20
Earnings Presentation Q2’14 August 13, 2014
Earnings
Presentation
Q2’14
August 13, 2014
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
Q2’14 Financial Results by Segment
Q2’14 Highlights 01
02
03 Recent Event: Senior Notes Issuance
01
Q2’14 Highlights
Opened Real Plaza Salaverry shopping mall on
time and budget (+ 72k sqm of GLA)
Opened 2 supermarkets in Lima (San Isidro and
Salaverry), expanded one supermarket, and
closed 2 legacy format Economax stores
(+8,250 new sqm of sales area, +4,782 sqm of
sales area net of closings)
Remodeled and improved layouts on 3
supermarkets
Opened 23 pharmacies (3 stores in Lima / 20 in
provinces); successfully launched marketing
campaigns of new high margin products in
Pharmacies segment
Accelerated same-store-sales growth in both
Supermarkets and Pharmacies segments
Q2’14 Highlights
5
01
-54
56
-40
90
Q2'13 Q2'14 YTD'13 YTD'14
101
131
205
248
Q2'13 Q2'14 YTD'13 YTD'14
1,258 1,459
2,491
2,865
Q2'13 Q2'14 YTD'13 YTD'14
Margin -1.6% 3.1% -4.3% 3.9%
Formatting
Font: Arial
Bullets:
Level 1
Level 2
Color code:
2013 Consolidated Results Million Soles (S/. mm)
Q2’14 Highlights Revenues
Margin 8.2% 8.7% 8.0% 9.0%
Q2’14 Consolidated Results Million Soles (S/. mm)
01
Adj. EBITDA Net Income
• 15.9% growth in Revenues
• 2 supermarkets opened
• 23 pharmacies added to the network
• +74k sqm of additional GLA of shopping malls (opening of
Real Plaza Salaverry and expansions)
• +5.2% SSS in Supermarkets, +10.8% SSS in Pharmacies
• 29.2% growth in Adj. EBITDA
• Net Income for Q2’14 was S/.56 million; Excluding Forex and
mark-to-market, Net Income increased 215.7%
6
Q2’14 Financial
Results by Segment
02
Var% Var%
Q2'13 YTD'13
Supermarkets 880 12.8% 1,749 12.0%
Pharmacies 512 16.6% 995 16.6%
Shopping Centers 79 60.1% 145 50.2%
Eliminations -13 16.6% -25 20.7%
Total revenues 1,459 15.9% 2,865 15.0%
Q2'14 YTD'14
Supermarkets
Pharmacies
Shopping Malls
• +60.1% vs. Q2’13; +50.2% vs. YTD’13
• Opening of Real Plaza Salaverry and expansion of one shopping mall
(74k sqm) in Q2’14, 180k sqm of additional GLA since Q2’13 (+56.5%),
total 499k sqm (558k sqm including related parties’)
• +16.6% vs. Q2’13; +16.6% vs. YTD’13
• Q2’14 SSS: +10.8%; YTD’14 SSS: +10.1%
• 23 pharmacies added to the network in Q2’14, 118 pharmacies since
Q2’13 (+18.6%), total 754 stores
• +12.8% vs. Q2’13; +12.0% vs. YTD’13
• Q2’14 SSS: +5.2%; YTD’14 SSS: +5.0%
• 4,782 sqm of additional sales area in Q2’14, 10 new stores since Q2’13
(+11.7%, 26,616 sqm), total 98 stores (253,391 sqm)
2013 Consolidated Results Million Soles (S/. mm)
Revenues Growth of 15.9% vs Q2’13 Million Soles (S/. mm)
02
Pharmacies
34.2%
Shopping Centers
4.6%
LTM Q2’14 Revenues Breakdown
Revenues
Supermarkets
61.2%
8
227 227 228
249 249
253
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
-0.7%
-2.1%
2.1%2.4%
4.8%5.2%
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
297 319 336
399 425
499
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
610
636
675
725 731
754
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
Quarterly Openings and SSS by Segment 02
Shopping Malls
GLA (‘000 sqm)
N° Stores 88 88 90 98
Pharmacies
N° Stores
Supermarkets
Openings Same Store Sales
98 98
-1.1%
0.4%
4.0%
6.9%
9.3%
10.8%
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
Pharmacies
9
Supermarkets
Sales Area (‘000 sqm)
• +76.5% vs. Q2’13; +56.1% vs. YTD’13
• EBITDA Mg. 53.8% vs. 48.8% in Q2’13; 54.3% YTD’14 vs. 52.3% YTD’13
• Higher margin driven by an increase in revenues and dilution of fixed
