114th June 2009

Renault Feasibility Study Summary

2

Agenda

• Aim & Purpose• Success Factors• Sales Forecast overview• Financial Summary• Challenges and solutions• Why Renault for Alissa?• What is next?

3

Aim• Acquire Renault franchise as an exclusive dealership in the

kingdom.

Purpose • Maximize shareholder business profitability.• Optimize the utilization of the group infrastructure

(economies of scale)• Business Diversification.

– Capture the available opportunity “Renault exclusive dealership”.– Balance and mitigate current franchise uncertainty.

4

Success FactorsRenault• Offering wide range of reliable products that are adapted to KSA environment

– Product test has been conducted in the region for the last 2 years for Passenger cars and Light Commercial Vehicles

• Professional and quality standard after sales service to meet the need of the target consumer

– Technical team reside in the region (in Dubai) to assist and serve the local dealers. In Addition to one Renault technical advisor for after sales service located in Riyadh and Renault will add any needed additional staff in the future.

– Very advanced certified training system for all levels (Higher level than GM and Isuzu training) and sponsored by Renault

– High ratio of spare parts availability. Buy back system for parts dead stock (30% of the landed cost)– Renault is committed to ensure the availability of all spare parts (Minimum stock will be available in

our stock for any new vehicle before launching) investment has been raised with Renault’s after sales team regarding this issue. They will look for some sort of support.

– Most of the parts are built on Nissan platform and Nissan power train which means most of the parts of Nissan are applicable for Renault (Renault parts can be sold through Autostar for Nissan vehicles parts)

5

Success Factors Cont…• Marketing Support “Renault marketing strategy”

– Detailed re-launching marketing strategy in the region “include re-building Renault image, Brand positioning and brand awareness) Complete Marketing campaign to be started in September in order to re-launch Renault brand in Saudi Arabia sponsored by Renault.

– Official ceremony for Renault re-launch in Saudi Arabia in September.– Competitive retail prices that enable Renault’s products to penetrate strongly and quickly in

the market. – Renault is eager to ensure the competitiveness of retail prices and they intend to review the

market continuously.– Fleet support for all Renault range and additional support for special deals.– Financial support from Manufacturer for Trade-in programs to acquire maximum re-sale

value. – Renault will establish a strategy to be launched in Sept/Oct 2009 which aim to set the re-

sale value of each model.– Focused and innovative marketing programs “Customer First Program” 50% sponsored by

Renault– Free marketing/sales materials and tools “sponsored by Renault”.

6

Success Factors Cont…

Alissa

Alissa Heritage as a pioneer in Saudi Auto market backed by experienced executive board

• Sales “strong network with complete infrastructure”• Distribution “ attractive customer base through out the kingdom”• Dedicated experienced management and staff.• Reliable fleet and retail customer data base.• Professional outdoor sales resources.• State - of – the - art IT and management system.• After sales service “Facilities, technical skills, and point of sales”• Strong foundation of Customer Relationship Management.• Customer financial offering (Leasing, Installment,...etc) for retail and fleet customers, through Al-Yusr and

other financial institutions• Operational leasing, Daily rental through BTC and other Rent-A-Car companies.• Retail distribution channels through Autostar and other sub-dealers.• Alissa offered a special office for Renault stuff at Alissa premises to work as a team with Alissa

management to support Alissa sales and after sales.

714th June 2009

Sales Forecast & Market ShareOverview

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Sales Forecast (units)

2009 2010 2011 2012 2013 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1,000

5,000 7,000

9,800

13,720

Renault

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2009 2010 2011 2012 20130.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0.21%

1.05%

1.47%

2.05%

2.87%

Total

Renault Market share(assuming no growth in Passenger car market)

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2009 2010 2011 2012 20130.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

0.20%

0.99%

1.34%

1.82%

2.52%

Total

Renault Market share(assuming 3%growth in Passenger car market)

