39
Ripley Corp September 2016
Ripley CorpSeptember 2016
At stock price of 415 CLPAmounts in CLP million Source: Ripley Corp’s Jun-16 Financial Results
RIPLEY CORP’S STOCK CURRENTLY AT 0.98X BOOK VALUE
RIPLEY CORP: A GREAT INVESTMENT OPPORTUNITY
Building a simple bank focused on the Ripley client Active Credit Cards 3.4 million
Low leverage allows growth without additional capital NFD/Equity 2.87x
Stake in 8 malls through joint ventures and full ownership
of 3 malls, distrIbuted in both countries
Stake in 11 Malls in Chile and
Peru
Recent modification in the valuation policy of investment
properties, from historical cost to fair value
Positive effect in Equity 2015
for $71,947 as well as $2,547
and $2,599 in the results till
June 2016 and June 2015,
respectively
Improving profitability as new projects are launched and
existing projects mature
EBITDA LTM $5,369
Ripley’s results will no longer be affected by Colombia’s
start-up costs
Closure progressing according
to plan. All stores closed and
the portfolio sold to Banco
Popular
RET
AIL
Strategic plan to significantly improve profitability of
existing infrastructure through greater emphasis in
fashion and brands and larger operational efficiencies
70 stores
In the best locations
BA
NKS
EQ
UIT
Y
33%
EQU
ITY
29%
REA
L ES
TATE
38%
EQ
UIT
Y
COLO
MB
IA
A COMPANY WITH HISTORY AND SUCCESS
A COMPANY WITH HISTORY AND SUCCESS
PERUCHILE
Stores: 42 Selling Space: 269,446 m2 Loan Portfolio: USD$ 1,081 M Malls: 9
Stores: 28 Selling Space: 186,724 m2 Loan Portfolio: USD$ 498 M Malls: 4*
Since 1956 Since 1997
A COMPANY WITH HISTORY AND SUCCESS
Source: Ripley Corp’s Jun-16 Financial ResultsCLP/USD: 674.67
68%
32%
Assets
73%
27%
Chile
Perú
Equity
*Starting 3Q16, the number of malls will drop to 2 as a result of the division of Aventura Plaza
A. RETAIL BUSINESS
B. FINANCIAL BUSINESS
C. REAL ESTATE BUSINESS
D. RIPLEY COLOMBIA
E. LOOKING FORWARD
STORES SITUATED IN THE BEST LOCATIONS
77% OF OUR SALES SURFACE IS LOCATED IN MAIN SHOPPING MALLS23% IN URBAN CENTERS OF MAJOR CITIES OF CHILE AND PERU
COMPETITIVE ADVANTAGESRETAIL BUSINESS
COMPETITIVE ADVANTAGES
Distribution Center with 67,000 m2 dispatches 50 million units per year
RETAIL BUSINESS
NEW RETAIL STRATEGIC PLAN: RIPLEY 3D
INCREASE PROFITABILITY PER SQUARE METER WITH GREATER EMPHASIS IN FASHION AND BRANDS AND LARGER
OPERATIONAL EFFICIENCIES
This new plan aims to increase the profitability per square meter of Ripley’s existing surface, prioritizing fashion and clothing brands
In addition this new plan aims to carry out important initiatives to improve the efficiency in operations
Ripley 3D is based on 3 dimensions: Product, Store and Management
RETAIL BUSINESS
PRODUCT DIMENSION
New management of private and exclusive brands with a clear differentiation strategy through fashion
Management of private and exclusive brands based on lifestyle methodology
RETAIL STRATEGIC PLAN RIPLEY 3D
ALLIANCES WITH LARGE INTERNATIONAL RETAIL GROUPSLEWIS (ENGLAND), BESTSELLER (DENMARK), IN SITU (SPAIN)
RETAIL BUSINESS
MANAGEMENT DIMENSION
Focus on profitability and efficiency towards each brand’s surface area
New service model optimizes staff expenses in stores
Align restock and product availability to a model that involves faster inventory turnover (Lead Time)
Optimize merchandise flow
RETAIL STRATEGIC PLAN RIPLEY 3D
RETAIL BUSINESS
26 STORES WITH THE NEW ATTENTION MODEL AS OF AUGUST 2016AND CONTINUING WITH THE MIGRATION PROCESS
STORE DIMENSION
A SIMPLE AND ENTERTAINING STORE
Standardize product displays and visual elements
Develop ecommerce and omnichannel
Create a entertaining and captivating store for our clients, based on the product
INCREASE M2 OF APPAREL & FASHION PRODUCTS COMPLEMENTING HARD GOODS THROUGH ONLINE CHANNEL
RETAIL STRATEGIC PLAN RIPLEY 3D
RETAIL BUSINESS
