food & beverage sector in athex - economist conferences · 2013-02-07 · the food and beverage...

Athens Exchange

Nicos Porfiris, Deputy Chief Operating Officer

Food & Beverage Sector in ATHEX How companies can access international long-term investors

The Food and Beverage Sector is appealing

Page 4 www.athex.gr

During recession periods the Food & Beverage Sector is a defensive sector for investors due to the relative inelasticity of demand

There is a trend in the global investor community which indicates appreciation of the sector perspectives

During the ATHEX roadshows in US and UK we have had a lot of queries regarding Med Diet sector in Greece

The sector has been highlighted as strategically important for Greece in the recent McKinsey report

BlackRock is introducing its World Agriculture Fund for small investors who, according to them, can profit from the long-term increase in food prices as rising affluence in China, India and Brazil dramatically changes dietary habits. They aren’t the only ones who see this industry as ready for

investment returns. Baring launched a global agriculture fund that allowed early investors a 30% gain.

20/1/2013

http://blogs.terrapinn.com/total-asset/2012/10/19/download-article-agricultural-investment-funds/www.blackrock.com/

http://www.bloomberg.com/quote/WLDC2US:LX





http://blogs.terrapinn.com/total-asset/2012/10/19/download-article-agricultural-investment-funds/www.barings.com/

Why investing in Greece is an opportunity?

There is a plethora of mostly Small and Medium Enterprises (SMEs) in the Agriculture Sector, with healthy financials and export orientation, that are in need of capital to finance their development and expansion

The question to address is why should foreigners invest in such companies in Greece?

www.athex.gr

… because as bond prices move higher company valuations improve

www.helex.gr

Data: 31/01/2013

The primary deficit declined by 80% from €5.9 bil. in 2011 to €1.2 bil in the 10 months to October 2012 In the month of October 2012, a primary surplus of €900 mil. was recorded

As Greek Government Bond prices move higher, the lower yields increase company valuations

… because International Investors are still in Greece

www.helex.gr

Data: 31/12/2012

Consistently Strong presence of International Investors

Investors from the USA, Luxembourg and United Kingdom are the most

heavily represented

(% of total Market Cap)

… because there are investment window opportunities

www.helex.gr

Data: 31/12/2012

ATHEX Market Cap over GDP ratio

at 1 / 5 of the European average at 1 / 3 if we adjust for the €22.3 bil of the Greek Bank’s recapitalization scheme

The Liquidity Gap is relative close to the European average

… because liquidity is there

www.helex.gr

Data: 31/01/2013

2012 liquidity was higher than 2007(previous record year)

Average Daily Trade volume

… because local investors indicate confidence in the market

www.helex.gr

Data: 31/12/2012

Increasing activity by Local Retail Investors in 2012

Consistently high activity levels since July2012

(% of total trading value)

… because the Athens Exchange is a Reliable, Developed Market

www.helex.gr

Fully Compliant with the European Union regulatory environment

Settlement efficiency rate 100% (ECSDA Statistical Exercise)

3rd best performing market in the world in failed trades (OMGEO Report by Global Custodians)

Transactions’ settlement occurs through EUROSYSTEM (Target 2) of the ECB

With a highest standard Risk Management System for central counterparts

Greece is in the Top 10 Most Improved Countries («Most Improved in Doing Business in 2012» report by World Bank)

Improvement of rating in the category «Protecting Investors» by 38 places.

Upgrade of Greece creditworthiness to B- (S&P evaluation)

The Agricultural Sector is well represented in ATHEX

Page 4 www.athex.gr

The Agricultural Sector in ATHEX includes

The Food and Beverage sector

in the Main Market, comprising of

19 companies, representing 23% of the average 2012 market capitalization of the M.M.

in the Alternative Market, E.NA., comprising of

2 companies, representing 7% of the average 2012 market capitalization of E.NA.

Related companies, in the areas of plastics, logistics etc

in the Main Market, comprising of

12 companies, representing 2.6% of the average 2012 market capitalization of the M.M.

in the Alternative Market, E.NA., comprising of

1 company, representing 9% of the average 2012 market capitalization of E.NA.

