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March 2017
Obour Land For Food Industries
Analyst Highlights Presentation
3
Disclaimer
This presentation is being provided to you on a confidential basis and may not be distributed or reproduced in any form.
This presentation is intended for information purposes only and does not constitute or form part of an offer for sale or subscription or an invitation or
solicitation of an offer to subscribe for or purchase securities of any kind and neither this document nor anything contained herein shall form the basis
of any contract or commitment from any party whatsoever.
This presentation has been prepared by Obour Land for Food Industries SAE (“Obour Land”) and reflects the management’s current expectations or
strategy concerning future events and are subject to known and unknown risks and uncertainties.
Some of the statements in this presentation constitute "forward-looking statements" that do not directly or exclusively relate to historical facts. These
forward-looking statements reflect Obour Land’s current intentions, plans, expectations, assumptions and beliefs about future events and are subject
to risks, uncertainties and other factors, many of which are outside Obour Land’s control. Important factors that could cause actual results to differ
materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Obour Land undertakes no
obligation to revise any such forward-looking statements to reflect any changes to its expectations or any change in circumstances, events, strategy or
plans.
Because actual results could differ materially from Obour Land’s current intentions, plans, expectations, assumptions and beliefs about the future, you
are urged to view all forward-looking statements contained in this presentation with due care and caution and seek independent advice when
evaluating investment decisions concerning Obour Land.
No representation or warranty, express or implied, is made or given by or on behalf of Obour Land or any of its respective members, directors, officers
or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this
presentation.
These materials are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality,
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By attending the presentation to which this document relates or by accepting this document you will be taken to have represented and warranted that
you have read and agree to comply with the contents of this disclaimer.
4
Table of Contents
I. Industry Overview
II. Obour Land In Depth
III. Historical Financials and Business Plan
IV. Contact IR
I. Industry Overview
6
8%
5% 5% 5%4%
4% 4%3% 3% 3%
3% 3%
2%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Lib
ya
Moro
cco
Nig
eria
Egypt
Tun
isia
Qa
tar
Alg
eria
Un
ited
Ara
b E
mira
tes
Turk
ey
Le
ba
no
n
Sau
di A
rab
ia
Kuw
ait
Sou
th A
fric
a1,035
1,193
1,450
1,623
1,894
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2010 2011 2012 2013 2014
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)
GDP Per Capita (2015-2020 CAGR) Disposable Income (EGP bn) Consumption (% GDP)
89
78
40
35 3431
11 107 6 5 4 4 2
2.0%
1.0%
1.7%
2.6%
0.9%
2.0%
1.0%
2.9%
2.2%
1.4%
1.0%
2.8%
3.1%
2.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
10
20
30
40
50
60
70
80
90
100
Population (mn) 2015-20 CAGR (%)
171
185
214 213221
90
110
130
150
170
190
210
230
2010 2011 2012 2013 2014
< EGP 3K20%
EGP 3K-4K25%
EGP 4K-5K20%
EGP 5K-6K12%
EGP 6K-8K12%
EGP 8K-12K7%
> EGP 12K5%
Expenditure Brackets
95%89%
84% 82% 80% 78%
59% 56% 56%
48%
29%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Egypt Turkey MoroccoSaudi ArabiaUnited Arab EmiratesQatar
▲16%
2010-2014 CAGR%
35 36
37
38
39
1.9%2.1%
2.2%2.3% 2.3%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
33
34
35
36
37
38
39
2010 2011 2012 2013 2014
