Roadshow Presentation - October 2018 - CMVM
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Roadshow Presentation
October 2018
Transaction Overview
Company • Sonae MC , SGPS, S.A. (“Sonae MC ”)
• Sonaecenter, Serviços, S.A., currently holding 51.8% of Sonae MC and fully owned by Sonae SGPS, S.A. (“Sonae SGPS”),
Selling Shareholder
which indirectly owns 100% of Sonae MC pre-IPO
Price Range • €1.40 - €1.65
Implied Market Cap • €1,400m - €1,650m
• Secondary shares only
• Base deal of €304m - €359m (217,360,000 ordinary shares)
• Over-allotment option of up to 32,600,000 ordinary shares (15% of base deal)
Offer Size
• Full deal size of €350m - €412m assuming full exercise of over-allotment
• Free float of 21.74% / 25.00% (pre / post over-allotment)
• Upsize option for up to 87,000,000 shares
• Institutional offering (167.4 million shares, 77% of base deal), including (i) international private placement to institutional
Offer Structure investors outside the U.S. pursuant to Reg S, and (ii) Rule 144A to QIBs in the US Rule 144A private placement to U.S. QIBs
• Public offering in Portugal (50.0 million shares, 23% of base deal)
• Euronext Lisbon
Exchange / Ticker
• ISIN: PTMOC 0AE0007 | Ticker: SONMC
• Institutional offering: 8 October – 18 October 2018
Timetable • Retail offering: 8 October – 17 October 2018
• Pricing: 18 October 2018
• Sonae MC : 180 days
Lock-up
• Sonae SGPS: 180 days; on behalf of all entities holding shares in Sonae MC
• Joint Global C oordinators: Barclays, BNP Paribas, Deutsche Bank
• Joint Bookrunners: C aixaBank BPI, Banco Santander, C aixaBI
Syndicate
• C o-lead Managers: Haitong Bank, JP C apital Markets, Mediobanca
• Financial Intermediaries and Bookrunners for the Retail Offering: C aixaBI, Millennium Investment Banking
P.1
Sonae MC is the Leading Food Retailer
in Portugal
Key highlights Port o
Region
Market position
in Grocery retail
1 in Grocery retail e-commerce
in Healthy nutrition
in Para-pharmacies
709 directly operated stores
49% real estate ownership(1) A zores
~30k employees
Turnover ~€4.1bn(2) Lisbon
Region
Madeira
Underlying EBITDA ~€301m (~7.4% margin)(3)
C ontinente
100% brand awareness(4) C ontinente M odelo
C ontinente Bom D ia
~85% loyalty card penetration in Portuguese M eu Super
households(5)
Note: For the purpose of the potential IPO and for this document, Sonae MC business is now defined as: i) the operation of food retail and adjacent formats (brands presented in the next slide), operated directly or through
franchise agreements; ii) ownership and management of related retail real estate properties, part of which is leased to third and related parties, as well as iii) rendering back office services to related parties.
Financial information relates to year ended 31 December 2017 and is based on audited annual combined financial statements for the potential IPO perimeter.
Sonae MC’s store data as of June 2018. Sonae MC has additional 344 franchised stores and 1 outlet store.
(1) Freehold real estate ownership calculated as stores sales area ownership in percentage of total stores sales area (based on December 2017 figures).
(2) Turnover: total revenue from sales and services rendered as of 2017.
(3) EBITDA: EBIT before depreciation and amortization expenses, provisions and impairments losses, Gains/(losses) on the disposal of subsidiaries, losses on the disposal of assets and gains on sales of assets excluding non-
recurring items (net capital gains/losses on the sale-and-leaseback transactions of real estate assets); Underlying EBITDA: EBITDA excluding non-recurring items, defined as net capital gains/losses from sale-and-
leaseback transactions of real estate assets. Underlying EBITDA is adjusted for these items as it impacts comparability and thus provides an understanding of our underlying profitability. EBIT: means profit before interests,
tax, dividends and share of profit or loss of joint ventures and associates.
(4) Based on study by Instituto de Marketing Research (IMR) on behalf of Sonae MC, as of April 2018.
(5) FYE 2017.