Food & Beverage and related companies have raised ~ € 2.5 bn, with € 0.375 bn through the IPO and the remaining € 2.1 bn through capital increases

Solid Turnover for the wider Agricultural Sector in ATHEX

Solid, increasing revenues have been observed in the Food & Beverage sector and related companies listed in ATHEX, despite the macro situation in Greece.

Strong export orientation is among the drivers of the trend

2012 9m results are also strong

Current

2009 2010 2011 2012 (9m)%

FluctuationTrend

Main Market 8.977.803 9.544.789 9.855.386 7.516.488 10%

Listed Companies in the F & B Sector 8.001.416 8.338.319 8.474.388 6.465.709 6%

Listed Companies related to the F&B Sector 976.387 1.206.471 1.380.998 1.050.779 41%

ENA 28.044 27.410 30.386 8%

Listed Companies in the F & B Sector 11.310 9.623 11.086 -2%

Listed Companies related to the F&B Sector 16.734 17.788 19.301 15%

Total 9.005.847 9.572.200 9.885.772 7.516.488 10%

* Companies in EN.A. don't have the obligation to

publish F.S. for 9month period.

Turnover

(in thousands € - .000)Statistics (2011 vs 2009)

Page 6 www.athex.gr

Equity for the wider Agricultural Sector in ATHEX

Equity of the Food & Beverage sector and related companies listed in ATHEX, has on average grown since 2009

Equity, according to the FY 2011 published results, has reached € 4.33bn

2012 9m results also indicate further increase in equity

Current

2009 2010 2011 2012 (9m)%

FluctuationTrend

Main Market 4.067.214 4.558.491 4.317.526 4.339.709 6%

Listed Companies in the F & B Sector 3.464.601 3.912.883 3.630.063 3.619.276 5%

Listed Companies related to the F&B Sector 602.613 645.608 687.464 720.433 14%

ENA 16.053 15.707 16.962 6%

Listed Companies in the F & B Sector 8.872 7.892 7.806 -12%

Listed Companies related to the F&B Sector 7.182 7.816 9.157 28%

Total 4.083.267 4.574.198 4.334.489 4.339.709 6%



Total Equity

(in thousand € - .000)Statistics (2011 vs 2009)

Page 7 www.athex.gr

EBITDA for the wider Agricultural Sector in ATHEX

Despite the increasing turnover, EBITDA since 2009 has slipped a little during 2011 but remains positive to 28 out of the 31 companies

2012 9m results are strong

Current

2009 2010 2011 2012 (9m) % Fluctuation Trend

Main Market 1.248.514 1.290.141 1.097.312 934.330 -12%

Listed Companies in the F & B Sector 1.114.869 1.135.866 919.459 789.930 -18%

Listed Companies related to the F&B Sector 133.645 154.275 177.852 144.400 33%

ENA 3.011 1.884 2.224 -26%

Listed Companies in the F & B Sector 839 -247 722 -14%

Listed Companies related to the F&B Sector 2.172 2.131 1.501 -31%

Total 1.251.525 1.292.025 1.099.536 934.330 -12%



EBITDA

(in thousand € - .000)Statistics (2011 vs 2009)

www.athex.gr

Why equity raising is appealing today

www.helex.gr

Since the 2008 global crisis there is a strong trend for banks to deleverage both globally and in Europe

With Basel III further deleveraging is expected

In Greece, following the PSI, the banks are in the process of being re-capitalised

Equity is the viable funding solution for companies that wish to fund growth and exports, as long as lending remains expensive

A summary report of the corporate governance of the top 25 banks Nestor Advisors, autumn 2012

Raising equity in ATHEX’s Main Market – Comparative Advantages for larger companies

Page 12 www.athex.gr

ATHEX Euronext NYSE Deutsche

Borse

NASDAQ LSE HKEX

6.92%

7.60% 8.00%

8.34%

9.70%

12.00%

13.20% Average IPO cost as % of raised capital

Source: Deutsche Boerse, "Cost of capital study: Choosing a listing venue to raise equity or debt" (November 2011)

Based on ATHEX IPO data (for overall 3rd party and ATHEX/HELEX/HCMC fees) and the Deutche Boerse report of the overall fee (page 6).