0-14 Yrs32%
15-24 Yrs18%
25-54 Yrs38%
55-64 Yrs7%
65 Yrs +5%
Source: Euromonitor, IMF, World Bank and CAPMAS
▲7%
7
13.8
9.4
5.75.1
3.53.0
2.5 2.3 2.31.6
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
France Italy USA Egypt Turkey Saudi Arabia South Africa UAE Algeria Morocco
Cheese is an
Egyptian household
staple and an
affordable source of
protein and as
such, Egypt’s
cheese per capita
consumption is
above the world
average
Unprocessed soft
cheese remains the
largest and the
fastest growing
subcategory in the
cheese market
Cheese Consumption per Capita (Kg)
Cheese Market Overview
Source: Euromonitor
Cheese Market Size (EGP mn)
6,9277,758
8,742
9,801
11,022
12,930
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014 2015
▲13%
2010-2015 CAGR%
Cheese Market Value Breakdown by Type (%) Growth by Cheese Type (2010-2015 Value CAGR) (%)
5,084 5,837 2,008 12,9302010 2015
2015 Total Value (EGP mn)
52%
31%
17%
Unprocessed Hard Cheese Unprocessed Soft Cheese Processed Cheese
45%
39%
16% 19%
10%12%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Unprocessed SoftCheese
Unprocessed HardCheese
Processed Cheese Total Cheese
8
Cheese Market Categories
Soft Unprocessed Cheese (White Cheese) Hard Unprocessed Cheese Processed Cheese
Description
Natural/white cheese; fastest growing
category
Prepared with natural ingredients
(fresh/powder milk), hence perceived as
healthy
Targets the mass market due to
affordability and product varieties
Multipurpose product used as snack or
main meal component
Most popular segment
Artisanal production
Distinctive smell, varying according to
stage of age
Has several forms including: Roumy,
Gouda, Cheddar, Emmental, among
others
Niche product, targeting consumers with
westernized eating habits
51% natural cheese, includes
preservatives, salt and artificial
ingredients
Characterized as less fatty and salty than
other cheeses
Premium pricing due to lower mass
appeal
Popular for sandwiches and as a cooking
ingredient
Market Value and Growth Profile
(EGP mn, %)
Product types/Packaging
Artisanal production (plastic tubs/buckets
only)
Organized production (carton packs,
plastic tubs/buckets)
Blocks
Slices
Shredded
Triangles, jars (glass & plastic)
Sales Channels
Traditional/unorganized grocery retail
outlets dominate
Modern trade penetration is low (no
access to remote areas, etc)
Tubs/buckets mainly limited modern trade
due to refrigeration needs, restricting their
growth
Carton packs (no refrigeration, longer
shelf life) driving growth
Both traditional and modern outlets and
require special storage section
Largely limited to modern retail outlets as
it typically requires refrigeration in
transport and storage
Accordingly, segment’s growth is
constrained by under penetration of
organized retailers but that could change
as modern trade chains expand
Key Players
Local labs especially for Roumy, and
other imported brands such as Frico
3,598 3,927 4,313 4,702 5,130 5,837
3,000
3,500
4,000
4,500
5,000
5,500
2010 2011 2012 2013 2014 2015
2,175 2,555 3,007 3,518 4,137 5,084
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
2010 2011 2012 2013 2014 2015
1,154 1,276 1,422 1,581 1,756
2,008
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2010 2011 2012 2013 2014 2015
▲10%▲19% ▲12%
Source: Euromonitor
2010-2015 CAGR%
9
White Cheese Market Competitive Landscape
Company OverviewBrandsCarton Pack
Market Share1 (%)
Obour Land is the
fastest growing
white cheese
producer in Egypt,
growing its market
share in the carton
pack from 23% in
2013 to 39% as of
9M 16
White Cheese Market – Competitive Landscape
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
201 vehicles and 10 distribution centers. The Company has a total head count of
1,361 employees
39% EGP 1,054mn
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.