Source: Company information, PlanetRetail RNG, INE, CaixaBank BPI, Nielsen, IQVIA, as of 2018 P.2
Multi-format Omnichannel Portfolio
Food retail as core offer, complemented by
adjacent formats Grocery retail portfolio Adjacent formats
8 7 % T OTAL SALES AREA 1 3 % T O TAL SALES AREA
GROCERY
P A RA-PHARMACIES
RETAIL U RBAN
H Y PERMARKETS
( H EAL TH, WE LL -BEIN G
A N D E YE-CARE )
PORTFOLIO
O RGANIC
L A RGE
S U P ERMARKETS
S U P ERMARKETS A N D RE STAURANTS
C O FFE E SHO PS
P ROXIMITY
S U P ERMARKETS
S T ATIO NERY,
B O OKS
A N D G I FTS
E - CO MMERCE
P E T CARE AND
V E T SERVI CES
• Grocery retail portfolio: with five distinct formats in
premium high foot-traffic locations and a P ROXIMITY
comprehensive product portfolio S T O RES D I Y RETAIL
(F RANCH ISE )
• Adjacent formats: complementary proposals that
build on the core food retail proposition to offer a
comprehensive experience for our customers
• E-commerce: leading platform that encompasses both
grocery and adjacent formats
Note: Store area data as of June 2018. P.3
Track Record of
>30 Years of
Consistent Growth Acquire d key Se le cte d acquisitions
com petitor in in he althy nutrition
Made ira
Sonae MC has consistently been Launched Acquire d
at the forefront of market trends loya lty ca rd m ajor
in Portugal – pioneering concepts com petitor
& channels and anticipating
future pockets of consumer
demand
O pe ned 1 st
Launched para -pharmacy
online platform
Ex panded into
prox imity formats
O pe ned
1 st C ontinente store
Key focus areas
Large format supermarkets Proximity, digital,
+ Fine tuning of value proposition health & wellness
+ Operating model sophistication Adjacent formats
Note: Vertical axis illustrates historical turnover evolution in Portugal. P.4
Why Invest in Sonae MC?
1 2 3 4 5 6 7
Attractive Leading food Strong retail Exceptional Highly Strong Clear growth
market retailer in a network & brand power efficient financial strategy
environment highly digital and customer operator performance
competitive platform engagement
environment
Unique #1 food retailer Comprehensive Most recognized Best-in-class Track record of To continue
opportunity with ~22% market network of food retail brand in supply chain growth and FCF growing market
to gain direct share(1) retail formats in Portugal with a capabilities and generation with share and
exposure to urban locations unique loyalty continuous focus best-in-class delivering
the growing complemented by programme on efficiency margin and >40% profitable growth
Portuguese food an unrivalled covering ~85% real estate
retail market digital platform of Portuguese ownership
households (1)
(1) As of 2017
Source: PlanetRetail RNG as of April 2018, INE
P.5
The Portuguese Economy is Thriving 1 A ttractive Market Environment 2 3 4 5 6 7
The Portuguese economy is delivering strong … which is being reflected in higher disposable
growth… income and improved consumer confidence
Nominal GDP growth Portuguese household disposable income(1) - % growth rate
Economic crisis Recovery Solid growth Economic crisis Recovery Solid growth
Forecas ts Forecas ts
3.9% 4.1% 3.8% 3.7% 3.8% 4.0% 4.1%
3.2% 3.4% 3.7% 3.0% 3.6% 3.6%
2.6% 2.8%
1.9% 1.7%
1.1%
(0.4%) (0.2%)(0.2%)
(1.9%) (2.1%)
(3.7%)(3.6%)
(4.4%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Unemployment rate Consumer confidence indicator(2) – quarterly average
Forecas ts
10
15.5% 0
13.9%
-10
10.8% 11.1%
8.9% -20
7.3% 6.7% 6.2% -30
-40
-50
2010 2012 2014 2016 2017 2018 2019 2020 -60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Jul-18
(1) Internal forecast for 2020.
(2) Consumer confidence represents by how much optimistic views of consumers are superior to pessimistic views.
Source: IMF World Economic Outlook database, Ministry of Finance, Eurostat, AMECO
P.6
Portuguese Food Retail Market is Growing and 1 A ttractive Market Environment 2 3 4 5 6 7
Underpenetrated vs. Other European Markets
Portuguese food retail market is expected to continue
its solid growth, one of the highest in Europe… … and is still relatively underpenetrated
Portuguese Food retail market size(1) – €bn 2017 Sales area per 100 inhabitants (2) – sqm
% CA GR Forecasts 44.9
+2.9%
39.8
-0.7% +2.3% Avg.: 33.0 33.7 34.4
22.7
19.2 19.7 27.0
18.1
2011
2012
2017
2018
2008
2009
2010
2013
2014
2015
2016
2019
2020
2021
Food retail market growth – CAGR 2017E-2022E(1) 2022 2017 Gross food retail sales per capita – €k
3.1% 3.7
2.9% 3.2
2.4% Avg.: €2.7k 2.8
Avg.: 2.1% 2.4
1.9% 2.1
1.8% 1.9
0.9%
(1) Gross food retail format national sales.
(2) Comprises area from modern grocery formats.
Source: PlanetRetail RNG as of May 2018. P.7
Portuguese Consumer Preferences are 1 A ttractive Market Environment 2 3 4 5 6 7
Changing
Portuguese consumers are increasingly focused on…
WHERE & HOW
WHAT
they buy HOW MUCH
they buy they pay
+ Proximity/urban + Value
+ Fresher
+ Omnichannel + Choices
+ Healthier
The winners will be those who best adapt to these changing dynamics
P.8
Sonae MC is the #1 Food Retailer in Portugal 1 2 Leading Food Retailer in Portugal 3 4 5 6 7
and has the Most Diverse Portfolio of Formats
2017 Grocery market share in Portugal and
store portfolio
A Leader
in market share in price positioning
in diversity of formats in online grocery
21.9% 20.8% in location of stores (with ~70% market share)
9.5% 8.8% 8.6%
4.1% 2.5% 1.1%
Market entry date 1985 1980 1996 1995 1991 1979 1992 2006
# stores 567(1) ~400 ~50 ~250 ~250 ~540 ~20 ~60
(2)
Hypermarket
Format Supermarket
(4) (2)
Proximity
(3) (2)
E-commerce
Note: Sonae MC store data as of 30 June 2018. Other players as of December 2017.
