Ripley Corp October 2017

Transcription

1 Ripley Corp October 2017

2 A COMPANY WITH HISTORY AND SUCCESS First store in Santiago Credit business beginning First department store Opening of Ripley Parque Arauco First store in Peru Opening of Ripley Bank Chile IPO of Ripley Corp Acquisition of 22.5% of Nuevos Desarrollos S.A. First stores in Colombia. Integration of Ripley s Chilean Financial Business Ripley Chile Bank placed its first bond Consolidation of Mall Aventura S.A. Closing of Ripley Colombia s operations

3 Equity 29.1% Real Estate Equity 20.0% Financial Equity 21.4% Retail Equity 12.4% Real Estate Equity 8.0% Financial Equity 9.1% Retail RIPLEY CORP TODAY Ripley is a lead actor in the retail industry in Chile and Peru, with a market share of approximately 18% and 38%, respectively It has an integrated participation in the retail, banking and real estate businesses in both countries The Company opened in the stock market in Its current market capitalization is MMM$ 1,181 (1) Controlled by the Calderón Volochinsky family, which maintains 50% of the share capital of the Company (aug-2017) Peru 34% 61 years of experience in the retail industry 29 stores 192,884 m2 EBITDA: MMM$ 9 Loan portfolio: MMM$ (Th) credit cards w/debt EBIT: MMM$ 19 2 malls MMM$ 181 investment EBITDA (2) : MMM$ stores (3) 272,573 m 2 EBITDA: MMM$ 33 LTM Income MMM$ 1,644 Chile 66% Note: Amounts in CLP; EBITDA and EBIT LTM (1) Bloomberg, September 29 th 2017 (2) Proforma using the consolidated EBITDA of Mall Aventura S.A. (from July 2016 on) and the unconsolidated EBITDA of Aventura Plaza S.A. weighted by ownership of 2Q16 (3) Ripley opened its 44 th store, Los Dominicos, in late August and its 45 th store, Coquimbo, in late September (4) Proportional EBITDA, weighted by Ripley Corp s ownership Loan portfolio: MMM$ 775 1,274(Th) credit cards w/ debt EBIT: MMM$ malls MMM$ 307 investment EBITDA (4) : MMM$ 27 Sources: Ripley Corp s Jun-17 Financial Statements

4 A. RETAIL BUSINESS B. FINANCIAL BUSINESS C. REAL ESTATE BUSINESS D. H RESULTS E. LOOKING FORWARD

5 Selected locations STORES SITUATED IN THE BEST LOCATIONS RETAIL BUSINESS 80% of our sales surface is located in main shopping malls in major cities of Chile and Peru

6 LARGE LOGISTIC INFRASTRUCTURE IN PLACE RETAIL BUSINESS Ripley Chile s distribution center has a surface of 67,000 m2 and dispatches 50 million units per year. Meanwhile, Ripley Peru s distribution center has a surface of 45,000 m2 and dispatches 32 million units per year.

7 RETAIL BUSINESS RETAIL STRATEGIC PLAN MAIN DRIVERS Increase the profitability per square meter prioritizing fashion and clothing brands Improve the efficiency in operations Ripley s Strategic Plan is focused on Product, Store and Management dimensions Increase profitability per square meter with greater emphasis in fashion & brands and larger operational efficiencies

8 RETAIL BUSINESS RETAIL STRATEGIC PLAN PRODUCT DIMENSION New management of private and exclusive brands, with a greater emphasis placed in our private labels Management of private and exclusive brands based on lifestyle methodology, with a clear differentiation strategy through fashion Alliances with large international retail groups such as Bestseller (Denmark) and In Situ (Spain)

9 RETAIL BUSINESS RETAIL STRATEGIC PLAN 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 omnichannel strategy

10 RETAIL BUSINESS RETAIL STRATEGIC PLAN 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 > 60% stores with new attention model in Chile

11 RETAIL BUSINESS Selling surface area Chile (1) 272, , , , ,573 1,043,717 Sales evolution (MMCLP) 1,138,288 1,144,903 1,168, , , , , , , , , , , , , , , jun jun-16 jun-17 Chile Peru Selling surface area Peru 8% Same Store Sales (SSS) (2) 156, , , , ,884 6% 4% % 0% -2% M jun jun-17 Selling surface in Peru N of stores (1) Ripley opened its 44 th store, Los Dominicos, in late August and its 45 th store, Coquimbo, in late September (2) SSS presented in 12 months base for year end and 6 months base for June -4% -6% Chile Peru

