Sonae Sgps Sa · EURONEXT:SON
Sonae Sgps Sa — Investor Presentation (June 2014)
41 slides from Sonae Sgps Sa's investor presentation, June 2014
Slide 1: Investor Presentation June 2014
INVESTOR PRESENTATION June 2014
Slide 2: 1. Sonae Overview
Slide 3: Group Structure
1. SONAE OVERVIEW Group Structure 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 — Teleco
Slide 4: Shareholdings
1. SONAE OVERVIEW Shareholdings A STABLE SHAREHOLDER STRUCTURE Reference shareholder, Efanor, a family holding company NYX NYSE EURONEXT 1S) . FREE FLOAT zak OF CIRCA ee LO% Own Shares 0.42% Norges Bank 2.01% Fundacao Berardo 249% Bestinver “BPI stake includes Equity swap of circa122 million Sonae s
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 CORPORATE STRATEGIC PILLARS INTERNATIONAL DIVERSIFY LEVERAGE EXPANSION INVESTMENT STYLE EXCEPTIONAL ASSETS AND COMPETENCIES - NEW GROWTH AVENUES + ADOPT THE MOST APPROPRIA
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 FOQD RETAIL MARKET, WHILE PROTECTING PROFITABILITY
Slide 10: A Leading Brand in Portugal
2. OPERATIONAL REVIEW - SONAE MC A LEADING BRAND IN PORTUGAL EXPOSURE TO DIVERSE FOOD FORMATS SINGLE BRANDING OF SONAE MC STORES UNDER “CONTINENTE” COMPLETED DURING 2011 CONTINENTE CONTINENTE CONTINENTE GORTIAEATE ae MODELO BOM DIA conmnsrs HYPERS SUPERS SUPERS Considered over the last 13 years, one
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 285 BETWEEN HYPERS AND SUPERS 28 * Mainly parapharmacy _ i: _ ; i and coffee shops Continente —C. Modelo C. Bom Dia Other* Con
Slide 12: Market Share Growth
2. OPERATIONAL REVIEW - SONAE MC Market Share Growth REINFORCEMENT FOOD RETAIL MARKET SHARES - 1014 OF LEADERSHIP IN THE PORTUGUESE coytinente FOOD RETAIL +0.9pp t +19pp MARKET Sonae MC 2nd Player 3rd Player ‘4th Player Source: Homescan Nielsen, cumulative YTDevolution - 23°" Feb 2014 Sth Player 6th
Slide 13: 95% 90% 85% 80% 75% 2007 2008 2009 2010 2011 2012 2013
95% 90% 85% 80% 75% 2007 2008 2009 2010 2011 2012 2013
Slide 14: Orthopedy Contact Lenses Supplements
>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: (total of ≈ 16k m2 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 is Wells IN RETAIL Coffee shops and small Health and well-being snack-bars * Typically next to Sonae MC - Parapharmacy, beauty products, hea ith and well-being care + Eye glasses and optical services supers + V
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 INVESTMENT IN OWN BRANDS IN PRIVAT
Slide 18: Profitable growth
2. OPERATIONAL REVIEW - SONAE MC Profitable growth GROWING MARKET 1014 TURNOVER GROWING 1.7% Y.OLY. 1014 Underlying EBITDA margin of 4.4% This growth was achieved despite disadvantageous The same level reached in 1012 (also without Easter SHARE, WHILE seasonality Easter effect, coupled with the high
Slide 19: (*) Source: IMF – World Economic Outlook and World Bank
• • • • • • • • • • (*) Source: IMF – World Economic Outlook and World Bank
Slide 20: International expansion and consolidation of market leadership in Portugal
2. OPERATIONAL REVIEW ~ INTERNATIONAL EXPANSION AND CONSOLIDATION OF MARKET LEADERSHIP INPORTUGAL 20
Slide 21: 1,805 1,132 402 3 1 254 37 12 332 40 12 308 11 3
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: Constrained discretionary consumption in Iberia
2. OPERATIONAL REVIEW - SR Constrained discretionary consumption in Iberia “LL” sales trend - Portugal 1013 2013 «3013 =4Q13 -5% -11% -2h% 5% 1Q14 6% “LL” sales trend - International 1013. 2013 =3Q13 4Q13 17% -12% = =-5% 5% 1Q14 7% ~ TURNOVER Portugal (M€) EBITDA Portugal (M€) 874 877 39 4 it) FYI2
Slide 23: International Expansion
2. OPERATIONAL REVIEW - SR International Expansion INTERNATIONALI- ZATION MOSTLY BASED ON NEW JOINT-VENTURES Worten Canary Islands FRANCHISING CONTRACTS Zippy Canary Islands EXPANSION MODELS: SportZone Canary Islands Zippy Middle East JOINT-VENTURES AND FRANCHISING To be MO Canary Islands ~ > 22 COU