Domty was listed on EGX and started trading on March 22nd, 2016 with a current
market capitalization of EGP 1,283mn
43% EGP 981mn
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
43%, however, the company did not adapt to the changing consumer
preferences, and hence lost market share to Obour Land and Domty
5% NA
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
and Dairy Feta cheese and Panda Istanbully cheese in Tetra Pak packages. The
company was acquired by Pioneers Holding in 2015
6% EGP 422mn2
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
private label brands spread across the Middle East. The company operates as a
subsidiary of Lactalis International
2% NA
Source: Nielsen Retail Audit, Company financials1 9M 16 market share by value2 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
9M 16 White
Cheese Sales Value
II. Obour Land In Depth
A. Production
11
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
Usage
Eight production
lines of soft cheese
125g, 250g & 500g
Head office +
four production lines
of soft cheese 80g,
125g & 250g + three
new production lines
of soft cheese
Will be utilized for
the production of
juices and fresh milk
Being revamped to
be utilized for the
production of
spreadable cheese
Ground floor is used
as storage space
Ground floor is used
as storage space
Ground floor is used
as storage space
12
Obour City Location Plants Location
14 15
7 & 8
13 16
14 (2)
12
Planning
In light of the monthly sales targets set by the senior
management, the Company formulates a production plan
Strategic as well as safety stocks of each material are
determined to provide the Company with the flexibility to
respond to changes in the demand pattern without any
interruption to production operations
Production Value Chain
Raw Material Procurement
Inspection
Raw Material Inventory ManagementProduction
Warehousing
Planning
Raw Material Procurement
A diversified list of suppliers is used for main raw
material requirements in order to limit concentration
risk and ensure better raw material quality/cost
efficiency, hence enabling the Company to mitigate
fluctuations in raw material prices
Inspection
The inspection process occurs simultaneously
with the ongoing purchasing process
Materials are inspected according to the
Company’s internal standards as well as strict
international quality standards
Any raw material items below set standards are
returned to their respective suppliers
Warehousing
The products are then transported to the
Company’s warehouses
In the local market, products are distributed to
consumers through any one of the Company’s
distribution channels
Production
An experienced and highly trained production team
thoroughly monitors the entire production process to
ensure minimal waste levels and uniformity of final
products
The production process has proven to be efficient in
reaching final product quality with minimal human
intervention
Raw Material Inventory Management
Following inspection, raw materials are transferred to
storage warehouses
Raw materials are then allocated to the production process
depending on the anticipated demand
Usage patterns are calculated based on a thorough
historical trend analysis that combines both financial and
operational parameters
1 2
3
45
6
13
Production Process
White Cheese Production Process
Receiving Raw Materials
Cooling &
Distribution
Raw Materials Inspection Powder Milk Mixing HomogenizationFirst Round of
Pasteurization
UltrafiltrationSecond Round of
PasteurizationAdditives Packaging Incubation
1 2 3 4 5
6 7 8 9 10 11
Tetra Pak supplies the
packaging materials used
for carton pack products
Obour Land imports skimmed milk
powder, milk protein concentrate
and natural butter, the main raw
materials used in the production
process
The Company operates two
laboratories, chemical lab and
microbiology lab, for quality
inspection of raw materials
using the sampling method
Skimmed milk powder is then
mixed with milk protein
concentrate, natural butter,
vegetable oil and water at a
regulated temperature to form
input mixture used in the
production process
Concentration of each raw
material in input mixture would
vary in accordance to the type
of final white cheese product
Input mixture is pumped into
tanks to homogenize the
mixture through the breakdown
and spread of fat
Within 15 seconds,
temperature in tanks is raised
to 85 degrees Celsius to kill all
the bacteria that could spoil the
cheese
The standard temperature for
pasteurization is 72 degrees
Celsius, however, the
Company raises it to 85 as a
measure of precaution
Water is separated
through filters and
disposed of, to produce a
concentrated mixture
A second round of
pasteurization takes
place in order to ensure
no bacteria remains in
the mixture
Salt, calcium and
potassium are added to
the mixture; additionally,
glucono delta lactone is
used to reduce the
mixture’s pH levels to
create the acidic taste of
cheese
Final product cheese is
cooled in fridges with a
