Earnings Presentation Q42014 February, 2015 This material was - - PowerPoint PPT Presentation

Earnings Presentation Q4’2014

February, 2015

This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. This presentation may include forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Peru and in Latin America as a whole. The words “believes”, “may”, “will”, “estimates”, “continues”, “anticipates”, “intends”, “expects”, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material.

2

AGENDA

Q4’14 RESULTS BY SEGMENT 2014 HIGHLIGHTS

01 02 03 04

WHAT WE ARE DOING WHAT TO EXPECT IN 2015-2017

01

2014 HIGHLIGHTS

66 21 63 113 Q4'13 Q4'14 2013 2014 160 202 475 604 Q4'13 Q4'14 2013 2014 1,492 1,738 5,322 6,147 Q4'13 Q4'14 2013 2014

Margin 1.2% 1.8% 4.4% 1.2%

2013 Consolidated Results

Million Soles (S/. mm)

Full Year 2014 Highlights

Revenues

Margin 8.9% 9.8% 10.7% 11.6%

• Double digit growth in Revenues, Adj. EBITDA, and Net

Income vs. 2013

• New corporate structure allowing its segments to have

independent capital structures and more transparency

• Refinanced debt to reduce cost of debt (US$ 12 mm in

annual savings from lower interest expenses)

• Increase

in fair value

• f

investment properties

• f

S/. 138.4 mm and exchange loss of S/.114.5 mm

• Increase in EPS from S/. 0.6 to S/. 1.1

5

2014 Consolidated Highlights

Million Soles (S/. mm)

01

• Adj. EBITDA

Net Income

66% 67% 65% 64% 34% 33% 35% 36%

Q4'13 Q4'14 2013 2014

01 InRetail Shopping Malls InRetail Consumer

Financial Results by Segment

Million Soles (S/. mm) 6

66% 64% 58% 56% 34% 36% 42% 44%

Q4'13 Q4'14 2013 2014

Revenues Revenues

63 110 215 349 Q4'13 Q4'14 2013 2014 38 68 115 202 Q4'13 Q4'14 2013 2014

• Adj. EBITDA

Net Rental Margin 75.9% 80.2% 82.9% 82.4% 7.1% 7.1% 8.5% 8.2% Margin

• Adj. EBITDA

1,439 1,633 5,142 5,833 Supermarkets Pharmacies 123 133 364 415

InRetail Peru 2014 Highlights

7

SUPERMARKETS

• Opened 28k sqm of sales area (+8.5% net of closings)
• Opened

6 supermarkets (3 in Lima / 3 in provinces)

• Expanded 5 supermarkets
• Refurbished 11 Plaza Vea stores
• Closed 3 Economax stores
• SSS growth of 4.4%
• Captured

efficiencies in SG&A due to multiple initiatives launched

• Launched “Vea Club” to increase customer knowledge

and enhance promotional campaigns

• Successfuly

integrated dry-food and non-food warehouses

• Completed upgrade of cash registers to NCR platform,

improving customers’ experience at point of sale

• Ranked 8th in GPTW Ranking

01

• Opened

124 pharmacies (37 in Lima / 87 in provinces); 12 pharmacies closed

• SSS growth of 8.5%
• Increased

penetration

• f

high margin products (+2.7pp)

• Reduced inventory in 32 days (85 days as of

December 2014), freeing up cash

• Sold
• ld

distribution center for S/. 12.9 MM, generating an extraordinary income of S/. 6.8 MM

8

PHARMACIES

01

InRetail Peru 2014 Highlights

9

SHOPPING MALLS

• Inaugurated Real Plaza Salaverry in May 2014 (+73k

sqm of GLA)

• Acquired of Real Plaza Centro Cívico in August 2014

(+41k sqm of GLA) for S/. 190 MM, 7X EBITDA, and initiated expansion of 8k sqm for a department store

• Expanded 41k sqm of GLA
• Acquired Puruchuco’s landplot for S/. 100 MM for the

development of a new shopping mall

• Increases in mark-to-market of S/. 138 MM in 2014

mainly as a result of new malls in operation and lower cost of debt

01

InRetail Peru 2014 Highlights

02

Q4´14 RESULTS BY SEGMENT

02

Q4´14 RESULTS BY SEGMENT

• +5.9% SSS vs. Q4’14 (+8.5% SSS 2014)
• 50 pharmacies added to the network in Q4’14, 112 in 2014 (+15.4%), total

837 stores

• Intensive competitive environment and stock liquidation to reduce inventory

impacted our sales per ticket, partially compensated by an increased in SSS transactions

• Expansion of 3 malls in Q4’14 (+11,120 sqm); opening of Real Plaza

Salaverry and acquistion of Real Plaza Centro Cívico in 2014 (+154,880 sqm; +38.9%); total 553,431sqm (607,120 sqm including third party’s properties)