Presence in formats based on store split as per PlanetRetail RNG in 2017. Hypermarket & Superstores >2,500 sqm; Supermarket 400 – 2,500 sqm; ProximitySonae MC has Demonstrated its 1 2 Leading Food Retailer in Portugal 3 4 5 6 7
Ability to Grow Market Share
2014-2017
2007 2017 market share c hange
1 1
14.0% 21.9% 1.4p.p.
12.3% 20.8% 1.3p.p.
6.4% 9.5% 1.6p.p.
4.9% 8.8% 1.1p.p.
8.3% 8.6% 0.4p.p.
4.4% 4.1% -0.5p.p.
2.0% 2.5% 0.2p.p.
52% 77%
2007 top 8 2017 top 8
players players
market share market share
0.1% in total
1.1% in total
0.2p.p.
market market
Note: Rankings exclude department stores due to specific product sales mix.
Source: PlanetRetail RNG as of May 2018.
P . 10A Price Leader in a Highly Competitive and 1 2 Leading Food Retailer in Portugal 3 4 5 6 7
Promotional Market
Sonae MC’s price leadership… …in a highly promotional market
DECO Basket Price Index(1) Incidence of sales on promotion - % of sales, 2017
46%
120
34% 34%
28%
115 22%
113
113 16%
112
110
106
105 Spain Germany EU Italy UK Portugal
102
102 …although promotional activity has stabilized
100 100
Sep-15 Jun-16 Oct-16 Jun-17 Oct-17 Mar-18 Jun-18 Incidence of sales on promotion - % of sales
Stabilising
50%
Continente Continente Modelo Competitor A 45%
40%
Competitor B Competitor C Competitor D
35%
2.1x
Competitor E 30%
25%
DECO data excludes the benefits of Sonae MC’s loyalty card 20%
which guarantee a 2% minimum annual discount
15%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
(1) Basket prices indexed to the lowest price operator.
Source: Nielsen, as of June 2018; DECO (Portuguese Consumers’ association). P . 11Multi-Format Omnichannel Approach 1 2 3 Strong Retail Network & Digital Platform 4 5 6 7
Designed to Capture all Shopping Missions
8 7 % T OTAL SALES AREA
PR O XIMITY STORES
UR BAN LAR GE PR O XIMITY
Food retail format (SMALLER FORMAT)
HYPER MARKETS SUPER MARKETS SUPER MARKETS
(FRANCHISING)
Year of 1st opening 1985 1989 1997 2011
% of Sonae MC’s total
~38% ~38% ~17% ~7%
food sales area
# of stores 41 132(1) 101 293
# of stores opened in L2Y
1 1 44 90
(2016-17; net)
Average sales area per
~6.8 ~2.1 ~1.2 ~0.2
store (‘000 sqm)
Offering Fresh
(% sales FMCG n/a
area) Non-food
Average # of SKUs (‘000) ~35 ~16 ~9 ~2
Average # of private
~10 ~4 ~3 ~1
label SKUs (‘000)
LFL growth
Positive Positive Positive Positive
(2016, 2017, 1H18)
+
Note: Sonae MC’s store data as of June 2018. Information regarding number of SKUs calculated based on 2017 average monthly figures.
(1) Figure includes 9 Continente Modelo franchised stores located in Azores.
Source: Company information. P . 12Continente has Reinvented the Hypermarket, 1 2 3 Strong Retail Network & Digital Platform 4 5 6 7
focused on High Density Urban Locations
Hypermarkets continue to perform well in
Store format Portugal (largely driven by Continente)…
• Anchored in high quality shopping centres (22 out of Total hypermarket sales in Portugal – €bn
CAGR
41 stores(1) ) or in standalone centres CAGR +2.8%
Forecas ts
+2.8%
• “Destination stores” located in high-density urban 4.2 4.4 4.5
4.2 4.2
locations, extremely difficult to replicate 3.7 3.8 3.8
• Differentiation through price, variety and fresh
products
2013 2014 2015 2016 2017 2018 2019 2020
Selected Continente stores … unlike in many other markets
Total hypermarket sales – CAGR 2013-17
2.8%
0.9%
BA RREIRO MA TOSINHOS 0.1%
-0.2%
-0.8%
-2.8%
TELHEIRA S COLOMBO
(1) Sonae MC’s store data as of June 2018.