The Main Market of ATHEX is suited for medium and larger companies (for Greek standards) that wish to raise capital from a large number of investors

Even medium market cap size companies could benefit from their inclusion in ATHEX indices

Such companies could be considered small for larger Exchanges, therefore lacking increased visibility

The overall listing costs (as % of raised capital) for the Greek market compare well to other alternatives

Raising equity in ATHEX’s ENA– The Alternative Market

www.athex.gr

ENA of ATHEX is suited for smaller companies that wish to raise capital from a few (e.g. less than 150 retail) investors

Financing business plans and expansion/exports

In full accordance to EU directives (e.g. MiFID) with less strict obligations/regulatory costs for the issuer

Flexible and easy means of fund raising and achieving objective company valuation

The listing and ongoing costs are extremely low

Concrete gains from

increased awareness and visibility to clients, business partners and suppliers

experience in the capital markets (IAS reporting, financial reporting, transparency)

Exit strategy for VCs or strategic investors

Longer term transition to the Main Market

Investments in SMEs – The challenge !

The Institutional Foreign investors :

Are looking, generally, for larger companies

It is not cost/risk efficient for them to invest in several small companies

Because each Company :

Is of different Size and in need of different absolute amount of capital

Has different liquidity, investment horizon and risk-return profile

Requires different cash outlays (initial, on-going)

Allows for different exit strategies depending on the type of project and the investment maturity cycle

… Therefore, there is no “one size fits all approach” – How ATHEX tries to help?

www.athex.gr

(1) Introduction of new indices to increase Visibility of SMEs

www.helex.gr

Data: 31/12/2012

FTSE/ATHEX Global Traders Plus

2012 Returns +53.7%

FTSE/ATHEX Factor Weight Index,

2012 Returns +62.6%

28 out of 30 index constituents had positive performance in 2012

17 out of 20 index constituents had positive performance in 2012

(2) Listed Investment Funds on ATHEX – The innovative alternative

www.athex.gr

Funds investing in non-listed companies are instruments that fit well in a long term investment strategy

They allow access to illiquid asset classes by offering more liquidity and the opportunity to pool resources and disperse risk with other investors

Through Listing on ATHEX they increase transparency and access to both institutional and retail investors

Sector Timing

….

Other Investors Fund Manager

Listed Funds

on ATHEX

Anchor Investor Fund raiser/Underwriter

Listed Investment Funds on ATHEX – Possible Vehicles

www.athex.gr

Fund type Description Real Estate Investment Trusts (REITs) Fund for the acquisition and administration of real estate property and

financial instruments. Operates under a very advantageous tax regime

both at the fund and investor level.

Amendments to legislation underway to make it even more competitive vs

EU peers

Closed Ended Investment Funds Fund for investment in listed shares, cash, derivatives and financial

instruments. Operates under a very advantageous tax regime both at the

fund and investor level.

Amendments to legislation underway to increase the Fund’s ability to

invest in non listed companies.

Venture Capital Companies Non-listed Fund for investment in Greek non listed companies. Operates

under a very advantageous tax regime both at the fund and investor level.

Amendments to legislation underway to provide for listing of the Fund on

ATHEX

Venture Capital Trusts Non-listed unincorporated Fund for investment in Greek non listed

companies. It is tax transparent and investors are taxed for income

attributed to them on the basis of what applies at their own jurisdiction.

Amendments to legislation underway to provide for listing of the Fund on

ATHEX

Listed Investment Funds on ATHEX – There are additional advantages

www.athex.gr

Investment FundsListed

Investment Funds Professional management

Risk reduction via diversification

Pooling resources with other investors

Tax efficiency

Liquidity

Increased Exit strategy alternatives

Transparency

Stronger Governance

Benefits from simultaneous Listing of

Fund and mature Target companies

Broad participation

Visibility

ATHEX contribution in IPO costs,

marketing effort etc

Ease to raise further capital

Listed Investment Funds - How ATHEX can assist

ATHEX

Provides on-going support to the issuer in every stage of the process

Subsidizes the IPO cost

Gives success fee to underwriter depending on the Market Cap of the IPO in order to incentivize the fund raiser

www.athex.gr

How is ATHEX promoting the Food & Beverage Sector

www.athex.gr

We are convinced about the great potential and the bright perspectives of the Greek food and beverage sector and are committed to assisting the growth of businesses operating therein.

