Project Rescue Restructuring Plan Operational & Financial

Strictly Private and Confidential Sherif Afifi

Content

• The Purpose of The Diagnostic Review Options assessment

• SWOT Analysis.

• Causes of distress - internal and external.

• Overcome the financial crisis.

• Rapidly improve Bottom-line results.

• Stabilization.

• Restructuring Strategy.

• Restructuring Plan.

• New organizational structure.

• Financial Restructuring.

• Restructuring project management.

• Financial projections.

2

The Purpose of The Diagnostic Review Options assessment

Yes

Due Diligence and management assessment

• What is the true position of the business from a strategic, operational and financial perspective? • Management assessment-degree of leadership alignment, of the problem/solution?

Options assessment

Short-term Survivability

• Feasible strategies and actions for short-term survival? • Can short-term survival be funded?

Viability assessment

• Is the business viable in the medium to long term to a qualitative basis? • Feasible strategies for stabilization, restructuring and recovery? • What does the financial modeling of turnaround impact show in the terms of future cash flow, profit and funding needs?

Yes

• Turnaround • Other options: - Quick fix& disposal - Disposal - Workout - Liquidation • What is the support of various stakeholders for selected options?

Turnaround viable

SWOT Analysis

4

Causes Of The Distress

Nature and number of causes of distress/decline.

For a restructuring to be viable, the causes of distress or decline should be both identifiable

and reversible.

The most common causes of decline and distress is poor management and poor financial

control as internal causes, and changes in market demand, increased competition and adverse

movements in commodity prices as external causes.

The following main causes of company failure:

• 29% loss of market.

• 22% management failure.

• 10% bad debts.

• 20% lack of working capital.

• Severity of the financial crisis.

A restructuring cannot be viable unless short-term survivability can be ensured.

The nature of the financial crisis dictates which restructuring strategies should be used.

Crisis management, working capital management and financial restructuring should take

precedence over cash consuming profit improvement strategies in the case of a severe cash

crisis.

The balance sheet situation dictates trade-offs between short and longer term application of

strategies - see phasing restructuring strategy.

Insolvency and poor prospects for quickly increasing operational cash flow necessitate a focus

on balance sheet actions such as portfolio divestment, asset reduction and financial

restructuring.

5

6

Causes of distress

The UK Operations

7

Total Expense 446,673.94 502,886.23 (56,212.29) -11.18%

Net Ordinary Income (219,010.11) (269,752.95) 50,742.84 -18.81%

Profit for the Year (219,010.11) (269,752.95) 50,742.84 -18.81%

TOTAL ASSETS LESS CURRENT LIABILITIES 592,485

Long Term Liabilities

2700 · Long Term Liabilities

2701 · Subordinate Loan-Delicious Inc 2,707,513

2702 · Intercompany - Liverpool Street (97,050)

2703 · Intercompany - Baker Street 21,100

Total 2700 · Long Term Liabilities 2,631,563

Total Long Term Liabilities 2,631,563

NET ASSETS (2,039,078)

Jan - May 11 Jan - May 10 £ Change % Change

31 May 11

2010- 2011 Total Exposure

5,000,000 25,000,000

Rehina

8

Risks

• Costs and expenses associated with increased overhead and capital

expenditures.

• Loss of flexibility resulting from large investments.

• Problems associated with unbalanced capacities along the value chain.

• Additional administrative costs associated with managing and more

complex set of activities.

Vertical Integration Risks

2010-2011 Total Loss

9,600,000 18,000,000

COMPANY PERFORMANCE PATTERNS

Proactive intervention creates and preserves value

9

RECOVERY

RENEWAL

ACQUISITION /

START UP

DYNAMIC GROWTH

MATURITY

STABILIZATION

STEADY GROWTH

C-Suite and

Stakeholder Recognition

of Major Issues

Insolvency

Risk

Control

Threshold

Growth

Product and Sourcing Strategy

Market Expansion

Revenue Enhancement

Acquisition support

Transaction Advisory

Financial and Operational

Diligence

Strategic Diligence

Performance Improvement

EBITDA and Cash Flow

Improvement

Revenue and Cost Optimization

Working Capital Improvement

/ Interim Assistance

Turnaround

Liquidity Management

Operational Change / Stability

Stakeholder Management

intervention

Crisis Management

Stabilization

Immediate Intervention

CRO intervention

NEED FOR

TRANSFORMATION

Time

Pro

fita

bili

ty

Warning Signs

Seriousness Of The Restructuring Situation

10

Restoration of corporate value:

Corporate health and decline levels:

Corporate renewal

level:

Time

Insolvency and

unlikely viability

Timeline of financial distress:

11

Successful performance

Effective and timeous response to industry driver trends and early warning signals of decline

Transformation/turnaround Underperformance

Transformation/turnaround Crisis

No ineffective or slow response to industry driver trends or early warning signals of decline

Proactive business transformation pre-emptive turnaround

Turnaround Insolvency

Effective and timeous response to underperformance

No ineffective or slow response to underperformance

Remedial business transformation/ turnaround

Turnaround viable , and effective and timeous response to the crisis

Turnaround not viable , or no, ineffective or slow response to the crisis

Classic turnaround outside the business Rescue

Turnaround viable Turnaround not viable

Turnaround Failure

Classic turnaround within the business rescue Framework

Liquidation

Restoring Corporate Value

How Can Corporate & Financial Restructuring Create Value

12

Operating

Cash

Flow

Debt

Equity

Fix The Business Or Fix The Finances

Assets Liabilities

Seriousness Of The Restructuring Situation

•Financial health diagnostics

•Diagnostic probe

•Directional diagnostic review

•Diagnostic review

•Emergency management

•Quick fix & disposal

•Turnaround kick-start

•Turnaround delivery

Either to provide the turnaround support to management, or to drive the business myself

Return to normality

Sustainable recovery

Fin

anci

al p

osi

tio

ns

Cri

sis

N

on

Cri

sis

. . . . . . . . . . . . . . . Mere recovery

X

X

restructuring

Situation assessment

Recognizing the need Turnaround

Plan refinement recovery

Emergency management

Decline Turnaround Steady state and growth Distress

Severity of The Financial Crisis

Cost/price structure

The income statement dictates whether the short-term focus should be on cost

reduction and/or revenue enhancement (repricing and/or volume generation).

A rapid improvement in one or more of these is normally required for a

restructuring to be viable.

Stakeholder attitudes

Stakeholder attitudes determine the political and emotional acceptability of

various restructuring strategies.

Stakeholder support need to be retained or developed for a restructuring to

succeed.

The various sets of stakeholders differ in understanding, confidence, objectives,

bargaining power and ability to influence the outcome. They often have conflicting

objectives.

14

Severity of The Financial Crisis

15

Internal constraints

Unlike the entrepreneur starting a new venture, a turnaround is not a greenfield

situation.

The Restructuring Strategy may be constrained by the company's historical strategy

and its present internal structure and operations.

Typical internal constraints are the heritage of products, customers, assets,

resources, know-how, politics, and contractual obligations.

Particular attention must be paid to identifying essential contracts, contracts with

onerous conditions, assets encumbered and contingent liabilities.

Industry characteristics

Industry profitability and potential for developing a competitive advantage are

dictated by Porter's 5 forces.

Can unfavorable industry characteristics be overcome?

Market size and growth rate, intensity of rivalry amongst existing competitors,

buying power of buyers and suppliers, and threat of new entry and substitution may

necessitate a new business model, or a restructuring strategy based on strategic

repositioning.

Viability Analysis

16

Viability Analysis

people

Implementation

Assets

Liability And equity

Marketing

operations`

cash

Stabilize company

Restructure company Develop business plan Expenses

Receivables Payables Inventory

Costs

Redeployment sale

Efficiency capacity

profitability

Control Forecast Monitor Contract

Evaluate Reorganize Replace

information

Timeline of Financial Distress

Underperforming

Healthy company

Management-led correction

Financially Troubled

Informal creditor workout

Liquidation Business rescue

Highest success rate

High success rate

Low success rate

Wind-up

Failure

In “financial distress” but not economically viable

In “financial distress” but not economically viable

Not in “financial distress”

Informal process Formal legal process

High cost Low cost

High success rate High failure rate

High directors and management power

Low directors and management power

Turnaround management model

Restructuring recovery

• The recovery stage involves the embedding and monitoring of the restructuring

plan devised during restructuring plan refinement and implemented during

restructuring.