temperature of 3 – 5
degrees Celsius awaiting
distribution
Cheese sold in plastic
tubs is cut into smaller
pieces, filled into trays,
and placed in
temperature controlled
incubators for four hours
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
14
19.9
32.7
9.6
-
3.6
65.7
26.1
44.4
12.6
0.33.4
86.7
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
500g 250g 125g 80g Plastic Tubs Total Unprocessed Cheese
2014 2015 Weighted Max Capacity1 (ktpa)
Manufacturing Operations at a Glance
Production Volumes (ktpa)2Tetra Pak Ties
Relaxed Payment Terms for
Equipment: Obour Land enjoys
preferential terms on equipment
purchased such as installments over 4-
5 years
Packaging material rebates: Obour
Land receives discounts on packaging
material volume procured. These
rebates amounted to 15.6% of the total
Tetra Pak expenditure in 2015
Cash discount: Obour Land receives a
discount for early payment for
packaging materials procured; the
Company has been increasing cash
purchases to benefit from this discount
Growth support: The Company
negotiates packaging material discount
arrangements at the time it purchases a
new machine from Tetra Pak. These
discount arrangements are generally
linked to the volume of packaging
material to be procured for use in the
machine, and are typically negotiated
separately for each machine. Any such
discount arrangements would reduce
cost of sales
Marketing support: Obour Land
receives annual marketing support from
Tetra Pak to support its marketing
campaigns of Tetra Pak packaged
products. This support is based on a
percentage of the marketing budget
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
33.0 36.0 47.3 51.9 11.3 14.1 1.8 4.1 4.1
60% 73% 69% 85% 85% 90% 15% 88% 83%
95.6 107.9
69% 80%
Weighted Utilization Rate
II. Obour Land In Depth
B. Marketing Strategy
16
Marketing Strategy Overview (1/2)
Commercial Strategy
Brand Development Product Development Pricing Promotion
Strategic Guidelines
Adapting to Structural Shifts
in the Market
Obour Land seeks to
continuously understand
the wider market landscape
and adapt to the rapidly
changing consumer
preferences
The Company sets high-
level marketing guidelines
that govern its marketing
mix
Diversification
Obour Land relies on its
management’s extensive
expertise in the F&B market
and seeks to diversify from
its core cheese products
and enter into
complimentary product
segments / markets that
can leverage existing
platforms
Strong Brand Equity
Obour Land is one of the most
recognized brands in the local
market, boasting one of the
highest awareness levels
The Company has been
investing in advertising
campaigns to cement the
brand in consumers’ minds
Additionally, it continuously
adapts to the market’s needs,
introducing its carton pack
product line in 2007 to
capitalize on the increasing
hygiene awareness, enabling
it to hold and maintain a
leading market position
Moreover, the Company is in
the process of introducing
new product packaging
New Sizes
Offering packages smaller
than the industry norm,
80gm SKU, helps the
Company price products
more efficiently,
capitalizing on the “on the
go” consumption trend
New Flavors
Obour Land continuously
researches flavors to
reach an optimum product
mix that suits consumer
preferences
New Products
The Company is investing
in new subcategories of
the cheese market
(mozzarella and
spreadable cheese) and
is venturing into new
product categories (juice
and milk)
Strong Ability to Adjust Pricing
The Company adopts pricing
strategy, whereby it prices its
products at a premium to its
competitors, capitalizing on
its premium quality product
offering and its robust brand
equity to implement its long
term strategy of profitable
growth
Advertising Strategy
The Company focuses on
spending efficiently by keeping
costs in line with market average,
without sacrificing exposure. This
is done through directing
marketing communication at
targeted segments, thus
maximizing cost efficiency
Obour Land maintains a strong
level of advertising to increase
brand awareness and adds
product or promotion specific
advertising
17
Marketing Strategy Overview (2/2)
Communication Channels
Obour Land adopts an
efficient communication
strategy enabling it to
strengthen its brand
positioning and maintain
a high level of
awareness of its
products
The Company
consolidates all its
products under the
“Obour Land” brand
name to maximize scale
All communication
channels used target A,
B and C income
brackets
Above The Line Media Campaigns Below The Line Media Campaigns
TV Ads Activations in Sports Clubs
Sponsorship
Obour Land Cup & Egyptian Premier League
Social Media
Facebook Page
“Moving Billboards”
Distribution Vehicles
The Company regularly engages with reputable advertising
agencies to launch ATL media campaigns, including television,
radio, internet and print advertisements, that target a wide
consumer audience
In an effort to raise awareness of existing products and introduce
new products, the Company engages in one on one media