costs despite higher pre-operational expenses related to the opening of
Real Plaza Salaverry
• +3.5% vs. Q2’13; +13.1% vs. YTD’13
• EBITDA Mg. 5.0% vs. 5.4% in Q2’13; 5.6% YTD’14 in line with YTD’13
• +3.5% vs Q2’13, that includes S/.20 mm paid by Tarjeta Oh! as entry fee,
due to higher commercial and logistic contribution from suppliers and
store efficiencies
Var% Var%
Q2'13 YTD'13
Adj. EBITDA:
Supermarkets 44 5.0% 3.5% 98 5.6% 13.1%
Pharmacies 46 8.9% 27.0% 84 8.5% 20.1%
Shopping Centers 43 53.8% 76.5% 79 54.3% 56.1%
Eliminations and holding -1 10.9% -13 442.4%
Total Adj. EBITDA 131 9.0% 29.2% 248 8.7% 21.0%
Q2'14 %Rev YTD'14 %Rev
• +27.0% vs. Q2’13; +20.1% vs. YTD’13
• EBITDA Mg. 8.9% vs. 8.2% in Q2’13; 8.5% YTD’14 vs. 8.2% YTD’13
• Higher gross margin due to an increase in penetration of high margin
products compensated higher logistic and warehousing expenses, and
higher operating expenses due to new stores in early stage of operation
02
Adjusted EBITDA Growth of 29.2% vs Q2’13 Million Soles (S/. mm)
Supermarkets
Pharmacies
Shopping Malls
Adj. EBITDA
Shopping Centers
26.9%
Pharmacies
31.6%
LTM Q2’14 Adj. EBITDA Breakdown
Supermarkets
41.5%
10
94 87
100
128
104 101 111
158
118
131
Q1 Q2 Q3 Q4
2012 2013 2014
17
14
24 24 27
24 26
37 36
43
Q1 Q2 Q3 Q4
2012 2013 2014
33 32
37 34 34
36
43 41
39
46
Q1 Q2 Q3 Q4
2012 2013 2014
45 42 38
72
45 42 42
81
55
44
Q1 Q2 Q3 Q4
2012 2013 2014
02
Adjusted EBITDA Evolution Million Soles (S/. mm)
InRetail Consolidated Supermarkets
Pharmacies Shopping Malls
11
-54
56
-40
90
Q2'13 Q2'14 YTD'13 YTD'14
13
40 41
67
Q2'13 Q2'14 YTD'13 YTD'14
Net Income excluding after-tax forex
and mark-to-market gains:
Excl. Forex and Mark-to-Market, Net Income Increased of 215.7% vs Q2’13
Consolidated Net Income of S/. 56 million in Q2’14,
compared to a loss of S/. 54 million in Q2’13. Excluding forex
and gain in fair value of investment properties, Net Income
increased 215.7% in Q2’14 due to:
Higher operating profit
Lower financial expenses and higher financial
income
Foreign exchange effects:
Exchange gain of S/. 7.1 million in Q2’14 vs. loss of
S/. 96.1 million in Q2’13
Exchange gain of S/. 1.0 million YTD’14 vs. loss of
S/. 117.5 million YTD’13
Higher increase in fair value of investment properties:
Mark-to-market gain of S/. 16.7 million in Q2’14 vs.
S/. 0.8 million in Q2’13
Mark-to-market gain of S/. 32.2 million YTD’14 vs.
S/. 2.7 million YTD’13
02
Consolidated Net Income Q2’14 vs Q2’13 Million Soles (S/. mm)
12
Net
Margin -1.6% -4.3% 3.9%
Net Income:
3.1%
Net
Margin 1.6% 1.0% 2.7% 2.3%
13
02
Consolidated Capex and Financial Debt Million Soles (S/. mm)
Capex Financial Debt
5.0x
4.0x 3.6x 3.6x 3.5x
3.9x
1.3x
2.9x 3.2x 3.1x
2011 2012 2013 LTMQ1'14
LTMQ2'14
Debt / EBITDA Net Debt / EBITDA
Debt 1,561 1,668
Cash 353 1,125
Net
Debt 1,208 542
1,722
324
1,398
1,773
194
1,580
1,827
201
1,627
299
189 176
370
114
242
Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
Total Capex 2013: S/. 1,034 mm
14
02
Debt by Segments As of June 30th, 2014
73%
Debt / EBITDA: 3.5x
Net Debt / EBITDA: 3.1x
Retail Segments & Holding Co.1/ Shopping Malls Segment
1/ The retail segments and the holding company (excluding shopping malls segment) represent restricted subsidiaries for purposes of the Intercorp Retail US$ 300 MM
8.875% Senior Guaranteed Notes due 2018, which, together with the US$ 29.1 MM debt (as of June 30th, 2014) of our parent company, Intercorp Retail, comprise the
total restricted group debt.
