Board of Directors Meeting · May 5, 2026
SPI Strategic
Financial Transformation
Financial Transformation
Board-ready investment case — 2025 performance review and 2026 transformation agenda covering Cash Conversion, Profit Quality, and Growth Discipline.
SPI
Revenue Growth 2025
17.6%
Strong top-line momentum
Net Margin 2025
19.7%
Profitability materially improved
Operating Cash Flow
SAR 22.8M
Positive and improving
CCC 2025
261 days
Key constraint to scale
Page 1 of 12
Executive Decision: Cash-Generating Growth
The company is financially stronger, but 2026 value creation depends on converting earnings into cash.
01
Revenue Growth 2025
17.6%
Strong top-line momentum
Net Margin 2025
19.7%
Profitability materially improved
Operating Cash Flow
SAR 22.8M
Positive and improving
CCC 2025
261 days
Key constraint to scale
Board-Level Thesis
- SPI has achieved a real operating turnaround in 2025.
- The next value lever is working capital discipline.
- Growth should be gated by cash conversion, not only sales volume.
- A 2026 transformation program can release SAR 30–40M cash.
Decisions Required from the Board
- Approve Working Capital Transformation PMO.
- Mandate monthly DSO, DIO, DPO and CCC reviews.
- Approve 2026 targets and management incentives.
- Prioritize high-margin and cash-positive growth.
Key Message: SPI is at an inflection point. 2025 proved the operational model works. 2026 must prove the cash model works. The Board's mandate on working capital discipline is the single most important decision today.
Page 2 of 12
2025 Financial Scorecard
SPI improved revenue, margins and cash flow while maintaining a strong balance sheet.
02
Current Ratio
3.29x
Strong liquidity position
Debt / Equity
0.47x
Moderate leverage
Gross Margin
37.7%
+3.8 ppts vs 2024
Net Profit
SAR 40.1M
+56.7% vs 2024
Revenue Bridge: 2024 → 2025
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Revenue | SAR 172.6M | SAR 203.0M | +17.6% ↑ |
| Gross Profit | SAR 58.5M | SAR 76.5M | +30.8% ↑ |
| Gross Margin | 33.9% | 37.7% | +3.8 ppts ↑ |
| Operating Profit | SAR 32.0M | SAR 47.6M | +48.8% ↑ |
| Net Profit | SAR 25.6M | SAR 40.1M | +56.7% ↑ |
Page 3 of 12
Profit Quality: Operating Improvement
Margins expanded as the company controlled operating costs and improved gross profit conversion.
03
What Changed in 2025
- Revenue grew from SAR 172.6M to SAR 203.0M.
- Gross profit rose from SAR 58.5M to SAR 76.5M.
- Operating profit increased from SAR 32.0M to SAR 47.6M.
- Finance cost remained controlled at around SAR 2.0M.
Gross Margin Expansion
37.7%
+3.8 ppts year-on-year improvement
Net Margin
19.7%
Approaching 20% — a strategic threshold
Board Insight: The 2025 improvement shows the business can generate attractive profitability. The 2026 agenda should protect margins while improving cash conversion and customer/product mix quality.
Page 4 of 12
Cash Conversion is the Next Unlock
Positive OCF confirms progress, but receivables and inventory still absorb cash.
04
Net Profit 2025
SAR 40.1M
Strong earnings base
Operating Cash Flow
SAR 22.8M
57% OCF/Profit conversion
Potential Cash Release
SAR 30-40M
Through WC optimization
Financial Impact of Optimization
Potential Interest Savings
SAR 2.6M / year
At 8% financing cost on released cash
Strategic Benefit
Cash release supports growth without increasing debt
Key Message: 2025 net profit reached SAR 40.1M; OCF reached SAR 22.8M. Working capital optimization can release SAR 30–40M — effectively funding the growth agenda at zero incremental cost of capital.
Page 5 of 12
Working Capital Diagnosis
The company is funding a long operating cycle before cash is collected.
05
DSO — Days Sales Outstanding
150 days
Collection challenge
DIO — Days Inventory Outstanding
164 days
Inventory tied-up cash
DPO — Days Payable Outstanding
53 days
Room to renegotiate
CCC — Cash Conversion Cycle
261 days
Transformation priority
Interpretation: The company collects cash 261 days after it begins the production cycle. This means every SAR of revenue locks up cash for nearly 9 months before it returns. Reducing CCC to <185 days releases SAR 30–40M in liquidity.