We promote the sector during roadshows, conferences and other events and increase visibility to potential investors

We have created a micro-site for the Sector, highlighting 16 sub-sectors and showing some of the products available and companies producing them

We have provided statistics based on sector studies and database information regarding the sector

We keep a database of interested companies providing us with their latest financial results and products

Examples of Sector information in Appendix 4

http://www.helex.gr/index.php?option=com_content&task=blogcategory&id=350&Itemid=10607&lang=en



Appendices

www.athex.gr

Appendix 1 – The Agricultural Sector in ATHEX

Main market :

Listed companies related to the F&B Sector

# Name of company Sector Sub Sector

1 EURODRIP SA Chemicals Specialty Chemicals

2 FRIGOGLASS SA Industrial Goods & Services Industrial Machinery

3 THE HOUSE OF AGRICULTURE SPIROY SA Chemicals Specialty Chemicals

4 VIS Container Manufacturing Co. Industrial Goods & Services Containers & Packaging

5 DAIOS PLASTICS SA Chemicals Specialty Chemicals

6 E. PAIRIS S.A Industrial Goods & Services Containers & Packaging

7 ELTON SA Chemicals Commodity Chemicals

8 KARATZIS SA Industrial Goods & Services Containers & Packaging

9 PAPERPACK SA Industrial Goods & Services Containers & Packaging

10 THRACE PLASTICS CO. Chemicals Specialty Chemicals

11 CRETE PLASTICS SA Chemicals Specialty Chemicals

12 FLEXOPACK SA Industrial Goods & Services Containers & Packaging

Main market :

Listed companies in the F&B Sector

# Name of the Company Sector Sub Sector

1 COCA-COLA HELLENIC BOTTLING COMPANY SA Food & Beverage Soft Drinks

2 KARAMOLENGOS BAKERY INDUSTRY SA Food & Beverage Food Products

3 GALAXIDI FISH FARMING SA Food & Beverage Farming & Fishing

4 EVROFARMA SA Food & Beverage Food Products

5 SELONDA AQUACULTURE SA Food & Beverage Farming & Fishing

6 KRE.KA SA Food & Beverage Farming & Fishing

7 KRETA FARM SA Food & Beverage Food Products

8 KRI-KRI SA Food & Beverage Food Products

9 KTIMA KOSTAS LAZARIDIS SA Food & Beverage Distillers & Vintners

10 FLOUR MILLS C. SARANTOPOULOS SA Food & Beverage Food Products

11 LOULIS MILLS SA Food & Beverage Food Products

12 NIREUS SA Food & Beverage Farming & Fishing

13 CHATZIKRANIOTIS & SONS MILLS SA Food & Beverage Food Products

14 DIAS AQUACULTURE SA Food & Beverage Farming & Fishing

15 FLOUR MILLS KEPENOS SA Food & Beverage Food Products

16 ELGEKA SA Food & Beverage Food Products

17 HELLENIC SUGAR INDUSTRY SA Food & Beverage Food Products

18 PERSEUS SA Food & Beverage Food Products

19 STELIOS KANAKIS SA Food & Beverage Food Products

ENA :

Listed companies in the F&B Sector


1 MEDITERRA S.A. Retail Food Retailers & Wholesalers

2 KRITON ARTOS S.A. Food & Beverage Food Products

ENA :

Listed companies related to the F & B Sector


1 FOODLINK S.A. Industrial Goods & Services Transportation Services

Companies in the Food and Beverage Sector Related Companies in other Sectors

www.athex.gr

Appendix 2 - Listing requirements in ATHEX – summary (1)

www.athex.gr

Main MarketAlternative Market (EN.A.

Market)(defined as Regulated Market in

EU - MiFid Directive)

(defined as Multilateral Trading

Facility in EU - MiFid Directive)

> 3,000,000 € > 1,000,000 €

2

(Companies with 1 fiscal year may be

accepted for listing provided that the

Advisor adequately subtantiates the

relevant request)

EBITDA 3 years aggregate > 3,000,000 €

Per annumPositive EBITDA for last 2

fiscal years

or

3 years aggregate > 2,000,000 €

Per annumProfitability for last 2 fiscal

years

25% 10%

(15% for capitalization > 700 mln €)(within 6 months since listing, free

float must run up to at least 15%

> 2,000 > 50

(> 7,000 for capitalization > 700 mln

€)

Desirable, but listing is

effective even with losses

provided that accrued loss

does not exceed 50% of the net

worth

Free Float

Shareholder's equity

Profitability

3Published financial

statements

Pre tax profit

number of persons

holding <2%

minimum %

MiFid: Markets in Financial Instruments Directive

www.athex.gr

Main MarketAlternative Market (EN.A.