In april, Ripley.com won for the second consecutive time the eCommerce Award Chile 2016. Also the company won a similar award in Peru
This award, also won the 2015, is given annually by Instituto Latinoamericano de Comercio Electronico with Camara de Comercio de Santiago, and recognizes the best eCommerce business in Chile
RETAIL BUSINESS
RIPLEY WINS eCOMMERCE AWARDS IN CHILE AND PERU 2016
A. RETAIL BUSINESS
B. FINANCIAL BUSINESS
C. REAL ESTATE BUSINESS
D. RIPLEY COLOMBIA
E. LOOKING FORWARD
ESTABLISHING A BANK FOCUSED ON PEOPLE
FINANCIAL BUSINESS INTEGRATION
IMPLEMENTINGRIPLEY MASTERCARD
CREATING A BANK TARGETED AT PEOPLE´S NEEDS
FINANCIAL BUSINESS
DEVELOP A SIMPLE AND COMPREHENSIVE BANKWITH A FOCUS ON RIPLEY CLIENTS
2013
Ripley begins offering
Mastercard to new clients
2014
Continues marketing
Mastercard exclusively to new
clients
2015
Greater selectivity with new clients and focusing on existing client
migration
2016
Resume growth in loan portfolio with a focus on
selectivity
and migration of former clients
RipleyPrivate Label Card
Ripley Mastercard
Used Only In Ripley Stores And A Select
Group Of Associated Commerce
Can be used in theentire Transbank
Network
Paid in Installments Revolving credit line
MIGRATION TO RIPLEY MASTERCARD - CHILE
FINANCIAL BUSINESS
Mastercard as percentage of loan portfolio
Mastercard 58%
Private Label Card 42%
June 2016
Private Label
Card 53%
June 2015
Mastercard 47%
In 2016
Resume growth in loan portfolio
Greater selectivity with new clients based on risk profile
Continue with existing client migration from Private Label Card to Mastercard
Temporary rise at the beginning of 2016 due to write-offs in renegotiated portfolio after higher risk observed in early 2015, which however, has been decreasing during the last months
MIGRATION TO RIPLEY MASTERCARD - CHILE
FINANCIAL BUSINESS
RISK COST CONTINUES ITSPOSITIVE TREND SINCE ITS PEAK IN FEBRUARY 2015
Source: Chilean banking regulator (SBIF)Amounts in CLP billions
CREDIT RISK SHOWINGPOSITIVE TREND
RISK CONTINUES TO IMPROVEIN LINE WITH EXPECTATIONS
Improvement to origination led to a credit risk positive behavior
Indicators of early NPL’s improving
Renegotiated loans portfolio decreases in recent months
FINANCIAL BUSINESS
Amounts in CLP Billion
14%
16%
18%
20%
22%
Jan
uar
y
Feb
ruar
y
Mar
ch
Ap
ril
May
Jun
e
July
Au
gust
Sep
tem
ber
Oct
ob
er
No
vem
ber
Dec
emb
er
NPL's 1-90 Days
2014
2015
2016
3
4
5
6
7
8
Net Provision Expense(Does not consider contingent and prudential provisions)
2014
2015
2016
70
75
80ja
n-1
5
feb
-15
mar
-15
apr-
15
may
-15
jun
-15
jul-
15
aug-
15
sep
-15
oct
-15
no
v-1
5
dec
-15
jan
-16
feb
-16
mar
-16
apr-
16
may
-16
jun
-16
jul-
16
Renegotiated Loans (Stock)
REVENUES: increased 25.4% YoY
Loan portfolio grew 23.8%1. Enhanced network productivity and collection processes2. Aligned relationship between the bank and the store
NET INCOME: 4.8% increase, reaching $2,850 Operational costs increase
1. Increase of net risk cost Significant growth of loan portfolio Deterioration in payment behavior of the Peruvian
banking system NPL’S 1-90 under control
2. Financial expenses increased caused by a rise in the interest rates in Peru
BANK’S NET PROFIT CONTINUES TO GROW DRIVEN BY THE INCREASE IN THE LOAN PORTFOLIO
RIPLEY PERU FINANCIAL BUSINESS
Amounts in CLP millions
271,204
335,812
2Q15 2Q16
6.5%4.7%
2,719
2,850
2Q15 2Q16
FINANCIAL BUSINESS
NPL’s OF BANK RIPLEY PERU KEEP A STEADY AND LOWER TREND THAN PREVIOUS YEARS
7%8%9%
10%11%12%13%14%15%16%
NPL's 1-90 Days
2014
2015
2016
0%
1%
2%
3%
4%
5%
6% NPL's 91+ Days
7%
9%
11%
13%
15%
17%
19%
21%
23% Total NPL's
NPL’s OF RIPLEY BANK PERU
A. RETAIL BUSINESS
B. FINANCIAL BUSINESS
C. REAL ESTATE BUSINESS
D. RIPLEY COLOMBIA
E. LOOKING FORWARD
CHANGE IN ACCOUNTING POLICY IN VALUATION OF INVESTMENT PROPERTIES
The company has decided to modify its accountingpolicy regarding the valuation of investment propertiesof the real estate business.