Page 6 of 12
Strengths to Protect, Weaknesses to Fix
The company has strong industrial fundamentals but must institutionalize cash discipline.
06
✅ Strengths to Leverage
- Established manufacturing platform with multiple dosage capabilities.
- Strong localization advantage in Saudi tenders and strategic partnerships.
- Clear profitability improvement in 2025.
- Balance sheet supports investment if cash cycle improves.
- BD model flexibility: tech transfer, secondary packaging, CMO.
⚠️ Weaknesses to Address
- High receivables concentration and long collection cycle.
- Inventory days remain high with expiry and slow-moving risk.
- CCC above 260 days limits funding flexibility.
- Tender exposure can pressure prices and profitability.
- Need monthly management rhythm linking finance, sales, RA and supply chain.
Page 7 of 12
2026 Strategic Pillars
A focused plan to convert profit improvement into sustainable cash generation.
07
1
💰 Cash Discipline
Reduce DSO, DIO and CCC. Make cash KPIs part of management cadence with monthly war-room reviews and clear ownership.
2
📊 Margin Protection
Prioritize high-margin private and specialty opportunities. Enforce tender pricing discipline to protect net profitability above 20%.
3
🏭 Asset Utilization
Lift plant utilization through CMO, technology transfer projects and selective exports targeting 85–90% utilization rate.
4
🤝 Partner Acceleration
Convert BD pipeline into registered, supply-ready products with clear economics. Target 5–8 new product launches in 2026.
Page 8 of 12
2026 Scenario: Cash Release Without Disruption
Moderate targets can generate meaningful liquidity while protecting availability and growth.
08
| KPI | 2025 (Actual) | 2026 Target | Action |
|---|---|---|---|
| DSO | 150 days | 120 days | Segmented collections + credit limits |
| DIO | 164 days | 130 days | S&OP + SKU rationalization |
| DPO | 53 days | 65 days | Selective supplier negotiation |
| CCC | 261 days | <185 days | Monthly cash war-room |
Impact: Achieving these targets unlocks SAR 30–40M in cash and saves SAR 2.6M annually in financing costs — without requiring additional debt or equity.
Page 9 of 12
2026 Board KPIs: Targets & Governance
Targets must be owned by named functions and reviewed monthly.
09
| KPI | 2026 Target | Ownership |
|---|---|---|
| Revenue Growth | 12–15% | Commercial / BD |
| Net Margin | >20% | Finance + Operations |
| OCF Growth | >30% | Finance |
| CCC | <185 days | Finance + Supply Chain |
| Utilization | 85–90% | Operations |
| New Products | 5–8 launches | RA + BD + Sales |
Governance Mechanism
Monthly dashboard reviewed by CEO / CFO / COO / Commercial with corrective actions tracked until closure. KPIs linked directly to management incentives to ensure accountability at every level.
Page 10 of 12
90-Day Implementation Roadmap
Start with governance and quick wins, then institutionalize the operating rhythm.
10
Days 0–30 · Foundation
Set up PMO. Baseline DSO / DIO / DPO by customer and SKU. Approve credit policy and collection protocols. Define KPI ownership.
Days 31–60 · Activation
Launch collection segmentation. ABC inventory review. Build supplier term renegotiation list with priorities. Start S&OP cadence.
Days 61–90 · Institutionalize
Implement monthly S&OP. Dashboard cadence live. Link target incentives to cash metrics. Track cash release vs. baseline. Deliver 90-day readout to Board.
Expected output after 90 days: Live dashboard, collection action list, inventory risk map, supplier terms plan and 2026 KPI ownership fully assigned.
Page 11 of 12
Requested Board Approvals
The Board is asked to approve a clear transformation mandate for 2026.
11
Approval Items
- Approve 2026 financial targets and KPI framework.
- Approve Working Capital Transformation PMO.
- Mandate monthly reporting to the Board / Executive Committee.
- Approve commercial discipline: growth must be margin and cash accretive.
- Approve prioritization of high-margin products and CMO / partner projects.
Success Definition by End-2026
Revenue growth
12–15%
Net margin
>20%
CCC
<185 days
OCF growth
>30%
Utilization
85–90%
New products
5–8 launches
Board Message
SPI is operationally strong; the next phase is disciplined,
cash-generating growth.
cash-generating growth.