Market)(defined as Regulated Market in

EU - MiFid Directive)

(defined as Multilateral Trading

Facility in EU - MiFid Directive)

The company must have been

tax audited

The company must have been

tax audited

The last published fiscal year prior

to the admission may not have

been tax audited

The last two published fiscal years

prior to the admission may not

have been tax audited

(applies also to all companies,

which have been included in the

last consolidated financial

statements)

(applies also to all companies,

which have been included in the

last consolidated financial

statements)

For companies with estimated

capitalization < 100 mln €, during

the first year after the listing,

major shareholders (>5%) are

allowed to transfer shares that

represent a maximum of 25% of

the shares they hold

For companies listed with 1 fiscal

year or with losses, during the first

year after the listing, major

shareholders (>5%) are not

allowed to transfer any of the

shares they hold

at least 2,000,000 € -

Mandatory Desirable

-

Mandatory, for the first 2 years

following the commencement of

trading

Minimum value of shares

offered

Tax Audit

Nominated Advisor

Corporate Governance

compliance

Shares lock-up

Appendix 2 - Listing requirements in ATHEX – summary (2)

Appendix 3 – Portfolio Investment Companies (PIC)

Tax benefits in summary

www.athex.gr

Source : Ernst & Young presentation at NY Roadshow, Sep 2012

Income Tax

(similar to REITs)

-

-

-

-

Shareholder Taxation

-

-

-

Tax treament at company (PIC) Level

Tax treament at Investor level

No further income tax liability for shareholders (exhausted at Portfolio

Investment Company level)

Dividends received by shareholders are exempt of Greek WHT

Sale of PIC listed shares is subject to the 0.2% transactions tax

10% of ECB reference rate + 1% (today 1,75‰)

Basis : 6m average investments value + available funds

No withholding tax on Greek or foreign-source securities income (in principle)

Greek tax withheld on received dividends is offset agains PIC' s income tax

liability

Under conditions, bond loans interest is exempt from WHT

Appendix 3 –

Venture Capital Company (VCC) and Venture Capital Fund (VCF) Tax benefits in summary

www.athex.gr

Source : Ernst & Young presentation at NY Roadshow, Sep 2012

Income Tax

-

-


-

-

-

Tax treament at company (VCF) Level

They are tax transparent, therefore NOT subject to any kind of taxation

The formation of a VCF and the contributions of the investors to the Fund are exempt from any kind of

Greek tax


Investors are taxed in their names on income they realize in the capacity as co-owners of the fund's assets

Any transaction on VCF units is regarded as a transaction on the relevant ownership rights in the underlying

assets

Non-resident VCF investors do not face Greek tax residency or permanent establishment risks, expicitly by

Income Tax

-


-

-

Tax treament at company (VCC) Level

Effective rate : 0%


Dividends received by shareholders are exempt of Greek WHT

Dividends received and further distributed by corporate shareholders are exempt from Greek WHT

Appendix 4 - Examples of Sub-Sectors of Interest (1)

OLIVE OIL 2009 2010 2011 Δ (2009 - 20011)

Owner's Equity (in € ) 307.369.069 325.762.755 334.456.854 8,8%

Turnover (in €) 950.156.653 931.820.136 1.034.184.720 8,8%

Profits Before Interest, Tax & Depreciation (in €) 45.667.405 62.303.062 68.298.961 49,6%

Gross Margin (%) 8,22% 10,18% 9,80% 19,2%

Foreign/Own capital 1,44 1,45 1,49

Strengths 1. Excellent product quality compared to

competitors 2. Olive oil demand is on the rise globally due

to its health benefits

Weakness 1. Fragmented market 2. Higher cost of production of olives 3. Lack of large scale modern and productive

capacity 4. Large co-operative companies distort the

market.