1114th June 2009

Financial Summary

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Net profit Forecast

1 2 3 4 50.000

5.000

10.000

15.000

20.000

25.000

30.000

35.000

0.403

5.493

10.992

18.672

30.238

0.0 4.1 5.98.5

12.4

AUM & GACO NP

AUM NP GACO NP

SR/M

13

ROCE Forecast

2010 2011 2012 20130.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

12.4%15.3%

17.5%19.2%

34.6%

40.9% 41.0% 39.9%

ROCE ROE

SR/M

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Financial Statements (Appendix 1)

• Profit and Loss Statement

• Balance Sheet

• Ratios

• Cash Flow Statement

• Exit cost by end of 2010

• Renault effect on Autostar P&L Statement

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Challenges & Solutions

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Challenges & SolutionsChallenge• The Bad brand image in the market

Solution• Re-launch Renault brand in KSA by Marketing activities. “Sept 2009”• Financial budget allocated by manufacturer for the re-launch activities.• Leverage Renault brand image by introducing new models to the market

adapted to the Saudi environment.• Communicate “What is Renault?” In our re-launch activities:

– Over 110 years in Automotive market– Owns 44% of NISSAN worldwide.– French design, Japanese technology– New Era for Renault products to cope with GCC requirements.

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Challenge • Perception of low service quality

Solution• Re-launch “Customer First” program for service.• Communicate the new wide network of service workshops kingdom

wide:– Now…you can serve your Renault in 6 workshops kingdom wide and more…

• High level of training for all mechanics sponsored by Renault.• Renault technical advisor for after sales service located in Riyadh and

Renault will add any needed additional staff in the future. • CRM to ensure high customer service for Renault users.

Challenges & solutions Cont…

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Challenge• Perception of expensive and non-availability of partsSolution• Communicate our over 35 parts outlets kingdom wide.• Restructuring price list of parts with the manufacturer.• Communicate price comparison of parts and service between

Renault and other brands.• Renault is committed to ensure the availability of all spare parts

(Minimum stock will be available in our stock for any new vehicle before launching) investment has been raised with Renault’s after sales team regarding this issue. They will look for some sort of support.

Challenges & solutions Cont…

19

Challenge• Low re-sale value.Solution• Financial support from Manufacturer for Trade-in

programs to acquire maximum re-sale value. • Renault will establish a strategy to be launched in

Sep/Oct 2009 which aim to set the re-sale value of each model.

• Extended warranty for used car.

Challenges & Solutions Cont…

20

Why Renault Franchise for Alissa

• Renault will enter the Saudi Automotive market, planning to capture sizable market share, equipped with new strategy, initiatives, products and dedicated expertise.

• Alissa is capable to accommodate and deliver Renault objectives and goals to sustain and grow shareholders’ profitable base.

Confidential

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What is Next?

• Obtain the Board approval.• Proceed with Renault to finalize the dealer

agreement.

22

Thank you

23

“RENAULT CUSTOMER FIRST” launched in the GCCPEACE OF MIND PACKAGE

11-POINT CONFIDENCE COMES STANDARD IN EVERY RENAULT

1. 100km test drive invitation

2. Initial 1000km free inspection

3. Always mobile service: courtesy cars / taxi vouchers

4. 24/7 Roadside Assistance

5. 3y / 100 000 km car warranty

6. Exclusive use of Renault Genuine Parts

7. 1y warranty for maintenance or repairing

8. Maintenance appointment within 48H

9. Quality Certificate after each repair or maintenance

10. Competitive fixed service prices

11. Dedicated Customer line

BACK

24

Appendix 1 “Financial statements”

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P&L Statement AUM BACK

Income Statement   2009 2010 2011 2012 2013

Units Sold 1,000 5,000 7,000 9,800 13,720

Sales 52,565,000 259,620,000 366,709,000 511,805,000 714,661,080

Cost of Sales -50,988,050 -240,148,500 -339,205,825 -473,419,625 -661,061,499

Gross Profit 1,576,950 19,471,500 27,503,175 38,385,375 53,599,581Gross Margin 3.0% 7.5% 7.5% 7.5% 7.5%

1,576,950 19,471,500 27,503,175 38,385,375 53,599,581

Operating Expenses -788,475 -9,735,750 -10,709,325 -11,780,258 -12,958,283Provisions -681,503 -962,611 -1,343,488 -1,875,985

