Driving Innovative Growth

Driving Innovative Growth January 2014

Contents Country Background Market Background About Ajjawi Ajjawi Sales Philosophy Ajjawi Business Presentation 2013

Welcome | 3 | 9/2/2014 Ajjawi & RB / Aug. 2011 Ajjawi Business Presentation 2013

Disclaimer All information contained in this presentation are considered deemed confidential. No part of this presentation is allowed to be used, transferred or copied by any mean to any other person or entity other than those who are directly related to it, without the prior written consent and approval of Ajjawi. Furthermore; this business presentation contains proprietary information including; trade secrets, vital data and sensitive details. The unauthorized disclosure of it may cause damage and harm to its owners, and hence it should be treated with strict confidentiality. Ajjawi Business Presentation 2013

Safe Harbor Statement Although statistical data, market information & business environment details are based on current information and the official sources it was taken from, it is believed to be accurate and correct at the time of its preparation. Ajjawi assumes no responsibility or liability for the changes that may occur to the data and relative statistics provided due to the ongoing market changes and the effect of both political and economical situations on it. This business presentation may be exposed to varying degrees of risks and uncertainties related to other factors including; competitive pricing, consumption or usage levels, physical risks, legislative, fiscal, tax and regulatory developments, economical, political and social conditions within the Palestinian Territories. All of these risks, in addition to others, may materially effect this presentation and should be taken into consideration as such. Ajjawi Business Presentation 2013

Country Background Ajjawi Business Presentation 2013 Country Background

Country Background • Palestine • Located on the Western edge of the Asian Continent and the Eastern extremity of the Mediterranean Sea. • Palestinian Territories have two definitions: Legal & Political. • Legally; Palestinian Territories are that part of Palestine which been annexed by Israeli after 1967 war. • Politically; Palestinian Territories are that part handed over to PLO to establish The Palestinian Authority after the Oslo Agreements. Ajjawi Business Presentation 2013 Country Background

Country Background Palestinian Territories is Divided into: • Area A: The PNA exercises full autonomy. • Area B: Palestinian jurisdiction is limited , security is handled by the Israelis. • Area C: Full Israeli control. Ajjawi Business Presentation 2013 Country Background

Country Background Palestinian Demographic Features 2010 Ajjawi Business Presentation 2013 Country Background

Country Background • Population Pyramid • 67% of The Palestinian Population is below 29 Years. Ajjawi Business Presentation 2013 Country Background

Country Background Percentage Contribution to GDP by Economic Activity In The Palestinian Territory for the Year 2010 at Constant Prices, (2004 is the Base Year) Ajjawi Business Presentation 2013 Country Background

Country Background • Living Standards & Humanitarian Aid (2010) • % of households below poverty line: 51.5%. • Number of individuals below poverty line: 2,095,437 • % of households that lost more than half of their income during Al Aqsa Intifada: 51.6%. • % of households that indicated their need for assistance: 67.0%. • Average monthly per capita expenditure in The Palestinian Territories (US $): 128.0 • Average number of rooms in housing units: 3.3 • Average number of persons / room (housing density): 1.8 Ajjawi Business Presentation 2013 Country Background

Country Background • Information & Communication Technology (06) • Availability of TV sets: 95.3%. • Availability of satellite dish for households having TV sets: 80.4%. • Availability of PC at home: 32.9%. • Availability of internet at home: 15.9%. • Persons (10 years and above) who have access to the internet: 26.4%. • Persons (10 years and above) who use computers: 50.9%. • % of households who have a mobile phone: 81.0%. • % of households who have a telephone line: 50.8%. • % of households who view Palestine TV: 29.9%. Ajjawi Business Presentation 2013 Country Background

Country Background Mass Media Ajjawi Business Presentation 2013 Country Background

Country Background • Available Media in Palestine • Bill Boards • Local Radio Stations • News papers • Magazines • Internet • TV • Digital Signage • Taxi and Bus Media Ajjawi Business Presentation 2013 Country Background