Threats 1. Rising competition from “new” oil producing

countries (i.e. Turkey, Tunisia, Syria)

Opportunities 1. Create a strong Greek brand 2. Convert exports of bulk olive oil to branded

packaged olive oil. 3. Substitute – to the extent possible – palm

and sunflower oil imports with either olive or corn oil

4. The reduced subsidies from the C.A.P. will lead to structural changes in the sector (i.e. consolidation etc.)

5. Access new markets (mainly Asian).

www.athex.gr


WINES 2009 2010 2011 Δ (2009 - 20011)

Owner's Equity (in € ) 196.462.060,02 213.770.290,54 213.467.583,54 8,7%

Turnover (in €) 199.657.486,18 204.352.584,81 200.924.346,88 0,6%

Profits Before Interest, Tax & Depreciation (in €) 23.831.873,91 23.609.884,23 21.828.696,53 -8,4%

Gross Margin (%) 33,37% 34,57% 33,83% 1,4%


Strengths 1. Favorable climatic conditions for

wine yards 2. Long tradition of winery in Greece 3. International reputation of Greek

wines has improved in the past few years

4. The sector was modernized substantially in the past decade

Weaknesses 1. Fragmented sector

2. High cost of production due to lack of

scale

3. Bulk sales distort competition

4. Weak export performance due to lack

of national promotion strategy

5. The vast majority of exports (c.85%)

is in the EU

Threats 1. Strong competition by non-traditional

export countries 2. Reduction of global wine consumption

Opportunities 1. Create a strong Greek brand 2. New market penetration (China,

Russia, India) 3. Alternative tourism efforts (agro-

tourism, wine-tourism) 4. EURO weakness benefits exporters

www.athex.gr


www.athex.gr

FISH 2009 2010 2011 Δ (2009 - 20011)

Owner's Equity (in € ) 476.192.449 436.601.536 368.588.713 -22,6%

Turnover (in €) 911.725.800 1.004.453.703 1.036.651.146 13,7%

Profits Before Interest, Tax & Depreciation (in €) 77.354.916 50.092.899 24.053.268 -68,9%

Gross Margin (%) 22,90% 18,96% 12,31% -46,2%


Strengths 1. 11th longest coastline in the world

(13,676km) and mild weather conditions favor fish farming.

2. Global demand growing approximately by 3% p.a. – Sea bass and Sea Bream are growing even faster.

3. Competitive cost position. 4. Extrovert companies 5. Vertical integration.

Weaknesses 1. Long product life leads to high working

capital needs 2. Ineffective branding due to the nature

of the product, unsophisticated processing skills and high certification costs

3. Absence of a clear zoning plan 4. Lack of clear licensing procedures

Opportunities 1. Expand geographic coverage by further

penetrating markets of presence as well as penetrating new markets (mainly Asia)

2. Broaden product portfolio into larger size, higher value added categories.

3. Substantial room for building competitiveness through scale, product focus and labor efficiency

Threats 1. Lack of funding due to the

banking sector’s difficulties 2. Stiff competition from lower

labor cost countries 3. Rising food costs (more than

50% of cost of production)

Recovery of financials has been observed in 2012 (9m)


www.athex.gr

Strengths 1. The Dairy market is very resilient despite

the current crisis. 2. “Greek Feta” and “Greek style yoghurt” are

strong brand names internationally. 3. Existing majors have modern production

capacities and nationwide distribution networks.

4. High barriers to entry in the domestic market.

5. Yoghurt exports are on stable rising path.

Weaknesses 1. Super markets and, to a lesser extent,

milk suppliers have a strong bargaining power over dairy companies. The 10 largest Super markets command a 70% share in food sales.

Opportunities

1. Continue growing and capture larger share of Greek feta and yoghurt by introducing greater product innovation and communicating Greek origin.

2. Promote Greece’s quality yellow cheeses (graviera, kaseri, katiki, kefalotyri).

Threats 1. A huge portion of cow milk is

currently imported.

DAIRY 2009 2010 2011 Δ (2009 - 20011)

Owner's Equity (in € ) 504.234.196 813.343.643 753.128.980 49,4%

Turnover (in €) 1.465.492.327 1.698.081.730 1.778.514.953 21,4%

Profits Before Interest, Tax & Depreciation (in €) 126.112.894,83 93.276.900 88.426.131 -29,9%

Gross Margin (%) 23,09% 22,28% 19,19% -16,9%


www.helex.gr

food & beverage sector in athex - economist conferences · 2013-02-07 · the food and beverage...

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