CSL Conference September 2011

Quality Food Products

Promasidor Nigeria Ltd Who….. What…… & Where we are going !

Consumer Market - summary ‣ Total population is around 150 million

‣ Demographics are skewed towards young ‣ Spending power still in hands of lower middle and working classes – large numbers/low income ‣ Growth of middle class both in economic terms & changing consumption patterns

‣ Vast majority of purchases still in traditional channels ‣ Local markets, lock ups, table tops ‣ Major growth in formal shops but from small base

Densely Populated

Change & Growth in the FMCG Sector • GDP growth will boost an increase in disposable income – Rising income levels • Increase in minimum wage from end of June 2011

• Westernisation and Sophistication – at the higher end of the market as western culture is influencing consumption patterns. • Strong demographics

– The average age of Nigerians is 18 years as at 2009 and is estimated to average 20 years by 2020

Distribution of the population by social class

•Euro monitor estimates that the size of the middle class will expand to 35% of the population in 2015 •Lower class will shrink to 59% of the population as against 66% in 2009 •Upper class will experience an increase to 6% of the population (Growing at an average rate of 7%) Source: Euro monitor International

Income Distribution In Nigeria

Top 10%

Next 20% Middle 50% Lowest 20%

FMCG: Key Facts • Food sector has grown by an average of 10% p.a. • 42% of Disposable income spent on food • Bread and cereal consumption represents an average of 21% of total food and beverage basket

• Dairy represents 4% • Major changes in consumer patterns • Household spending on fast food grew by over 200% in 2011 • Nigeria fast food industry is worth about N250bn

Disposable Income Distribution Nigeria: Household disposable Income 2009

Total Private Consumption $127bn

Nigeria: Household disposable Income 2015

Total Private Consumption $233bn

Milk consumption

Per head, litres p.a.

Retail Sector • Strong growth being experienced in the organized retail market • Retail sector currently averaging a 10% annual growth rate

• Major chains expanding to new cities in response to increased consumer demand • Growing product base to attract middle class • Only 2% of the retail market is catered for by the formal retail outlets • Drive to improve the quality of the shopping experience

That’s the background

What about us?

An African owned business developed through product and marketing innovation to meeting basic consumer needs with a commitment to the communities in which we live and work

A brief History •Founded 1993 •Pioneer in small pack/low retail price •Rapid growth •Product diversification •Strong Market positions •Successful distribution •High brand awareness

Ownership

•Rose family 75%

•E. Oppenheimer & Sons 25% (since 2006)

2010 Revenue vs peer group

$190m

$300m

$409m

$590m

$306m

$540m

BUSINESS AMBITION

TO BE IN THE TOP 5 OF 20 PEER GROUP COMPANIES (1) BY PBIT BY 2013

Triple turnover in naira terms 5 brands in the top 3 by volume market share in their segments Promasidor to be an Employer of Choice when judged against peers (3)

Double case volume 10 brands with at least 75% spontaneous brand awareness (2) Promasidor corporate brand in the top 10 most admired companies (4)

1) Guinness, NBL, NBC, 7-UP, Nestlé, Unilever, Friesland Campina, Chi Foods, PZ Cussons, C-Way, Dangote Foods Divisions, Limca, Viju, Foremost Dairies Plc, Classic Beverages, Dana Foods Divisions, etc. Will require significantly higher PNG turnover than several of the others who play in premium and higher-margin segments. 2) Combination of 5 brands in top 3 market share and 10 in top unprompted recall would mean a powerful portfolio with strong and developing PNG Brand Planning Workshop June 2010: Pre-read

brands. 3) Judged against recruitment/retention & industry surveys 4) Price Waterhouse Cooper peer group poll

CONFIDENTIAL

17

BUSINESS AMBITION

1. Play to our strengths • Delivering product we understand, to consumers we

understand, through channels we understand • Quality products at an affordable price to C2D consumers (the bulk of Nigerians who can afford commerciallyproduced food & beverages) • (Recruit new consumers to the PNG franchise)

