Transcript Slide 1
PADICO Holding
Investors’ Presentation 2009
Agenda
The Palestinian Economy
Overview of PADICO
PADICO Financial Statements
Future Plans 2010 – 2013
The Palestinian Economy
About Palestine
The Palestinian Territory landscape is 6,020 sqkm, divided into the West Bank, East Jerusalem (5,655 sqkm) and Gaza Strip (365 sqkm).
The Palestinian National Authority governs the West Bank and Gaza Strip. It was established in 1994, pursuant to the Oslo Accords between the PLO and the government of Israel.
The Palestinian Economy’s Key Indicators
Total Population Literacy Rate
Demographics
4,016,416 94% Median age Life expectancy at birth 18 years 73.5 years GDP by Sector 25% 14% 14% 13% 11% 9% 5% 5% 5%
5000 4500 4000 3500 3000 1997 1999
Amounts in USD millions
GDP Trend 2001 2003 2005 2007
GDP Trend Real GDP growth rate increased by 2% in 2008 compared to 2007 Estimated growth in 2009 is 6.4% 2010 real GDP growth is projected to be 7.5%
About PADICO
Who We Are
Our Who We Are Mission
• PADICO Holding was the first and largest investment holding company in the Palestinian Territory, established by Palestinian expatriates after the Oslo agreement in 1993.
• PADICO Holding has a paid up capital of USD 250 million and is traded on the Palestine Securities Exchange (PADICO.PS).
• Since its inception in 1993, its mission has been to develop and strengthen the Palestinian economy, through investing in vital economic sectors.
Our Investment Strategy
Invest in Palestine Target ROE of 20% Invest in entrepreneurial projects, targeting infrastructure and environmental sectors in the medium term Invest in large and strategic growth investments Balanced Portfolio Being a leader in the country Diversification Thought Leadership
Risk Management
PADICO manages the risk associated with the political and economic environment through: Sector diversification, with the concentration being on sectors characterized as defensive sectors that are associated with infrastructure, real estate and telecommunications.
A financial portfolio that invests in regional and international equity markets, that is separated from the main operations of the holding company through a subsidiary; Rawan International Investment Co.
PADICO Investments - by sector
A Highlight Of Our Key Investments
Capital * % ** 185.7
31.7
Capital % 70.5
70.9
Capital % 14.1
62.7
Capital % 4.9
41.5
Capital % 26.5
60.1
Capital % 10.00
78.0
*Authorized capital in USD millions ** % owned by PADICO ***Holding as of 31-12-2009
Capital % 26.5
55.3
Results from some of our key investments
Profits 1997 USD 14.3 million Listed Companies 1997 19 Profits 2009 USD 99.2 million Listed Companies 2009 39 Operating Profits 1998 USD (40.4) thousand Total Assets 1997 USD 17.2 million Operating Profits 2009 USD 4.8 million Total Assets 2009 USD 114 million
PADICO Financial Statements
Consolidated Income Statement Summary
(Amounts in USD thousand)
Operating Revenue Profits from Associates Revenue (Loss) from investment portfolios Revenues from Consolidation Recovery of Provision for a loan granted to an affiliate
Total Revenues
Operating Expenses
Total Expenses Net Profit 2006
18,697 16,971 26,250 16,515 23,267 39,508 8,047 11,608 (8,128) 31,018 29,529 340 -
2007
-
2008
-
59,813 64,366 59,815
13,023 11,276 16,984
31,686 28,393 36,075 27,688 35,560 22,526 2009
15,449 6,359
85,478
20,270
43,147 42,236 Net profits
increased by
87.5%
in 2009 compared to 2008 due to: An increase in operating revenues by 18%, backed by the performance of PPC and consolidated revenues of PRICO .
Registration of positive revenues from the investment portfolios compared to a total loss of USD 8.1 million in 2008.
The recovery of provision for a loan granted to an associate (PTIC) amounting USD 6.4 million, following the restructuring process.
