The Savola Group Savola The Sustainability Report 2018 Value Built on Values Strength through Sustainability Sustainability Report 2018 Welcome to Savola Group’s 2018 Sustainability Report This report is the fifth Sustainability Report for Savola, covering the sustainability achievements, performance and activities of its operating companies within the Kingdom of Saudi Arabia, including Panda Retail Company, Afia International Company, United Sugar Company and the Group’s Headquarters (HQ). The scope of this report has also expanded to include our International Food Industries (IFI) business. Although this is our fifth official report, it is the first report on our annual sustainability performance. Previously, we produced sustainability reports on a two-year basis, however, as a result of our ongoing commitment towards sustainability we are now reporting on an annual basis. This report covers the period between January 1, 2018 and December 31, 2018, while the previous Report covered the period between January 1, 2016 and December 31, 2017. A more detailed overview of the scope of this report and coverage can be found on page 03. The Savola Group Sustainability Report 2018 01 Overview 02 03 04 05 06 07 01 Overview > Savola at a Glance 02 > Group CEO Statement 04 > Our Sustainability Team 06 Key Highlights > Our Sustainability Strategy 08 02 Savola World Business > Good Governance 14 Strategy Continues to Guide our Approach > Building an Ethical Culture 18 to being Responsible Citizens > Supply Chain & Procurement 20 > Preventing Bribery & Corruption 23 > Health & Safety 24 4 Million 03 Community People Reached through the Digital Campaigns of Negaderha Program > Community Initiatives and Contributions 28 > Food Waste Reduction 30 04 84% Employees > A Supportive Culture 38 Participation in our Tawer Employee Engagement Survey > Training and Development 42 > Diversity and Inclusion 45 05 +600 Environment > Energy Consumption 50 Attendees to Conferences and Internal > Waste Management 50 Workshops, as Part of Makeen Program > Water Consumption 51 06 5th Our Sector > Customer Satisfaction 54 > Health, Nutrition and Packaging 56 Sustainability Report Published – and our First Annual > Makeen Program 58 Sustainability Report > Effective Risk Management 62 07 About this Report > About this Report 66 > GRI Index 67 > Glossary 70 01 Overview The Savola Group Sustainability Report 2018 Savola at a Glance About Savola Who Are We? We are the leading strategic investment holding Group in the food and retail sectors across the MENAT (Middle East, North Africa and Turkey) region. We maintain a diverse and expanding portfolio of managed and non-managed assets. Across our verticals in food and retail, we operate the largest grocery store chain in Saudi Arabia, producing much-loved everyday household products, including oil, sugar, pasta and frozen foods, in more than 30 countries. We believe in creating “Value Built on Values”. We are Savola. Since 1979, investors have chosen Savola for its strong performance and specialist market knowledge. Number of Panda Stores Number of Herfy Stores Egypt 5 Kuwait 8 Bangladesh 3 Saudi Arabia 214 Saudi Arabia 368 Major/ manufacturing markets Export markets Panda stores Saudi Arabia Afghanistan Ethiopia Libya Palestine Sudan Saudi Arabia Iran Angola France Maldives Qatar Syria Egypt Egypt Bahrain Gambia Mali Rwanda Tanzania Turkey Benin Ghana Mauritius Sierra Leone Tunisia Sudan Cameroon Guinea Mayotte Singapore Turkey Algeria Canada Iraq Morocco Somalia UAE Morocco Cape Verde Italy Mozambique Somaliland Uganda Iraq China Jordan Nepal South Africa United Kingdom Herfy stores UAE Comoros Kenya Netherlands South Korea Yemen Saudi Arabia Congo Kuwait New Zealand South Sudan Kuwait Djibouti Lebanon Oman Spain Bangladesh Eritrea Liberia Pakistan Sri Lanka 02 The Savola Group Sustainability Report 2018 01 Overview 02 03 04 05 06 07 Food Investments Retail Investments Scope of Report Our food vertical includes investments in large Panda Retail is the largest In the scope of this report, we will branded categories across the MENAT region. modern grocery chain in Saudi include International Food Industries Savola Foods is a leader in basic branded Arabia, with 214 stores serving Company (IFI), a subsidiary of Savola consumer packaged goods, which it offers in 116 million customers annually. Foods Company. IFI is the first local more than 30 countries. We are proud to say Panda boasts a proud history, company specialized in producing that many of our products are market leaders a leading market share and specialty fats like shortening, in their respective categories. We continue formidable geographic reach. margarine, coco butter alternatives, to build on our range of established products We also generate