Operating Profit 788,475 9,054,248 15,831,239 25,261,629 38,765,312

Others 0 0 0 0 0Finance Cost -365,604 -3,333,959 -4,443,056 -5,957,334 -7,557,292

Zakah -19,712 -226,356 -395,781 -631,541 -969,133

Net Profit   403,159 5,493,932 10,992,402 18,672,755 30,238,888Net Profit Margin 0.8% 2.1% 3.0% 3.6% 4.2%

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Balance Sheet AUM BACKBalance Sheet   2009 2010 2011 2012 2012

ASSETSCurrent assetsCash and bank balances 315,390 1,557,720 2,200,254 3,070,830 4,287,966Accounts receivable 4,320,411 21,338,630 30,140,466 42,066,164 58,739,267Inventories - Stocks 16,763,195 69,083,815 97,579,758 136,189,207 190,168,376Prepaid expenses and other assets 262,825 1,298,100 1,833,545 2,559,025 3,573,305Total current assets 21,661,820 93,278,265 131,754,023 183,885,227 256,768,915

Non-current assetsProperty and equipment 210,260 1,038,480 1,466,836 2,047,220 2,858,644Total non-current assets 210,260 1,038,480 1,466,836 2,047,220 2,858,644TOTAL ASSETS 21,872,080 94,316,745 133,220,859 185,932,447 259,627,559

LIABILITIESCurrent liabilitiesShort term loans and current portion of long term debt 6,647,343 55,565,982 74,050,927 95,317,336 120,916,669Accounts payable 4,190,799 19,738,233 27,879,931 38,911,202 54,333,822Accrued expenses and other liabilities 243,113 1,071,744 1,437,764 1,927,484 2,604,173Provision for zakat 19,712 226,356 395,781 631,541 969,133Total current liabilities 11,100,966 76,602,315 103,764,403 136,787,563 178,823,796

Non-current liabilitiesEnd-of-service indemnities 367,955 1,817,340 2,566,963 3,582,635 5,002,628Total non-current liabilities 367,955 1,817,340 2,566,963 3,582,635 5,002,628TOTAL LIABILITIES 11,468,921 78,419,655 106,331,366 140,370,198 183,826,424

SHAREHOLDERS’ EQUITYEquity 10,403,159 15,897,091 26,889,493 45,562,248 75,801,136

TOT LIAB & S/HOLDERS’ EQUITY 21,872,080 94,316,745 133,220,859 185,932,447 259,627,559

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Ratios AUM BACK

Ratio Analysis   2009 2010 2011 2012 2013

Return on Cap Emp (ROCE) 4.5% 12.4% 15.3% 17.5% 19.2%

Return on Equity (ROE) 3.9% 34.6% 40.9% 41.0% 39.9%

Receivable Turnover Days 30 30 30 30 30

Inventory Turnover Days 120 105 105 105 105

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Cash Flow Statement AUM BACKCashflow Statement 2009 2010 2011 2012 2013

Cash Flows from Operating Activities

Net income for the Year 403,159 5,493,932 10,992,402 18,672,755 30,238,888

Adjustments :to reconcile NP to net cash used in oper activitiesProvision for doubtful receivables 683,345 3,375,060 4,767,217 6,653,465 9,290,594 Provision for zakah 19,712 226,356 395,781 631,541 969,133 Provision for employees' end of service benefits 367,955 1,449,385 749,623 1,015,672 1,419,993

Changes in operating assets and liabilitiesAccounts receivable, net (5,003,756) (20,393,279) (13,569,053) (18,579,164) (25,963,697)Inventories, net (16,763,195) (52,320,621) (28,495,943) (38,609,449) (53,979,169)Prepayments and other current assets (262,825) (1,035,275) (535,445) (725,480) (1,014,280)Accounts payable 4,190,799 15,547,434 8,141,698 11,031,271 15,422,620 Accrued expenses and other current liabilities 243,113 828,631 366,020 489,720 676,688 Zakat Paid (19,712) (226,356) (395,781) (631,541)Net cash used in operating activities (16,121,693) (46,848,088) (17,414,055) (19,815,450) (23,570,772)