Restructuring recovery is characterized by

• An increased emphasis on profits in addition to the earlier emphasis on cash

flow.

• Operational efficiency improvements.

• Building the organization.

• Typically, this is when the restructuring leader passes on the baton to someone

new to head the stabilized and restructured company as it returns to normal.

• The restructuring is completed when the company has returned to normal on a

sustainable basis.

• Restructuring management may take 18 months to 3 years from the start of

emergency management.

18

Turnaround Management Model

19

Detailed planning & analysis

Implementation

Imbedding & monitoring

Rapid Improvement Program

20

Revenue and Margin Enhancement:

– Merchandise mix – Customer / Product profitability – Pricing strategies – Marketing and sales productivity – Service / adjacent revenue opportunities

Direct Cost Reduction:

– Labor productivity – Manufacturing / retail footprint – Sourcing / outsourcing opportunities – Logistics network efficiency and warehousing – Supply chain management

Overhead Cost Reduction:

– G&A / overhead spend – Org. effectiveness / efficiency – IT infrastructure – Indirect materials and services sourcing

Working Capital Improvement:

– Accounts Receivable – Accounts Payable – Inventory – Complexity – Back-office processes

▲ Cash Management

– Stabilization / liquidity management

EBITDA

Revenue

Costs

ROCE

Cash Focus

Assets /

Liabilities

Capital

Employed

Stabilization

21

Developing a refined business case for raising finance (see funding the distressed company).

Stabilization is further achieved by reintroducing predictability to the operations by setting

performance targets, establishing information systems, and tracking progress.

Stabilization requires a rather autocratic leadership style to impose discipline and

conformance to new systems and controls.

Internal stakeholders affected by or who can influence cash management and other

emergency initiatives need to understand the new priorities, new procedures and what is

expected of them.

External stakeholders need to see that their interests are being preserved

Stakeholder support is addressed by demonstrating control, and ensuring that promises are

adhered to, especially achievement of short-term objectives and cash flow forecasts.

Discipline is required to handle the complexities of timing, resources required and cost

associated with the various activities constituting the planning and execution of the

restructuring.

Stabilizing the distressed company is both a restructuring strategy component and a

restructuring stage in its own right.

Turnaround strategy

Restructuring strategy objectives

The overall goal of restructuring strategy is to return an underperforming or distressed

company to normal in terms of acceptable levels of profitability, solvency, liquidity and cash

flow.

Restructuring strategy is described in terms of how the restructuring strategy components of

managing, stabilizing, funding and fixing an underperforming or distressed company are

applied over the natural stages of a restructuring.

To achieve its objectives, restructuring strategy must reverse causes of distress, resolve the

financial crisis, achieve a rapid improvement in financial performance, regain stakeholder

support, and overcome internal constraints and unfavorable industry characteristics.

Restructuring

The restructuring stage involves the implementation of the restructuring plan devised during

restructuring situation assessment, and further improvement during the restructuring plan

refinement stage.

Restructuring takes the form of:

• Leadership restructuring;

• Financial restructuring;

• Strategic, organizational and operational restructuring

22

Restructuring strategy components

Managing the restructuring

The enabling components to manage the restructuring's stabilization, funding,

recapitalization and fixing are turnaround leadership, stakeholder management, and

turnaround project management.

Stabilizing the business

The momentum of an underperforming or distressed business is down.

Such a business needs to be stabilized to ensure the short-term future of the business

through cash management, cash generation and cash conservation, demonstrating

control, re-introducing predictability and ensuring legal and fiduciary compliance.

Funding and recapitalization

An underperforming or distressed business invariable needs to be funded and

recapitalized to ensure that it can be fixed.

Fixing the distressed business.

Finally, the underperforming or distressed business needs to be fixed in strategic,

organizational and operational terms.

23

Man

age

Stabilise

Fund Fix

operations

organization

Strategy

Turnaround leadership

Stakeholder management

Turnaround project management

24

Strategy components

1. How did it fall into the hole? (causes of distress)

The Restructuring strategy

1

6

5

3

4

2

Financial turnaround Sustainable recovery

2. How deep is the hole? (severity of crisis) 3. How will it get out of the hole?

(turnaround strategy) 4. What does it mean to be out of the hole?

(short-term Restructuring objectives)

5. How will it climb the mountain? (longer-term Restructuring strategy)

6. How high is the mountain? (vision)

Our approach ensures sustainable results after getting

out of the hole

Our Restructuring Strategy

• Our strategy is to overcome causes of distress, to achieve a

rapid improvement in financial performance, and to overcome

internal constraints and unfavorable industry characteristics, in

a mix of the following:

• Strategic repositioning

• Reorganization

• Revenue enhancement

• Cutback action (cost and asset reduction)

• In addition to the restructuring strategy, the restructuring plan

provides explicitly for stabilizing the business, funding to

eliminate the financial crisis, and for stakeholder management.

26

Short-Term Survivability

27

Determining short-term survivability

1. Short-term cash flow forecast

The first step is forecasting cash flow for a 13 week horizon reflecting aggressive but

realistic working capital requirements that can be achieved employing emergency

management actions.

2. Should no financing be required, restructuring viability is not affected by short-term

funding needs.

3. Should financing be required, a short-term funding survival plan is required.

Short-term funding survival plan

• What cash can be generated internally by means of asset reduction

• What funding gap will this leave and for how long

• What need to be funded from external sources

• What is the business able and willing to offer e.g. security

If short-term funding cannot be secured, the restructuring is not viable.

Viability factors

Restructuring viability depends on a number of factors

• Can causes of distress/decline be reversed

• Can the financial crisis be eliminated

• Can a rapid improvement in profit margins be achieved

• Can favorable stakeholder attitudes be developed

• Can internal constraints on restructuring potential be overcome • Can unfavorable industry characteristics be overcome

28

The Business transformation model

29

Inbound logistics Operations Outbound logistics Marketing and

sales Service

Procurement Technological development

Human resources infrastructure

Primary value chain

Demand fulfillment Demand generation

Support activities:

• Call-off to suppliers

• Materials handling

• Warehousing

• Inventory control

• Conversion • Assembly • Packaging • maintenance

• Warehousing

• Order processing

• Picking

• Shipment

• Delivery

• Purchasing raw

material, supplies,

fixed assets.

• Process design

• Product design

• R&D

• Installation

• Repair

• Training

• General management

• Finance

• Accounting

• IT

• Recruiting, hiring,

training, developing and

compensating all

personal.

• Channels to market • Product, pricing, • advertising and promotion

distribution • Customer value, cost to consumer, convenience , communication • Sales force effectiveness

Delivering profitable Top Line Growth

30

Today Time

Revenues

Costs

Profit Opportunity

Incremental Profit Opportunity:

Cost Reduction

Future

Incremental Profit Opportunity:

Revenue Growth

Current Profitability

L.E.

Revenue Enhancement :

Increase revenues by identifying top line growth opportunities.

Increase revenues while reducing costs by improving the quality of revenue.

Reduce costs by maximizing the efficiency of revenue support functions (e.g.

marketing).

▲ Review accuracy of near- and mid-

term forecasting of cash.

▲ Revisit cash management practices

with focus on releasing “lazy” cash.

▲ Treasury Management Systems.

▲ Focus on relationship management

with suppliers and customers

including negotiations of payment

terms.

▲ Identify potential asset disposals.