campaigns using BTL activities covering on the ground presence
and activations where customers receive brochures and free
samples of products
Obour Land launches large and extensive marketing campaigns, mainly using above the line (“ATL”) and below the line (“BTL”) communication
channels complemented by social media campaigns and sponsorships, to maintain strong brand awareness and loyalty among consumers
Print Ads
Obour Land sponsors one of the most
viewed sports events in Egypt, the
Egyptian Football Cup, which has
substantially raised awareness as it is
now called the Obour Land Cup
In 2016, Obour Land started sponsoring
the Egyptian Premier League
Obour Land has an active Facebook
account, with more than 157K likes,
which it utilizes to maintain its customer
relationships and raise awareness about
new promotions and products
Obour Land’s trucks are considered to
be a source of communication to
consumers as they are used as moving
billboards depicting pictures of the
Company’s different product offerings
II. Obour Land In Depth
C. Sales & Distribution
19
70%
60%66%
71%
27%
37%29%
26%
3% 3% 5% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 9M 2016
Wholesalers Retailers Key Accounts
Sales Channels
Sales Breakdown by Channel Branches Overview
Branch
# of
Sales
Rep
#
Fleet
Storage Capacity
# Carton
Packs
# Plastic
Tubs
Al Sharkeya 13 13 3,500 350
Al Mansourah 5 5 3,350 400
Kafr Al Sheikh 3 3 2,400 125
Al Beheira 6 6 4,320 600
Al Menoufeya 5 5 4,000 500
Tanta 6 6 1,800 250
Menya 5 5 3,500 220
Assiut 6 6 2,000 525
Alexandria 19 19 5,000 2,200
6th of October 18 18 18,000 600
Total 86 86 47,870 5,770
# FleetMaximum Handling Capacity
(Tons/Day)
161
191201 201
90
110
130
150
170
190
210
2013 2014 2015 9M 2016
479
555
605 605
250
300
350
400
450
500
550
600
650
2013 2014 2015 9M 2016
▲12% ▲12%
Wholesalers
Retailers
Key
Accounts
Wholesalers, representing the Company’s
indirect sales, purchase the products from
Obour Land’s production facility and sell
them to smaller groceries and supermarkets
Retailers represent the sales carried out by
the Company’s sales representatives who
distribute the products through the
Company’s branches spread across Egypt
Key accounts represent the chains and
hypermarkets and makes up the smallest
contribution of the Company’s sales as it
implements a strict policy to control products’
pricing and to sell on a cash basis
Obour Land’s
management controls
the pricing of its
products through:
- Down payments by
wholesalers to lock
in prices
- All wholesalers
have to sign a
contract at the
Company’s
premises
- Manages pricing
regionally by
controlling
quantities supplied
to retailers through
sales
representatives and
branches
- The Company
minimizes sales
through chains and
hyper markets,
which typically
command high
discounts and credit
terms, attracting
traders who stock
up at deep
discounts and
manipulate the
price of the product
in the market
2013-2015 CAGR%
Sales
ChannelOverview
Average
Discount1
5%
2%
10%
1 Average discount offered to each sales channel
20
Sales Division Structure
Development and Planning Committee
Composed of the Chairman, CEO, and
General Manager of the Production Facility
Sales Division Structure
Sales Director (11)
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 has 10 branches spread across Egypt, specifically in Al Sharkeya, Al
Mansourah, Kafr El Sheikh, Al Beheira, Al Menoufeya, Tanta, Menya, Assiut,
Alexandria and 6th of October, excluding the production facility in Obour city
These branches successfully directly distribute the Company’s products to 23 of
Egypt’s governorates; the remaining four (Suhag, Luxor, Aswan and North Sinai)
are serviced through indirectly through retailers
Key Responsibilities Sales Support Functions
Obour Land also employs two customer
service representatives in charge of client
management whereby they ensure
customer satisfaction and efficient delivery
of products
They also address clients’ questions and
concerns, resolve any issues, and
communicate major issues to the sales
director of the respective branch
A dedicated sales director oversees the Company’s sales operations,
communicates the overall sales strategy and supervises the realization of the
sales plan and the profitability objectives
Sales Accountant (101) Each branch has a dedicated sales accountant who monitors the inflow and
outflow of products and cash collection on a daily basis
Sales Representative (861)
Obour Land employs a total of 86 sales representatives who sell its products to
current and prospective customers and arrange shipping schedules
Moreover, each sales representative is allocated a truck and driver to fulfill the
delivery of merchandise
Customer Service Representative
The Company utilizes two GPS tracking
systems, one for the direct distribution
vehicles in Cairo and one for the vehicles
in the 22 other governorates
The system enables the sales director and
the steering committee to monitor their