Theses investments will be accounted at fair valueinstead of historical cost.
Positive adjustment to Ripley Corp’s Dec-15 net equityof $71,947.
Positive effect of $2,547 and $2,599 in the results tillJune 2016 and June 2015, respectively.
THE EFFECT IS IN LINE WITH WHAT THE COMPANY HAS BEEN COMUNICATING REGARDING THE FAIR VALUE OF ITS REAL ESTATE
BUSINESS
REAL ESTATE BUSINESS
Amounts in CLP millions
Ownership Country Investment Malls Construction Land Bank
Mall Concepción 100% Chile 62,474 1 - -
Nuevos Desarrollos 22.5% Chile 116,740 6 2 3
Aventura Plaza* 40% Peru 114,691 4 1 2
Inm. Viña del Mar 50% Chile 103,091 2 - -
REAL ESTATE BUSINESS
Investment is shown as proportion of ownership in each entity (Total: $396,996 CLP Million)
CONTINUE GROWING IN OUR REAL ESTATE BUSINESS
IMPROVING PROFITABILITY AS NEW PROJECTS ARE LAUNCHED AND EXISTING PROJECTS MATURE
Amounts in CLP Million Source: Ripley Corp’s Jun-16 Financial Results
*Starting 3Q16, Ripley Aventura will be consolidated line by line after the division of Aventura Plaza S.A.
SHARE IN INMOBILIARIA MALL VIÑA DEL MAR
INCREASING 16.67% STAKE IN UNIQUE ASSETS WITH LOW LEVERAGE
REAL ESTATE BUSINESS
The stake increase of 16.7% in Inmobiliaria Mall Viña delMar happened during 2Q16, therefore, the results of thisquarter already represent a 50% stake of Ripley in thecompany.
During this past April, Inmobiliaria Mall Viña del Mardistributed dividends for a total sum of $23,310, owningRipley half of that amount.
On May 31st, the Court of Appeals ruled in favor of Inmobiliaria Mall Viña del Mar, overruling the decree that paralyzed the construction of Marina Arauco’s expansion
The expansion represents approximately 20% of additional gross leasable area
Amounts in CLP millions
EBITDA GREW 27.6% Mall Concepción: EBITDA increases 6.7%
reaching $1,341 in 2Q16 Inmobiliaria Viña del Mar:
20% growth in EBITDA Increase in the stake percentage from
33.33% to 50% Nuevos Desarrollos:
17.1% rise in EBITDA up to $2,319 in 2Q16
Aventura Plaza: EBITDA increases 10.8%
NET INCOME INCREASES 31.8%
REAL ESTATE BUSINESS
PROFITABILITY KEEPS INCREASING AS NEW PROJECTS ARE LAUNCHED AND SHOPPING MALLS MATURE
Amounts in CLP millions
2nd QUARTER 2016 RESULTS
1,256
1,7501,980
2,635
1,341
3,148
2,319
2,920
Mall Concepción Inmob. Mall Viñadel Mar S.A.
Nuevos DesarrollosS.A.
Aventura Plaza S.A.
EBITDA
2Q15 2Q16
Non-consolidated operations
A. RETAIL BUSINESS
B. FINANCIAL BUSINESS
C. REAL ESTATE BUSINESS
D. RIPLEY COLOMBIA
E. LOOKING FORWARD
CLOSING OF RIPLEY COLOMBIA
CLOSING OF OPERATIONS PROGRESSING ACCORDING TO PLAN
On February 18th 2016, Ripley announced theclosing of operations in Colombia, after significantefforts to meet the investment plan.