31

Liquidity Improving cash management

Unlock cash

Meet debt covenants

Operational Performance Revenue optimisation

Align Capacity to demand

optimisation

Reduce non- operational

costs

B/S Restructuring Debt refinancing

Disposal / Carve-out of non-

core assets

Revenue Cost Utilization

Cas

h

P&

L B

/S

Performance Improvement

Restructuring Plan Assumptions

32

Restructuring Plan Assumptions Shut down The UK Operations write-off amount 25,000,000

Converting Rehina to a Cost Center August 2011 write- off amount 13,000,000

Suppliers Overdue Starting Sept. 2011 {9m total) 9,000,000

Redundancy & Downsize Cost 1st year 717,000

Cost of Sales reduction { waste, Menu Re-eng & Rehina mark up } 6%

Salaries & Overhead Reduction 842,994

CIB MTL Starting Sep. 20/2011 Intrest rate 11.75 + Hybrid 1.5% 8 Mnths GP 10,000,000

TBS 51% from Net Profit Recognition in our P&L 51%

Store Closures 8 Stores savings in NOC 4%

Home Delivery Service launch sales Increase 2%

Net Profit to reach 15%

Debit to Equity Swap to improve the capital structure & lowering the finanical leverage 16,000,000

Asset Disposal & Rehina & Shooting Club Store 12,000,000

Intiatives During the Dianostic Phase 1,080,600

Loan repayment 17,110,192

Outsourcing Products to lower the operational leverage 0

Impact on NCF

Initiatives During The Diagnostic Phase End of service Ali Mubarark 160,000

Outsourcing Admin & Legal 100,000

Tax differences 300,000

UK operations injection 76,000

Consultation Fees 444,600

Total 1,080,600

Balance Date: 1/10/2011

Creditor Information Table

Creditor Balance Rate Payment Custom

MTL 2 HSBC 8,400,000 13.00% 400,000 2

NSCGB 2,153,500 9.81% 7,500 5

Overdue to Supp 9,881,278 0.00% 450,000 1

Other creditors 5,316,895 1.00% 70,000 4

MTL 3 CIB 8,867,500 13.25% 100,000 3

34,619,173 1,027,500

Creditors in Original Total Interest Months to Month

Paid

Chosen Order Balance Paid Pay Off Off

MTL 3 CIB 8,867,500 2,326,870 30 Apr-14

MTL 2 HSBC 8,400,000 1,182,329 24 Oct-13

NSCGB 2,153,500 602,933 33 Jul-14

Other creditors 5,316,895 120739.73 36 Oct-14

Overdue to Supp 9,881,278 0 22 Aug-13

Total Interest Paid: 1,239,797

Unnecessary Cash Out 2010-2011

2010-2011 UK 5,659,386

2010 Delicious Prop 1,300,000

2011 Rehina 3,075,313

Total 10,034,699

UK Balance Sheet May 2011

Long Term Liabilities 31 May 2011

2700 · Long Term Liabilities

2702 · Intercompany - Liverpool Street (97,050.26) -926829.983

2703 · Intercompany - Baker Street (21,100.00) -201,505

-1,128,335

33

Restructuring Plan Assumptions

Current Org Structure

34

Proposed Org. Structure

35

Delivering

General

Manager

Operations

Manager

Finance &

Admin HR&OD Supply Chain

Production

Manager

Rehina

Ordering Receiving Assembling Stores/Selling Customer

Customer Ordering Receiving Production Stores/ Selling

Ordering Receiving Production Stores/Selling Customer

Asst. Production Manager In satellite

Area Manager Home Delivery Manager

Production TBS

Marketing &

Franchise IT

Production Cilantro

QA

Displaying

Delivering

Develop. &

Construction

Pre- Restructuring Org. Structure Salaries 1,080,604

Post -Restructuring Org. Structure Salaries 842,994

Total Monthly Savings 237,610

Total Savings

Annually 2,134,320

Total Overhead Cut 63

Total Redudancy Cost 717,000

Financial Restructuring

• Financial restructuring is part of restructuring management, but the mistake is often made to merely

restructure a distressed company.

• To turn a distressed company around, it needs implementation of a restructuring strategy to fix the

distressed company.

• The fixing component is often neglected in restructuring plans approved by lenders.

The distressed company under restructuring management typically faces any of a number of financial

issues:

• It requires funding to meet both its short-term commitments during emergency management, and to

cover turnaround restructuring costs.

• This may include:

Working capital for trade creditor and interest payments.

Restructuring costs such as professional fees, closure and retrenchment costs.

Investment in new technology and systems.

• The balance sheet has to be restored to solvency.

• Excessive gearing needs to be corrected.

A successful restructuring program may often affect financial results on the operating profit or EBITDA

level only.

This requires the capital structure to be aligned with the projected level of operating profit and cash flow

to avoid interest charges keeping the company in the red.

• The debt structure represents excessive short-term and insufficient long-term debt.

Refinancing therefore involves not only the injection of new funds in the form of loan or equity finance, but

also changing the existing capital structure .

36

Debt Restructuring Analysis

Fix Leverage

Leverage Up

Optimize

Investment Opportunities

Finance With Debt

No Investments Opportunities

Issue Debt or Share Buyback

Leverage Recap

Issue Debt

LBO

Analyze Debt Service

Capacity

Leverage Down

Restructure

Analyze Debt Service

Capacity

Force Allocation

Negotiate

Analyze Debt Service

Capacity

Negotiate Allocation

37

Funding and Financial restructuring

Internal funding:

• Working capital reduction

• Asset realization

Existing funders:

• Re-term

• Standstill agreements and moratoria

• Debt/equity swaps

• Creditor agreements

New funders:

• Sale & leaseback

• Securities income streams

• Private equity

• Business rescue fund

38

The Financing Spectrum

39

Exp

ec

ted

Retu

rn

Risk

Senior secured debt

Equity

Senior unsecured debt

Subordinated debt

Preferred equity

Convertible debt

Getting the Financing Right

40

Debt

Equity

• Achieve lowest weighted average cost of capital

• May also affect the business side

Assets Liabilities

The Proportion of Equity & Debt

Minimize the Cost of Capital by Changing the Financial Mix

• Add debt, reduce equity.

• See effect of added debt on interest costs.

• See effect of leverage on cost of equity.

• Net effect will determine whether the WACC decreases if the

firm takes on more or less debt.

41

Debt Restructuring

42

Creditors in Original Total Interest Months to Month Paid

Chosen Order Balance Paid Pay Off Off

MTL 3 CIB 8,867,500 2,326,870 30 Apr-14

MTL 2 HSBC 8,400,000 1,182,329 24 Oct-13

NSCGB 2,153,500 602,933 33 Jul-14

Other creditors 5,316,895 120,740 36 Oct-14

Overdue to Supp 9,881,278 0 22 Aug-13

Total Interest Paid: 4,232,871 (Lower is Better)

Balance Date: 10/1/2011

Creditor Information Table

Row Creditor Balance Rate Payment Custom

1 MTL 2 HSBC 8,400,000 13.0% 400,000 3

2 NSCGB 2,153,500 9.8% 7,500 5

3 Overdue to Supp 9,881,278 0.0% 450,000 1

4 Other creditors 5,316,895 1.0% 70,000 4

5 MTL 3 CIB 8,867,500 13.3% 100,000 2

Total: 34,619,173 Total: 1,027,500

Monthly Payment

1,100,000 .

Initial Snowball 72,500

Strategy: Avalanche (Highest Interest First)

Total Interest: 4,232,871

Debt Restructuring Loan Repayment Schedule

43

Monthly Payments

No. Month Snowball Additional MTL 3 CIB MTL 2 HSBC NSCGB

Other

creditors

Overdue to

Supp

Oct-11 1 Nov-11 72,500 172,500 400,000 7,500 70,000 450,000 2 Dec-11 72,500 172,500 400,000 7,500 70,000 450,000 3 Jan-12 72,500 172,500 400,000 7,500 70,000 450,000 4 Feb-12 72,500 172,500 400,000 7,500 70,000 450,000 5 Mar-12 72,500 172,500 400,000 7,500 70,000 450,000 6 Apr-12 72,500 172,500 400,000 7,500 70,000 450,000 7 May-12 72,500 172,500 400,000 7,500 70,000 450,000 8 Jun-12 72,500 172,500 400,000 7,500 70,000 450,000 9 Jul-12 72,500 172,500 400,000 7,500 70,000 450,000 10 Aug-12 72,500 172,500 400,000 7,500 70,000 450,000 11 Sep-12 72,500 172,500 400,000 7,500 70,000 450,000 12 Oct-12 72,500 172,500 400,000 7,500 70,000 450,000 13 Nov-12 72,500 172,500 400,000 7,500 70,000 450,000 14 Dec-12 72,500 172,500 400,000 7,500 70,000 450,000 15 Jan-13 72,500 172,500 400,000 7,500 70,000 450,000 16 Feb-13 72,500 172,500 400,000 7,500 70,000 450,000 17 Mar-13 72,500 172,500 400,000 7,500 70,000 450,000 18 Apr-13 72,500 172,500 400,000 7,500 70,000 450,000 19 May-13 72,500 172,500 400,000 7,500 70,000 450,000 20 Jun-13 72,500 172,500 400,000 7,500 70,000 450,000 21 Jul-13 72,500 172,500 400,000 7,500 70,000 450,000 22 Aug-13 91,222 191,222 400,000 7,500 70,000 431,278 23 Sep-13 522,500 622,500 400,000 7,500 70,000 0 24 Oct-13 540,171 640,171 382,329 7,500 70,000 0 25 Nov-13 922,500 1,022,500 0 7,500 70,000 0 26 Dec-13 922,500 1,022,500 0 7,500 70,000 0 27 Jan-14 922,500 1,022,500 0 7,500 70,000 0 28 Feb-14 922,500 1,022,500 0 7,500 70,000 0 29 Mar-14 922,500 1,022,500 0 7,500 70,000 0 30 Apr-14 922,500 1,005,477 0 24,523 70,000 0 31 May-14 1,022,500 0 0 1,030,000 70,000 0 32 Jun-14 1,022,500 0 0 1,030,000 70,000 0 33 Jul-14 1,022,500 0 0 454,409 645,591 0 34 Aug-14 1,030,000 0 0 0 1,100,000 0 35 Sep-14 1,030,000 0 0 0 1,100,000 0 36 Oct-14 1,030,000 0 0 0 352,044 0

