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Q3 2016
Disclaimer
This presentation is for information purposes only and does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquireor subscribe for securities of Emperia Group or any of its subsidiaries, or any depositary receipts representing such securities in any jurisdiction or an invitation or inducement to engage in investment activity in relation thereto. Inparticular, this presentation does not constitute an advertisement or an offer of securities in Poland.
No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking,express or implied, is given by or on behalf of Emperia Group or any of its directors, officers, employees, shareholders, affiliates, advisers, representatives or any other person as to, and no reliance should be placed on, the fairness,accuracy, completeness or correctness of the information or the opinions contained herein or any other material discussed at the presentation. Neither Emperia Group nor any of its directors, officers, employees, shareholders, affiliates,advisors,representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or any other material discussed at the presentation or theircontents or otherwise arising in connection with the presentation.
This presentation includes statements that are, or may be deemed to be, “forward-looking statements”, with respect to the financial condition, results, operations and businesses of Emperia Group. These forward-looking statements canbe identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as” anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal” believe”, or otherwords of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond Emperia Group’s control. As a result, EmperiaGroup’s actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements. Emperia Group assumes no responsibility to update any of the forward looking statements containedin this presentation.
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The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. Some of the information presented in this document may still be in draft form. NeitherEmperia Group nor any other party is under any obligation to update or inform recipients of this presentation of any changes to such information or opinions. In particular, it should be noted that some of the financial information relatingto Emperia Group and its subsidiaries contained in this document has not been audited and in some cases is based on management information and estimates.
Neither Emperia Group nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the statements contained in this presentation.
2016-11-15 2
2016-11-15
Strong revenue growth, earnings in line with
expectations
Launch of 11 new stores
Work on convenience store concept
Significant events in Q3 2016
3
Development
Buy-back programme continued
On-going tax proceeding
Emperia Group – operating structure
2016-11-15
Stokrotka Own and franchise stores
B2B communications, document management, ERP systems for retail
Elpro Development and other companies
Infinite
Property managementand development
Retail
Property segment
IT segment
4
Retail
6
According to GUS, retail sales in Q32016 increased by 4.1% comparedwith the previous year.
According to Nielsen, third-quartersales at Stokrotka increased by14.9% from the year before, whilethe Supermarkets segment saw a0.6% increase y/y, and theHypermarkets segment fell by 0.9%,compared to the previous year.
Poland's retail market 2013-2016
Quarterly change in sales value y/y
*Total retail sales y/y, GUS data** Nielsen data - overall sales (Hypermarkets: Real, Auchan, Tesco>2500sqm, Carrefour>2500sqm, E. Leclerc>2500sqm, b1,
Supermarkets: Carrefour<2500m2, Carrefour Market, Simply Market, E.Leclerc <2500m2, Intermarche, Netto, Polomarket, Mila, Tesco <2500m2)
