An Egyptian Exporter

Taher Gargour Colin SykesBusiness Development Group CFO

FY 2006 results presentation

March 2007

Corporate Summary

3

Introduction: An Egyptian exporter

Split of sanitary ware and tiles1Split of domestic and export1

* All production facilities are owned and controlled by Lecico

AlexandriaKhorshidBorg El-Arab

Cairo

Established 1997

Sanitary ware capacity2.0 million pcs 20054.0 million pcs end 2007

Borg El-Arab

Established 1975

Sanitary ware capacity2.5 million pcs 2005

Tiles capacity17.0 million m2 200521.4 million m2 early 2007

Khorshid

Established 1959

Sanitary ware capacity:600,000 pcs 2005

Tiles capacity1.1 million m2 2005

Kfarchima

Kfarchima Beirut

• Lecico Egypt S.A.E. is a leading sanitary ware producer in the Middle East and a large tiles producer

• Lecico was founded in 1959 and has been majority owned by the Gargour family since 1969

• The company has a global competitive advantage making European quality sanitary ware at Egyptian costs

• The company is a significant exporter with c53% of Lecico’s sanitary ware sales volume going into Europe

• Lecico is in the midst of a major capacity expansion which will boost capacity to over 7m pieces of sanitary wary

• This expansion will make Lecico approximately the sixth largest sanitary ware producer in the world

• 4.4 m sqm tile expansion also underway in Egypt, start-up of production expected in first half of 2007.

• Lecico has recently acquired certain assets of Sarreguemines in France; a manufacturer with sales of c0.4m pieces per annum

Note: (1) FY 2006

Egypt (38%)

Lebanon (9%)

Export (53%)

Sanitary ware (62%)

Tiles (38%)

Corporate Overview

5

Investment case

Management and brand history• Brand with over 45 years of history • Egyptian, Lebanese and European expatriate management

Regional leadership

• Sanitary ware market leadEgypt and Lebanon• Largest producer in the Midd

Growing exports

•Targeting growth in typically higher margin exports

er in

le East

Significant cost advantage

• Economies of scale• Low labour and energy costs• European quality product

Strong historic growth record

24% Revenue CAGR (2000-2006)30% Net Profit CAGRSupplier for key European

brands

Aggressive expansion program

Tile capacity doubled and sanitary ware capacity grew 40% since 2000Substantial further capacity expansion underway

Sanitec relationship

6

Strong management & over 45 years brand history

Management team

Gilbert GargourChairman and CEO

Colin SykesGroup CFO

Elie BaroudiManaging Director

Egypt

Georges GhorayebGroup Technical Director and Managing Director, Lebanon

Factory ManagersElie Youssef (Sanitary) Nabil Nader (Tiles)

Production ManagersM Tantawi (Khorshid) I Mclaren (Borg 1&2)

W Hourani (Borg 3&4)A Raimondi (Tiles)S Mancini (Fireclay) Legal Counsel

S Hamouda

Financial Controller

M Hassan

Financial Controller

C A Khalil

1959

1967

1978

1983

1997

1999

2003

2007+

Lecico founded in Lebanon

Tile production started

Operations established in Egypt

Sanitary ware production started

Sanitec becomes indirect shareholder in Lecico via CHME

Lecico enters into a sourcing agreement with Sanitec

Sanitary ware production started in Lebanon

Tile production started in Egypt

Sanitary ware factory opened in Borg El-Arab (Egypt)

Borg El-Arab 2 completed

Roll out of European Ceramics (Borg 3 & 4), and tile expansion

Brian DalgarnoProduction Director

Integration of Sarreguemines into Lecico’s operations

Senior management experience: average 16yrs with Lecico and 23yrs industry experience