Creditor: MTL 3 CIB MTL 2 HSBC NSCGB Other creditors Overdue to Supp

Balance: 8,867,500 8,400,000 2,153,500 5,316,895 9,881,278

Rate: 13.25% 13.00% 9.81% 1.00% -

Base Payment: 100,000 400,000 7,500 70,000 450,000

Months to Pay Off: 30 24 33 36 22

Month Paid Off: Apr-14 Oct-13 Jul-14 Oct-14 Aug-13

Total Interest: 2,326,870 1,182,329 602,933 120,740 -

Strategic, organizational and operational fixing

Refinancing

Crisis stabilization

Leadership

Stakeholder management Inform, involve, obtain Views, negations

Project management

Coaching and mentoring

Communicating progress

Of recovery phase

Cash flow and debt

repayment monitoring Financial restructuring

Restructuring & Turnaround implementation

Restructuring implementation

Restructuring components:

Manage the

process

Stabilize

Fix

Fund

Crisis stabilization

Of emergency

Management phase

Detailed analysis and planning

Financial analysis, cash

flow, funding

Take charge Performance management

Of restructuring phase

Agreements, Involvement, feedback

Embedding & monitoring

Implementation

Stabilization/ Restructuring Plan refinement

Restructuring Recovery

Emergency management/ Quick fix & disposal

Turnaround kick-start

Turnaround delivery

Turnaround support

Turnaround management providing support management managing the business

Support vs. management Options:

Turnaround Duration

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. . .

. .

100%

0%

Visibility assessment and

turnaround kick-start

Turnaround value added

Turnaround resources required

Turnaround embedding, monitoring, coaching, mentoring

4,5 months 12 months 24 months

Value added vs. Turnaround Resources Required

46

Implementation phase 1

Analysis &

designs

Orientation, onboarding,

establishing war room

Analysis and assessment

Designing business restructuring plan

Work stream

charters

Joint teams

Executive stream group

Weeks 1 - 6 Weeks 7- 20 • Financial • Leadership • Strategy • Organizational • Sales and marketing • Supply chain • Project management • Communication and

mobilization • Project review

meetings • Management review

meetings

War room, management of work elements, recourses and scheduling, benefits tracking.

Stakeholder management – inform, involve, achieve ownership and buy-in.

Project management Program

Deliverables & TimeLine Implementation Plan Phase I

47

Proposed Work Stream Deliverable Responsibility Estimated Time

Fast Track Old Collections • Weekly progress reports on

collection

• Detailed Status report on

negotiations with big accounts

Taha/Ahmed /Mohamed 100% for first 2 weeks

25% for next 11

weeks

Restructure / Exit UK

Operations

• Restructuring / Exit Plan

• Support with Exit, if separately

requested by A&M

Nadine/Ahmed 2 weeks

Improve Working Capital in

Ongoing Business

• 13 week cash flow forecast

• Develop Operational Procedures

related to Working Capital

• Implementation Support

Ahmed Abd El Azem 3 weeks

5 weeks

Ongoing till 13th week

Shifting Rehina to a

Centralized cost centre

• Process Mapping

• Implementation Support

Sarah/Sameh/Amr 10 weeks

On-going

Asset disposal/Downsizing • Cash in -12m

• Overhead cost reduction 22%

Walid/ Ahmed/Nadine 15 weeks

Project Rescue Gantt Chart

48

Project Rescue TimeLine

49

Start Fri 7/1/11

Finish Thu 7/5/12

July September November January March May July

Revenue Fri 7/1/11 - Thu 12/15/11

Operations Cost Reduction Fri 7/1/11 - Thu 5/10/12

Overhead Reduction Fri 7/1/11 - Thu 12/29/11

Working Capital / Asset Efficiency Fri 7/1/11 - Thu 7/5/12

Sun 7/3/11

Adjusted Book Value

50

Adjustments

Long Term Assets

Fixed Assets (Net) 33,086,002.84 9,883,994 23,202,009.00

Projects Under Construction 1,028,799.00 1,002,799 26,000.00

Deferred Capital Loss 15,289.00 15,289.00

Subordinated Supportive Loan To Affiliates 25,045,071.00 25,045,071 -

Deferred Taxes Assets 79,157.00 79,157.00

Investments In Affiliates 3,837,062.00 1,185,000 2,652,062.00

Fixed assets Held By Third Parties 206,515.00 206,515.00

Total long Term Assets 63,297,895.84 26,181,032.00

Current Assets

Inventory 5,040,693.92 787,699 4,252,995.00

Accounts Receivables (Net) 2,107,950.00 715,407 1,392,543.00

Debit Balances Due From Related Parties 22,285,941.70 20,465,515 1,820,426.70

Other Debit Balances 16,384,360.28 4,135,812 12,248,548.00

Cash And Bank Balances 1,739,390.26 (9,583,374) 11,322,764.00

Total Current Assets 47,558,336.16 31,037,276.70

Current Liabilities

Bank Overdraft 8,810,563.00 3,290,169 5,520,393.70

Current Portion Of M.T.L 2,400,000.00 2,400,000.00

Accounts And Notes Payables 15,353,113.01 (1,170,328) 16,523,441.00

Other Credit Balances 20,102,078.31 11,829,713 8,272,365.00

Current Liabilities 48,147,754.32 32,716,199.70

Net Working Capital 589,418.15- 1,089,505 1,678,923.00-

Total Investment 62,708,477.69 24,502,109.00

Long Term Liabilities

Medium Term Loan 61,559,760.17 35,959,760 25,600,000.00

Long Term Liabilities Due To Related Parties 15,452,520.00 15,452,520 -

Deferred Tax Liabilities 1,342,401.00 1,342,401.00

Total Long Term Liabilities 78,354,681.17 26,942,401.00

Stockholders Equity - -

Paid Up Capital 16,000,009.55 (13,999,990) 30,000,000.00

Legal Reserve 496,354.00 78,798 417,556.00

Retained Earnings 22,025,659.81- (31,530,718) 9,505,058.00

Net Profit For The Period 12,476,229.22- 32,245,999 44,722,228.00-

Net Profit From Other Investment 2,359,322.00 2,359,322.00

Total Stockholders Equity 15,646,203.48- 2,440,292.00-

Total Equity 15,646,203.48- 120,089,263 2,440,292.00-

Adjusted Book Value 2011

Adjusted Income Statement

51

Income Statements

Year 2011 2012 2013 Consolidated

Sales 84,856,234 79,467,449 82,458,961 246,782,644

Cost of Sales 64,464,252 53,506,366 55,228,000 158,631,921

Gross Profit 22,046,679 25,961,083 27,230,961 88,150,723

G&A EXP 16,856,772 6,505,211 6,505,211 29,867,194

Leasing EXP. 2,688,021 1,477,973 455,872 4,621,867

Sales & Marketing EXP 305,328 1,500,000 1,500,000 3,305,328

Capital Loss 38,623,896 38,623,896

Credit Facility Interest 3,004,573 3,889,884 3,889,884 10,784,342

Pre opening & other provisions 30,000 1,472,211 985,000 2,487,211

Adjustments (1,654,697) (6,456,000) (6,456,000) (14,566,697)