2016-11-15
1Q2013
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
Retail sales* 0.8% 0.7% 3.9% 4.3% 5.0% 4.5% 1.8% 1.3% 0.6% 1.4% 0.3% 3.0% 2.1% 3.3% 4.1%
Stokrotka 3.1% 2.2% 3.9% 3.4% 0.3% 9.3% 8.3% 6.7% 4.4% -0.8% 5.9% 13.1% 22.1% 20.4% 14.9%
Supermarkets** 6.1% -0.3% 4.8% 3.6% 1.2% 10.5% 2.6% 2.3% 0.3% -2.0% 4.0% 3.7% 6.5% 2.6% 0.6%
Hypermarkets** -5.1% -6.9% -4.0% -3.8% -4.9% -0.3% -4.7% -4.1% -2.8% -3.8% 0.0% -0.5% 1.3% -0.7% -0.9%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
7
*GUS inflation data for the food and non-alcoholic beveragecategory
LFL sales – Stokrotka
Year-on-year change in sales, on same-store basis
2016-11-15
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016
Inflation GUS 1.5% -0.5% -1.9% -2.6% -3.7% -2.1% -0.9% 0.1% 0.4% 0.8% 0.9%
LFL Stokrotka -5.2% -0.2% -1.1% -3.1% -3.6% -6.4% -3.0% 1.4% 8.5% 6.6% 5.4%
1.5%
-0.5%
-1.9%-2.6%
-3.7%
-2.1%
-0.9%
0.1% 0.4% 0.8% 0.9%
-5.2%
-0.2%-1.1%
-3.1% -3.6%
-6.4%
-3.0%
1.4%
8.5%
6.6%
5.4%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Retail segment – Q3 2016 financial results
2016-11-15
Revenue
from sales
EBITDA
Net profit
Capital expenditure
Revenue growth: LFL and new store openings
New pricing policy - substantial investment inprice perception
Impact of customer loyalty programmes andlaunch of new stores on revenue and margins
Costs connected with new store openings in Q32016: PLN 0.4m (3 own stores); Q4 2015: PLN2.8m (25 own stores)
Q3 2015 Q3 2016PLNm
Gross margin
8
508.5 594.416.9%
27.8% 27.6%-0.2
7.711.548.6%
-0.8
1.7
18.89.8
-47.6%
Retail segment – Q1-Q3 2016 financial results
2016-11-15
Revenue
from sales
EBITDA
Net profit
Capital expenditure
Revenue growth: LFL and new store openings
New pricing policy - substantial investment inprice perception
Impact of customer loyalty programmes andlaunch of new stores on revenue and margins
Costs connected with new store openings inQ1-Q3 2016: PLN 2.8m (26 own stores); Q1-Q32015: PLN 4.2m (37 own stores)
Compensation and penalties paid in Q1-Q32016: n/a, Q1-Q3 2015: PLN 2.2m
Costs of store closures in Q1-Q3 2016: PLN0.8m, Q1-Q3 2015: PLN 1.4m
Q1-Q3 2015 Q1-Q3 2016PLNm
Gross margin
9
1 4661 78321.6%
28.5% 27.2%-1.3
30.7 34.110.8%
3.8 4.17.8%
33.544.933.9%
Retail segment – CAPEX
2016-11-15
Upgrade
renovations
IT equipment
and systems
Store
fittings
Motor
vehicles
Q1-Q3 2015 Q1-Q3 2016
10
9.227.5%
20.160.0%
2.67.8%
1.64.8%
12.527.8%
27.360.8%
2.55.6%
2.65.8%
508.5
Retail segment – sales drivers in Q3 2015Change, in PLNm
16.89%
Q3 2015older sites - stores open as of the end of Q2 2015, newer sites - opened since Q3 2015
2016-11-15 11
Retail – Stokrotka
2016-11-15
Launch of 2 supermarkets, 1 market and 8 franchise stores
Total floor area of stores opened in Q3 2016 was 4 715 sqm
CAPEX per new own store: PLN 0.83m
Number of stores
Average monthly sales per sqm (in PLN)
-Nielsen data - all Supermarkets: Carrefour<2500m2, Carrefour Market, Simply Market, E.Leclerc <2500m2, Intermarche, Netto, Polomarket, Mila, Tesco <2500m2) - amounts inclusive of VAT
Number of stores at the end of Q2 2016 348
Stores opened in Q3 2016 11
Stores closed in Q3 2016 1
Number of stores at the end of Q3 2016 358
Q3 2015 Q3 2016 change
Supermarkets 1 264 1 230 -2.7%
Stokrotka 1 201 1 261 5.0%
Stores by format
Number of stores
Revenue from sales*
own supermarkets 248 503.7
own markets 70 68.3
franchise stores 40 19.2
stores shut-down 1 0.1
* / in PLNm /
12
11.2%
19.6%
78.3%69.3%
2016-11-15 13
Retail segment – structure by format in Q3 2016
Supermarkets
Markets
Franchise stores
5.7%
16.1%
Q3 2015 Q3 2016
Number of stores
Sales value
7.9%3.2%
11.6%1.5%
85.2%90.6%
2016-11-15 14
Retail segment – structure by format
*Total, including Maro Markety and Społem Tychy, which joined in 2014.
