CORPORATE PRESENTATION March 2017
InRetail Overview Multi-format retailer with exclusive focus in Peru Leading positions in its 3 segments #1 supermarket chain #1 pharmacy chain #1 shopping center operator Controlled by Intercorp Peru, one of Peru s largest business groups 2
InRetail is part of one of Peru s leading business groups 100.0% 77.6% Education Float 1/ 28.8% BVL: INRETC1 1/ Includes 6.3% of Nexus 3
InRetail at a Glance Supermarkets Pharmacies Shopping Malls (US$ millions) Revenues 1,256 777 136 2,155 % of Revenues 57.9% 35.8% 6.3% Adjusted EBITDA 82 72 85 235 Adj. EBITDA Margin 1/ 6.5% 9.2% 82.1% 10.9% % of Adj. EBITDA 34.4% 30.0% 35.6% # Stores / S.Centers 165 1,107 19 Sales area / GLA 304,293 sqm N/A 625,636 sqm # Employees 15,130 11,107 312 Note: FX of 3.38 (average ) 1/ For Shopping Malls is calculated over the Net Rental Income 4
KEY INVESTMENT HIGHLIGHTS 1 SIGNIFICANT 2 MARKET 3 STRONG 4 UPSIDE FINANCIAL POTENTIAL RESULTS LEADERSHIP WITH CLEAR STRATEGY CAPEX 2017-2019 5
1 SIGNIFICANT UPSIDE POTENTIAL 6
Fastest growing economy boosts emerging middle class (2009- CAGR) Real GDP Growth Population by Socio-Economic Category 5.4% ~1.7x 3.2% SEC Annual Income 2005 % of total population A $ 46,299 Perú Latin America 1/ 1/ Average Real GDP growth of Colombia, Brazil, Chile, Mexico Source: IMF World Economic Outlook B $ 23,523 5.1% 15.4% +28.1 p.p. GDP per Capita C $ 13,862 14.3% 32.1% (, US$ 000) 13.6 13.3 9.0 8.7 6.1 Average: US$8.3 6.0 D E $ 8,608 $ 4,720 25.9% 54.7% 34.2% 18.3% -28.1 p.p. Source: APOYO Consultoría Argentina Chile Mexico Brazil Colombia Peru Source: IMF World Economic Outlook Estimates 7
Significant upside potential for modern retail Supermarkets Pharmacies Shopping Malls Penetration as a % of Total Sales - Sales of Retail Pharma per capita US$ - Malls per million people - Sales area per capita: Peru 0.24 sqm vs Chile 0.67sqm Mean ex-peru: 52.5% ~2.0x 40% 53% 58% 59% Mean ex-peru: 115.4 ~2.6x 208 Mean ex-peru: 3.9 3.7 4.3 5.0 ~1.7x 26% 88 97 2.3 2.6 69 50 Peru Colombia Brazil Mexico Chile Peru Colombia Mexico Brazil Chile Peru Brazil Colombia Ecuador Chile Source: Euromonitor, Source: Business Monitor, Source: Accep 8
Peru: Rising Retailing Market in Peaking Stage Global Retail Development Index Opportunities Opening Peaking Maturing Closing Peru top-ranked LatAm country in the GRDI Ranking Peru () Brazil (2013) Mexico (2009) 1. China 6. Turkey 9. Peru 15. Colombia 20. Brazil 25. Paraguay Brazil (2005) Chile (1998) Mexico (2003) Peru (2002) Chile () Mexico () Peru: Growing middle class Consumers willing to explore organized formats Consumers seek organized formats and global brands Real estate affordable and available Consumer spending has expanded Sophisticated local competition Real estate difficult to secure Consumers used to modern retail Higher discretionary spending High competition Real Estate expensive and not readily available Retail is gaining force, mainly in some of Lima s emerging neighborhoods and in secondary cities Consumer confidence is the highest in LatAm Increasing development of malls with space for new players. Strong interest from fast-fashions Source: ATKearney The Global Retail Development Index TM 9
2 MARKET LEADERSHIP WITH CLEAR STRATEGY 10