2. Use consumer insight to introduce new products that will enhance margins • Low cost of supply • Higher added-value

• Grow frequency amongst existing consumers • (Recruit new consumers to the PNG franchise)

3. Use consumer insight to enter new channels & categories • Leverage innovation skills (first in sachets, first round teabag, first seasoning powder) • Move as middle class grows • Higher risk but potential for higher margin • Recruit new consumers to the PNG franchise

PNG Brand Planning Workshop June 2010: Pre-read

Grow current base Existing brands in current & new formats, to existing consumer segments, in existing channels

Grow frequency Line extensions & new brands/ products, to existing consumer segments, in existing channels E.g.: Evaporated milk, flavoured milk

Grow franchise Line extensions & new brands/ products, to new consumer segments, in new channels

CONFIDENTIAL

18

Our Brands and the categories we play in

POWDERED MILK CATEGORY

POWDERED MILK CATEGORY

CATEGORY SALES VOLUME AND VALUE TREND.

The Category is currently worth about $473 million. > 59,000 Tons sold annually. 11% & 3% YOY average value & volume growth respectively over the last 4 yrs.

Source: AC Nielsen RAM June 2011

VOLUME & VALUE SHARE TREND - BRANDS

Volume Share %

Value Share %

The 3 brand strategy (dual flanking of Cowbell – our flagship brand) has been repositioned and is gradually yielding results.

COMPETITIVE LANDSCAPE House vol share 30.4%

Promasidor, with its 3 brand strategy, is a strong number 2 in the category. Source: AC Nielsen RAM June 2011

.

BRAND FACTS • Our flagship brand Cowbell was launched into the Nigerian market in March 1993. • It was the 1st milk brand to be sold in single serve units in Nigeria. • Its launch and aggressive market penetration strategies completely revolutionized the marketing landscape in Nigeria. • Single serve units have now been exploited in every single category – margarine, detergents, alcoholic beverages, evaporated milk, water, etc. • It is a fat filled milk, contains 28 essential vitamins and minerals and is available in 6 pack sizes. • Loya Premium Milk is our Full cream powdered milk initially launched in May 2004. • It was repositioned, re-packaged and reformulated (with 50% more calcium – HiCal) and relaunched in October 2010. • PNG Revenue c $200m

SKUS & PRICING.

COCOA BASED BEVERAGES CATEGORY

CATEGORY SALES VOLUME AND VALUE TREND.

The Category is currently worth about $565 million. > 72,000 Tons sold annually. 12% & 5% YOY average value & volume growth respectively over the last 4 yrs.

Source: AC Nielsen RAM June 2011

PROMASIDOR VOLUME AND VALUE SHARE TREND.

Growing Volume share. Flat Value share. Source: AC Nielsen RAM June 2011

Market Shares

11 years post launch, Cowbell Chocolate has grown rapidly and is now the Number 3 brand in the category. Source: AC Nielsen RAM June 2011

BRAND FACTS • Launched into the Nigerian market in August 2000. • Prior to its launch, market was dominated by Milo, Bournvita, Vitalo and Ovaltine. • Pioneered the 3-in-1 segment (Cocoa + Sugar + Milk) of the category. • Vitamin enriched – contains 28 essential vitamins & minerals. • Has 4 SKUs: 9g Sachet, 23g Sachet, 450g Sachet, and 500g Tin. • Active both ATL & BTL (RFE, Chocademy, Funfairs & SYS) • Revenue $80m

SKU’s & PRICING.