Source: Company information, PlanetRetail RNG as of May 2018. P . 13Continente Bom Dia is a Modern Proximity 1 2 3 Strong Retail Network & Digital Platform 4 5 6 7
Format with Significant Further Potential
Portuguese proximity market is
Store format showing strong growth…
• Proximity supermarkets located mainly in cities / Total supermarkets & neighbourhood sales in Portugal – €bn
highly populated areas CAGR
+6.0%
• Modern concept based on quality and variety of fresh CAGR Forecas ts
+5.2% 9.3 9.9
products, targeting daily shopping 8.8
7.9 8.3
7.0 7.5
• High service levels 6.8
• 101 stores as of June 2018 (1) , with parking available
in many of them (unusual vs. most other proximity
stores)
2013 2014 2015 2016 2017 2018 2019 2020
… ahead of other European markets
Total supermarkets & neighbourhood sales – CAGR 2013-17
5.2%
3.1% 2.8%
0.9%
0.1%
-0.5%
(1) Sonae MC’s store data as of June 2018.
Source: Company information, PlanetRetail RNG as of May 2018. P . 14Sonae MC is the Food Retail 1 2 3 Strong Retail Network & Digital Platform 4 5 6 7
E-commerce Leader in Portugal
HOME
• Operating since 2001 and market leader in Portugal: ~70% market share
DELIVERY
• National coverage: >500k registered customers
• Extended assortment: +50K SKUs
• Price, promotions and loyalty card – same benefits as in physical stores
MOBILE
A PP
• Mobile app: ~78k registered users accounting for c.20% of online turnover
CLICK &
COLLECT
• Ability to leverage store estate with click & collect option
DRIVE
THROUGH
• Drive-through option available in Lisbon, Porto and Algarve
SA ME-DA Y
DELIVERY
• Same-day nationwide delivery (7 days/week)
Source: Company information, Euromonitor, CaixaBank BPI. P . 15Diversified Portfolio of Profitable Adjacent 1 2 3 Strong Retail Network & Digital Platform 4 5 6 7
Formats to Complement Core Food Retail Stores
1 3 % T O TAL SALES
A REA
STATIONER Y, BO OKS PET CAR E AND
Description PAR A-PHARMACIES HEALTHY NUTRITION CO FFEE SHO P DIY
AND GIFTS VET SER VIC ES
Year of 1st opening 2005 2005 2005 2007 2014 1995
Owned 200 37 (10 / 27)(2) 129 38 9 31
# stores
Franchised 28 1 (0 / 1)(2) 7 6 - -
# stores opened in L2Y(1)
55 7 (1 / 6) (2) 18 11 8 1
(2016-17; net)
Average size (sqm) ~100 ~260 / 60(2) ~60 ~210 ~100 ~2,000
Average # of SKUs (‘000) ~2 ~3 ~0.4 ~3 ~1 ~11
LFL growth Positive Positive Positive Positive Positive Positive
(2016, 2017, 1H18)
• Para-pharmacies, • C hain of organic • Urban coffee • Stationery, • Pet store brand, • Discounter in the
including health, supermarkets shops, bookstore and providing food, DIY, light
beauty products and restaurants complementing gifts products and construction,
and well-being their offer with services for pets bathroom and
• Ambitious simple meals • C omplemented garden segments
Concept • Eye care expansion plan by convenience • Services include
with several • Focus on coffee, amenities, such grooming as well
openings / pastries and as mail, payshop as veterinary
acquisitions in bread, served in and printing
the last couple of comfortable services
years environments
Note: Sonae MC store data as of June 2018. Sonae MC owns 51% of Go Natural’s restaurants. Sonae MC owns 50% of Maxmat.
(1) Including franchised stores; figure excludes acquisitions.
(2) Split refers to number of stores, number of openings, and average size of supermarkets / restaurants.
Source: Company information. P . 16Unique Loyalty Programme with an 1 2 3 4 Exceptional Brand Power & Customer Engagement 5 6 7
Unrivalled Customer Database Covering
~85% of Portuguese Households
Key areas where we use loyalty
Growing number of active loyalty accounts card information
W ith purchases in the last 12 months
Drive customer strategy
3.1m 3.7m (acquisition and retention)
2.9m 3.0m
2.4m 2.8m
Customize (and personalize)
promotional activity
2007 2008 2009 2010 2011 2017 Improve assortment
management
Key figures and features Support store expansion and
optimisation efforts
• ~85% household penetration(1)
Guide product innovation
• ~88% of Sonae MC sales performed using Continente loyalty card
(…) and MUCH MORE
• Uses euro as “currency” (not points) – guaranteed 2% minimum cash discount on
annual consumption
• Partnerships with other industry leaders across relevant household spending areas (2)
• Launched new digital mobile App last February, which already has c.400k users
Selected partner brands(2) – More than 2,000 PoS
Gas Stations Media Air Transport Banking Quick service restaurants
(1) Company estimate considering an universe of 4.1 million households in Portugal.
(2) Currently has 19 partners across industries.