Largest nationwide footprint of premier retail locations Supermarkets Pharmacies Shopping Malls 106 Spmkts 59 Mass 1,107 Stores 19 Malls (9) (7) (1) (5) (2) (57) (6) (51) (37) (74) (22) (34) Piura (2) Chiclayo Trujillo Cajamarca (3) (1) (1) (39) (19) (8) (20) Chimbote Huánuco (74) (59) (3) (2) (2) (2) (2) (45) (473) (3) (49) (15) (29) (3) (60) (5) (24) Lima (8) Huancayo Cusco Juliaca Arequipa (1) (1) (8) (17) Only modern shopping mall First mover in 17 out of the 23 cities outside of Lima Total sales area (m2): 304,293 62% of stores are owned 1/ Present in all of Peru s 24 departments 100% of stores are rented 43% in Lima / 57% in Provinces First mover in 6 out of the 12 cities Total GLA (m 2 ): 625,636 Note: As of December 1/ Owned by Supermercados Peruanos or through a related party 11
Openings and SSS by Segment Openings Same Store Sales (SSS) Supermarkets Sales Area ( 000 sqm) 225 249 270 290 304 Supermarkets 4.4% 3.2% 3.7% 3.4% 0.4% 0.6% 0.0% 1.0% 1.2% 2012 2013 2014 2012 2013 2014 Q1 16 Q2 16 Q3 16 N o Spmkts 82 96 99 104 N o Mass 4 2 2 19 106 59 Pharmacies N o Stores Pharmacies 580 725 837 921 1,107 13.6% 2.7% 8.5% 5.1% 9.0% 5.1% 7.2% 2.7% 5.9% 2012 2013 2014 2012 2013 2014 Q1 16 Q2 16 Q3 16 Shopping Malls GLA ( 000 sqm) Shopping Malls 286 399 553 582 626 9.9% 5.2% 2.6% 4.7% 8.2% 6.3% 4.4% 2.4% 5.2% 2012 2013 2014 2012 2013 2014 Q1 16 Q2 16 Q3 16 N o Malls 13 15 17 18 19 Note/ Shopping Malls SSS include anchor stores 12
Supermarkets Segment Formats One stop shop: food and non-food products, and entertainment to differentiate from traditional markets Brand Sales area range (m2) # of Stores Total / Provinces Revenues S/4,241 mm Attractive price positioning through Every Day Low Price strategy Fastest growing chain with largest presence across Peru 2,000 5,000 68 / 28 Compact Hypermarkets 81% Compact sized formats provide flexibility to grow Secured access to landbank and Real Estate team to sustain growth Launched e-commerce platforms for Plaza Vea and Vivanda brands 500 2,000 29 / 6 Supermarkets 13% Ranked 12 th among the most valuable brands in Peru (Brandz) 900 1,200 Figures as of December 9 / 0 High-end 6% 13
Piloting New Discount Model Piloting a low CAPEX, low cost, every day low price format to capture untapped demand and penetrate traditional trade 59 stores between 100 and 300 sqm in Lima Testing value proposition (assortment, price, store size, etc.) Ensuring cost structure through store productivity and efficient supply chain 14
Pharmacies Segment Pharmaceutical Retail Market Sustainable Every Day Low Price strategy High market-share Strong bargaining power with suppliers Player # of Stores Annual sales per store Modern Market S/4.9bn Total Market S/7.2bn High penetration of profitable private labels Operational efficiencies with fast store growth Mom & Pops ~7,000 ~ S/0.3mm 33% Small, standardized formats (~120 sqm) Limited Capex of US$60,000 per store 100% leased stores with proven renewal track record Other chains ~ 1,500 ~ S/1.7mm 52% 34% Ranked 11th among the most valuable brands in Peru (Brandz) 1,107 S/2.1mm 48% 33% Assisted Sales Model Note: Figures as of December Source: IMS - Since Sept, calculation methodology changed since some independent pharmacies were included in the modern channel. 15