The costs associated with the closing of thisoperation were fully provisioned and reported onthe 2015 consolidated financial statements througha charge to results (loss) for US$ 92 million.
The development of the closure is progressingaccording to plan. As of May 30th 2016 all storeswere already closed and the portfolio was sold andtransferred to Banco Popular.
RIPLEY COLOMBIA
Humphreys“the company could direct their investment to
established markets reducing the pressure on cash flow that would have meant the continuation of operations in Colombia, which, from this perspective, would have a positive effect on cash flow of Ripley Corp.”
Feller Rate“With [the closure] , and the prospect of more conservative investment policy with respect to the period 2012-2014 , in line with evidenced during 2015 , it is expected that the financial profile of the company will be strengthened in the medium term“
POSITIVE EFFECT ON FINANCIAL INDICATORS
ENDING OPERATIONS RIPLEY COLOMBIAPOSITIVE EFFECT IN RIPLEY’S FINANCIAL PROFILE
RIPLEY COLOMBIA
A. RETAIL BUSINESS
B. FINANCIAL BUSINESS
C. REAL ESTATE BUSINESS
D. RIPLEY COLOMBIA
E. LOOKING FORWARD
LOOKING FORWARD
MAIN FOCUS
Increase in square meters
and higher store maturity
Migrate clients to
Mastercard
Continue growth
leveraging on known
clients
RE
AL
EST
AT
E
- Begin Operation of Projects
Under Development
Greater maturity of existing
shopping malls
Developing projects and
land banks begin operating
Gradual
increase in
leverage
Develop current accounts
& debit cardsBA
NK - Competitive Credit Card
- New Core Banking System
MAIN SOURCE OF GROWTH & PROFITABILITY
Increase in margins
through strategic
Plan 3D focused on
brands and new
service model
Strengthening
eCommerce
channelRE
TA
IL - Fashion & Brands
- Increase Profitability
RIPLEY CORP EBITDA CALCULATION
As of 2016, for the purpose of calculating EBITDA financial expenses of bank subsidiaries are not considered, which were previously included as part of the operational cost.
Thus, as of 1Q16, the EBITDA is calculated as operating income without depreciation and without financial expenses of banks which are included as operating costs.
There have been no changes to Ripley Corp’s income statement. The information necessary to calculate the EBITDA in both the new or previous methodology is available.
THIS CHANGE IN PRESENTATION AIMS TO AVOID CONFUSION IN THE CALCULATION OF LEVERAGE AND VALUATION INDICATORS.
RECENT HIGHLIGHTS
During April, the rating agencies Apoyo & Asociados and Class & Asociados decided to upgrade in one notch the risk classification of short-term instruments (short-term deposits and negotiable certificates of deposit) of Banco Ripley Peru, which went from CP-1- to CP-1
Meanwhile, during 2015 both Fitch Ratings and ICR set Banco Ripley Chile’s credit rating at "A +" and " N1 +" for long and short-term respectively
BANCO RIPLEY CHILE & BANCO RIPLEY PERUIMPROVE THEIR RISK RATING
RECENT HIGHLIGHTS
FINANCIAL BUSINESS WITH LOW LEVERAGE LEVELS AND STRONG FINANCIAL STRUCTURE
APPENDIX
With 60 years of experience in retail, River Island belongs to the Lewis family holding and has over 300 stores throughout UK, Ireland, Europe, Middle East and South Africa.
Created in 2001, Sfera is part of the El Corte Ingles Group and has over 200 stores throughout Spain, Portugal, South Arabia, Peru and Mexico. It´s known for its comfortable and fashionable clothes, with trendy accessories for casual young ladies and sophisticated women.
Recreating a young fashionable lifestyle philosophy mixed with style and attitude, Tennis has more than 37 years of experience and over 120 stores.
BRANDS
Highly personalized lifestyle brand with a laid-back take on latest trends. Trucco has over than 240 stores over Europe, Asia, middle east and central America and belongs to In Situ SA.
Created by Adolfo Cambiaso in 2004, La Dolfina Polo Lifestyle shares its collection inspired on the most genuine values of this sport.
Inspired on the Oslo fashion fair and with a modest but carefully chosen collection aimed at young men, Jack&Jones is one of Europe´s leading producers of menswear with more than a thousand stores throughout Europe, Asia and Canada.
APPENDIX
MAIN SHAREHOLDERS
As of September 2016
•
•
•
•
•
APPENDIX
Calderon Kohon12%
Calderon Volochinsky
53%
Others24%
Pension Funds10%
Mutual Funds1%