Source: Company information, INE. P . 17Deep Culture of Efficiency and Innovation, 1 2 3 4 5 Highly Efficient Operator 6 7
with Best-in-Class Supply Chain Capabilities
A
• Well-established procurement relationships
Procurement • Category management with strong analytical support
• In-house private label portfolio development
Permanently
Highly coordinated and monitored
assessed and
B benchmarked to
foster:
Logistics • Centralised transportation and warehousing network
& • Growth
Stock • Highly efficient stock forecasting and execution
Management • Execution quality
• Cost efficiency
C
• Streamlined organisation • Strong service
levels
Store • Continuous improvement
Operations • Agile decision
• Clear focus on execution
making
D
• Sophisticated loyalty card and data mining
programme
Marketing,
Client • Continuous market and client research
Interaction
• Targeted advertising and marketing strategy
Source: Company information. P . 18Selected Examples of Cost Efficiency 1 2 3 4 5 Highly Efficient Operator 6 7
Outcomes
Logistics costs Store costs
Inde x to 100: 2014
While logistic complexity … variable costs(2) Proven track record of reducing store costs
per box (1) increased… decreased
+18%
-15%
118
100 100 -14%
85
-16%
2014 2017 2014 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2007 2017
General expenses(3) # of FTEs(3)
pe r sqm in store
Note: Management figures.
(1) Measure of productivity based on picked boxes per hour taking only into account the impact of external effects to the logistics. External effects concern demand, type of stores, product range, etc.
(2) Costs directly related to logistic operations that depend on boxes or weight moved (eg. workforce, materials, third part operators, transportation costs).
(3) Store FTEs and general expenses of comparable stores at 2007 constant prices; general expenses exclude rents, electricity, customer bags and central cost.
Source: Company information.
P . 19Strong Turnover Growth 1 2 3 4 5 6 Solid Financial Profile 7
Turnover(1) evolution (€bn)
Total growth +5.6% +5.5% +6.4%
LFL(2) +2.1% +1.3% +2.8%
New stores(3) +65 +87 +64 LTM / +20 1H18
4.1
3.8 2.0
3.6 1.9
2015 2016 2017 1H17 1H18
• All formats had positive LFL growth in 2016, 2017 and 1H18
• Going forward, new store openings expected to continue at a similar level as recent years
Note: Financial information (excluding LFL and new stores) is based on audited annual and reviewed interim combined financial statements for the potential IPO perimeter.
(1) Turnover: total revenue from sales and services rendered.
(2) Like-for-like (“LFL”): management figures; sales from owned stores that operated under the same conditions in comparable months in both the current period and the prior comparative period, and excludes stores
opened, closed or that underwent major upgrade works in one of the periods. LFL sales growth is the change in LFL sales compared to the prior period, expressed as a percentage.
(3) Net additions excluding franchises.
Source: Company information. P . 202015-17 EBITDAR Margin Broadly Stable, 1 2 3 4 5 6 Solid Financial Profile 7
Underpinned by Cost Efficiency
EBITDAR margin
9.9% 0.3p.p. 9.7%
-0.2p.p.
-0.3p.p. Mainly due to:
Mainly due to:
Ma inly due to: C ost control,
Price
Salary incre ases, a nd e fficiency
inve stments,
the re introduction m e asures
and im pact of
ne w store s of public holidays
in 2016, a nd the
e x pansion
progra mme
(1) (2)
2015 Commercial margin Staff costs SG&A 2017
% turnove r % turnove r
Note: Financial information is based on audited annual combined financial statements for the potential IPO perimeter.
(1) Commercial margin means turnover less cost of goods sold and materials consumed and advertising expenses, plus payment discounts received, supplementary income and net operating gains/losses from exchange differences.
(2) SG&A means underlying EBITDAR less commercial margin and employee benefits expense.
Source: Company information. P . 21Attractive Margin Profile 1 2 3 4 5 6 Solid Financial Profile 7
`
Profitability (€m) Highlights
2015 2016 2017 1H17 1H18 • 2015-17 underlying EBITDAR
margins(4) broadly stable
Underlying
361 375 395 166 178
EBITDAR(1) ‒ Price investments
Margin
9.9% 9.8% 9.7% 8.9% 9.0%
‒ Impact of new stores
(% of turnover)
‒ Increased staff costs
Rents from + Cost efficiencies
leased real (62) (84) (94) (46) (50)
estate • 2015-17 underlying EBITDA
margin(4) decline primarily due
to higher rents as a results of
Underlying
299 291 301 120 128 sale & leaseback programme
EBITDA (2)
• As evidenced by 1H results,
Margin
(% of turnover)
8.2% 7.6% 7.4% 6.4% 6.5% underlying EBITDA margins
have now stabilised
• Summer and Christmas
Freehold real
estate 62% 51% 49% 51% 49% seasons structurally benefit
ownership (3) 2H figures
Note: Financial information is based on audited annual and reviewed interim combined financial statements for the potential IPO perimeter.
EBITDA: EBIT before depreciation and amortization expenses, provisions and impairments losses, Gains/(losses) on the disposal of subsidiaries, losses on the disposal of assets and gains on sales of assets
excluding non-recurring items (net capital gains/losses on the sale-and-leaseback transactions of real estate assets). EBIT: means profit before interests, tax, dividends and share of profit or loss of joint ventures
and associates.
(1) Underlying EBITDAR means underlying EBITDA before rental costs from leased real estate assets.
(2) Underlying EBITDA means EBITDA excluding non-recurring items, defined as net capital gains/losses from sale-and-leaseback transactions of real estate assets.