Country Background Culture Ajjawi Business Presentation 2013 Country Background

Country Background • Legal Structure • The Legal framework in Palestine is sourced from many origins. It is a pool of laws that had been accumulated with time depending on the regime that governed Palestine. • Sources Of Laws • The Old Ottoman Civil Law “Al Magella”. • British Decrees carrying the force of law, imposed by the British Mandate over Palestine. • Jordan applied its own laws during the annexation of the West Bank after 1948. Ajjawi Business Presentation 2013 Country Background

Country Background • Sources Of Laws … Continued • Egyptian regulations and laws deemed necessary for the Egyptians during their administration of the Gaza Strip. • Israeli military orders (Laws& regulations) during their occupation of the West Bank & Gaza Strip. • Palestinian Authority legal framework is still a matrix of all a/m laws & regulations and the agreements signed with the Israelis. • Currently some new basic laws & regulations had been passed by PLC while a high profile Technical Committee supported with International Legal Experts are preparing a modern Palestinian Constitution. Ajjawi Business Presentation 2013 Country Background

Market Background Ajjawi Business Presentation 2013 Market Background

The Palestinian Market is characterized of being endowed with poor financial resources. The Palestinian retail market is an unorganized market. Small groceries and kiosks dominate the total number of existing retail outlets. Some mini markets and very few big supermarkets are available in main cities only. Recently some hypermarkets are witnessed in the three major cities; Ramallah, Nablus and Hebron. Market Background Ajjawi Business Presentation 2013 Market Background

Market Background • The Palestinian situation had created unique market features; many of the Palestinian working in Israel had gained the buying habits and trends that are dominant in Israel, while those who lived in Diaspora or had been educated in other parts of the world brought back with them the life styles, buying habits and trends that were gained from their relative markets. • Furthermore, the different levels of income among Palestinians (from very poor to very rich) created a potential for very low priced items to the high expensive premium alternatives. Ajjawi Business Presentation 2013 Market Background

Market Background The deterioration of economic conditions in the Palestinian Territory can be attributed to three factors: • The continuation of Israeli practices and measures against Palestinians, such as withholding PNA's VAT and customs transfers (estimated at US$600 million/month). Overall, the Israeli measures against the Palestinian people have deprived the Palestinian people of more than 60% of their government's budget. • The Declaration of the Palestinian State in September and USA threats to stop the financial support to the PNA. • The failure of the Palestinian factions, in reaching a political accord in order to set the national political agenda to overcome the current economic crisis. Ajjawi Business Presentation 2013 Market Background

Market Background Such deterioration in economic activity produces certain classical features such as; • High unemployment and poverty rates that threaten the social fabric of the country. • Distortions in the economic structure towards an increase in the economic activities that cater to basic needs. These economies suffer from structural changes in the industrial base towards the production of low-value low-wage manufacturing. • The mobility of many workers from the formal sector into the informal sector. • Widening income and consumption gaps in favor of the rich and wealthy accompaniedby an increase in the marginalization of the poor. Ajjawi Business Presentation 2013 Market Background

Market Background Market Segmentation • Like any other market, the Palestinian market is divided into very clear subgroups that possess similar characteristics. These sub groups (segments) can include elements such as: • Usage: Heavy vs. light • Demographics: Age, sex, marital status, income, educational status. • Geography: Regional, national, international, rural, urban, camp. • Psychographics: attitudes, beliefs, perceptions, preferences, etc. • Benefits: What is in it for me? How does it improve my life? Ajjawi Business Presentation 2013 Market Background

Market Background • Market Volume • PALESTINIAN CENTRAL BUREAU OF STATISTICS ESTIMATES THE ANNUAL CONSUMPTION AND EXPENDITURE ON HOUSEHOLD AND PERSONAL CARE ITEMS (2009) IN THE WEST BANK TO BE: • HOME CARE PRODUCTS: ± 82,000,000.00 US$ • PERSONAL CARE PRODUCTS: ± 153,000,000.00US$ • FOOD PRODUCTS: ± 350,000,000.00US$ Ajjawi Business Presentation 2013 Market Background

Market Background Distribution Channels Depending on the size, type, location and economical justification of the retail outlet, many distribution channels exists in Palestine; • Direct retail (Super markets, groceries,& Kiosks) • Wholesalers & semi wholesalers. • Remote or far-to-reach POS at villages and surrounding rural areas. • Pharmacies & Drug Stores. • Limited function distributors. • Sales force. • Etc... Ajjawi Business Presentation 2013 Market Background