Cash flows from investing activities

Purchase of property & Equipment (210,260) (828,220) (428,356) (580,384) (811,424)Equity raised 10,000,000 Net cash used in investing activities 9,789,740 (828,220) (428,356) (580,384) (811,424)

Cash flows from financing activitiesProceeds from / Payments of short term loans 6,647,343 48,918,639 18,484,945 21,266,410 25,599,332 Net cash from financing activities 6,647,343 48,918,639 18,484,945 21,266,410 25,599,332

Net (decrease) increase in cash and cash equivalents 315,390 1,242,330 642,534 870,576 1,217,136 Cash and cash equivalents at beginning of the year - 315,390 1,557,720 2,200,254 3,070,830 Cash and cash equivalents at end of the year 315,390 1,557,720 2,200,254 3,070,830 4,287,966

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Exit cost by end of 2010AUM - Renault COC

Project Appraisal - Exit Cost (SR 000’s) 6.00%        Inflows     Outflows             Netflows PV

Sales Purchase ExpensesReceipts Payments Capex Payroll Rent Com Mktg G&A

Cash Credt Shut Down

          98.0%                    2009 0 Jul 1,317 83 1,800 - 167 32 (3,399) (3,399)

1 Aug 917 525 83 9 167 32 101 100 2 Sep 1,835 19,472 300 83 19 167 32 (18,238) (18,062)3 Oct 2,752 1,670 18,985 83 28 167 32 (14,874) (14,659)4 Nov 3,669 3,339 14,604 83 37 167 32 (7,915) (7,763)

  5 Dec   4,587 5,009   14,604   83   47 167 32 (5,338) (5,209)2010 6 Jan 5,504 6,678 19,472 439 195 600 56 310 55 (8,945) (8,688)

7 Feb 5,504 8,348 19,472 175 195 56 310 55 (6,412) (6,197)8 Mar 5,504 10,017 20,689 100 195 56 310 55 (5,884) (5,660)9 Apr 5,504 10,017 - 195 56 310 55 14,905 14,268 10 May 5,504 10,017 9,736 195 56 310 55 5,169 4,924 11 Jun 5,504 10,017 9,736 195 56 310 55 5,169 4,900 12 Jul 5,504 10,017 14,604 195 1,800 56 310 55 (1,499) (1,414)13 Aug 5,504 10,017 14,604 195 56 310 55 301 283 14 Sep 5,504 10,017 15,578 195 56 310 55 (673) (628)15 Oct 5,504 10,017 15,334 195 56 310 55 (429) (399)16 Nov 5,504 10,017 15,091 195 56 310 55 (186) (172)

  17 Dec   5,504 10,017   15,091   195   56 310 55 (186) (171)2011 18 Jan - 10,017 8,114 - 195 17,936 16,435

19 Feb 10,017 8,114 - 98 18,034 16,445   20 Mar       8,303     49         8,254 7,490

NPV (7,577)

Total       79,807 145,249 24,532 237,072 2,856 3,181 4,200 813 4,722 852 (4,107)  

BACK

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P&L Statement AutostarIncome Statement   2010 2011 2012 2013

Units Sold   1,500 2,100 3,003 4,354

Sales 76,500,000 107,100,000 153,153,000 222,071,850

Cost of Sales -69,997,500 -97,996,500 -140,134,995 -203,195,743

Gross Profit 6,502,500 9,103,500 13,018,005 18,876,107

6,502,500 9,103,500 13,018,005 18,876,107Gross Margin 8.5% 8.5% 8.5% 8.5%Operating Expenses -1,530,000 -2,142,000 -3,063,060 -4,441,437

-2.0% -2.0% -2.0% -2.0%Operating Profit 4,972,500 6,961,500 9,954,945 14,434,670

Others 60,117 84,163 120,354 174,513Finance Cost -363,764 -400,364 -490,634 -617,294

Zakah -557,875 -781,025 -1,116,865 -1,619,454

Net Profit   4,110,978 5,864,275 8,467,799 12,372,435Net Profit Margin 5.4% 5.5% 5.5% 5.6%

BACK