Total Operating Expenses 59,853,894 8,389,280 6,879,968 75,123,142

Operating EBITDA -34,802,643 21,461,688 24,240,878 13,027,581

Depreciation and Amortization 7,407,348 6,353,776 6,353,776 20,114,899

EBIT -42,209,990 15,107,912 17,887,102 33,142,480

Operating Income (Loss)- EBIT -45,214,563 11,218,027 13,997,217 -7,087,319

Pre Restructuring Estimated CASHFLOWS FCFF

52

PRE-RESTRUCTURING ESTIMATED CASHFLOWS

Base 2012 2013 2014 2015 2016

Growth in Revenue 6.00% 3.00% 3.00% 5.00% 5.00%

Growth in Deprec'n 0.00% 0.00% 0.00% 0.00% 0.00%

Revenues 91,543,079 94,289,371 97,118,053 100,031,594 103,032,542 108,184,169

Operating Expenses

% of Revenues 105.00% 104.00% 98.00% 98.00% 97.00% 97.00%

- Operating Expenses 96,120,233 98,060,946 95,175,691 98,030,962 99,941,566 104,938,644

EBIT (4,577,154) (3,771,575) 1,942,361 2,000,632 3,090,976 3,245,525

Tax Rate 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%

EBIT (1-t) (3,661,723) (3,017,260) 1,553,889 1,600,506 2,472,781 2,596,420

+ Depreciation 7,501,864 7,501,864 7,501,864 7,501,864 7,501,864 7,501,864

- Capital Expenditures 1,044,088 1,044,088 1,044,088 1,044,088 1,044,088 1,044,088

- Change in WC 9,000,000 906,276 933,465 961,469 990,313 1,700,037

= FCFF (6,203,947) 2,534,240 7,078,200 7,096,813 7,940,244 7,354,159

Terminal Value (in '17) 102,130,908

Value of Firm 23,195,344

- Value of Debt 126,502,435

Value of Equity -103,307,092

Value of Equity per Share -689

Pre Restructuring Cost Of Equity & Capital FCFF

53

PRE-RESTRUCTURIN COSTS OF EQUITY AND CAPITAL

2012 2013 2014 2015 2016

Cost of Equity 13.22% 13.22% 13.22% 13.22% 13.22%

Proportion of Equity -7.00% -7.00% -7.00% -7.00% -7.00%

After-tax Cost of Debt 10.60% 10.60% 10.60% 10.60% 10.60%

Proportion of Debt 107.00% 107.00% 107.00% 107.00% 107.00%

Cost of Capital 10.42% 10.42% 10.42% 10.42% 10.42%

Cumulative WACC 110.42% 121.92% 134.62% 148.64% 164.12%

Present Value 2,295,159 5,805,679 5,271,796 5,341,881 4,480,829

Pre Restructuring EVA Valuation FCFF

54

2012 2013 2014 2015 2016 Terminal Year

EBIT (1-t) -3,661,723 -3,017,260 1,553,889 1,600,506 2,472,781 2,596,420 2,674,313

- WACC (CI) 11,547,605 10,969,320 10,393,867 9,821,331 9,251,800 9,251,800

EVA -14,564,865 -9,415,431 -8,793,362 -7,348,550 -6,655,380 -6,655,380

Terminal EVA

PV -13,190,813 -7,722,722 -6,532,060 -4,943,812 -4,055,069

PV of EVA -36,444,475

+ Capital Invested 110,856,232

+ PV of Chg Capital in Yr5 4,522,310 This reconciles the assumptions on stable growth, ROC and Capital Invested

= Firm Value 78,934,066

WACC 10.42% 10.42% 10.42% 10.42% 10.42% 10.42%

ROC -2.72% 1.48% 1.60% 2.62% 2.92% -1.64%

Capital Invested 110,856,232 105,304,732 99,780,421 94,284,114 88,816,651 91,481,150

Calculation of Capital Invested

Initial 110,856,232 110,856,232 105,304,732 99,780,421 94,284,114 88,816,651

+ Net Cap Ex -6,457,776 -6,457,776 -6,457,776 -6,457,776 -6,457,776

+ Chg in WC 906,276 933,465 961,469 990,313 1,700,037

Ending 110,856,232 105,304,732 99,780,421 94,284,114 88,816,651 84,058,912

Cumulated WACC 110.42% 121.92% 134.62% 148.64% 164.12%

Sensitivity Analysis (Pre-Restructuring)

55

Value Conclustions

Appraoch Value Per Share Weight

Income Approach 154.64 80% 123.71

Asset Based (ABV) -104.31

Market Approach -29.63 20% -5.93

Weighted Value 117.78

Sensitivity Analysis

Income Based Weight

Income Start 35% 117.78 35% 40% 45% 50% 55% 60% 65%

Multiple Approach 5%

Mark

et A

ppro

ach

10% 51.16 58.89 66.62 74.35 82.09 89.82 97.55

15% 49.68 57.41 65.14 72.87 80.60 88.34 96.07

Increase 5% 20% 48.20 55.93 63.66 71.39 79.12 86.85 94.59

25% 46.71 54.45 62.18 69.91 77.64 85.37 93.11

30% 45.23 52.96 60.70 68.43 76.16 83.89 91.62

35% 43.75 51.48 59.21 66.95 74.68 82.41 90.14

40% 42.27 50.00 57.73 65.47 73.20 80.93 88.66

45% 40.79 48.52 56.25 63.98 71.72 79.45 87.18

50% 39.31 47.04 54.77 62.50 70.23 77.97 85.70

55% 37.82 45.56 53.29 61.02 68.75 76.48 84.22

60% 36.34 44.08 51.81 59.54 67.27 75.00 82.73

65% 34.86 42.59 50.33 58.06 65.79 73.52 81.25

Post Restructuring Estimated CASHFLOWS FCFF

56

POST RESTRUCTURING ESTIMATED CASHFLOWS

Base 2012 2013 2014 2015 2016

Growth in Revenue 6.00% 3.00% 3.00% 5.00% 5.00%

Growth in Deprec'n 0.00% 0.00% 0.00% 0.00% 0.00%

Revenues 84,856,234 88,250,483 91,780,502 95,451,722 99,269,791 104,233,281

Operating Expenses

% of Revenues 105.00% 87.00% 84.00% 84.00% 84.00% 84.00%

- Operating Expenses 89,099,045 76,777,920 77,095,622 80,179,447 83,386,625 87,555,956

EBIT (4,242,812) 11,472,563 14,684,880 15,272,276 15,883,167 16,677,325

Tax Rate 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%

EBIT (1-t) (3,394,249) 9,178,050 11,747,904 12,217,820 12,706,533 13,341,860

+ Depreciation 7,407,348 7,407,348 7,407,348 7,407,348 7,407,348 7,407,348

- Capital Expenditures 41,289 41,289 41,289 41,289 41,289 41,289

- Change in WC 9,000,000 373,367 388,302 403,834 419,988 545,984

= FCFF (5,028,191) 16,170,741 18,725,661 19,180,045 19,652,604 20,161,935

Terminal Value (in '16) 236,575,031

Value of Firm 67,331,068

- Value of Debt 59,658,601

Value of Equity 7,672,467

Value of Equity per Share 51

11,12,13 NP From

TBS= 5,100,004

57

Post Restructuring Cost Of Equity & Capital

POST-RESTRUCTURIN COSTS OF EQUITY AND CAPITAL

2012 2013 2014 2015 2016

Cost of Equity 13.22% 13.22% 13.22% 13.22% 13.22%

Proportion of Equity 45.00% 45.00% 45.00% 45.00% 45.00%

After-tax Cost of Debt 10.60% 10.60% 10.60% 10.60% 10.60%

Proportion of Debt 55.00% 55.00% 55.00% 55.00% 55.00%

Cost of Capital 11.78% 11.78% 11.78% 11.78% 11.78%

Cumulative WACC 111.78% 124.94% 139.66% 156.11% 174.50%

Present Value 14,466,824 14,987,311 13,733,444 12,589,058 11,554,432

58

Post Restructuring EVA Valuation

2012 2013 2014 2015 2016 Terminal Year

EBIT (1-t) -3,394,249 9,178,050 11,747,904 12,217,820 12,706,533 13,341,860 13,742,116