216221
241
248
120
125
130
135
140
145
200
210
220
230
240
250
260
2013* 2014 2015 3Q2016
Sale
s ar
e in
00
0s
sqm
Nu
mb
er o
f st
ore
s
Supermarkets
20
28
56
70
0
5
10
15
20
0
10
20
30
40
50
60
70
80
2013 2014 2015 3Q2016
Sale
s ar
ea in
00
0s
sqm
Nu
mb
er o
f st
ore
s
Markets
13
30
40
0
2
4
6
8
10
12
0
10
20
30
40
50
2013 2014 2015 3Q2016
Sale
s ar
ea in
00
0s
sqm
Nu
mb
er o
f st
ore
s
Franchise stores
Retail segment – working capital turnover
2016-11-15
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Inventory turnover 44.2 43.1 44.4 43.1 45.3
Receivables turnover 5.1 5.8 5.7 5.6 5.8
Payables turnover 63.8 69.7 67.0 62.8 60.1
Cash conversion cycle -14.4 -20.8 -16.9 -14.1 -9.0
Turnover ratios presented in days
15
16
Stokrotka – store profitability*
2016-11-15
* 240 Stokrotka stores operating at the end of 2014
Q1-Q3 2015 Q1-Q3 2016
Revenue from product sales 1 319.5 1 395.3
Store operating costs 306.3 311.9
Operating costs as % of revenue 23.2% 22.4%
EBITDA 82.6 84.0
% EBITDA 6.3% 6.0%
/PLNm/
17
Retail – central office
2016-11-15
2.7% 2.5% 2.3% 2.2% 2.4% 2.3% 2.1% 2.1% 2.1% 2.2%1.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016
Central management costs as % of revenue
1.0% 1.0%1.3%
1.2%0.9% 0.8%
1.0% 1.1%0.9% 1.0%
1.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016
Marketing costs as % of revenue
Retail segment – developments
2016-11-15
Implementation of recommendations from productivity improvement project
Preparations for minimum wage increase
Improvement in fresh product availability indicator
Preparations for launch of first convenience stores in Q1 2017
Decision to open additional distribution centres
Next phase of project intended to reduce product losses
Verification of existing pricing policy with participation of external firms
Implementing new customer loyalty programmes
18
Retail segment – preliminary sales results
2016-11-15 19
Revenue from product sales
October
2015 2016PLNm
Revenue from product salesJanuary-October
LFL at own stores
October Jan-Oct2016
18120211.6%
1 586 1 91224.0%
3.7%6.4%
328 (+1)
336 (+8)
340 (+4)
341 (+1)
345 (+4)
348 (+3)
351 (+3)
355 (+4)
358 (+3)
361 (+3)
310
320
330
340
350
360
370
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Number of stores at the end of period
Property segment
Property segment
2016-11-15
Retail sites
Type of property
Structure of operating properties
Other
Q3 2015 Q3 2016
Operating facilities
Non-operating facilities
Change in number of properties
-4.3%
21
84
8
83
5
78
6
78
5
Property segment
2016-11-15
Number of facilitiesAverage monthly NOI
in Q3 2016
NOI – operating facilities 83 3.6
including retail sites 78 3.3
NOI* (in PLNm)
Related tenants Other tenants
Lease space [sqm 000s] 55.3 31.2
Average lease rate [PLN per sqm] 43.7 40.0
Retail sites
* NOI (net operating income) is defined as the difference between a property’s operating revenue and operating costs, less depreciation
22
2016-11-15 23
* NOI (net operating income) for a property is the difference between operating revenue and operating costs, less
depreciation; in PLNm.
