Investor Presentation 2014 (Herfy)

Transcription

1 Investor Presentation 2014 (Herfy) 1

2 Disclaimer This document has been prepared by Herfy ( the Company ) solely for presentation purposes. The information contained in this document has not been independently verified and no representation or warranty, expressed or Implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or options contained herein. None of the Company or any of its respective affiliates, advisors or Representatives shall have any liability whatsoever ( in negligence or otherwise) for any loss whatsoever arising from any use of this document, or its contents, or otherwise arising in connection with this document. This document does not constitute an offer or invitation to purchase any shares or other securities in the Company and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. Before making any investment decision, an investor should consider whether such an Investment is suitable for his particular purposes and should seek independent legal accounting, tax or other Appropriate professional advice. Any decision to purchase shares or other securities in the Company is the sole responsibility of the investors who Shall be responsible for his own due diligence. 2

3 Table of Contents 1. Herfy Overview 2. Overview of Fast Food in KSA and the Region 3. Competitive Advantages 4. Financial Performance 3

4 HERFY OVERVIEW HERFY OVERVIEW HERFY OVERVIEW 4

5 HERFY OVERVIEW A. The Company Herfy Food Services Company (Herfy) was originally founded as a limited liability Company on 11 th March 1981 with Capital of SR 1.5 MM. In 2009, the Capital of the Company has been increased to 270 MM. In 2011, the Capital of the Company has been increased to 300 MM. In 2013,the Capital of the company has been increased to 330 MM. In 2014,the Capital of the company has been increased to 462 MM. 5

6 B. Herfy It s Getting Better HERFY OVERVIEW Herfy is the only fast food chain company that is listed in the Saudi food & agriculture sector. The company has grown significantly during the last couple of years. The aggressive expansion strategy of opening around new restaurants each year, coupled with increasing production capacity of bakery and meat divisions, should drive the company s growth over the next three years. 6

7 C. Company Facilities HERFY OVERVIEW The Company employs more than 4,000 employees and owns the following Facilities: 219 Fast Food Restaurants across the Kingdom and 13 outside the Kingdom Bakery Factory in Riyadh Meat Processing Plant in Riyadh New Bakery Plant (Started Operation on June 2012) 21 Chocolate & Pastries Retail Shops Herfy Café & Grill (Fine Dining Rest.) 7

8 HERFY OVERVIEW D. Ownership Structure Savola Group and its affiliates own 49% of Herfy with Savola representative as the Chairman of the Company. Shareholders Savola Group Company Holding % 47.60% Number of shares 21,991,200 Amount (SR) 219,912,000 Mr. Ahmed Hamad Al Saeed 20.30% 9,378,600 93,786,000 Mr. Khaled Ahmed Al Saeed 0.70% 323,400 3,234,000 Savola Packaging Systems Company Limited 0.70% 323,400 3,234,000 Utur Packing Materials Company Limited 0.70% 323,400 3,234,000 Public Shares 30.00% 13,860, ,600,000 Total 100% 46,200, ,000,000 8

9 ast Food in KSA and the REGION Fast Food in KSA and the REGION Fast Food in KSA and the REGION 9

10 Overview of Fast Food in KSA and the Region Saudi fast food market: growing but competitive Many opportunities, few obstacles The Saudi population is one of the fastest growing in the world. Saudi Arabia has a very young generation as 50% is below 20 years old. Furthermore, Although fast food markets in major cities are well penetrated, huge horizontal expansion within these cities offers new opportunities for growth. 10

11 Overview of Fast Food in KSA and the Region HERFY s Restaurant (Core Business) Provides direct Sales and Home Delivery Services of Burgers and other related Meals and Sandwiches. Considered as Herfy s core business with 100% growth in sales in the past 6 years, exceeding SAR. 724 MM for the year 2013 and SAR. 374 MM for the first half of the year The highest contributor to Company Sales representing 84.5% of Total Sales. Company s other segments provide vertical integrations and support to the core business by providing the buns and the meat Herfy has developed new restaurant with a very attractive look and modern interior décor. 11

12 Overview of Fast Food in KSA and the Region Restaurants Sales 800, , , , , , , , , , , , , , ,000 50, , , , , , , , (6 months) 12

13 Overview of Fast Food in KSA and the Region Restaurants Operation Profit 200, , , , , , , , ,000 99, , ,416 98,394 80,000 60,000 40,000 20, months 13

14 Overview of Fast Food in KSA and the Region Herfy : Number of Outlets 14

15 Overview of Fast Food in KSA and the Region Herfy Restaurants in the Kingdom Northern Region 13 Restaurants Tabouk 3 units, Hail 3 units, Ar-Ar 1 unit, Hafer Al-Baten 2, Rafah 1, Sakakah % of the total Restaurants Western Region 21 Restaurants (Jeddah 8 units, Madina 6 units,yanbu 2 units,taif 2 units & Macca 3 units) 9.7 % of the total Restaurants Central Region 134 Restaurants Riyadh 103 units, Al Kharj 5 units, Majmah 1 unit, Shaqrah 1 unit, Qassim 21 units & Zulfi 1 unit, Dawadmi 1 unit, Quawaya 1 unit) 62.3 % of the total restaurants Southern Region 23 Restaurants (Abha 10 units, Khamis Mushait 7 units, Najrhan 2 units & Jizan 4 units, Al-Baha 1 unit) 10.1 % of the total Restaurants Eastern Region 28 Restaurants (Dammam 15units, Al khobar 6 units, Qatif 1 unit, Al Hassa 4 units, Rastanurra 1 unit, Jubail 1 unit) 12.6 % of the total Restaurants 15