Market Background Points of Sale Ajjawi Business Presentation 2013 Market Background

Market Background Points of Sale Classification Ajjawi Business Presentation 2013 Market Background

Market Background Retail Outlets Per Governorate Ajjawi Business Presentation 2013 Market Background

Market Background • Competition • Ajjawi Believes in vigorous yet fair competition and supports efforts to create a more open competitive environment. • More than ever before, it is vital to convince and inspire consumers. That is what we do by listening to them; identifying their wishes and needs and translating it into quality products that reply to their appeals, wishes and needs while launched in the market with reasonable price structures. Ajjawi Business Presentation 2013 Market Background

Market Background • Competition • Competing companies can be classified into: • Local manufacturers. • International suppliers. • Regional suppliers ( Israel, Jordan UAE, SA, Etc..). • Gray Markets. • “Bag Merchants”. Ajjawi Business Presentation 2013 Market Background

About Ajjawi Ajjawi Business Presentation 2013 About Ajjawi

Company Fact Sheet Established in early Seventies of the last Century (1970). Ajjawi is a specialized & dedicated professional operation concentrating its activities on ; Food & FMCGs Home and Personal care Products. Agri Business Automotive Real Estate & Services We built our reputation and professionalism through hard work, long years of dedication and adherence to innovation and creativity. About Ajjawi | 43 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Company Fact Sheet • We are bringing our wealth of knowledge and expertise to the service of our customers and consumers – a truly local multinational operations. • Our deep roots in our culture and market give us our strong relationships with our customers and consumers and are the foundation of our future growth. • Our Long term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learncontinuously. | 44 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi Vision “To be the Palestinian preferred supplier of essential and value-added products and services for everyone, everywhere and every day that make peoples’ lives healthier, happier, and more enjoyable.” Mission Statement Ajjawi is a leading enterprise devoted to providing Palestinian customers & consumers essential products & services that improve the quality of everyday life. We are determent to achieve success in our investments & business, always adhere to the strictest ethical and world class standards. We place high priority in investing in our people & in serving our communities. | 45 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Ajjawi’s Main Responsibilities • Economic - Be profitable. • Legal - Obey the law. • Ethical - Do what is right. • Discretionary - Contribute to community and quality of life. | 46 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Strategic Objectives • To maintain Ajjawi’s leading position as “SUPPLIERS OF CHOICE” in the Palestinian Market. • Build superior consumer Brand Value by delivering the right bundle of consumer benefits at the right price compared to the competition. • Build shopper demand through superior customer collaboration by enhancing the relationships we have with our trade partners to achieve success with consumers. • Develop our product portfolio to better align with key consumer and customer trends, and the fastest-growing channels and demographic groups. | 47 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Strategic Objectives • To sustain and develop our marketing, sales, services and support to unbeatable levels with the highest customers’ & consumers’ satisfaction measures. • Develop existing infrastructure through the use of advanced information and communication technologies, more advanced infrastructures and better business vehicles. • Drive out costs and assets by creating a leaner cost structure and make better use of our assets to generate savings we can reinvest in brand building. | 48 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Distribution Areas • Distribution areas are geographically separated into the following zones taking into consideration the existing geopolitical complications, ease of goods delivery and customers’ service standards: • Northern Zone; (Nablus, Jenin, Tulkarem & Salfit Governorates) • Central Zone; (Ramallah & Al Bireh, Jericho and Jerusalem Governorates). • Southern Zone; (Bethlehem & Hebron Governorates). • Gaza Strip. • Palestinian Market within Israel | 49 | Ajjawi Business Presentation 2013 About Ajjawi

About Ajjawi • Company Fact Sheet • Manpower: • Sales force: 10 • Merchandisers: 02 • Logistics & Deliveries: 20 • Admin & Supporting Staff: 10 • Facilities: • Warehouses: 1 (30,000 m3) • Operations Offices: o4 • Trucks & Vans: 06 • Vehicles: 17 | 50 | Ajjawi Business Presentation 2013 About Ajjawi

Driving Innovative Growth