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 ‘om | 90% - SUPPORT” FOR axx | VALUATIONOF ™ RETALIERS oo | 50% + INAN UNCERTAIN © cos! ECONOMIC 30% | ENVIRONMENT oe | 10% + O% + 1) Colruyt Morrison Tesco Sainsbury Carrefour Metro J.Martins Sector: 50% Casino Rallye Boo
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 1.3 billion Euros (Net book value) BLogistics and Offices Third Parties (commercial galleries) HYPERMARKETS (1014) Continente 40 stores 84
Slide 27: 3. Core Partnerships
4. CORE PARTNERSHIPS SONAE SIERRA (Shopping Centres) 50% ownership - Equity Consolidated SONAECOM / NOS (Telecoms) 89.9% voting rights - Equity Consolidated
Slide 28: Sonae Sierra: Resilient Performance
3. CORE PARTNERSHIPS - SONAE SIERRA Resilient Performance A SELF SUSTAINABLE COMPANY WITH INCREASING EXPOSURE TO EMERGING MARKETS IN 1Q14*: + Occupancy rate = 94.6% + Overall tenant sales decreased due to the sale of Parque Principado, ValeCenter and Airone. + Expansion restricted in Europe but part
Slide 29: Sonae Sierra: Growth Avenues
3. CORE PARTNERSHIPS - SONAE SIERRA Growth Avenues GROW IN EMERGENT MARKETS AND SERVICES BUSINESS IPO of Sonae Sierra Brasil 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 ha Nz <S Value CONSOLIDATION UNLOCKS A SIGNIFICANT Zam Creation VALUE CREATION *On February 20% 2014: Following Sonaecom's voluntary August 27 2013: ZON OPTIMUS (NOS) was created tender offer for the acquisition of own shares (price equivalent to €2.45 per Sonaecom sh
Slide 31: 4. Recent Financial Performance
Slide 32: Overview
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. =NET DEBT 4.82bn 378m 78% — -597mMw: ‘ih Lo). * Includes the deconsolidation of app
Slide 33: Turnover
4. RECENT FINANCIAL PERFORMANCE Turnover DESPITE THE SHARP DECLINE INPRIVATE 7 THANKS TO MARKET SHARE GAINS CONSUMPTION FELT IN IBERIA CONSOLIDATED TURNOVER TURNOVER PER BUSINESS (ME) CONSOLIDATED “mes 1031014 Var. SONAE 1.085 1126 4% TURNOVER SONAE MC 774 787 2% GREW 4.670 4.821 SONAE SR 264 291 10
Slide 34: EBITDA
4. RECENT FINANCIAL PERFORMANCE EBITDA IN A DIFFICULT .. SUPPORTED BY THE IMPLEMENTATION OF OPERATIONAL MACRO EFFICIENCY PROGRAMMES ENVIRONMENT, — GROUP'’S UNDERLYING EBITDA UNDERLYING eeToaw a - UNDERLYING wa SONA 603 EBITDA REACHES 330 SONAE We ig 35158 £€60M in1Q14 SONAE RP 27 284% INVEST. MANAGE
Slide 35: Capital Structure
4. RECENT FINANCIAL PERFORMANCE Capital Structure Net Financial Debt 1q14 Retail Units 1,024 Holding & Other 431 Investment Management 44 TOTAL NET FINANCIAL DEBT 1498* “Includes a €200M retail bond. With refinancing needs secured until the end of 2015 Lo) FINANCIAL NET DEBT LTE spectrum payment by
Slide 36: Capital Structure: Convertible Bonds
4. RECENT FINANCIAL PERFORMANCE Capital Structure COVERTIBLE BONDS June 4th 2014 . Sonae issued 210.5 ME 210.5 ME Convertible bond * 122 million shares * Initial conversion price 1.726 €/ share *Premium 35% - Maturity 5 years- redeemed at par at maturity * Coupon 1.625% per annum, payable semi-annua
Slide 37: Capital Structure
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 24 25 2) 20, Fyll 1Q12 1Hl2 9Ml2 FYl2 1013 1Hl3 9M13 FY13 1gl4 “18% HOLDING LOAN -TO-VALUE") 2% 19% 19% | H 18% 17%
Slide 38: 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 ry OBJECTIVE 3.48 cents 5.3% 46% TO MAINTAIN DIVIDEND PER DIVIDEND YIELD ~~—~ PAY-OUT RAT
Slide 39: 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 40: Conclusion
CONCLUSION AN ATTRACTIVE ; ; + ,; ; INVESTMENT * Growing leading market positions in Portugal, while OPPORTUNITY protecting operational profitability * An internationalisation strategy based on a “capital light” approach, enabling future growth and value creation & * Significant deleveraging made po
Slide 41: Contacts / Safe Harbour
INVESTOR PRESENTATION June 2014 SAFE HARBOUR This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that should not be regarded as historical facts. These forward-looking statements are su