12 RIPLEY S e-commerce Strategic Plan focused on platform development and internet sales Ripley s e-commerce sales are growing over market growth both Chile and Peru Close to 80 million visits during 2016 to Ripley s internet homepage in Chile On April 4 th Mercado Ripley.com was launched, allowing third parties to sale their products at Ripley s website Winner of the 2015 and and 2017 in Peru IMPORTANT GROWTH IN e-commerce in Chile and Awards e-commerce sales YoY growth evolution e-commerce industry in Chile (USD mm) 75% 40% 40% 40% 23% 25% ,820 2,350 1,958 1,592 1, , Sources: Ripley Corp Chamber of Commerce Santiago Chile Peru

13 A. RETAIL BUSINESS B. FINANCIAL BUSINESS C. REAL ESTATE BUSINESS D. H RESULTS E. LOOKING FORWARD

14 HOW WE'LL DO IT OUR ATTRIBUTES OUR PROMISE FINANCIAL BUSINESS A SIMPLE BANK Close to its customers TRANSPARENCY QUICKNESS ACCESABILITY BENEFITS In the sale In services Omnichannel From Ripley world With the charges In problem resolution Monday through Sunday Ripley reward points In the communication No waiting time Where the client wants to be Valued alliances Client knowledge Digital innovation in products, channels and services Integration with retail Lean processes Culture and a capable team

15 FINANCIAL BUSINESS MIGRATION TO RIPLEY MASTERCARD CHILE S CASE Ripley Private Label Card Ripley Mastercard 70% 65% 60% 55% 66% 50% Used only in Ripley stores and a select group of associated commerce No restrictions 45% 40% 35% 34% Paid in Installments Revolving credit line 30% Mastercard Private Label As percentage of the loan portfolio Ripley begins offering MasterCard to new clients Greater selectivity with new clients and focusing on existing clients migration Resume growth in loan portfolio with a focus on selectivity and migration of known clients

16 FINANCIAL BUSINESS Bank in Chile Bank in Peru ROE ROE 16,7% 19,2% 19,3% 20,9% Good profitability indicators 17,7% 17,9% 18,8% 16,4% jun-16 jun-17 Basel Index jun-16 jun-17 Basel Index 20,0% 21,3% 20,6% 19,0% Solid financial position and good levels of Basel Index 13,6% 14,7% 15,6% 14,5% jun-16 jun-17 Loan Portfolio (MMCLP) jun-16 jun-17 Loan Portfolio (MMCLP) Growing loan portfolio YoY jun-16 jun jun-16 jun-17 Source: Ripley Corp s Jun-17 Financial Statements, SBIF and SBS

17 CHILE S FINANCIAL BUSINESS 22% NPL's 1-90 Days 6,0% NPL's 90 + Days 20% 18% 16% 5,5% 5,0% 4,5% 4,0% 14% 3,5% Healthy evolution of Early Non performing loans ( NPL s ) Late NPL s show a slight increase when compared to previous years, yet in healthy levels and in line with the behavior of the Chilean banking system during 2017 New provision model introduced in October 2016 The Net Provision Expense, even considering the new provisions model, is stable and in line with previous years. 1,6% 1,1% 0,6% 0,1% Net Risk Provision Expense (1) (Does not consider non-ifrs provisions: contingent and additional provisions) Old provisions model 2017 (1) In October 2016, Ripley Bank Chile changed its risk provisions aligning its model to the SBIF definitions

18 PERU S FINANCIAL BUSINESS 17% NPL's 1-90 days 6% NPL's 90 + days 15% 5% 13% 4% 11% 3% 9% 2% 7% 1% Early and late NPL s still maintaining healthy levels Rise in Net Provision Expenses in 2017 is explained by: 1. Deterioration in the payment behavior of the Peruvian banking system 2. Increase of alignment provisions, which are based in behaviors with other banks and not only with Ripley Bank However, the net risk provision has been improving in recent months, thanks to tougher risk assessment policies 1,2% 1,0% 0,8% 0,6% 0,4% 0,2% 0,0% Net Risk Provision Expense