profits ghee and butter blend. by expanding into higher-value items and through our long-term diversifying our portfolio. We also generate strategic investments and The company’s factory in Jeddah is profits through our long-term strategic are the largest shareholder in fully supported with an automated investments. We are the largest shareholder in Herfy Food Services Company, and integrated system for refining the Middle East’s leading food manufacturer one of the leading restaurant, and processing all types of and distributor, Almarai, with a 34.52% stake in industrial bakery and meat vegetables fats and has a production the business. In 2018, we acquired a majority processing businesses in capacity of 60,000 MT per year. stake in Al Kabeer Group of Companies, Saudi Arabia, with a 49% The company started production one of the region’s leaders in frozen foods stake in the business. in January 2017 and is now the manufacturing and distribution. primary supplier for top clients in food industry market in KSA. 03 Overview The Savola Group Sustainability Report 2018 Group CEO Statement Delivering a Culture of Sustainability across the Group The mindset of sustainable living is hardwired into the Savola Group. We live in a world which is deeply interconnected; the echoes of every choice we make and action we take ultimately impact both our present and future generations. We aim to embody this mindset through our Employees Leading the Way responsible behavior towards all our stakeholders, Our unique sustainability platform, Savola World, including our community, customers, employees embodies our commitment to our stakeholders and environment. This is not in opposition to and reach beyond our organization to touch our goal of securing growth and profits for our the lives of people throughout the region. Our shareholders and investors rather, we believe employees are our most important ambassadors. sustainable business practices translate into They continue to inspire us to uphold the long-term, profitable success. This philosophy commitments and goals we have set, and is what drives Savola’s purpose: “Value built we, in turn, remain committed to their health, on values.” welfare and success as individuals. Each one of us has a legacy to protect and we In 2018, we maintained our focus on attracting, work to create value that is built upon ensuring supporting and developing our employees the well-being of our people, society, nation, throughout our organization, providing and the generations ahead. world-class employee benefits and lifelong learning opportunities. We also launched and Committed to Sustainability strengthened a number of programs to promote We need to move sustainability into the heart wellbeing and success, and continue to focus of our business. As collective understanding on improving the inclusion of persons with of sustainability issues has evolved, we need disabilities in the workplace, through our to meet our stakeholders’ requirements “Makeen” program, which aims to drive positive and be transparent about our impacts, behavioral change throughout the region. risks, and opportunities we face. We continued to promote healthy living and More frequent sustainability reporting sustainable food consumption and storage reconfirms our commitment to sustainability, through our “Negaderha” program, which in a way that helps us to measure, understand engages with the public and NGOs to reduce food and communicate performance, set goals, and waste in Saudi Arabia. We are also proud about manage change more effectively. By following building strategic alliances with national NGOs proper guidelines and best practice, our in Saudi Arabia during 2018 to help Negaderha sustainability reporting enables us to measure extend its outreach and impact. We remain our maturity and self-awareness and provide committed to the idea of rational, sustainable credible demonstrations of our efforts. consumption and our reduce–reuse–recycle policy 04 The Savola Group Sustainability Report 2018 01 Overview 02 03 04 05 06 07 is designed to limit waste across our operations and encourage others to do the same. Our 2018 Employee Engagement survey of our staff revealed an increase by six points over the results of the last survey in 2016. The survey gives us a useful understanding and knowledge-base to help us improve engagement and establish stronger synergies across our subsidiaries. A Year of Challenges and Opportunities This year, Savola Group has faced strong challenges across all markets, with macro- economic conditions affecting our business. However, we remain focused on the long term and committed to a strategy that will both safeguard our leading market position and allow us to emerge a stronger and leaner organization.