16 Overview of Fast Food in KSA and the Region Herfy Restaurants in the Kingdom Central; 134 Northern; 13 Eastern; 28 Southern; 23 Western ; 21 16

17 Overview of Fast Food in KSA and the Region Existing Herfy s Franchised Restaurants in the Region Kuwait 8 Bahrain 2 UAE 3 17

18 Overview of Fast Food in KSA and the Region Aggressive franchise Expansion Plan Herfy s phenomenal franchise success in the GCC countries has encouraged the company to go overseas. With a profound expertise of more than 33 years in the fast food industry, plans are afoot to open more HERFY franchised units in Asia, mainly Southeast Asia where Muslim countries are located such as Malaysia, Indonesia, Brunei, and on the African side of the Mediterranean Basin as well as in Africa, reaching South Africa, where Muslim communities are, taking advantage of the fact that HERFY is a Saudi company, selling all Halal meat products. 18

19 Competitive Advantage Competitive Advantage Competitive Advantage 19

20 COMPETITIVE ADVANTAGES Herfy: Organic Growth is the Current Mode Restaurants segment: aggressive and clever expansion strategy Opening around 20 to 25 stores per year, Herfy plans to continue expanding its restaurant Business. This should not only drive the company s growth, but also enlarge the overall size of The burger market. In our view, what is interesting about our strategy is not so much the Number of stores that Herfy is opening, as its geographical approach. In addition to large cities such as Riyadh and Dammam, Herfy plans to expand in rural areas, suburbs, and Smaller cities where no other restaurant chains exist. Such as (Al-Baha, Ar-Ar, Rafha, Sakaka, Bisha) Bakery division The company opened new production plant that is three times the capacity of the existing one. This plant started production on June During 2013 the second line for slice bread started production. During 2014 the purchase agreement for the third line (Croissant & Cake) has been approved. We believe that we will capitalize on our Distribution network and achieve solid sales growth of 20% in this segment in Meat division: remarkable growth - The meats segment contributed 3.5% of Herfy s revenues for the first half of 2014; however, it grew by 18% compared to the same period of In addition to the market sales, the internal sales to (Herfy Rest.) was 37.5 M SAR for the first half of year 2014, it grew by 3% compared to Moreover both sectors are expected to keep on their momentum of outstanding growth during the upcoming years due to our aggressive expansion plan.. 20

21 COMPETITIVE ADVANTAGES Track Record: Operating in the Fast Food Industry for more than 33 years. Knowledge of Local Market: extensive knowledge in identifying local market food tastes and changing needs. Vertical Integration: the Meat and the Bakery Facilities allow for better control of quality, cost and supply of raw material for its final products. Major ownership by a Leading player in the Food Industry (SAVOLA): enabled Herfy to reach a wider customer base and thus achieve wider distribution for its products. Sales and Distribution function ( network): Herfy owns a fleet of distribution vehicles and does not rely on third parties for distribution of its products. 21

22 FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE 22

23 FINANCIAL PERFORMANCE 1) Summary of Balance Sheet SAR (MM) (6 Months) Assets Current Assets Non-Current Assets Total Assets Liabilities Current Liabilities Non Current Liabilities Total Liabilities Share Holders Equity Total Liabilities Share Holder Equity

24 FINANCIAL PERFORMANCE 2) Summary of Income Statement SAR (MM) (6 Months) Sales Cost of Sales (322.5) (348.3) (387) (482.3) (575.7) (575.6) (294.9) Gross Profit Marketing,Selling Distribution Expenses (22.7) (26.4) (33.5) (34.5) (36.4) (35.9) (18.5) General and Administrative Expenses (28.3) (29.5) (35.6) (43.4) (49.3) (49.4) (26.7) Income from Operation Other Income (Expenses) Income before Zakat Zakat (3) (3.2) (3.5) (3.6) (4.6) (5.3) (2.2) Net Income

25 FINANCIAL PERFORMANCE 3) Sales, Gross profit & Net Profit CAGR ( ) SAR million SAR million SAR million Sales Gross Profit Net Profit 25

26 FINANCIAL PERFORMANCE 4) Historical positive growth in revenues months Meat Plant Bakery Facilities & Shops Restaurants Total Sales 26

27 FINANCIAL PERFORMANCE 5) Historical positive growth in earnings Profit Performance ( ) months Grosss Profit Operating Profit Net Income 27

28 FINANCIAL PERFORMANCE 6) Segment Sales ( ) SAR (thousands) Months Restaurant 363, , , , , , ,909 Bakeries Other 92, , , , ,744 95,993 53,312 Meat Plant 9,862 12,742 18,328 24,374 26,931 28,582 15,424 Total 466, , , , , , ,645 GRAPH (FIGURES %) 28

29 FINANCIAL PERFORMANCE 8) Return on Equity of more than 34% for the past 7 years Return to Stakeholders ( ) 29

30 FINANCIAL PERFORMANCE 9) Financial Ratio SAR (MM) (6 Months) Current Ratio Return on Assets 26.7 % 30 % 27.4 % 27.2 % 28.2 % 25.7 % 24.3 % Return on Equity 37.3 % 39.6 % 35.6 % 35.8 % 37.7 % 34.1 % 32.3 % Return on Sales 19.5 % 22.1 % 21.4 % 20.7 % 21.5 % 22.6 % 22.7 % Total Debt to Assets 26.3 % 22.5 % 23.3 % 24.6 % 25.9 % 23.9 % 25.8 % 30

31 10) Dividends FINANCIAL PERFORMANCE Months SAR (MM) Dividends 31

32 11) Share Performance FINANCIAL PERFORMANCE 32