The Seasoning Category

The Seasoning Category Cube

74,891 Tons

US$320

Powder

MSG

Volume

Value

63,892

$265m

(85.3%)

(83%)

5,483

$32m

(7.3%)

(10%)

5,516

$23m

(7.4%)

(7%)

Amongst all three sub categories, the powder sub segment commands higher value relative to its volume share. Source: AC Nielsen RAM - June ’11

Growing by Volume and Value

600000 80000 70000 60000 50000 40000 30000 20000 10000 0

2

8 00

Total Volume (1000kg)

500000

Total Value (bN)

400000 300000 200000

2

0 01

D YT

'10

100000 0

08 0 2

10 0 2

10 ' D YT

Both cubes and powder growing, but powder growing faster than cubes. Source: AC Nielsen RAM - June ’11

The Brand Onga: Summary ๏ July 2004: Launched ‣ 4 variants; Stew, Chicken, Classic and Crayfish; ‣3 SKUs, 6g, 1kg and 3kg ๏ Q4 2010: Add 5th variant, Onga Soup in 6g & 3kg ๏ Q1 2011: Launched Shaker packs – first in Market. ๏ Other facts: ‣ 1st Powder seasoning in Nigeria ‣ Target: Females, 18 - 35 yrs. (Those just starting to cook/who are not yet set/hooked on Cubes) ‣ Key competition; Maggi, Knorr, Royco, and Aji no moto ‣ Brand Ambassador: Kate Henshaw Nuttal to re-enforce the younger targeting and build brand affinity. ‣ Marketing activities: Both ATL and BTL ‣Revenue $25m

aged

The Tea Category

The Tea Category Volume 3,017 Tonnes pa

Value US$ 43 Million The market is dominated by bagged tea, with negligible volume from loose tea sub-category

The Brand Top Tea: Summary April, 1998:4 Pack sizes: BP x26 bags, PP x26 bags, PP x100 & PP x500 March, 2004: Pack Consolidation and Introduction of Sachet Tea

November, 2009: Package Change & New Communication Direction Other Facts: First Tea in round bags in Nigeria

Target: 30-45 yrs male/Females, Professional, Contemporary Key Competition: Lipton, Prime Tea, Highland Tea, City Tea Marketing support: ATL & BTL

Tea Category - Shares Volume shares

Revenue $10m

SALES VOLUMES

Retail pack sales volumes in million cases

+14% +11% +25% +26%

63% growth in last 3 years

Retail pack sales volumes in million cases

+117%

+100%

+28% +100%

DIVISIONAL & REGIONAL SALES ANALYSIS

REGIONAL SPREAD & DELINEATION JAN – JUNE ’11

DIVISIONAL VALUE SALES ANALYSIS ($) JAN – JUN ’10 vs. ‘11

Millions

139 146 140 120 100 80 60

58

62 44

45 37

40

39

20 0

NORTH

SOUTH 2010

WEST 2011

NAT.

#160:1$

Our Operations

Our operation is fun but it also has some complexities

• We operate from about 240,000sq ft combined warehousing capacity • We import about 40 thousand tons of milk per annum • equivalent of 1.6 million 25kg bags

• We use about 280,000 50kg bags of sugar pa • Inbound approx 220 (40ft) containers a month • We are in Maersk & MC shipping lines top 2%

• We handle about 40 trucks per day inbound & outbound in our Isolo site • We handle about 55 skus

• We ship about 1.8 million cases a month to support sales operations not including bulk sales • Some 75% of our Volume is single serve (8/10/22 gm etc)

• That’s around 4 billion sachets per annum not including large packs, pillows & boxes

• Distributed via 41 distribution centres nationally

• 38 of our DC’s outsourced & managed by MDS

CAPEX UPDATE 2011

Robert ROSE’s visit July 2011

Revenue growth, USD m

EBIT growth, USD m

Naira devaluation

Again but with bullets AND picture

‣ This is a first bullet

‣ Next one ‣ Last bullet

Subject to Market Conditions & Regulatory Approvals

Same as previous

‣ But with reversed ‣ colours

Quality Food Products

Our Future - Expansion and diversification – Current factory expansion project – New land acquired close to site

– Potential acquisition – Potential MNC partnership – New site in North of Nigeria

– Yoghurt/soya/cheese/juice/evap

THANK YOU !