager . The system enables the sales director and the steering committee to monitor their overall distribution speed and reach, and . A branch manager is assigned to each of the 10 branches to ensure that their Branch Manager (101) to help track any inefficient shipping route respective sales plan is implemented with the utmost efficiency and quality overlaps

. Each branch has a dedicated sales accountant who monitors the inflow and Sales Accountant (101) outflow of products and cash collection on a daily basis

. Obour Land employs a total of 86 sales representatives who sell its products to current and prospective customers and arrange shipping schedules Sales Representative (861) . Moreover, each sales representative is allocated a truck and driver to fulfill the delivery of merchandise

1 Represents the number of employees in the specific position 20 II. Obour Land In Depth D. Human Resources Human Resources

Recruitment # of Employees by Department Training

. Obour Land has developed a standardized Finance . The Company strives to conduct dynamic training and organizational recruitment process which includes testing material and HR & 2% development programs to ensure that new employees are up to speed with the Operations training requirements Adminstration Company’s practices as well as to ensure that existing employees are 7% 47% . The typical interviewing process is divided into two stages: Total consistently up-to-date with the industry’s best practices - HR interview, where the candidate’s general skills 1,361 are examined Sales & . Employees receive various training courses covering different areas - Committee interview, where the HR head and the Distribution including operations, accounting, and safety relevant department head examine the candidate’s 44% capabilities and skills that are needed to fulfill the designated role . Plant employees receive a special training that is offered by an ex . The recruitment function coordinates among different Tetra Pak engineer in order to carry out machinery maintenance in departments to gauge their recruitment needs and the future and eliminate the need for outsourcing accordingly match these departments with the highest quality human capital available in the market

HR Operations & Administrations Compensation & Benefits

. The HR Operations function is responsible for all administrative . The function is responsible for budgeting responsibilities as well as operations of the department that include keeping records of insurance the execution of the compensation and benefits policies, in addition to coverage, personnel transactions, hires, promotions, transfers, and terminations monthly payroll, transactions entry, and administrating sales . Responsible for handling of medical and social insurance for all workers and filing of incentives quarterly & annually relevant claims

22 III. Historical Financials and Business Plan Historical Income Statement

2013 2014 2015 9M 2016 . The provisions for expected EGP claims are related to the Revenues 528,868,362 926,979,665 1,169,837,613 1,054,286,976 Company’s expected tax claims Cost of sales1 (467,487,279) (835,651,737) (985,062,271) (827,319,660) Gross Profit 61,381,083 91,327,928 184,775,342 226,967,316

Gross Profit Margin 12% 10% 16% 22%

Selling and marketing expense1 (19,906,976) (26,702,550) (46,645,944) (68,898,303)

General and administrative expense1 (2,963,581) (3,945,846) (4,674,091) (4,759,170) EBITDA 38,510,526 60,679,532 133,455,307 153,309,843

EBITDA Margin 7% 7% 11% 15%

Depreciation 5,762,866 8,042,793 10,044,891 9,699,818

EBIT 32,747,660 52,636,739 123,410,416 143,610,025

EBIT Margin 6% 6% 11% 14%

Other income (loss) (263,085) 201,794 2,522,059 1,907,961

Provision for expected claims (4,386,485) (6,028,106) (5,730,770) (1,767,597)

(Loss) gain from disposal of fixed assets 3,648 198,825 (51,050) 256,218

Foreign exchange difference (313,944) (178,319) 913,605 519,941

Interest income 143,607 177,642 1,253,987 1,455,929

Interest expense (1,032,770) (911,101) (2,258,525) (3,406,348)

EBT 26,898,631 46,097,474 120,059,722 142,576,129

Income tax (7,788,445) (14,014,480) (28,208,203) (32,463,677)

Net Profit 19,110,186 32,082,994 91,851,519 110,112,452 Net Profit Margin 4% 3% 8% 10%

24 Source: Company Financial Statements 1 Excludes depreciation expense Historical Balance Sheet

EGP 2013 2014 2015 9M 2016 . Long term liability is related to 99,691,781 99,131,395 182,527,661 packaging machinery acquired Fixed Assets 190,735,439 from Tetra Pak and is Projects Under Construction 8,691,932 40,886,437 34,865,836 100,181,733 discounted at an annual rate Total Non-Current Assets 108,383,713 140,017,832 217,393,497 290,917,172 of 4%

. The loan from shareholders Inventories 74,722,292 55,982,298 131,297,821 250,124,081 was used to acquire two plots Accounts & Notes Receivable 4,345,346 6,798,751 13,067,057 10,859,435 of land adjacent to the Prepayments & Other Debit Balances 14,696,369 11,661,405 29,725,286 71,260,821 Company’s headquarters in Obour City, as well as Cash on Hand & at Banks 28,997,101 93,417,825 125,600,700 86,888,182 purchase and pile up inventory Total Current Assets 122,761,108 167,860,279 299,690,864 419,132,519 at low price points Total Assets 231,144,821 307,878,111 517,084,361 710,049,691

Provision for Expected Claims 6,241,124 12,269,230 17,826,168 19,477,995 Credit Facilities 1,324,520 2,723,993 31,384,204 97,879,732 Accounts & Notes Payable 44,903,919 43,410,684 17,981,042 100,995,120 Loan From Shareholders - - 95,000,000 - Long Term Liabilities - Current Portion 12,530,029 15,315,071 18,451,657 4,120,706 Income Tax Payable 3,050,932 10,761,582 20,564,632 27,772,170 Dividends Payable 14,362,410 278,261 - - Accrued Expenses & Other Credit Balances 48,430,553 55,583,194 11,876,752 13,136,291 Total Current Liabilities 130,843,487 140,342,015 213,084,455 263,382,014