7

Domestic market leadership

38%

13%11%

8%

8%

8%

7%7% Lecico

CleopatraGravenaAracemcoAmerican Standard PharaosDuravit Others

25%

19%

17%

10%

6%

23% Cleopatra

Pharaos

Lecico

Al Amir

Gemma

Others

15%

30%55%

Lecico

Uniceramic

Imports

Market leadership in Egypt

Market leadership in Lebanon

• Leading sanitary ware market share

• 2.0m piece Lecico capacity expansion ongoing

• Leading sanitary ware market share

• Branded as European quality

Sanitary ware market (4.5 million pieces)1 Tile market (80 million m2)1

Sanitary ware market (0.5 million pieces)1 Tile market (8.5 million m2)1

• Competitive pricing to support distributors’sanitary ware sales

• 4.4 m sqm Lecico capacity expansion ongoing

• Number two market share in tile sales

• Presence maintained to complement sanitary ware sales

Note: (1) Management estimates for 2005

55%

45% Lecico

Imports

8

Growing exports

Growth in group’s exports

2,4251,6221,1331,009 1,998 1,819

81.0% 79.0% 82.0% 84.0% 80.0% 84.0%

0

1,000

2,000

3,000

2001 2002 2003 2004 2005 20060%

20%

40%

60%

80%

100%

2,267 2,8841,4311,2401,229 1,982 2,389

51.0%46.0% 42.0%

50.0%59.0%56.0%

60.0%

0

1,000

2,000

3,000

2000 2001 2002 2003 2004 2005 20060%

20%

40%

60%

80%

Lecico’s total export volumes (sanitary ware) Egypt’s leading sanitary ware exporter

• Lecico exports c50% of its sales vs. 20% for local peers

• Lecico sells to over 50 countries (including OEM sales)

• Approximately 30% of exports are for other brands

• Lecico represents 50% of Egypt’s sanitary ware exports with the balance split among 9 manufacturers

• Sanitary ware export volumes grew at 15% CAGR (2001-2006)

• Volumes fell slightly in 2005 due to market slowdown in UK

Export focus on Europe

Europe as percentages of total exports Growth of Lecico brand sanitary ware market share in UK

650 725560470400 650 680

5.0%6.0%

7.0%8.0% 8.0% 8.0%

10.0%

0

200

400

600

800

2000 2001 2002 2003 2004 2005 20060%

2%

4%

6%

8%

10%

• UK estimated c10% market share in direct sales

• Around 50% of total exports are to UK (direct and OEM)

• Average of over 80% of exports are to Western Europe

• European export volumes (excluding UK) flat in 2005

9

Significant cost advantage

International cost advantage

Lecico produces sanitary ware at an all-in average cost of US$10.6 / piece

– In Egypt, manufacturing cost averages US$7.4 / piece of sanitary ware– The difference reflects higher packing costs for EU-destined exports and significantly higher industrial cost in Lebanon– Our information suggest other low cost producers’ manufacturing cost averages US$10-15 / piece– While European producers average US$25+ / piece depending on their market

Why is Lecico able to produce so cheaply?

– Egypt: Low energy costs, low labour cost, low investment costs, low effective taxes– Size: Economies of scale, standard global plant size: 1m pieces– Experience: Over 45 years as a company and almost 40 years as a sanitary ware producer– Utilization: 85-90% capacity utilization rate versus 70% industry average in Egypt– Efficiency: Production per employee is > twice that of our local competitors

Investment, distribution and overheads benefit from regional economies of scale

– Sanitary ware investment cost approx US$12-15 / piece vs. US$20-30 / piece global standard– Low shipping cost to Europe: US$1 per sanitary ware piece vs approx US$5+ for Asian manufactures

Growth strategy

11

Long-term sanitary ware growth strategy…

• Aim to increase market growth− UK, Ireland, France

Expand production capacity

• Sanitary ware capacity expansion: from 5.1m pcs in 2005 to 7.1m pcs by end 2007

• Expanding casting capacity to handle greater proportion of WCs in either plant

• Adding capacity in tiles (+4.4m sqm or 24% increase) and expanding fired clay capacity

Lower production costs while keeping European quality

• Constructing in-house production facility for key raw material for tiles (frit plant)

• Local sourcing of raw materials without compromising quality

• Cost savings through improvements in manufacturing efficiency

Expand regional and international exports

• New and expanded OEM contracts – Sanitec, IKEA, SFA, Setma

• Potential future markets− Germany, Algeria, Saudi

Arabia, Iraq, Syria

12

…translates into concrete actions

ActionStrategy

Expand regional and international exports

● Aim to increase market growth

− UK, Ireland, France

● Expand in Europe

− Germany, Greece, Italy, Spain

● Expand in the Middle East

− Algeria, Saudi Arabia, Iraq, Syria, UAE

● Expand OEM activity

− Sanitec, IKEA, SFA, Setma and others

Expand production capacity and optimize costs

● Sanitary ware capacity expansion: from 5.1m pieces in 2005 to 7.1m pieces by end 2007

● Expanding casting capacity to handle greater proportion of WCs in either plant

● Adding +4.4m sqm of tile capacity and expanding fired clay capacity.

● Constructing in-house production facility for tiles’ key raw material (frit plant)

Expand regional and international exports

● Started unbranded sales to UK builders merchants

● Started unbranded sales to DIY market in the UK

● Added new sales teams and product ranges for the UK

● Secured new DIY customers in France

● Acquired certain assets of Sarreguemines in France

● Registration of complete packs with Norme Française

● First sale out of Lecico’s Algerian subsidiary in 2Q 2006

● Sales executives appointed in Germany & Greece

● Increased proportion of total Sanitec outsourcing

● Expanded most other European outsourcing contracts

Expand production capacity and optimize costs

● First 1.0m piece line to be operational by early 2Q 2007

● Tile line expected to be operational by late 1H 2007

● Three frit kilns have started operations.