- WACC (CI) 14,234,568 13,410,962 12,589,115 11,769,097 10,950,982 10,950,982

EVA -5,056,518 -1,663,057 -371,294 937,436 2,390,878 2,390,878

Terminal EVA

PV -4,523,710 -1,331,048 -265,857 600,503 1,370,168

PV of EVA -4,149,945

+ Capital Invested 120,856,232

+ PV of Chg Capital in Yr5 5,506,969 This reconciles the assumptions on stable growth, ROC and Capital Invested

= Firm Value 122,213,256

WACC 11.78% 11.78% 11.78% 11.78% 11.78% 11.78%

ROC 7.59% 10.32% 11.43% 12.72% 14.35% -5.87%

Capital Invested 120,856,232 113,863,541 106,885,784 99,923,560 92,977,489 95,766,813

Calculation of Capital Invested

Initial 120,856,232 120,856,232 113,863,541 106,885,784 99,923,560 92,977,489

+ Net Cap Ex -7,366,059 -7,366,059 -7,366,059 -7,366,059 -7,366,059

+ Chg in WC 373,367 388,302 403,834 419,988 545,984

Ending 120,856,232 113,863,541 106,885,784 99,923,560 92,977,489 86,157,414

Cumulated WACC 111.78% 124.94% 139.66% 156.11% 174.50%

Sensitivity Analysis (Post-Restructuring)

59

Value Conclustions

Appraoch Value Per Share Weight

Income Approach 448.87 80% 359.10

Asset Based (ABV) -16.27

Market Approach -53.92 20% -10.78

Weighted Value 348.32

Sensitivity Analysis

Income Based Weight

Income Start 35% 348.32 35% 40% 45% 50% 55% 60% 65%

Multiple Approach 5%

Mark

et A

ppro

ach

10% 151.71 174.16 196.60 219.05 241.49 263.93 286.38

15% 149.02 171.46 193.91 216.35 238.79 261.24 283.68

Increase 5% 20% 146.32 168.77 191.21 213.65 236.10 258.54 280.98

25% 143.63 166.07 188.51 210.96 233.40 255.85 278.29

30% 140.93 163.37 185.82 208.26 230.71 253.15 275.59

35% 138.23 160.68 183.12 205.57 228.01 250.45 272.90

40% 135.54 157.98 180.43 202.87 225.31 247.76 270.20

45% 132.84 155.29 177.73 200.17 222.62 245.06 267.51

50% 130.15 152.59 175.03 197.48 219.92 242.37 264.81

55% 127.45 149.90 172.34 194.78 217.23 239.67 262.11

60% 124.76 147.20 169.64 192.09 214.53 236.97 259.42

65% 122.06 144.50 166.95 189.39 211.83 234.28 256.72

FCFF Valuation Model (Pre-Restructuring)

60

This model is designed to value a firm, with changing margins and revenue growth

Present Value of FCFF in high growth phase = 29,655,219.28

Present Value of Terminal Value of Firm = 22,270,758.62

Value of the firm = 51,925,977.90

+ Cash and Marketable Securities = 1,739,390.26

Market Value of Debt = 126,502,435.49

Market Value of Equity = (72,837,067.32)

Growth Rate in Stable Phase = 3.00%

FCFF in Stable Phase = 8,141,831.18

Cost of Equity in Stable Phase = 13.22%

Equity/ (Equity + Debt) = 114.11%

AT Cost of Debt in Stable Phase = 10.60%

Debt/ (Equity + Debt) = -14.11%

Cost of Capital in Stable Phase = 13.59%

Value at the end of growth phase = 76,900,387.51

1 2 3 4 5 6 7 8 9 10

Terminal

Year

Revenues 91,543,079.00 94,289,371.37 97,118,052.51 100,031,594.09 101,031,910.03 103,052,548.23 106,144,124.67

107,205,565.9

2 109,349,677.24 111,536,670.78 114,882,770.91

- Operating

Expenses 87,016,424.36 87,752,561.48 89,558,141.67 92,244,885.92 93,167,334.78 95,030,681.47 97,881,601.92 98,860,417.94 100,837,626.30 102,854,378.82 105,692,149.24

EBITDA 4,526,654.64 6,536,809.89 7,559,910.84 7,786,708.17 7,864,575.25 8,021,866.75 8,262,522.76 8,345,147.98 8,512,050.94 8,682,291.96 9,190,621.67

- Depreciation 7,501,864.00 7,501,864.00 7,501,864.00 7,501,864.00 7,501,864.00 7,876,957.20 8,034,496.34 8,195,186.27 8,604,945.58 9,035,192.86 9,306,248.65

EBIT (2,975,209.36) (965,054.11) 58,046.84 284,844.17 362,711.25 144,909.55 228,026.41 149,961.71 (92,894.64) (352,900.90) (115,626.98)

- EBIT*t

EBIT (1-t) (2,975,209.36) (965,054.11) 58,046.84 284,844.17 362,711.25 144,909.55 228,026.41 149,961.71 (92,894.64) (352,900.90) (115,626.98)

+ Depreciation 7,501,864.00 7,501,864.00 7,501,864.00 7,501,864.00 7,501,864.00 7,876,957.20 8,034,496.34 8,195,186.27 8,604,945.58 9,035,192.86 9,306,248.65

- Capital

Spending 1,044,088.00 1,044,088.00 1,044,088.00 1,044,088.00 1,044,088.00 1,085,851.52 1,140,144.10 1,197,151.30 1,257,008.87 1,319,859.31 279,187.46

- Chg.

Working

Capital 906,276.48 933,464.78 961,468.72 330,104.26 666,810.61 1,020,220.23 350,275.61 707,556.74 721,707.87 769,603.03

Free CF to

Firm 3,482,566.64 4,586,445.40 5,582,358.07 5,781,151.45 6,490,382.99 6,269,204.63 6,102,158.43 6,797,721.07 6,547,485.34 6,640,724.78 8,141,831.18

Present Value 3,076,664.10 3,579,624.93 3,849,103.90 3,521,574.98 3,492,798.77 2,980,549.47 2,562,996.52 2,522,368.46 2,146,349.14 1,923,188.99

NOL 2,975,209.36 3,940,263.47 3,882,216.63 3,597,372.46 3,234,661.21 3,089,751.66 2,861,725.25 2,711,763.53 2,804,658.17 3,157,559.07

Index 1

FCFF Valuation Model(Post-Restructuring)

61

1 2 3 4 5 6 7 8 9 10 Terminal Year

Revenues 84,856,233.61 87,401,920.62 90,023,978.24 92,724,697.58 93,651,944.56 95,524,983.45 98,390,732.96 99,374,640.28 101,362,133.09 103,389,375.75 107,524,950.78

- Operating

Expenses 82,310,546.60 64,677,421.26 66,617,743.90 68,616,276.21 69,302,438.97 70,688,487.75 72,809,142.39 73,537,233.81 75,007,978.49 76,508,138.06 79,568,463.58

EBITDA 2,545,687.01 22,724,499.36 23,406,234.34 24,108,421.37 24,349,505.59 24,836,495.70 25,581,590.57 25,837,406.47 26,354,154.60 26,881,237.70 27,956,487.20

- Depreciation 7,896,740.00 7,896,740.00 7,896,740.00 7,896,740.00 8,291,577.00 8,706,155.85 8,880,278.97 9,057,884.55 9,510,778.77 9,986,317.71 10,385,770.42

EBIT (5,351,052.99) 14,827,759.36 15,509,494.34 16,211,681.37 16,057,928.59 16,130,339.85 16,701,311.60 16,779,521.93 16,843,375.83 16,894,919.98 17,570,716.78

- EBIT*t 1,895,341.27 3,101,898.87 3,242,336.27 3,211,585.72 3,226,067.97 3,340,262.32 3,355,904.39 3,368,675.17 3,378,984.00 3,514,143.36

EBIT (1-t) (5,351,052.99) 12,932,418.09 12,407,595.47 12,969,345.10 12,846,342.87 12,904,271.88 13,361,049.28 13,423,617.54 13,474,700.66 13,515,935.99 14,056,573.43