Shopping Malls Segment Nationwide premium portfolio of 19 locations Sales (S/ millions) 5,159 4,570 Shopping Malls Sales 7,087 626k sqm of GLA, an expansion of 13% over the last 24 months 2,150 2,034 1,953 Preferred partner for local and international tenants: High tenant renewal rates and low concentration of renewal per year High occupancy levels despite recent important additions in GLA Secured access to landbank to sustain growth Source: ACCEP Falabella includes Open Plaza and 60% of Mall Aventura Plaza Parque Arauco includes its malls and 50% of Mega Plaza 1/ 6 additional malls, 40% of Aventura Mall and 50% of Mega Plaza 94% 92% Occupancy Rates 93% 94% 97% Other 1/ 97% Ranked 4 th among most valuable brands in Peru (Brandz) 2011 2012 2013 2014 16
3 STRONG FINANCIAL RESULTS 17
Consolidated Financial Results Million Soles (S/ mm) Highlights Revenues High single digit growth in Adj. EBITDA and Revenues and +85.5% in Net Income 6,798 +7.0% 7,273 Gross Margin: +74 bps in 5.4% EBITDA Margin: +25 bps in 1,868 1,968 Net Margin: +156 bps in Gross Margin 30.8% 31.8% 30.2% 31.0% Adj. EBITDA Net Income +9.5% +85.5% 724 793 268 219 6.2% 232 99-7.6% 91 144 Margin 11.7% 11.8% 10.7% 10.9% Margin 5.3 % 4.6% 2.1% 3.7% 18
Financial Results by Format Million Soles (S/ mm) Revenues Adj. EBITDA +7.0% +12.1% 5.3% 6,406 36% 6,853 38% Pharmacies Spmkts 6.8% 459 44% 515 47% 1,759 35% 65% 1,852 36% 64% 64% 62% 148 36% 64% 158 38% 62% 56% 53% Gross Margin 28.7% 29.7% 28.0% 28.8% Margin: 8.4% 8.5% 7.2% 7.5% +5.2% +5.3% 435 458 272 286 5.8% 2.7% 118 125 73 75 Gross Margin Net Rental 68.1% 67.0% 69.1% 68.8% 80.7% 80.1% 82.8% 82.1% Margin: 19
InRetail Consumer - Financial Results Million Soles (S/ mm) Revenues Adj. EBITDA 4,077 +4.0% 4,241 259 +7.1% 277 Supermarkets 1,149 2.7% 1,179 96 2.3% 98 Gross Margin 27.2% 27.7% 26.1% 26.7% Margin: 8.3% 8.3% 6.3% 6.5% 2,339 +12.2% 2,624 202 +19.2% 241 Pharmacies 613 10.3% 676 53 15.9% 61 Gross Margin 31.7% 33.6% 31.7% 32.7% Margin: 8.6% 9.1% 8.7% 9.2% 20
Consolidated Net Income Million Soles (S/ mm) Net Income +85.5% Net Income Breakdown 268 181 102 268 99-7.6% 91 144 144 69 2 22 Net Margin 5.3% 4.6% 2.1% 3.7% Net Income EBITDA Growth Higher Financial Expenses Lower Mark to Market Lower FX Effect Other Net Income Net Income excluding FX and mark-to-market: Net Margin 113-26.1% 83 240 +5.2% 252 5.0% 4.2% 3.5% 3.5% Net income : -26.1% S/54 mm of tax expenses in vs S/ 4 mm in, due to a one-time reversion in of S/ 24 million of deferred tax due to changes in Shopping Malls accounting treatment Net income : +5.2% +9.5% Adj. EBITDA +1.1% in financial expenses, net +134.9% in tax expenses, due to a one-time reversion in of S/ 24 mm of deferred tax in Shopping Malls 21
Consolidated Capex and Free Cash Flow Million Soles (S/ mm) CAPEX Cash-Flow Breakdown : S/510 mm : S/523 mm 197 195 161-523 134 884 74 105 79 87-7 -175 235-171 244 Q1 15 Q2 15 Q3 15 Q1 16 Q2 16 Q3 16 Ending Cash Balance Operating Cash Flow CAPEX Debt Decrease Financial Expenses Other Non- Operating Investing Activities Ending Cash Balance Free Cash Flow : S/361 mm 22
Consolidated Financial Debt Million Soles (S/ mm) Consolidated Financial Debt USD Exposure 4.0x 4.0x 3.6x 2.9x 3.6x 3.6x 3.2x 3.6x 3.2x 3.5x 3.2x 3.5x 2.9x 3.3x 2.8x 39% 42% 72% 23% 23% 1.3x 28% 38% 35% 2012 2013 2014 LTM Q1 16 LTM Q2 16 LTM Q3 16 dic-14 dic-15 dic-16 Net Debt/EBITDA Debt/EBITDA Hedge USD PEN Debt 1,668 1,722 2,446 2,670 2,694 2,671 2,792 2,659 -S/ 11 mm debt in vs, explained by: Cash Net Debt 1,125 542 324 1,398 285 2,160 325 2,344 265 2,429 262 2,409 435 2,357 432 2,227 -S/ 7 mm from debt repayment -S/ 24 mm from PEN appreciation +S/ 7 mm from new Call Spread financing +S/ 13 mm from 2021 bond structuring costs 1/ Since, ratios are adjusted for positive hedge effect 23