● Lecico plans to add a further two frit kilns to take total capacity to 60 tons per day

Sarreguemines

14

Who is ?

• Sarreguemines Sanitaire (www.sarreguemines-sanitaire.com) is a long established French sanitary ware producer with a history dating back to the late 1700s

• Sarreguemines has sales of around 460 thousand pieces of sanitary ware per annum

• Sarreguemines’ main customers include:

• Sarreguemines specialises in fine fireclay (FFC) with sales of approximately 130 thousand FFC pieces per annum (circa 28% of average sales volume) and adds roughly 20 new FFC models annually.

• In 2005, Sarreguemines reported revenues of EUR 18.6 million and operational (EBIT) losses of EUR 1.2 million

• Since July-2006, Sarreguemines has operated under court receivership

• In October 2006, Lecico acquired certain assets of Sarreguemines that included trade mark, inventory, warehousing and the fine fireclay manufacturing facility for EUR 1.5 million.

• Labour force was reduced from 253 members in 2005 to 143 currently

15

Why buy ?

• Lecico believes Sarreguemines can be made profitable from 2007 onward by:– Outsourcing the majority of production (330k pieces of vitreous china)– Reducing workforce to 143 members from 253 in 2005 (a net saving of around EUR 2.0 million)

• Over the coming years, Sarreguemines’ vitreous china outsourcing will be transferred to Lecico– Synergies include turning transport costs (from China) into profit and adding volume to Lecico Egypt

• Sarreguemines acquisition will expand Lecico’s footprint in Europe– Adding sales of around 220k pieces in France alone (over a 90% increase on 2005 sales volumes)

• Sarreguemines will add significant FFC design and manufacturing resources to Lecico– Sarreguemines’ FFC capacity of 120k pieces will double Lecico’s FFC capacity (120k as of 1Q 2007)– Sarreguemines’ FFC know-how will help Lecico improve production techniques and yields

• Sarreguemines’ product range has a more high-end and European-style design that complements Lecico’s more UK-design based range

• Lecico can cross-sell Sarreguemines into its existing European and Middle Eastern markets, positioning the acquisition as a high-end brand to compliment Lecico’s mass market offering

Extracting synergies from combining Sarreguemines’ activities with Lecico and leveraging the Sarreguemines brand will be extremely challenging and will take time

Financial overview

17

4Q 2006 – Continued recovery in a difficult period

Revenue-led sequential recovery in operations…• Sanitary ware recovery drives 4Q revenues up 27% Y-o-Y (vs. 16% drop in 4Q 2005)

– New DIY contracts in the UK and France help drive a 41% increase in sanitary ware export volumes to an all-time high– Egyptian sanitary ware market recovery with domestic sales volumes up 22% year-on-year in 3Q 2006

• Sales-led 29% 4Q gross profit growth sufficient to deliver 4% growth for the year despite weak 1H– Sanitary ware sales growth was strong enough in 4Q to help drive a 29% increase in consolidated gross profits Y-o-Y…– …reversing the drop in gross profits for 9m 2006 and delivering a 4% consolidated gross profit growth for the year

…in a difficult operating environment• Plant closure and continued instability in Lebanon weighed on revenue and profitability

– Plant closure during war with Lebanon and continued political instability have had a significant impact on market demand and Lecico Lebanon activity

– Volumes have gradually picked up to pre-war levels, but they are still behind 2005 levels

• Increase in gas and fuel prices in Egypt in late July inflated energy costs– Fuel price increase inflated energy cost per piece and per sqm in Egypt by 3% and 14% y-o-y, respectively in 3Q 2006– Cost optimization and volume benefits helped keep sanitary cost inflation limited at 5% y-o-y, respectively in 4Q 2006– Frit plant roll out offset inflationary impact of energy prices in the tile division, where costs were flat Y-o-Y – The probable suppressive impact of general inflation on retail consumption is not completely ruled out yet

18

Continued recovery in a difficult period

1,194 1,287 1,1561,0291,008943 880 995

-11.0% -6.0% -9.0% -12.0%

5.0%

18.5%25.0%

31.4%

600

800

1,000

1,200

1,400

1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q2006 4Q 2006-60%

-40%

-20%

0%

20%

40%

Sanitary ware volume growth at highest level in 8 quarters Sanitary ware gross profit growth at highest level in 8 quarters000 pieces Y-o-Y (%)