+ Depreciation 7,896,740.00 7,896,740.00 7,896,740.00 7,896,740.00 8,291,577.00 8,706,155.85 8,880,278.97 9,057,884.55 9,510,778.77 9,986,317.71 10,385,770.42

- Capital Spending 41,289.00 41,289.00 41,289.00 41,289.00 42,940.56 44,658.18 46,891.09 49,235.65 51,697.43 54,282.30 1,246,292.45

- Chg. Working

Capital 356,396.18 367,088.07 378,100.71 129,814.58 262,225.44 401,204.93 137,747.03 278,248.99 283,813.97 454,913.25

Free CF to Firm 2,504,398.01 20,431,472.91 19,895,958.41 20,446,695.39 20,965,164.73 21,303,544.10 21,793,232.23 22,294,519.42 22,655,533.02 23,164,157.43 22,741,138.14

Present Value 2,241,666.40 16,361,498.38 14,250,314.23 13,098,419.11 12,012,411.84 10,919,584.83 9,995,037.24 9,150,726.52 8,323,627.60 7,619,421.22

NOL 5,351,052.99

Index 1

Growth Rate in Stable Phase = 4.00%

FCFF in Stable Phase = 22,741,138.14

Cost of Equity in Stable Phase = 13.22%

Equity/ (Equity + Debt) = 104.26%

AT Cost of Debt in Stable Phase = 8.00%

Debt/ (Equity + Debt) = -4.26%

Cost of Capital in Stable Phase

= 13.44%

Value at the end of growth phase = 240,888,071.26

Present Value of FCFF in high growth phase

= 103,972,707.37

Present Value of Terminal Value of Firm = 79,235,676.41

Value of the firm = 183,208,383.78

+ Cash and Marketable Securities = 1,739,390.26

Market Value of Debt = 59,658,600.70

Market Value of Equity = 125,289,173.35

FCFF STABLE GROWTH MODEL

62

EBIT (1- tax rate) = 11,446,329

- (Capital Spending - Depreciation) -6,226,700

- Change in Working Capital 8,000,000

Free Cashflow to Firm = 9,673,030

Cost of Equity = 13.22%

Cost of Debt = 10.60%

Cost of Capital = 11.78%

Expected Growth rate = 5.00%

Value of Firm 149,845,550

Growth rate Value

7% 216,616,267

6% 177,452,996

5% 149,845,550

4% 129,336,868

3% 113,500,879

2% 100,903,963

1% 90,644,548

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

7% 6% 5% 4% 3% 2% 1%

Expected Growth Rate

Value vs. Expected Growth

Equity Analysis Pre-Restructuring

63

SALVAGE VALUE

Equipment 0 0 0 0 0 0 0 0 0 35,000,000

Working Capital 0 0 0 0 0 0 0 0 0 15,749,036

OPERATING CASHFLOWS

Lifetime Index 1 1 1 1 1 1 1 1 1 1

Revenues 91,543,079 96,120,233 100,926,245 103,954,032 104,993,572 104,993,572 104,993,572 104,993,572 104,993,572 104,993,572

-Var.

Expenses 67,741,878 71,128,972 74,685,421 76,925,984 77,695,243 77,695,243 77,695,243 77,695,243 77,695,243 77,695,243

- Fixed Expenses 21,302,726 22,367,862 23,486,255 24,190,843 24,432,752 24,432,752 24,432,752 24,432,752 24,432,752 24,432,752

EBITDA 2,498,475 2,623,398 2,754,568 2,837,205 2,865,577 2,865,577 2,865,577 2,865,577 2,865,577 2,865,577

- Depreciation 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623

EBIT (5,087,149) (4,962,225) (4,831,055) (4,748,418) (4,720,046) (4,720,046) (4,720,046) (4,720,046) (4,720,046) (4,720,046)

-Tax (1,017,430) (992,445) (966,211) (949,684) (944,009) (944,009) (944,009) (944,009) (944,009) (944,009)

EBIT(1-t) (4,069,719) (3,969,780) (3,864,844) (3,798,734) (3,776,037) (3,776,037) (3,776,037) (3,776,037) (3,776,037) (3,776,037)

+ Depreciation 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623

- ∂ Work. Cap 4,843,428 5,530,001 (4,122,526) 454,168 155,931 0 0 0 0 0

NATCF -126,015,113 (1,327,523) (1,914,158) 7,843,305 3,332,721 3,653,655 3,809,586 3,809,586 3,809,586 3,809,586 3,809,586

Discount

Factor 1 1 1 1 1 1 1 2 2 2 2

Discounted CF -126,015,113 (1,204,283) (1,575,254) 5,855,427 2,257,069 2,244,709 2,123,228 1,926,119 1,747,309 1,585,098 20,593,408

DISCOUNT RATE

Approach(1:Direct;2:CAPM

)= 2

1. Discount rate = 10%

2a. Beta 1.38

b. Riskless rate= 8.25%

c. Market risk premium = 3.60%

d. Debt Ratio = 114.00%

e. Cost of Borrowing = 13.25%

Discount rate used= 10.23%

CASHFLOW DETAILS

Revenues in year 1= 91,543,079

Var. Expenses as % of Rev= 74%

Fixed expenses in year 1= 21,302,726

Tax rate on net income= 20% INITIAL INVESTMENT

Investment 110,856,232

- Tax Credit 0

Net Investment 110,856,232

+ Working Cap 8,888,034

+ Opp. Cost 6,270,847

+ Other invest. 0

Initial

Investment 126,015,113

Investment Measures

NPV = (90,462,284)

IRR = -18.19%

ROC = -5.00%

Equity Analysis Post-Restructuring

64

SALVAGE VALUE

Equipment 0 0 0 0 0 0 0 0 0 35,000,000

Working Capital 0 0 0 0 0 0 0 0 0 10,917,658

OPERATING CASHFLOWS

Lifetime Index 1 1 1 1 1 1 1 1 1 1

Revenues 84,856,234 89,099,045 93,553,998 96,360,617 99,251,436 99,251,436 99,251,436 99,251,436 99,251,436 99,251,436

-Var.

Expenses 52,610,865 55,241,408 58,003,478 59,743,583 61,535,890 61,535,890 61,535,890 61,535,890 61,535,890 61,535,890

- Fixed Expenses 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726 21,302,726

EBITDA 10,942,643 12,554,911 14,247,793 15,314,309 16,412,820 16,412,820 16,412,820 16,412,820 16,412,820 16,412,820

- Depreciation 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623

EBIT 3,357,020 4,969,288 6,662,170 7,728,685 8,827,196 8,827,196 8,827,196 8,827,196 8,827,196 8,827,196

-Tax 671,404 993,858 1,332,434 1,545,737 1,765,439 1,765,439 1,765,439 1,765,439 1,765,439 1,765,439

EBIT(1-t) 2,685,616 3,975,430 5,329,736 6,182,948 7,061,757 7,061,757 7,061,757 7,061,757 7,061,757 7,061,757

+ Depreciation 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623 7,585,623

- ∂ Work. Cap 446,152 912,861 43,893 308,728 317,990 0 0 0 0 0

NATCF -126,015,113 9,825,087 10,648,193 12,871,466 13,459,843 14,329,390 14,647,380 14,647,380 14,647,380 14,647,380 14,647,380

Discount

Factor 1 1 1 1 2 1 1 2 2 2 2

Discounted CF -126,015,113 8,810,450 8,562,473 9,281,389 8,703,353 8,308,755 7,616,051 6,829,541 6,124,253 5,491,801 20,362,846

DISCOUNT RATE

Approach(1:Direct;2:CAPM

)= 2

1. Discount rate = 10%

2a. Beta 1.38

b. Riskless rate= 8.25%

c. Market risk premium = 3.60%

d. Debt Ratio = 55.00%

e. Cost of Borrowing = 13.25%

Discount rate used= 11.78%

CASHFLOW DETAILS

Revenues in year 1= 84,856,234

Var. Expenses as % of Rev= 62%

Fixed expenses in year 1= 21,302,726

Tax rate on net income= 20%

INITIAL INVESTMENT

Investment 110,856,232

- Tax Credit 0

Net Investment 110,856,232

+ Working Cap 8,888,034

+ Opp. Cost 6,270,847

+ Other invest. 0

Initial

Investment 126,015,113

Investment Measures

NPV = (37,146,079)