(3) Freehold share calculated as stores sales area ownership in percentage of total stores sales area (year-end figures).
(4) Underlying EBITDA margin and underlying EBITDAR margin mean underlying EBITDA and underlying EBITDAR, respectively, as a percentage of turnover (total revenue from sales and services rendered)
Source: Company information. P . 22Our Best-In-Class Margins Outlook is Supported by 1 2 3 4 5 6 Solid Financial Profile 7
Four Core Distinctive Attributes
Key attributes which support our best-in-class margin profile going forward
Single country operator with first mover advantage
1 • Focused on only one country, where we are the leader
• Best in class locations - impossible to replicate
Firmly established as a price leader in Portugal
• Significant price investments made over the last few years – we are now a leader
2
• Loyalty programme and data analytics enable us to create more efficient price and promotions management
• Internalized ruthless culture of efficiency at all levels
Unique multi-format store network and experience
• Multi-format omnichannel approach designed to capture all shopping missions
3 • High density store portfolio – large proportion of sales from the two key urban areas (Lisbon and Porto)
• Superior in-store environment, enabled by selective capex investments
• Fresh and private label portfolio development to further drive store traffic
Highly efficient supply chain, with more to come
• Long standing supplier relationships
4
• Highly efficient logistics and stock management systems
• Proven ability to optimize in-store costs
Source: Company information, DECO (Portuguese Consumers Association).
P . 23Selective Investment Programme to 1 2 3 4 5 6 Solid Financial Profile 7
Enhance Store Estate and Open New Stores
Investment evolution (Capex) 3 types of capex to drive performance
(€m) 2015 2016 2017
• Maintenance capex: investments to maintain
and refurbish existing stores, as well as
investments in non-store areas such as IT,
Maintenance capex (79) (106) (100)
warehousing, logistics and e-commerce
Optimisation capex (31) (36) (40)
• Optimisation capex: investments to
significantly change existing stores or the
customer experience. This type of investment
goes beyond a typical store refurbishment
Expansion capex (40) (101) (79)
• Expansion capex(4): investments to open
Gross capex (1) (150) (243) (219)
new stores in the period (including associated
real estate investments)
Sale & leaseback (2) 134 149 25 • Capital recycling: sale & leaseback
programme, with a target freehold ownership
of ~45% at December 2018
Total net capex (3) (17) (94) (195)
Note: Financial information is based on audited annual combined financial statements for the potential IPO perimeter.
(1) Gross capital expenditure (“gross capex”): maintenance capital expenditure plus optimization capital expenditure plus expansion capital expenditure.
(2) Net book value.
(3) Net capital expenditure (“net capex”): gross capital expenditure less sale-and-leaseback divestments (net book value of retail properties sold in sale-and-leaseback transactions, including net assets of Imoconti
excluding debt, and related Goodwill).
(4) Expansion capex: investments to open new stores in the period (including associated real estate investments) recorded as property plant or equipment, or intangible assets incurred in the year, for stores opened
in the following years, the year or in the previous year
Source: Company information. P . 24Strong Cash Flow Generation 1 2 3 4 5 6 Solid Financial Profile 7
(€m) 2015 2016 2017
Underlying EBITDA 299 291 301
Maintenance & optimisation capex (111) (142) (140)
Cash conversion (1) 63% 51% 53%
Δ accounting working capital(7) (30) (41) 54
Income tax expense (45) (25) (30)
FC F before net interest, dividends, net financial investments,
114 83 184
expansion capex, divestments and others (2)
Expansion capex (40) (101) (79)
Sale & leaseback divestments (3)
134 149 25
Others (4) 40 57 3
FC F before dividends, interest and net financial investments (5) 248 188 133
Net financial expense (19) (23) (17)
FCF before dividends and net financial investments (6) 228 166 116
Note: Financial information is based on audited annual combined financial statements for the potential IPO perimeter.
Maintenance capex: investments to maintain and refurbish existing stores, as well as investments in non-store areas such as IT, warehousing, logistics and e-commerce.
Optimisation capex: investments to significantly change existing stores or the customer experience. This type of investment goes beyond a typical shop refurbishment.
Expansion capex: investments to open new stores in the period (including associated real estate investments) recorded as property plant or equipment, or intangible assets incurred in the year, for stores opened in the following
years, the year or in the previous year.
EBITDA: EBIT before depreciation and amortization expenses, provisions and impairments losses, Gains/(losses) on the disposal of subsidiaries, losses on the disposal of assets and gains on sales of assets excluding non-recurring
items (net capital gains/losses on the sale-and-leaseback transactions of real estate assets). EBIT: means profit before interests, tax, dividends and share of profit or loss of joint ventures and associates.
Underlying EBITDA: EBITDA excluding non-recurring items, defined as net capital gains/losses from sale-and-leaseback transactions of real estate assets.
(1) Cash conversion: underlying EBITDA, less maintenance capital expenditure and optimization capital expenditure, divided by underlying EBITDA.
(2) FCF before net interest, dividends, net financial investments, divestments and others" = Underlying EBITDA - Maintenance capex - Optimisation capex - Δ Accounting WK - Income tax expense.