44 40 40364550 33 36

-6.0%

-29.0%-38.0% -45.0%

-27.0%

-3.0%10.4% 22.4%

25

35

45

55

1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q2006 4Q 2006-120%

-100%-80%

-60%-40%

-20%

0%20%

LE million Y-o-Y (%)

186 183 193171178153 152 158

-3.2%3.9% 3.3%

26.7%

7.5%

-16.1%

4.7%

-9.0%

140

160

180

200

1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q2006 4Q 2006-30%

-20%

-10%

0%

10%

20%

30%

66 64 66596963 51 56

7.9%-3.2%-11.4%

-31.6%-27.1%

-13.7%-2.0%

28.6%

0

20

40

60

80

1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q2006 4Q 2006-40%

-30%

-20%

-10%

0%

10%

20%

30%

Consolidate gross profit growth at highest level in 8 quartersY-o-Y (%)LE million

Consolidated sales revenue growth at highest level in 8 quarters

LE million Y-o-Y (%)

19

Profit and loss

Raw materials (37%)

Other materials (18%)

Energy (11%)

Salaries and wages (13%)

Depreciation (8%)

Other costs (13%)

Cost of sales breakdown (2006)

720559382265 697 652

39.1% 36.3%44.1%

49.6% 49.2% 52.7%

0

200

400

600

800

2001 2002 2003 2004 2005 2006-16%

0%

16%

32%

48%

64%

Net salesLE million Exports (%)

Net Profit (1)

11814018847 72 108

17.9% 18.9% 19.2%

26.9%

21.4%

16.4%

0

40

80

120

160

200

2001 2002 2003 2004 2005 20060%

5%

10%

15%

20%

25%

30%

EBIT

LE million Margin (%)

79844428 136 89

10.7% 11.6%15.0%

19.5%

13.6%11.0%

-30

0

30

60

90

120

150

2001 2002 2003 2004 2005 2006-15%

-5%

5%

15%

25%

Margin (%)LE million

20

Segmental analysis

178 249 369 469 389 444

2.7

3.44.0

4.33.9

4.6

0

100

200

300

400

500

2001 2002 2003 2004 2005 2006

Rev

enue

s (L

E m

)

0.0

1.0

2.0

3.0

4.0

5.0

Volu

mes

(000

's p

cs)

Net sales revenue Total sales volume

65 74 93 110 101 9635 41 51 55 58 610

20

40

60

80

100

120

2001 2002 2003 2004 2005 2006LE

per

pie

ce

Av price/piece Av cost/piece

Sanitary ware – sales volumes and revenue Sanitary ware – gross profit and marginSanitary ware – selling price and cost per piece

83 110 168 234 164 161

36%46% 44% 46% 42%

50%

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006

Gro

ss p

rofit

(LE

m)

0%

10%

20%

30%

40%

50%

60%

Gro

ss m

argi

n (%

)

Gross prof it Gross margin (%)

87 133 191 228 263 276

9.210.8

14.6 15.317.7 18.5

0

60

120

180

240

300

2001 2002 2003 2004 2005 2006

Rev

enue

s (L

E m

)

0.4

5.4

10.4

15.4

20.4

Volu

mes

(sqm

m)

Net sales revenue Total sales volume

Tiles – sales volumes and revenues Tiles – selling price and cost per sqm Tiles – gross profit and margin

9 12 13 15 15 158 9 9 11 10 100

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006

LE p

er s

qm

Av price/sqm Av cost/sqm

18 39 54 66 78 91

21%

30% 28% 29% 30% 33%

0

20

40

60

80

100

2001 2002 2003 2004 2005 2006

Gro

ss p

rofit

(LE

m)

-15%

-5%

5%

15%

25%

35%

Gro

ss m

argi

n (%

)

Gross prof it Gross margin (%)

21

Balance sheet and cash flow

Working capital

254242209192217266204 1221107896129208216 135991261039912698 17115973105992262710

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006

Days

Inventory days (Inventory/cost of sales) Receivables days (Receivables/net sales) Payables days (Payables/Cost of sales) Net working capital days

Returns and leverage Capital expenditures

Project Investment cost (LE m)

2006 2007Khorshid frit plant 10.0 5.0Fire Clay capacity expansion 25.0 0.0Tile expansion and upgrade plans 50.0 10.0Borg El-Arab 3 & 4 40.0 35.0General maintenance work 38.0 35.0

Total planned specific project capex 163.0 85.012%14%20%26%18%13%9% 13%14%26%19%15%11%9%

