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
GDP Trend
Demographics
Total Population
4,016,416
Literacy Rate
94%
Median age
18 years
5000
4500
4000
3500
3000
Life expectancy at birth
73.5 years
1997
1999
2001
2003
2005
Amounts in USD millions
GDP by Sector
2007
GDP Trend
25%
14% 14% 13%
11% 9%
5%
5%

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%
5%
About PADICO
Who We Are
Who We
Are
Our
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
Invest in entrepreneurial projects, targeting infrastructure
and environmental sectors in the medium term
Target ROE of
20%
Invest in large and strategic growth investments
Balanced
Portfolio
Diversification
Being a leader
in the country
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
Capital
70.5
Capital
14.1
Capital
4.9
% **
31.7
%
70.9
%
62.7
%
41.5
Capital
26.5
Capital
10.00
Capital
26.5
%
60.1
%
78.0
%
55.3
*Authorized capital in USD millions
** % owned by PADICO
***Holding as of 31-12-2009
Results from some of our key investments
Profits 1997
USD 14.3 million
Profits 2009
USD 99.2 million
Listed Companies 1997
19
Listed Companies 2009
39
Operating Profits 1998
USD (40.4) thousand
Operating Profits 2009
USD 4.8 million
Total Assets 1997
USD 17.2 million
Total Assets 2009
USD 114 million
PADICO Financial Statements
Consolidated Income Statement Summary
(Amounts in USD
thousand)
2006
2007
2008
2009
Operating Revenue
18,697 16,971
26,250
31,018
Profits from Associates
16,515 23,267
39,508
29,529
Revenue (Loss) from
investment portfolios
8,047
11,608 (8,128)
340
Revenues from
Consolidation
-
-
-
15,449
Recovery of Provision for
a loan granted to an
affiliate
-
-
-
6,359
Total Revenues
59,813 64,366
59,815
85,478
Operating Expenses
13,023 11,276
16,984
20,270
Total Expenses
31,686 28,393 36,075
43,147
Net Profit
27,688 35,560 22,526
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
Net Profit
Revenue Sources
Amounts in USD thousand
Amounts in USD thousand
42,236
35,560
27,688
22,526
2006
2007
2008
2009
Consolidated Balance Sheet Summary
(Amounts in
USD
thousand)
2006
2007
2008
2009
Cash at banks
35,500
21,523
20,720
20,862
Current assets
100,352
98,134
73,805
79,475
Total assets
452,527
455,699
530,028
620,197
Current
liabilities
62,440
44,249
60,198
83,430
Total liabilities
112,051
105,132
144,883
190,492
Total equity
340,476
350,567
385,145
429,705
Outstanding
shares
249,989
249,989
250,000
250,000
Total Assets
Amounts in USD thousand
620,197
530,028
452,527
455,699
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
Profitability Ratios
EPS
ROA & ROE
ROA
An increase of
89%
ROE
10%
10%
0.17
8%
Amounts in USD
0.14
8%
7%
0.12
6%
0.09
2006
7%
2007
2008
5%
2009
2006
2007
2008
2009
Capital Structure
Debt Ratios
Debt/Equity
Current Ratio
New Loans were used
for expansionary
purposes; acquisition of
affiliates
222%
123%
95%
39%
2007
34%
2008
39%
2009
USD
Stock Performance
Stock Ratios
2006
2007
2008
2009
Closing Share
Price (USD)
2.98
2.23
1.21
1.19
BV/ Share
(USD)
1.29
1.33
1.38
1.47
EPS (USD)
0.12
0.14
0.09
0.17
P/E (x)
24.8
15.93
13.44
7.0
P/BV (x)
2.31
1.68
0.87
0.82
Market
Capitalization
(USD Million)
465
558
303
298
Multiples
Future Plans 2010-2013
Where is PADICO heading in the future?
Existing
Investments
Future
Projects
• 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
• 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
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:
Status
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
Rationale
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.
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).
Synergies
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
Transforming the PSE from a private shareholding company to a
public shareholding company
Transaction Summary
Separate the depository and clearance centre from the trading
activities
PADICO to reduce its holdings in the PSE from 76% to around 50%
Rationale
Corporate governance implementation
Attract strategic international investors into
the PSE.
Status
The Government approved the
transformation
In the process of marketing the PSE to a
strategic investor
Sector Overview
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
Investment
 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.
PADICO
Investment
Sector Overview
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
PADICO
Investment
Sector Overview
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.
Contact Information
PADICO Holding
Ramallah- Palestine
Tel: + 970 2 240 3336
Fax: + 970 2 240 3363
P.O.Box: 1708 Ramallah- Palestine
Email: [email protected]