Long Term Liabilities - Non-Current Portion 2,367,806 11,063,560 10,474,359 41,614,783 Deferred Tax Liabilities 6,591,103 6,722,374 10,348,538 11,763,433 Total Non Current Liabilities 8,958,909 17,785,934 20,822,897 53,378,216 Total Liabilities 139,802,396 158,127,949 233,907,352 316,760,230

Paid up Capital 42,500,000 100,000,000 200,000,000 200,000,000 Amounts Paid in Respect to Capital Increase 33,100,000 25,000,000 - - Legal Reserves 1,199,780 1,926,912 3,068,074 7,660,650 Retained Earnings 14,542,645 22,823,250 80,108,935 185,628,811 Total Equity 91,342,425 149,750,162 283,177,009 393,289,461 Total Equity & Liabilities 231,144,821 307,878,111 517,084,361 710,049,691

25 Source: Company Financial Statements Forecasted Income Statement

. The provisions for expected EGP 2016E 2017F 2018F 2019F 2020F 2021F claims are related to the Revenues 1,436,292,000 2,088,582,190 2,752,644,648 3,421,231,788 4,017,204,106 4,545,223,667 Company’s expected tax claims Cost of sales1 (1,147,358,036) (1,667,131,821) (2,194,400,077) (2,730,050,168) (3,207,775,154) (3,631,030,561)

Gross Profit 288,933,964 421,450,369 558,244,571 691,181,620 809,428,952 914,193,105

Gross Profit Margin 20% 20% 20% 20% 20% 20%

Selling and marketing expense1 (86,979,395) (134,892,175) (163,878,751) (203,683,099) (218,875,413) (247,644,302)

General and administrative expense1 (8,737,168) (16,651,391) (22,243,593) (27,646,317) (32,462,255) (36,729,080)

EBITDA 193,217,401 269,906,803 372,122,227 459,852,204 558,091,284 629,819,724

EBITDA Margin 13% 13% 14% 13% 14% 14%

Depreciation (13,951,213) (24,396,153) (27,693,926) (29,327,627) (32,277,040) (32,878,923)

EBIT 179,266,188 245,510,650 344,428,301 430,524,576 525,814,244 596,940,801

EBIT Margin 12% 12% 13% 13% 13% 13%

Other income (loss) 2,236,547 - - - - -

Provision for expected claims (1,767,597) - - - - -

Interest income 2,000,000 2,208,642 5,228,259 10,584,859 16,817,579 16,817,579

Interest expense (5,310,736) (7,603,815) - - - -

EBT 176,424,402 240,115,476 349,656,560 441,109,435 542,631,822 613,758,379

Income tax (39,695,490) (52,683,425) (77,330,169) (97,907,065) (122,092,160) (138,095,635)

Net Profit 136,728,912 187,432,052 272,326,392 343,202,369 420,539,662 475,662,744

Net Profit Margin 10% 9% 10% 10% 10% 10%

26 1 Excludes depreciation expense Forecasted Balance Sheet

EGP 2016E 2017F 2018F 2019F 2020F 2021F . Payables of fixed assets purchases relates to Fixed Assets 309,815,291 312,941,541 331,067,529 328,024,738 357,336,854 351,876,477 machinery acquired from Tetra Projects Under Construction 34,865,836 34,865,836 - - - - Pak and is discounted at an annual rate of 4% Total Non-Current Assets 344,681,127 347,807,377 331,067,529 328,024,738 357,336,854 351,876,477

Inventories 272,023,426 274,049,066 300,602,750 336,581,528 395,479,129 447,661,302 Accounts & Notes Receivable 19,675,233 34,332,858 52,790,445 65,612,664 77,042,271 87,168,673 Prepayments & Other Debit Balances 90,674,475 137,024,533 180,361,650 224,387,685 263,652,752 298,440,868 Cash on Hand & at Banks 79,048,659 141,815,561 381,010,353 677,475,499 1,004,282,355 1,441,745,908 Total Current Assets 461,421,792 587,222,019 914,765,199 1,304,057,376 1,740,456,506 2,275,016,752 Total Assets 806,102,920 935,029,396 1,245,832,728 1,632,082,115 2,097,793,360 2,626,893,229

Provisions 19,477,995 19,477,995 19,477,995 19,477,995 19,477,995 19,477,995 Credit Facilities 101,384,204 - - - - - Accounts & Notes Payable 136,011,713 205,536,800 270,542,475 336,581,528 395,479,129 447,661,302 Other Current Liabilities 14,362,920 20,885,822 27,526,446 34,212,318 40,172,041 45,452,237 Total Current Liabilities 271,236,832 245,900,617 317,546,917 390,271,840 455,129,165 512,591,534

Payables of Fixed Assets Purchases 101,826,846 74,624,408 47,421,970 23,710,985 4,025,244 0 Deferred Tax Liabilities 11,763,433 11,763,433 11,763,433 11,763,433 11,763,433 11,763,433 Total Non Current Liabilities 113,590,279 86,387,841 59,185,403 35,474,418 15,788,677 11,763,433 Total Liabilities 384,827,111 332,288,458 376,732,320 425,746,259 470,917,842 524,354,967

Total Shareholders Equity 421,275,808 602,740,938 869,100,408 1,206,335,856 1,626,875,518 2,102,538,262 Total Equity & Liabilities 806,102,920 935,029,396 1,245,832,728 1,632,082,115 2,097,793,360 2,626,893,229

27 IV. Contact IR Contact IR

[email protected] Headquarters Ahmed Nour El-Din Hassan st Direct: +202 4881 2219 Obour City, 1 Industrial Zone Head of Investor Relations, Investments Block 13012 & Corporate Finance Mobile: +201 000 733337 Greater Cairo, Egypt

Fax: +202 4881 2218

Visit our IR website: ir.obourland.com