• +4.9% SSS vs. Q4’13 (+4.4% SSS 2014)
• 2 new stores, 3 expansions and one Economax store closed in Q4’14 (+8k

sqm); 6 new stores, 5 expansions and 3 Economax stores closed in 2014 (+21k sqm, +8.5%), total 101 (269,718 sqm)

• Aggressive and innovative promotional campaigns in Q4’14

2013 Consolidated Results

Million Soles (S/. mm)

Revenues Growth of 16.5% vs Q4’13

Million Soles (S/. mm)

Supermarkets Pharmacies Shopping Malls

Pharmacies 33.7% Shopping Malls 5.6% 2014 Revenues Breakdown

Revenues

Supermarkets 60.7% 11 Million S/. Var % Var % Q4'13 2013 InRetail Consumer 1,633 13.5% 5,833 13.4% Supermarkets 1,094 14.8% 3,757 12.9% Pharmacies 541 11.0% 2,086 14.4% InRetail Shopping Malls 110 73.0% 349 62.7% Total Revenues 1,738 16.5% 6,147 15.5% Q4'14 2014 Million S/.

02

227 227 228 249 249 253 261 270 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14

Quarterly Openings and SSS by Segment

Openings Same Store Sales

12

• 0.7%
• 2.1%

2.1% 2.4% 4.8% 5.2% 2.6% 4.9% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14

• 1.1%

0.4% 4.0% 6.9% 9.3% 10.8% 8.2% 5.9% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14

Pharmacies Supermarkets

297 319 336 399 425 499 542 553 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 610 636 675 725 731 754 787 837 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14

Shopping Malls

GLA (‘000 sqm)

Pharmacies

N° Stores

Supermarkets

Sales Area (‘000 sqm) N° Stores 88 88 90 98 98 98 100 101 N° Malls 13 13 13 15 15 16 17 17

02

Million S/. Var % Var % Q4'13 2013 InRetail Consumer 133 8.2% 8.7% 415 7.1% 13.9% Supermarkets 85 7.8% 4.6% 232 6.2% 10.0% Pharmacies 49 9.0% 17.6% 185 8.9% 19.5% InRetail Shopping Malls 68 62.0% 77.8% 202 57.8% 75.5% Total Adj. EBITDA 202 11.6% 26.3% 604 9.8% 27.0% Q4'14 % Rev 2014 % Rev

• +77.8% growth vs. Q4’13; +75.5% growth vs. 2013
• Net rental Mg. 82.4% vs. 82.9% in Q4’13; 80.2% in 2014 vs. 75.9% in 2013
• Higher margin driven by recent opening of shopping malls and dilution of

fixed costs, offset by higher SG&A

• +4.6% growth vs. Q4’13; +10.0% growth vs. 2013
• EBITDA Mg. 7.8% vs. 8.5% in Q4’13; 6.2% in 2014 vs. 6.3% in 2013
• Lower gross margin in Q4’14 due to intensive promotional campaigns and

lower store contribution from suppliers, despite efficiencies in SG&A

• +17.6% growth vs. Q4’13; +19.5% growth vs. 2013
• EBITDA Mg. 9.0% vs. 8.5% in Q4’13; 8.9% in 2014 vs. 8.5% 2013
• Higher gross margin due to an increase in penetration of high margin

products, logistic efficiencies and extraordinary income, compensated lower margin in regular products, an increase in rental expenses and personnel expenses associated to higher commissions to our salesforce

Adjusted EBITDA Growth of 26.3% vs Q4’13

Million Soles (S/. mm)

• Adj. EBITDA

2014 Adj. EBITDA Breakdown Supermarkets 37.4% 13

Supermarkets Pharmacies Shopping Malls

Shopping Malls 32.7% Pharmacies 29.9% Million S/.

02

26 24 26 38 36 43 55 68 Q1 Q2 Q3 Q4 2013 2014 45 42 42 81 55 44 48 85 Q1 Q2 Q3 Q4 2013 2014 104 101 110 160 117 131 154 202 Q1 Q2 Q3 Q4 2013 2014 34 36 43 41 39 46 52 49 Q1 Q2 Q3 Q4 2013 2014

Adjusted EBITDA Evolution

Million Soles (S/. mm)

InRetail Consolidated (+27.0 YoY) Pharmacies (+19.5% YoY) Supermarkets (+10.0% YoY) Shopping Malls (+75.5% YoY)

14

02

Consolidated Net Income

• In Q4’14 we registered non-recurring expenses of

S/.96.6 million associated to the premium paid for refinancing debt

• In 2014, we registered an increase in fair value of

investment properties generated by InRetail Shopping Malls explained by: (i) a reduction in cost of debt, (ii)