Total Consolidated Debt: S/. 1,827 mm
Q2'14
Debt 1,111
Cash 138
Net Debt 974
EBITDA LTM Jun'14 390
Debt/EBITDA 2.9x
Net Debt/EBITDA 2.5x
Q2'14
Debt 716
Cash 63
Net Debt 653
EBITDA LTM Jun'14 143
Debt/EBITDA 5.0x
Net Debt/EBITDA 4.6x
03
Recent Event:
Senior Notes Issuance
03
17
InRetail Shopping Malls Recently Issued Two
Bonds
Issuer InRetail Shopping Malls
Size US$ 350 million S/.141 million
Format 144A / Reg. S Reg. S
Coupon 6.500% 7.875%
Structure
7NC4 Final: July 9th 2021; 1st Call Date: July 9tth 2018 20 year, Amortization starting in 2030;
Final: July 25th 2034
Senior Unsecured Notes
Issue Ratings Ba2 (stable) by Moody’s/ BB (stable) by Fitch
Use of Proceeds /
Impact
i. Refinance US$ 180 million of Interproperties
Holding Notes
ii. Reduce cost of finance
iii. Have a lighter amortization schedule, freeing
up cash
iv. Acquire a real estate property named Puruchuco, for
the future development of a shopping mall (expected
GLA of 110k sqm to be opened in 2016)
v. Finance expansion of other shopping malls
i. Refinance S/. 141 million of financial obligations
ii. Reduce cost of finance
iii. Have a lighter amortization schedule, freeing
up cash
03
Issuance Structure
18
Real Estate
Trusts
Management
Companies
Downstream
Guarantee
Upstream
Guarantee
Upstream
Guarantee
Issuer
New Senior Notes:
• US$ 350 MM
• S/. 141 MM
Debt:
• Leasings & Other debt:
S/. 79 MM (US$ 28 MM)
Debt:
• Leasings & Other debt:
S/. 0.5 MM (US$ 0.2 MM)
Panama
Peru
03
Pro Forma Debt As of June 30th, 2014
73%
InRetail Consolidated Shopping Malls Segment InRetail Consolidated Shopping Malls Segment
Current
Q2'14Adj.
Pro Forma
Q2'14
Debt 716 485 1,200
Cash 63 386 449
Net Debt 653 99 752
EBITDA LTM Jun'14 143 - 143
Debt/EBITDA 5.0x 8.4x
Net Debt/EBITDA 4.6x 5.2x
Current
Q2'14Adj.
ProForma
Q2'14
Debt 1,827 485 2,312
Cash 201 386 587
Net Debt 1,627 99 1,725
EBITDA LTM Jun'14 518 - 518
Debt/EBITDA 3.5x 4.5x
Net Debt/EBITDA 3.1x 3.3x
Covenants:
Current
Q2'14
Pro Forma
Q2'14
Total Debt / Total Assets (<60%) 27.3% 38.7%
Secured Debt / Total Assets (<30%) 27.3% 2.1%
EBITDA / Interest Expense (>1.75x) 2.3x 2.3x
Unencumb. Assets / Unsecured Debt (>150%) na 185.5%
19
03
Strong growth without additional CAPEX
Real Plaza Cusco
Real Plaza Cajamarca
Real Plaza Salaverry Our Shopping Malls segment and InRetail Peru Corp.
Consolidated LTM EBITDA figures as of June 2014, do not
fully reflect the EBITDA generated in a full year by the shopping
malls recently opened and under operation:
Therefore, we expect our Net Debt/EBITDA as of December
2014 to be below our December 2013 figures:
Largest mall in the city
First and only mall in the city
Flagship mall opened in a prime location in Lima
Date Opened GLA
As of June ‘14
Occupancy
As of June ‘14
Real Plaza
Salaverry May 2014 72k 88.8% 2/
Real Plaza
Cusco December 2013 35k 96.6%
Real Plaza
Cajamarca December 2013 38k 91.7%
20
Expected Net Debt /
EBITDA 2014
InRetail Peru Corp < 2.9x
Retail Segments & Hold.Co. < 2.4x
Shopping Malls Segment < 4.6x
2/ The mall is 100% leased as of August 2014.
August 13, 2014
For more information please contact:
InRetail Perú Corp.
Gonzalo Rosell, Head of Corporate Finance and IRO
Phone: (511) 618-8000, option 1, ext.55424
www.inretail.pe