Property segment
85
84 84 84
86 86
85
83
81
82
83
84
85
86
87
4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Number of operating facilities
1
2
3
4
4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
3.6 3.6 3.53.6 3.5
3.6 3.6 3.6
Average monthly NOI* - operating facilities
56.0 54.2 54.2 54.2 54.6 55.8 55.8 55.3
35.5 34.4 33.0 32.2 31.3 31.8 31.9 31.2
0
20
40
60
80
100
4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Lease area (000s sqm)
related tenants other tenants
Property segment – Q3 2016 financial results
2016-11-15
Revenue from sales
EBITDA
Net profit
Capital expenditures
Q3 2015 Q3 2016PLNm
Gross result on property disposals in Q3 2016: PLN8.5m (PLN 6.4m net), and in Q3 2015: PLN 0.2m(PLN 0.2m net)
Profit on sales
24
17.7 17.5-0.9%
7.7 7.3-5.5%
10.7
19.077.9%
6.7
13.397.7%
2.5
0.5
-79.2%
Property segment – Q1-Q3 2016 financial results
2016-11-15
Revenue from sales
EBITDA
Net profit
Capital expenditures
Q1-Q3 2015 Q1-Q3 2016PLNm
Gross result on property disposals in Q1-Q3 2016:PLN 8.7m (PLN 6.5m net), and in Q1-Q3 2015: PLN8.0m (PLN 7.9m net)
Profit on sales
25
53.6 52.5-2.0%
23.1 22.1-4.1%
39.5 39.3-0.3%
26.6 25.9-2.5%
8.6
1.5
-82.1%
IT segment
2016-11-15 27
IT segment
Infinite's flagship systems and services
Infinite EDI solutions for electronic documentexchange between business partners all over theworld, without time-consuming and error-pronepaper-based transactions. Process automation withinthe supply chain translates into more effectiveproduction and inventory management and, inconsequence, a reduction in operating costs.
Infinite SFA is a solution supporting the handling ofprocesses and tasks by mobile employees. The systemimproves productivity whilst ensuring a high level ofcustomer service. Thanks to a wide array of functions,the application features reporting for key work aspects,as well as planning and defining tasks needed to achievebusiness objectives.
Proprietary ERP (Enterprise Resource Planning)systems offered by Infinite facilitate management ofkey processes at both small and large businesses inretail and FMCG sectors.
The Infinite BI system, which belongs to the BusinessIntelligence software group, transforms data intobusiness information. It facilitates modern drill-downanalysis, report automation and geomarketing.
2016-11-15 28
IT segment
Infinite's flagship systems and services
Infinite ECM is a group of solutions intended formanagement of documents coming in and out of theorganisation. By integrating and processing data fromvarious ICT systems, these tools generate electronicdocuments, which can be quickly distributed.
Infinite RCP allows companies to more effectively planand record work time in accordance with the existingLabour Code regulations. The system is used by small,medium and large businesses alike, also those withdispersed and complex organisational structures.
As companies develop their IT capabilities, demand forhighly qualified IT staff grows. Based on many years ofexperience, Infinite supports businesses in selectingspecialists through competence- and project-basedoutsourcing.
Comprehensive package of IT services for business,covering: service and purchase of computer, networkand accounting equipment from renownedmanufacturers, which is guaranteed by Service LevelAgreements adapted to client requirements.