(3) Net book value of the properties sold & leased back.
(4) Others includes non-recurring items, share of profit or loss of joint ventures and associates, non-controlling interests and dividends received during the year.
(5) FCF before dividends, interest and net financial investments = Underlying EBITDA - Income tax expense - Net capex - Δ accounting WK + other items.
(6) FCF before dividends and net financial investments = Underlying EBITDA - Δ accounting WK - Income tax expense -total net capex + other - net financial expense
(7) Change in accounting working capital means the inventories, trade payables and other assets and liabilities (excluding loans obtained from non-controlling interests, items included in the computation of net debt and Shareholders
attributed dividends).
Source: Company information. P . 25Uses of Cash: our Economic & Financial 1 2 3 4 5 6 Solid Financial Profile 7
Priorities
• LFL(1)
1 Invest for profitable growth • New stores
• Efficiency
2 Ensure conservative capital • Dec-2018 Net debt (2) / underlying
structure EBITDA(3) of around 2x
• Dividend payout ratio target:
3 Pay attractive dividend 40-50% of adjusted net
income after non-controlling
interests (4)
(1) Like-for-like (“LFL”): sales from owned stores that operated under the same conditions in comparable months in both the current period and the prior comparative period, and excludes stores opened, closed or
that underwent major upgrade works in one of the periods. LFL sales growth is the change in LFL sales compared to the prior period, expressed as a percentage.
(2) Net debt: gross debt (bank loans, bonds and other loans), less cash and bank balances and other current investments.
(3) Underlying EBITDA: EBITDA excluding non-recurring items, defined as net capital gains/losses from sale-and-leaseback transactions of real estate assets.
(4) Equity and net profit attributable to non-controlling shareholders.
P . 26We Have a Clear Strategy 1 2 3 4 5 6 7 Clear Growth Strategy
Strategic drivers Key areas of focus Outcome
1
Further develop value
perception Continued
market
Win in fresh leadership
Drive traffic and
basket size Step-up private label
Continue transformation programme
to grow
Drive the healthy nutrition +
turnover
agenda
Proximity stores
Exploit major Profitable
market E-commerce & digital growth
opportunities
Health & Wellness
2
+
Efficiency and
effectiveness
Maintain Best in Social
margins class efficiency Continued store network purpose
optimisation
Supported by: innovation, data and a highly motivated team
P . 27Recap of our Key Messages
• Undisputed food retail leader in Portugal, with
unique customer insights via loyalty programme
(3.7m active accounts(1) )
• Multi-format omnichannel business, including:
‒ Differentiated, highly performing
hypermarket format located in densely
populated urban areas
‒ Significant opportunity to open proximity
stores
‒ ~70% market share in food retail E-
commerce
• 30-year track record of growth, with strong
momentum
• Best-in-class margin profile, with deep focus on
efficiency
• Highly experienced and engaged team – excited
about the growth opportunities that lie ahead
• Strong social purpose
(1) As of 31 December 2017
P . 28Appendix
IMAGEM
P . 29Solid Financial Profile
(€m) 2015 2016 2017 Highlights
Turnover 3,637 3,843 4,055 • Turnover CAGR between 2015 and
% growth 5.6% 5.5% 2017 of 5.6% mainly driven by the
performance of the existing store
% LFL growth 2.1% 1.3% network and expansion
programme
Underlying EBITDAR(1) 361 375 395
% turnover 9.9% 9.8% 9.7% • Underlying EBITDAR margin
broadly stable
Rental costs (62) (84) (94)
• From 2015 to 2017, rental costs
% turnover -1.7% -2.2% -2.3% (as % of turnover) increased from
1.7% to 2.3% mainly due to sale
Underlying EBITDA (2) 299 291 301 & leaseback programme: from end
of 2014 to 2017, freehold reduced
% turnover 8.2% 7.6% 7.4%
from 73% to 49%
Non-recurring items (3) 41 61 11 • Non-recurring items: net capital
gains from sale & leaseback
EBITDA (4) 341 352 311 operations
% turnover 9.4% 9.2% 7.7%
• From 2015 to 2017, the average
depreciation, amortisation,
Depreciations, amortisations, and P&I (5) (128) (122) (142)
provisions and impairments (5 ) is
3.4% of turnover and around
EBIT(6) 212 231 170
€190/sqm
% turnover 5.8% 6.0% 4.2%
Net Income attributable to owners of the • During this period, the Company
147 180 115
company tax rate was approximately 21%
Note: Financial information is based on audited annual combined financial statements for the potential IPO perimeter.
(1) Underlying EBITDA before rental costs from leased real estate assets. • Net income impacted by capital
(2) EBITDA excluding non-recurring items, defined as net capital gains/losses from sale-and-leaseback transactions of real estate assets.
(3) net capital gains/losses from sale-and-leaseback transactions of real estate assets. gains on the sale & leaseback
(4) EBIT before depreciation and amortization expenses, provisions and impairments losses, Gains/(losses) on the disposal of subsidiaries, losses on the
disposal of assets and gains on sales of assets excluding non-recurring items (net capital gains/losses on the sale-and-leaseback transactions of real estate
programme
assets). EBIT: means profit before interests, tax, dividends and share of profit or loss of joint ventures and associates.