• pening of Real Plaza Salaverry
• Mark-to-market gain of S/. 96.6 million in Q4’14
• vs. S/. 29.8 million in Q4’13
• Mark-to-market gain of S/. 138.4 million in 2014
• vs. S/. 44.6 million in 2013
• Foreign exchange loss generated by the exposure of
• ur long-term financial obligations:
• Exchange loss of S/. 57.6 million in Q4’14 vs.

loss

• f S/. 8.8 million in Q4’13
• Exchange loss of S/. 114.5 million in 2014 vs.

loss of S/. 125.2 million in 2013

Net Income Growth of 79.6% vs 2013

Million Soles (S/. mm) 15

66 21 63 113 Q4'13 Q4'14 2013 2014

1.2% 1.8% 4.4% 1.2% Net Margin

02

Consolidated Capex and Financial Debt

Million Soles (S/. mm) 16

Financial Debt

Capex

658 1,034 792 2012 2013 2014

Capex by Quarter 2014

114 242 333 104 Q1'14 Q2'14 Q3'14 Q4'14

4.0x 3.6x 3.5x 4.0x 4.0x

1.3x 2.9x 3.1x 3.6x 3.6x

2012 2013 LTM Q2'14 LTM Q3'14 2014 Debt/EBITDA Net Debt/EBITDA

InRetail Shopping Malls Bond Issuances InRetail Consumer Bond Issuances

Debt/EBITDA Net Debt/EBITDA Debt Cash Net Debt 1,668 1,125 542 1,722 324 1,398 2,226 238 2,028 2,446 285 2,160 1,827 201 1,627

02

InRetail Consumer

Debt / EBITDA: 4.0x Net Debt / EBITDA: 3.6x

Total Consolidated Debt: S/. 2,446 mm

17

Debt by Segments

As of December 31st, 2014 Debt Cash Net Debt 1,347 1,168 1,095 976 168 131 215 306 1,179 1,036 880 670 1,111 1,099 624 691 124 86 81 656 987 1,013 543 35 2.9x 3.0x 2.9x 2.9x 3.2x 2.0x 2.4x 2.5x 2.6x 2.8x 2012 2013 LTM Q2'14 LTM Q3'14 2014 Debt/EBITDA Net Debt/EBITDA 8.2x 5.4x 5.0x 6.4x 5.5x 0.4x 4.7x 4.6x 5.9x 4.9x 2012 2013 LTM Q2'14 LTM Q3'14 2014 Debt/EBITDA Net Debt/EBITDA 716 63 653 1,111 131 981

Bond Issuances Bond Issuances

InRetail Shopping Malls

Million S/. Million S/.

02

03

WHAT WE ARE DOING

Continue remodeling and refurbishing stores Lower expenses with emphasis on improving productivity and efficiencies on our stores and distribution centers Continue expanding in Lima and provinces with 12,000 sqm

19

03

Supermarkets Segment in 2015

1 2

Increase gross margin with more efficient promotional campaigns leveraging Vea Club’s data and higher penetration of Tarjeta Oh!

3 4

Continue developing and increasing penetration

• f high margin products

Lower expenses by capturing additional supply chain and store efficiencies Launch digital and e-commerce strategies Continue improving our assisted sales model and cross selling opportunities supported on Big Data management

20

03

Pharmacies Segment in 2015

1 2 3 4 5

Expand in Lima and Provinces with 100 new stores

5

Continue improving performance of malls

• Tenant Mix
• Operational efficiencies
• Marketing attractions

Implement IT solutions to enhance shopping experience Strengthen and build new long-term relationships with local and international tenants Prepare to initiate construction of Puruchuco Shopping Mall

21

03

Shopping Malls Segment in 2015

1 Mobile APP

Continue building a portfolio of premium locations for future malls

2 3 4

04

WHAT TO EXPECT IN 2015-2017

23 Puruchuco Shopping Mall

04

What to Expect in 2015-2017

Secured Growth in 2015

• 12k sqm of additional supermarkets sales area in 2015

(+4.4% growth)

• 100 new pharmacies in 2015
• 10k sqm of additional GLA from shopping mall’s expansions
• Development of Puruchuco Shopping Mall:
• +110k sqm of additional GLA expected for 2017
• Total estimated investment of US$ 150 MM

US$ 700 million for CAPEX in 2015-2017

By Segments By type of investment

23 40.3% 7.3% 52.4% 72.5% 21.6% 6.0%

Supermarkets Pharmacies Shopping Malls New stores, malls, landbank Logistics, IT, other Refurbishing of stores, mall expansions

For more information please contact: ir@inretail.pe www.inretail.pe