0.6

0.2

0.91.0

0.80.6

-0.1

0%

10%

20%

30%

40%

50%

60%

70%

2000 2001 2002 2003 2004 2005 2006-1.0

-0.5

0.0

0.5

1.0

1.5

Return on equity ROIC Net debt/equity

22

Revenues and margins

Segmental sales breakdown (2005 vs. 2006)

2005

Sanitary w are (60%)

Tile (40%)

2006

Sanitary w are (62%)

Tile (38%)

2005

Egypt (36%)

Lebanon (5%)

Export (59%)

Sanitary ware export volumes by geographySanitary ware sales volume by geography

2005

Europe (80%)

Middle East (11%)

Africa & other (9%)

2006

Europe (84%)

Middle East (11%)

Africa & other (5%)

2006

Egypt (34%)

Lebanon (5%)

Export (61%)

Segmental gross profit (2005 vs. 2006) Tile sales volume by geography

2005

Sanitary w are (68%)

Tile (32%)

2006

Sanitary w are (64%)

Tile (36%)

2005

Egypt (77%)

Lebanon (5%)

Export (18%)

2006

Egypt (73%)

Lebanon (6%)

Export (21%)

Share performance and data

24

Share structure and history

• Lecico listed in November 2004 and is currently valued at a market cap of US$ 160 million with a 48% free float

– Trading history: GDR trades an average of US$ 0.15 million in trading a day and trades on 31% of market trading days (2006)

– Lack of local liquidity and difficult operating year have led to shrinking liquidity– Lecico plans to address this by improving local liquidity in 2007

– Share multiples: Lecico now trades on 2006 multiples of:– 11.6x PER, 6.6% Div Yield (2005), 1.4x P/B and 8.3x EV/EBITDA

Shareholding structure

Share liquidity overview (GDR) Share liquidity overview (Local)GDR and Local share price

Intage / Gargour

32%

Sanitec15%

Treasury5%

GDR float39%

Local float9%

0

5

10

15

20

25

07F

eb05

20A

pr05

01J

ul05

12S

ep05

21N

ov05

02F

eb06

13A

pr06

28J

un06

07S

ep06

16N

ov06

30J

an07

75

85

95

105

115

GDR Local Share

0

100

200

300

400

500

600

700

Feb-

05M

ar-0

5Ap

r-05

May

-05

Jun-

05Ju

l-05

Aug

-05

Sep

-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06Fe

b-06

Mar

-06

Apr-0

6M

ay-0

6Ju

n-06

Jul-0

6A

ug-0

6S

ep-0

6O

ct-0

6N

ov-0

6D

ec-0

6Ja

n-07

0%

10%

20%

30%

40%

50%

60%

70%

80%

Av daily volume (USD 000) Days traded (%)

0

50

100

150

200

250

300

Feb-

05M

ar-0

5Ap

r-05

May

-05

Jun-

05Ju

l-05

Aug-

05Se

p-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06Fe

b-06

Mar

-06

Apr-

06M

ay-0

6Ju

n-06

Jul-0

6Au

g-06

Sep-

06O

ct-0

6N

ov-0

6D

ec-0

6Ja

n-07

0%5%10%15%20%25%30%35%40%45%

Av daily volume (USD 000) Days traded (%)

25

Thank you

For additional information, please contact:Taher G. GargourTelephone: +203 518 0011Fax: +203 518 0029Mobile: +2012 104 1047E-mail: tgargour@lecico.com.eg

Visit our website at: www.lecico.com.eg

Forward-looking statements:This presentation may contain certain “forward-looking statements”, relating to Lecico Egypt S.A.E. business, which can be identified by the use of forward-looking terminology such as “will”, “planned”, “expectations”, “forecast” or similar expressions, or by discussions of strategy, plans or intentions. Such statements may include descriptions of investments planned or currently under development by Lecico Egypt S.A.E. and the anticipated impact of these investments. Such statements reflect the current views of Lecico Egypt S.A.E. with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Lecico Egypt S.A.E. to be materially different from any future results that may be expressed or implied by such forward-looking statements.

mailto:tgargour@lecico.com.eghttp://www.lecico.com.eg/

Corporate SummaryIntroduction: An Egyptian exporterCorporate OverviewInvestment caseStrong management & over 45 years brand historyDomestic market leadershipGrowing exportsSignificant cost advantageGrowth strategyLong-term sanitary ware growth strategy……translates into concrete actionsSarregueminesWho is ?Why buy ?Financial overview4Q 2006 – Continued recovery in a difficult periodContinued recovery in a difficult periodProfit and lossSegmental analysisBalance sheet and cash flowRevenues and marginsShare performance and dataShare structure and historyThank you