(5) Depreciations, amortisations, provisions, impairment and capital gains / losses from sale / write-off excluding sale and leaseback transactions.
(6) Profit before interests, tax, dividends and share of profit or loss of joint ventures and associates.
Source: Company information. P . 30Company Targets for 2018
• New Continente Bom Dia stores ~18
• New Continente Modelo stores ~4
• Underlying EBITDAR margin and underlying EBITDA margin YoY stable
~€215m
• Gross capex(1) ~€115m
Maintenance and optimisation capex ~€100m
Expansion capex
• Freehold at year-end ~45%
Notes:
Maintenance capex – Investments to maintain and refurbish existing stores, as well as investments in non-store areas such as IT, warehousing, logistics and e-commerce.
Optimisation capex – Investments to significantly change existing stores or the customer experience. This type of investment goes beyond a typical shop refurbishment.
Expansion capex – Investments to open new stores in the period (including associated real estate investments) recorded as property plant or equipment, or intangible assets incurred in the year, for stores opened in the
following years, the year or in the previous year.
(1) Maintenance capital expenditure plus optimization capital expenditure plus expansion capital expenditure.
Source: Company information.
P . 31Medium Term Ambition (2019-21)
50-60
• New Continente Bom Dia stores (cumulative)
• New Continente Modelo stores (cumulative) 4-8
• New adjacent format stores (cumulative)
~150
• Underlying EBITDAR margin and underlying EBITDA margin(1) broadly
stable
• Maintenance and optimisation capex ~€115m
/year
• Gross expansion(2) capex (cumulative) €260-
280m
• Gross proceeds from sale and leaseback operations (cumulative
2019-20) €60-80m
• Year-end net debt /underlying EBITDA below 2x
Notes:
Maintenance capex – Investments to maintain and refurbish existing stores, as well as investments in non-store areas such as IT, warehousing, logistics and e-commerce.
Optimisation capex – Investments to significantly change existing stores or the customer experience. This type of investment goes beyond a typical shop refurbishment.
Expansion capex – Investments to open new stores in the period (including associated real estate investments) recorded as property plant or equipment, or intangible assets incurred in the year, for stores opened in the
following years, the year or in the previous year.
(1) Assuming a freehold ~45%.
(2) Op co + prop co capex. Does not include divestment.
Source: Company information. P . 32Disclaimer
This document was prepared s olely for informational purposes and does not constitute an offer to s ell or the s olicitation of an offer to buy any s ecurity. This document s hould not be cons trued as a
pros pectus or offering document and you s hould not rely upon it or us e it to form the bas is for any decision, contract, commit ment or action whatsoever, with res pect to any proposed transaction or
otherwise.
This document was prepared and the analyses contained in it based, in part, on certain as sumptions made by and information obtained from Sonae SGPS, S.A. (the "Company") and/or from other
s ources. Neither Barclays Bank PLC, BNP Paribas and Deuts che Bank AG, London Branch (the "Banks "),CaixaBI and Millennium Investment Banking (the “Retail Banks”) the Company nor any of their
res pective affiliates, officers, employees or agents , make any repres entation or warranty, express or implied, in relation tothe fairness, reas onableness, adequacy, accuracy or completeness of the
information, s tatements or opinions, whichever their source, contained in this document or any oral information provided in connection herewith, or any data it generates and accept no res ponsibility,
obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of s uch information. The information and opinions contained in this document are provided as at the
date of the document, are s ubj ect to change without notice and do not purport to contain all information that may be requiredto evaluate the Company. The information in this document has not been
independently verified. The Banks , the Company and their respective affiliates, officers, employees and agents expressly disclaim any and all liability which may be bas ed on this document and any
errors therein or omis sions therefrom.
Neither the Banks , the Company nor any of their res pective affiliates, officers, employees or agents , makes any representation or warranty, express or implied, that any transaction has been or may be
effected on the terms or in the manner s tated in this document, or as to the achievement or reas onableness of future proj ections, management targets, es timates, prospects or returns, if any.
The information contained in this document does not purport to be comprehensive and has not been s ubject to any independent audit or review. This presentation contains combined financial
information prepared for the perimeter of the bus inesses proposed to be lis ted. Certain numbers in the I nformation are unaudited and are bas ed on internal company records. I t is intended that certain
of thes e numbers will be s ubject to further review in due course. Once they have been reviewed such numbers may be s ubject to amendment and the final numbers may differ from those s et out in
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A s ignificant portion of the information contained in this presentation is bas ed on es timates or expectations of the Company, and there can be no as s urance that these es timates or expectations are or
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Statements in this document, including those regarding the possible or as s umed future or other performance of the Company or its industry or other trend projections, constitute forward-looking
s tatements. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances
that will occur in the future whether or not outs ide the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or
implied by s uch forward-looking statements. Accordingly, there can be no as s urance that such forward -looking s tatements will prove to be correct. You s hould not place undue reliance on forward -
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