Debt by Segment Million Soles (S/ mm) Total Consolidated Debt: S/.2,659 mm Debt / EBITDA: 3.3x Net Debt / EBITDA: 2.8x 2.9x 2.0x 3.0x 2.4x 3.2x 2.8x 3.1x 2.6x 3.0x 2.7x 2.9x 2.6x 3.0x 2.4x 2.7x 2.2x 8.2x 5.4x 4.7x 5.5x 4.9x 4.4x 4.0x 4.5x 4.1x 4.4x 4.0x 4.3x 3.7x 4.3x 3.7x 0.4x 2012 2013 2014 LTM Q1 16 LTM Q2 16 LTM Q3 16 2012 2013 2014 LTM Q1 16 LTM Q2 16 LTM Q3 16 Net Debt/EBITDA Debt/EBITDA Debt 976 1,095 1,347 1,422 1,427 1,420 1,519 1,402 691 624 1,111 1,248 1,267 1,251 1,273 1,257 Cash 306 215 168 202 150 138 273 277 656 81 124 128 119 130 168 162 Net Debt 670 880 1,179 1,220 1,276 1,282 1,245 1,125 35 543 987 1,120 1,148 1,121 1,245 1,095 1/ Since, ratios are adjusted for positive hedge effect 24
USD Debt Exposure and Debt Maturity by Segment Million Soles (S/ mm) USD Exposure Debt Maturity 24% 31% 913 51 64% 21% 55% 36% 22% 47% 220 195 77 68 144 127 266 62 204 118 53 66 861 dic-14 dic-15 dic-16 2017 2018 2019 2020 2021+ Hedge USD PEN Interests Debt Maturity 1,311 55% 53% 207 81% 132 130 127 26% 25% 88 85 82 97 80 1,105 19% 20% 21% 44 45 46 17 dic-14 dic-15 dic-16 2017 2018 2019 2020 2021+ Hedge USD PEN Interests Debt Maturity 25
4 CAPEX 2017-2019 26
CAPEX 2017-2019 2017 Key Investments Projected CAPEX of S/2 B for 2017-2019 Supermarkets Opening of 8.5k sqm of sales area (+2.8% growth in 2017) Initiated construction of new Distribution Center to be operational in 1H 2018 Shopping Malls 47% Supermarkets 40% Pharmacies 13% Pharmacies +100 new pharmacies (+9.0% growth in 2017) By Type of Investment Logistics, IT, other 12% Maintenance 7% Shopping Malls Start construction of Puruchuco mall (120k sqm of GLA) to open in 2H 2018 Refurbishing and expansions 12% New stores, malls and landbank 70% 27
5 Appendix 28
Composition of Stores by Age Supermarkets 9% 12% 14% 11% 10% 7% 4% 6% 5% 5% 10% 10% 10% 10% 9% 12% 14% 8% 9% 7% 4% 5% 7% 10% 9% 11% 14% 6% 4% 8% 10% 9% 10% 6% 3% 8% 73% 72% 72% 70% 72% 72% 72% 75% 78% 77% 78% 83% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q1 16 Q2 16 Q3 16 0-1 years 1-2 years 2-3 years Mature Pharmacies 18% 17% 15% 15% 15% 14% 12% 11% 11% 10% 12% 24% 24% 23% 8% 11% 18% 21% 20% 6% 18% 15% 15% 14% 13% 13% 12% 11% 20% 16% 14% 13% 12% 18% 9% 11% 52% 52% 51% 49% 49% 51% 54% 59% 62% 64% 65% 62% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q1 16 Q2 16 Q3 16 0-1 years 1-2 years 2-3 years Mature 29
30 Cash Cycle Pharmacies Supermarkets 1 1 1 3 2 3 2 3 2 4 4-43 -29-30 -30-39 -31-36 -31-35 -32-39 -38 60 100 80 0-20 -40-60 53 99 3 Q3 16 60 90 Q2 16 57 88 59 92 Q2 15 54 93 Q1 15 59 93 Q4 14 52 90 Q3 14 59 93 93 56 99 Q1 14 52 94 Q3 15 52 93 61 Q1 16 Q2 14 Cycle Inventory Turnover Days Acc Payables Days Acc Receivables 4 4 4 3 4 3 3 3 3 4 4 3-26 -24-24 -25-27 -30-32 -27-19 -17-18 -10 140 120 100 80 0-20 -40 Q2 16 83 111 Q1 16 112 88 120 Q3 15 84 95 83 116 Q2 15 78 112 Q1 15 81 112 Q4 14 82 104 125 87 107 Q2 14 103 126 Q3 14 103 116 Q3 16 88 116 Q1 14 Inventory Turnover Cycle Days Acc Payables Days Acc Receivables
This material does not constitute an offering document. 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. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes 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 forwardlooking 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.
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