overall distribution speed and reach, and
to help track any inefficient shipping route
overlaps
GPS Tracker
Regional Manager (21) A regional manager is assigned to the Delta region and another to the Upper Egypt
region who are in charge of implementing the sales plan communicated to them
1 Represents the number of employees in the specific position
Area Manager (41)
Branch Manager (101)
Each region is split into two areas and each area is managed by an area manager
who reports to his respective regional manager
A branch manager is assigned to each of the 10 branches to ensure that their
respective sales plan is implemented with the utmost efficiency and quality
II. Obour Land In Depth
D. Human Resources
22
Recruitment
Obour Land has developed a standardized
recruitment process which includes testing material and
training requirements
The typical interviewing process is divided into two stages:
- HR interview, where the candidate’s general skills
are examined
- Committee interview, where the HR head and the
relevant department head examine the candidate’s
capabilities and skills that are needed to fulfill the designated role
The recruitment function coordinates among different
departments to gauge their recruitment needs and
accordingly match these departments with the highest quality
human capital available in the market
Compensation & Benefits
The function is responsible for budgeting responsibilities as well as
the execution of the compensation and benefits policies, in addition to
monthly payroll, transactions entry, and administrating sales
incentives quarterly & annually
HR Operations & Administrations
The HR Operations function is responsible for all administrative
operations of the department that include keeping records of insurance
coverage, personnel transactions, hires, promotions, transfers, and terminations
Responsible for handling of medical and social insurance for all workers and filing of
relevant claims
Training
The Company strives to conduct dynamic training and organizational
development programs to ensure that new employees are up to speed with the
Company’s practices as well as to ensure that existing employees are
consistently up-to-date with the industry’s best practices
Employees receive various training courses covering different areas
including operations, accounting, and safety
Plant employees receive a special training that is offered by an ex
Tetra Pak engineer in order to carry out machinery maintenance in
the future and eliminate the need for outsourcing
Human Resources
Operations47%
Sales & Distribution
44%
HR & Adminstration
7%
Finance 2%
# of Employees by Department
Total
1,361
III. Historical Financials and Business Plan
24
Historical Income Statement
EGP 2013 2014 2015 9M 2016
Revenues 528,868,362 926,979,665 1,169,837,613 1,054,286,976
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%
The provisions for expected
claims are related to the
Company’s expected tax
claims
Source: Company Financial Statements1 Excludes depreciation expense
25
Historical Balance Sheet
EGP 2013 2014 2015 9M 2016
Fixed Assets 99,691,781 99,131,395 182,527,661 190,735,439
Projects Under Construction 8,691,932 40,886,437 34,865,836 100,181,733
Total Non-Current Assets 108,383,713 140,017,832 217,393,497 290,917,172
Inventories 74,722,292 55,982,298 131,297,821 250,124,081
Accounts & Notes Receivable 4,345,346 6,798,751 13,067,057 10,859,435
Prepayments & Other Debit Balances 14,696,369 11,661,405 29,725,286 71,260,821
Cash on Hand & at Banks 28,997,101 93,417,825 125,600,700 86,888,182
Total Current Assets 122,761,108 167,860,279 299,690,864 419,132,519
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
Long term liability is related to
packaging machinery acquired
from Tetra Pak and is
discounted at an annual rate
of 4%
The loan from shareholders
was used to acquire two plots
of land adjacent to the
Company’s headquarters in
Obour City, as well as
purchase and pile up inventory
at low price points
Source: Company Financial Statements
26
Forecasted Income Statement
The provisions for expected
claims are related to the
Company’s expected tax
claims
1 Excludes depreciation expense
EGP 2016E 2017F 2018F 2019F 2020F 2021F
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
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%
27
Forecasted Balance Sheet
Payables of fixed assets
purchases relates to
machinery acquired from Tetra
Pak and is discounted at an
annual rate of 4%
EGP 2016E 2017F 2018F 2019F 2020F 2021F
Fixed Assets 309,815,291 312,941,541 331,067,529 328,024,738 357,336,854 351,876,477
Projects Under Construction 34,865,836 34,865,836 - - - -
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
IV. Contact IR
29
Contact IR
Ahmed Nour El-Din Hassan
Head of Investor Relations, Investments
& Corporate Finance
Direct: +202 4881 2219
Mobile: +201 000 733337
Fax: +202 4881 2218
Headquarters
Obour City, 1st Industrial Zone
Block 13012
Greater Cairo, Egypt
Visit our IR website: ir.obourland.com