Sociedade Comercial Orey Antunes : Orey informa sobre Resultados Consolidados de 2016 - Versão Inglesa

COMUNICADO | FY 2016

1

PRESS RELEASE FY 2016

(Audited accounts)

16 June 2016

1. EXECUTIVE SUMMARY

   Having implemented a significant restructuring, 2016 was transformational for Orey Group. The net loss registered in 2016 fiscal year reached Euro 12.8 million. This negative result is primarily due to (1) an accounting loss related to the sale of its shareholding in Banco Inversis amounting to Euro 5.9 million;

   (2) non-recurring costs amounting to Euro 3.2 million, primarily related to the restructuring programme including curtailment costs and penalties for early termination of certain supplier contracts and (3) Euro 4 million losses related to the global activity.

   Orey's shareholding in Banco Inversis, which was acquired on 8 January 2016 for the global price of Euro

   21.7 million, was eventually sold for Euro 30 million in July 2016 and generated a positive return of Euro

   8.3 million. However, given that at the end of 2015 this stake was registered in Orey's balance sheet for Euro 35.2 million, the sale of this investment generated a non-recurring accounting loss in fiscal year 2016 as referred above. The proceeds of the sale of Banco Inversis were primarily used to amortise financial debt, namely the Euro 19.6 million credit facility that was issued to fund the acquisition of this stake.

   This sale had a relevant strategic impact, leaving Orey with an oversized structure, namely staff, but also in terms of operations. Against this backdrop, using the net proceeds of the Banco Inversis sale, Orey implemented a comprehensive restructuring plan aimed at adjusting its operating structure to the new circumstances and significantly improving the operating cash-flow profile. Moreover, in the awake of Inversis sale, Orey's balance sheet became excessively exposed to non-liquid and long-term maturity assets that did not generate cash on a recurring basis, as the Brazilian distressed assets and private equity accounted for the majority of the balance sheet. From a liability perspective, Orey's balance sheet was excessively exposed to short-term maturities with high cost of funding that meant a significant recurring cash disbursement.

   As referred before, against this backdrop, during 2016 and early 2017 Orey implemented a reorganizational plan (1) to significantly reduce costs to rebalance the P&L; (2) reposition its commercial offering and (3) implemented new balance sheet structure to the through asset sales and renegotiated terms and conditions of the most important debt facilities, including bonds and bank debt, aimed at increasing maturities and reducing cost of debt. The reorganisation plan also covered other areas, namely extensive contact with Orey Financial customers aimed at re-establishing the commercial relationship and a special focus on initiatives to rejuvenate the commercial team and increase its motivation.

   Whereas this cost cutting and reorganisation plan is now mostly executed, the focus is now investing on organic growth.

   In terms of growth-related initiatives in the financial area, it should be highlighted that Orey has already done extensive work around its online business for the mass and affluent markets, including: (1) the launch of a redesigned website; (2) the launch of a brand repositioning campaign; (3) significant investment in marketing namely programmatic marketing, and (4) a strong commercial activity with a focus on thematic campaigns. Other growth initiatives include relaunching the offline brokerage service

   and relaunching the asset management division, focusing on portfolio and fund management. Orey will also be pursuing new customer segments, namely the institutional and private segments.

   From a balance sheet standpoint, the initiatives are now aimed at simplifying the corporate structure, including reducing the number of vehicles and jurisdictions where Orey is present. Additionally, notwithstanding the significant improvement in operating cash-flow, this is not yet enough to cover debt service and, as such, the Group continues exposed to short-term external funding. Against this backdrop, Orey called a General Bondholder meeting of the Best Of bond with the objective of harmonising the terms and conditions of the bond with the ability to generate cash-flow and to make its maturity compatible with the materialisation of Orey's investments in A. Araújo in Brasil, which are held through the investment vehicle in credit rights (FIDC - Fundo de Investimento em Direitos Creditícios) while at the same time maintaining the senior profile and claim over SCOA's balance sheet.

   While, as referred to above, 2016 was a transformational year for Orey Group, 2017 is an year of investing in growth when Orey will also continue to be focused on cost reduction and will further streamline operations to ensure sustainability of operating cash-flow. Orey will pursue growth opportunities in the financial areas aiming at achieving the proper scale for this business segment, repositioning itself in the market and reducing our operational risk profile and dependence on external partners. In the non-financial segment, the objective for 2017 is to enhance growth and profitability profile while increasing cash-flow generation.

2. BUSINESS REVIEW

   Sociedade Comercial Orey Antunes, S.A. ("SCOA", "Orey" or "Grupo Orey"), is a century-old company, incorporated in 1886, that began its activity in the industrial, iron, steel and machinery sectors and established itself as a reference player in the areas of shipping services, logistics and transportation. More recently Orey has been positioning itself as an investment company, having extended its operations to the financial sector, which is considered strategic. In the financial area, the Orey Group has focused on Portuguese and Spanish geographies. However, Orey maintains a well diversified presence both in terms of business areas as well as in multiple countries, including Portugal and Spain and Brazil, Angola and Mozambique.

   The holding company, SCOA, is focused on the strategic management of the entire group, including the implementation of the strategic asset allocation process according to the investment criteria and diversification objectives for each asset class.

   Sociedade Comercial Orey Antunes, S.A.

   Orey Financial Private Equity AlternativeInvestments Real Estate

   Sector Focus

   services

   Grow and increase profitability

   • Financial sector

   • Centralised

   • Transport & Logistics

   • Shipping

   • Marine and Safety

   • Industrial

   • Special situations

   • Distressed assets

   • Orey Group headquarters

   • Warehouses used by Group operations

Hold to maturity Sell / Reduce

• Exposed to economies that are set to recover from prolonged recessions, including Brazil

• Solid prospects in Angola

• Market share gains in the financial business