IT segment – Q3 2016 financial results
2016-11-15
Revenue from sales
EBITDA
Net profit
Product development
Entry into new sectors - banking
Growth in service sales in Q3 2016 by 16.3%, including to external entities by 19.3%
Share of external revenue in Q3 2016: 72.1%; in Q3 2015: 70.3%
Q3 2015 Q3 2016PLNm
29
Sale of services
9.3 8.9-3.7%
2.6 2.2-16.7%
2.01.5
-27.0%
6.9 8.016.3%
IT segment – Q1-Q3 2016 financial results
2016-11-15
Revenue from sales
EBITDA
Net profit
Product development
Entry into new sectors - banking
Growth in service sales in Q3 2016 by 19.7%, including to external entities by 24.9%
Share of external revenue in Q1-Q3 2016: 72.8%; in Q1-Q3 2015: 69.8%
Q1-Q3 2015 Q1-Q3 2016PLNm
30
Sale of services
28.2 28.82.1%
7.1 7.10.0%
5.3 5.1-4.4%
20.624.619.7%
Emperia Group
Emperia Group – Q3 2016 financial results
2016-11-15
Revenue
from sales
EBITDA
Net profit
Capital expenditures
Costs connected with new store openings inQ3 2016: PLN 0.4m (3 own stores); Q4 2015:PLN 2.8m (25 own stores)
Gross result on property disposals in Q3 2016:PLN 8.5m (PLN 6.4m net), and in Q3 2015:PLN 0.2m (PLN 0.2m net)
Q3 2015 Q3 2016PLNm
Gross margin
32
519.5605.816.6%
28.1% 27.8%-0.3
20.4
32.258.2%
8.2
16.4100.6%
21.310.5
-51.0%
Emperia Group - Q1-Q3 2016 financial results
2016-11-15
Revenue
from sales
EBITDA
Net profit
Capital expenditures
Costs connected with new store openings inQ1-Q3 2016: PLN 2.8m (26 own stores); Q1-Q3 2015: PLN 4.2m (37 own stores)
Gross result on property disposals in Q1-Q32016: PLN 8.7m (PLN 6.5m net), and in Q1-Q32015: PLN 8.0m (PLN 7.9m net)
Compensation and penalties paid in Q1-Q32016: n/a, Q1-Q3 2015: PLN 2.2m
Costs of store closures in Q1-Q3 2016: PLN0.8m, Q1-Q3 2015: PLN 1.4m
Q1-Q3 2015 Q1-Q3 2016PLNm
Gross margin
33
1 5021 81821.1%
28.7% 27.4%-1.3
75.6 78.74.1%
37.3 34.8-6.6%
42.1 47.111.8%
Emperia Group – financial results
2016-11-15
Retail
Revenue
from sales
IT business
EBITDA(in PLNm)
Q1-Q3 2015 Q1-Q3 2016
94.82% 94.35%
Property development
Central
management
34
94.65% 95.60%
30.7
39.5
7.1
-1.2
34.139.3
7.1
-2.1
Emperia Group – balance sheet
2016-11-15
PLNm Q3 2015 2015 Q3 2016
Goodwill 52.0 52.0 52.0
Property, plant and equipment 509.1 522.8 519.5
Net working capital -58.4 -97.8 -47.1
Other 4.3 5.6 9.2
Invested assets 507.0 482.6 533.6
Borrowings 2.9 2.6 17.1
Cash and cash equivalents 86.2 114.9 98.7
Net debt -83.3 -112.3 -81.6
Equity 590.3 594.9 615.2
35
Expenditure in Q1-Q3 2016:
Share buy-back PLN 14.5m
Capital expenditures PLN 47.1m
Decrease in cash in Q1-Q3 2016: PLN5.1m, including growth in cash flowsfrom operating activities: PLN 11.0m
Corporate governance
Corporate governance 2016
2016-11-15
Total number of shares purchased by Emperia Holding S.A. and Elpro Development S.A. as at 11 November 2016: 318 202 (2.58%), including 233 467 purchased in Q1-Q3 2016 for PLN 14.5m
Decision made on 30 August 2016 on the launch of process to analyse strategic options to speed up the expansion of the retail segment
Completion of settlement of incentive schemes for 2010-2011
Number of registered shares: 12 340 049
Number of shares publicly traded: 12 021 847
Shareholding structure(as per the Company's latest data)
37
Free float 46.6%
Own shares2.6% Altus TFI
13.1%
Ipopema TFI 11.8%
AXA OFE 7.9%
Aviva OFE 6.8%NN OFE
6.1%
MetLife OFE5.1%
Thank you for your attentionEmperia Holding S.A.
02-566 Warsaw, ul. Puławska 2 building B
tel. +48 81 745-17-78
fax +48 81 746-32-89
e-mail: [email protected]
www.emperia.pl