IRR = 1.12%

ROC = 7.89%

Payback Period Pre-Restructuring

65

Total costs 90,806,941 100,030,504 98,628,288 98,628,288 98,628,288 98,628,288 90,832,634 90,832,634 90,832,634 90,832,634

EBITDA 736,138 1,218,088 5,394,461 5,394,461 5,394,461 5,394,461 13,190,115 13,190,115 13,190,115 13,190,115

Less: Depreciation 7,896,740 7,896,740 7,896,740 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776

Income before taxes (7,160,602) (6,678,652) (2,502,278) (959,315) (959,315) (959,315) 6,836,339 6,836,339 6,836,339 6,836,339

Less: Taxes (1,432,120) (1,335,730) (500,456) (191,863) (191,863) (191,863) 1,367,268 1,367,268 1,367,268 1,367,268

Net income (5,728,481) (5,342,922) (2,001,823) (767,452) (767,452) (767,452) 5,469,071 5,469,071 5,469,071 5,469,071

Plus: Depreciation 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000

Minus: Investment 62,000,000 0 0 0 0 0 0 0 0 0

Net Cash Flow (61,528,481) 857,078 4,198,177 5,432,548 5,432,548 5,432,548 11,669,071 11,669,071 11,669,071 11,669,071

Cumulative Net Cash Flow (61,528,481) (60,671,403) (56,473,226) (51,040,677) (45,608,129) (40,175,581) (28,506,510) (16,837,439) (5,168,368) 6,500,704

Undiscounted payback period: 9.44 Years

Enter Discount Rate Here: 10%

Discounted Cash Flow (55,934,983) 708,329 3,154,153 3,710,504 3,373,185 3,066,532 5,988,079 5,443,708 4,948,825 4,498,932

Cumulative Discounted Cash Flow (55,934,983) (55,226,654) (52,072,501) (48,361,997) (44,988,812) (41,922,280) (55,934,983) (55,934,983) (55,934,983) (55,934,983)

Discounted payback period: 22.43 Years

Investment Payback Analysis

Payback Period Post Restructuring

66

Total costs 84,484,202 62,695,646 63,073,124 63,073,124 63,073,124 63,073,124 63,073,124 63,073,124 63,073,124 63,073,124

EBITDA 372,032 16,771,803 19,385,837 19,385,837 19,385,837 19,385,837 19,385,837 19,385,837 19,385,837 19,385,837

Less: Depreciation 7,407,348 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776 6,353,776

Income before taxes (7,035,316) 10,418,027 13,032,061 13,032,061 13,032,061 13,032,061 13,032,061 13,032,061 13,032,061 13,032,061

Less: Taxes (1,407,063) 2,083,605 2,606,412 2,606,412 2,606,412 2,606,412 2,606,412 2,606,412 2,606,412 2,606,412

Net income (5,628,253) 8,334,422 10,425,649 10,425,649 10,425,649 10,425,649 10,425,649 10,425,649 10,425,649 10,425,649

Plus: Depreciation 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000 6,200,000

Minus: Investment 62,000,000 0 0 0 0 0 0 0 0 0

Net Cash Flow (61,428,253) 14,534,422 16,625,649 16,625,649 16,625,649 16,625,649 16,625,649 16,625,649 16,625,649 16,625,649

Cumulative Net Cash Flow (61,428,253) (46,893,831) (30,268,182) (13,642,533) 2,983,116 19,608,765 36,234,413 52,860,062 69,485,711 86,111,360

Undiscounted payback

period: 4.82 Years

Enter Discount Rate Here: 10%

Discounted Cash Flow (55,843,866) 12,011,919 12,491,096 11,355,542 10,323,220 9,384,745 8,531,587 7,755,988 7,050,898 6,409,907

Cumulative Discounted Cash Flow (55,843,866) (43,831,947) (31,340,851) (19,985,309) (9,662,089) (277,344) (55,843,866) (55,843,866) (55,843,866) (55,843,866)

Discounted payback period: 5.94 Years

Investment Payback Analysis

Z-Score distress prediction model

67

When Z is 3.0 or more, the firm is

most likely safe based on the

financial data. However, be careful to

double check as fraud, economic

downturns and other factors could

cause unexpected reversals.

When Z is 2.7 to 3.0, the company is

probably safe from bankruptcy, but

this is in the grey area and caution

should be taken.

When Z is 1.8 to 2.7, the company is

likely to be bankrupt within 2 years.

This is the lower portion of the grey

area and a dramatic turnaround of

the company is needed.

When Z is below 1.8, the company is

highly likely to be bankrupt. If a

company is generating lower than

1.8, serious studies must be

performed to ensure the company

can survive.

Working Capital 11,079,157.00

3.50

Total Assets 52,212,094.00 Total Liabilities 42,194,359.00

Retained Earnings 10,418,027.00 EBITDA 20,661,687.63

Market Value of Equity 10,017,735.00

Net Sales 79,467,448.99

Working Capital 11,911,378.22

1.20

Total Assets 121,359,589.31 Total Liabilities 134,161,649.42

Retained Earnings 10,418,027.00 EBITDA 6,640,818.49

Market Value of Equity (12,802,060.11) Net Sales 101,248,591.19

Pre-Restructuring

Post-Restructuring

Altman Z-Score

68

13 Week CASHFLOW Forecast

69

June July August September Total

(EGP in millions) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast)

1 week 4 weeks 5 weeks 4 weeks 14 weeks

Operating Receipts (1) 0 5,067 6,533 14,632 26,232

Other cash

Operating Payments (1) 0 (5,053) (6,461) (7,014) (18,528)

Net Cash Flow From Operations 0 14 72 7,618 7,704

Non-Operating

Intercompany 0 (120) 0 (78) (198)

Professional Services 0 0 0 0 0

Capex 0 (64) (115) (535) (715)

Taxes 0 (1,496) (780) (730) (3,006)

Other 0 (166) (166) (1,692) (2,024)

0 (1,847) (1,061) (3,035) (5,943)

Net Cash Flow 0 (1,833) (989) 4,583 1,761

Cash Availability

Beginning Cash (2) 1,353 1,353 (480) (1,469) 1,353

Less : Float (3) 0 0 0 0 0

Net Cash Flow 0 (1,833) (989) 4,583 1,761

Ending Cash 1,353 (480) (1,469) 3,113 3,113

Contingency (4) 0 0 0 0 0

Ending Cash Availability 1,353 (480) (1,469) 3,113 3,113

Cash Flow Sensitivity analysis

70

Cash Flow Sensitivity AnalysisFor the year ended 12/31/2011

% change in receipts and disbursements 5.0%

Expected Pessimistic Optimistic

Beginning Cash Balance 423,138 423,138 423,138

Cash Inflows (Income):

Accounts Receivable Collections 1,883,250 1,789,088 1,977,413

Loan Proceeds 8,000,000 7,600,000 8,400,000

Sales & Receipts 31,775,000 30,186,250 33,363,750

Other: 194,500 184,775 204,225

Total Cash Inflows 41,852,750 39,760,113 43,945,388

Available Cash Balance 42,275,888 40,183,251 44,368,526

Cash Outflows (Expenses):

Salary 5,180,000 4,921,000 5,439,000

Mobile Allowance 100,000 95,000 105,000

Incentives 1,208,000 1,147,600 1,268,400

Social Insurance 1,020,000 969,000 1,071,000

Service charge 315,000 299,250 330,750

Suppliers 10,600,000 10,070,000 11,130,000

Petty Cash 900,000 855,000 945,000

RENT 7,876,875 7,483,031 8,270,719

Overdues 2,000,000 1,900,000 2,100,000

Cash Purchases 500,000 475,000 525,000

Rehana Fund 625,000 593,750 656,250

AUC 837,500 795,625 879,375

london

Utilities 1,000,000 950,000 1,050,000

HSBC Installment 1,939,199 1,842,239 2,036,159

AUDI Installment 384,903 365,658 404,148

NSGB Installment 32,080 30,476 33,684

CIB Installment 216,000 205,200 226,800

AT LEASE 240,000 228,000 252,000

Coffee beans 240,000 228,000 252,000

Subtotal 35,214,557 33,453,829 36,975,285

Total Cash Outflows 35,214,557 33,453,829 36,975,285

Ending Cash Balance 7,061,331 6,729,421 7,393,241