Revenues & Net Profit
Revenue Sources Amounts in USD thousand 27,688 Net Profit Amounts in USD thousand 35,560 22,526 42,236
2006 2007 2008 2009
Consolidated Balance Sheet Summary
(Amounts in USD thousand)
Cash at banks
2006
35,500
2007
21,523
2008
20,720
2009
20,862 Current assets
Total assets Total equity 452,527 455,699 530,028 620,197
Current liabilities Total liabilities 62,440 44,249 60,198 83,430 112,051 105,132 144,883 190,492
340,476 350,567 385,145 429,705
Outstanding shares 100,352 98,134 73,805 79,475 249,989 249,989 250,000 250,000
452,527
Total Assets
455,699 530,028 620,197 2006 2007 2008 2009
Total Assets increased by 17% in 2009 compared to 2008 due mainly to the consolidation of PRICO which led to increases of around USD 121 million in: Projects in progress Real estate investments Intangible assets
0.12
Profitability Ratios
EPS
An increase of 89%
0.17
0.14
0.09
6% ROA & ROE
ROA ROE
10% 8% 8% 7% 7% 10% 5% 2006 2007 2008 2009 2006 2007 2008 2009
Capital Structure
Debt Ratios
Debt/Equity Current Ratio
222% 39% 2007 34% 2008 123% 39% 2009
New Loans were used for expansionary purposes; acquisition of affiliates
95%
Stock Performance
Stock Ratios
Closing Share Price (USD) BV/ Share (USD) EPS (USD) 2006
2.98
2007
2.23
2008
1.21
2009
1.19
1.29
0.12
1.33
0.14
1.38
0.09
1.47
0.17
P/E (x) P/BV (x)
24.8
15.93
13.44
2.31
1.68
0.87
7.0
0.82
Market Capitalization (USD Million)
465 558 303 298
Multiples
Future Plans 2010-2013
Where is PADICO heading in the future?
Existing Investments
• Restructuring and focusing its investments in each sector: •Real Estate and Tourism sectors •Manufacturing sector •Services Sector • Divestiture of investments that PADICO has no controlling stake in them or have no future prospects
Future Projects
• Expansions into new and viable sectors mainly in infrastructure and real estate with an allocated budget of USD 100 million in the coming 3 years, 30% long term and 70% short and medium term.
Real Estate Restructuring Plan
Transaction Summary Rationale
Consolidate PADICO activities in the real estate into one structure Establish a strong and a leading company in Palestine The new holding to concentrate on real estate development, management and contracting Merging and acquiring 16 companies into one holding company.
The value of the transaction is USD 95 million PADICO to own a controlling stake in the new holding .
Synergies Status
Cost synergies: Integration in HR, IT and operations practices; especially in terms of purchases and usage of equipment. Revenue synergies: Market and client business integration: Phase one has been completed relating to the due diligence of the related companies in addition to the valuations.
Restructuring of current separate entities is being finalized, in terms of loans repayment and capital reductions.
Business plan is being finalized for the new holding
Manufacturing Sector Restructuring Plan
Transaction Summary
Consolidating 6 companies into one holding company.
The value of the transaction is USD 9.7 million PADICO owns a controlling stake in the holding (PIIC).
Rationale Synergies
Consolidate PADICO activities in the manufacturing sector into one structure Establish a strong and a leading company in Palestine The new holding to invest in Oil production, carton, plastics and packaging industry, in addition to Poultry.
Cost synergies: Integration in HR, IT and operations practices, especially in terms of acquiring raw materials.
Revenue synergies: Market, client business integration especially in terms of effective distribution.
Status
The holding has acquired most related companies in PADICO Portfolio The holding to finalize an internal restructuring and add a strong marketing department
PSE Restructuring Plan
Transaction Summary
Transforming the PSE from a private shareholding company to a public shareholding company Separate the depository and clearance centre from the trading activities PADICO to reduce its holdings in the PSE from 76% to around 50%
Status Rationale
Corporate governance implementation Attract strategic international investors into the PSE.
The Government approved the transformation In the process of marketing the PSE to a strategic investor
Power Generation
There is only one Power Generation Plant in Palestine based in the Gaza Strip and provides only 30% of the electricity needs there.
In the West Bank, Palestinians import around 2 million MWh/ year from Israel to match the demand.
Electricity tariffs are higher than neighboring countries by around 30%. PADICO will establish a power generation station located in Northern West Bank, with a total capacity of 400 MWh. The estimated cost will be USD 300 million, USD 120 million will be financed through equity, while the USD 180 million will be debt.
The plant is expected to start operations by end 2012.
Solid Waste
1.4 million tones of municipal waste is generated every year in the West Bank and Gaza Strip The average growth in waste generation is estimated at 4% per year, depending on population growth, economic growth and the extent to which people adopt consumer and disposable lifestyles. PADICO established the first recycling company in Palestine (including the composting) “ The Palestinian Recycling Company”.
The new company's first pilot projects will be building, managing , and operating a recycling facility in Nablus with a total cost of USD 2 million, to start operations mid 2010
Waste Water
The average quantity of wastewater in Palestine is over 100 mcm per year More than 75% of the waste water go into the ground 80% of the collected wastewater can be retreated and utilized for irrigation.
PADICO will be the first private company to enter the water sector in Palestine.
An MOU has been signed with Jenin Municipality to upgrade the wastewater treatment plant.
The project estimated cost is around USD 1- 2 million, and will start operations beginning of 2011.