19 A. RETAIL BUSINESS B. FINANCIAL BUSINESS C. REAL ESTATE BUSINESS D. H RESULTS E. LOOKING FORWARD

20 Ripley Corp s ownership in Real Estate businesses (jun-17) Ownership Country Investment (1) (CLP MM) REAL ESTATE BUSINESS CONTINUE GROWING IN OUR REAL ESTATE BUSINESS EBITDA LTM jun-17 increased 3.3% (1) when compared to LTM jun-16, reaching CLP MM$ 38,263 On April 2016 Ripley s ownership of Inm. Mall Viña del Mar came up to 50% after the purchase of an extra 16.67% of it Starting 2Q16, Ripley recognizes all of its investments properties at fair value instead of historical cost On July 2016 the division of Aventura Plaza S.A. was executed and Ripley began to consolidate the operation of Mall Aventura S.A. LTM jun Mall Concepcion & leased properties LTM jun Mall Aventura S.A. (2) GLA (m 2 ) (1) LTM EBITDA (1) Inmob. Mall Viña del Mar S.A. Mall Concepción 100% Chile 77,444 26,000 1 Nuevos Desarrollos S.A. 22.5% Chile 123,839 97,530 7 Inm. Mall Viña del Mar S.A. 50% Chile 105,571 58,500 2 Mall Aventura S.A. 100% Peru 180, ,900 2 Total 487, , Malls Nuevos Desarrollos S.A Total Notes: Amounts in MMCLP Nuevos Desarrollos includes: Plaza Sur, Plaza Alameda, Plaza Mirador Bío Bío, Las Américas (Iquique), Plaza Egaña, Plaza Copiapó and Mall Plaza Los Dominicos; Mall Aventura includes: Aventura Plaza Arequipa y Aventura Plaza Santa Anita; Inm. Mall Viña del Mar includes Mall Marina y Mall Centro Curicó 1) Amounts equivalent to the total of the asset weighed by the percentage of Ripley s ownership 2) Proportional EBITDA of Ripley Corp. EBITDA of Mall Aventura considers three months of Aventura Plaza S.A. s EBITDA (pre consolidation) weighted by Ripley Corp s ownership in such company

21 Mall Marina Arauco Expansion (Q2 2018) Mall located in the city of Viña del Mar, which has a population of approximately 287,000 people Mall owned by Inmobiliaria Mall Viña del Mar S.A., where Ripley shares 50% of the property REAL ESTATE PROJECTS IN CHILE REAL ESTATE BUSINESS Mall Plaza Arica (2018) Mall located in the city of Arica (northern Chile), which has a population of around 4,000 people GLA: 32,000 m2 Mall owned by Nuevo Desarrollos S.A., where Ripley has 22.5% of the property Note: In brackets, estimated opening

22 Mall Arequipa Expansion (Q3 2017) Mall located in Arequipa city, the second most populated city in Peru, which has a population of approximately 877,000 people Current GLA: 65,300 GLA of the expansion: 7,018 m2 Mall owned by Mall Aventura S.A., which is 100% property of Ripley Mall Santa Anita Expansion (Q3 2018) MALL EXPANSION PLAN IN PERU Mall located in the city of Lima in the Santa Anita district, which has an urban population of around 233,000 people Current GLA: 57,600 GLA of the expansion: 30,212 m2 Mall owned by Mall Aventura S.A., which is 100% property of Ripley REAL ESTATE BUSINESS Note: In brackets, estimated opening

23 Iquitos project (Q3 2021) Mall located in the San Juan Bautista district, it will become the first and only mall in the city of Iquitos, which has a population of approximately 432,000 people as well as a large floating population (app. 500,000 people) GLA: 52,286 m2 Mall owned by Mall Aventura S.A., which is 100% property of Ripley San Juan de Lurigancho project (Q3 2021) NEW MALL PROJECTS IN PERU Mall located in the district of San Juan de Lurigancho, the largest and most populated one in Peru (population of around 1,110,000 people), which also connects the city north to south GLA: 64,461 m2 Mall owned by Mall Aventura S.A., which is 100% property of Ripley REAL ESTATE BUSINESS Note: In brackets, estimated opening

24 A. RETAIL BUSINESS B. FINANCIAL BUSINESS C. REAL ESTATE BUSINESS D. H RESULTS E. LOOKING FORWARD

25 H v/s H OPERATIONAL RESULTS Ripley Corp Chile Peru Central offices & consolidation adjustments Consolidated H1-17 H1-16 Var % H1-17 H1-16 Var % H1-17 H1-16 H1-17 H1-16 Var % Retail revenues 376, , % 188, , % (1,882) (1,859) 563, , % Bank revenues 142, , % 72,400 69, % , , % Real Estate revenues 3,307 3, % 7, ,279 3, % Total Revenues 522, , % 269, , % (1,882) (1,859) 790, , % Gross profit retail 101,845 94, % 46,683 47, % , , % Gross profit bank 90,574 86, % 41,179 43, % , , % Gross profit real estate 3,307 3, % 7, ,279 3, % Gross Profit 195, , % 95,834 91, % , , % SG&A expenses (172,863) (172,129) 0.4% (88,850) (82,859) 7.2% (3,195) (2,185) (264,908) (257,173) 3.0% EBIT 22,863 12, % 6,985 8, % (3,195) (2,185) 26,652 18, % Positive EBIT evolution (+46.3%) due to efficiencies in expenses in Ripley Chile and total revenues rise of 6.0%, attributed to: Higher same stores sales ( SSS ) in Chile (+7.3%) Financial revenues grew 5.0% Consolidation of Mall Aventura S.A. ( Aventura ) Note: Amounts in MMCLP

26 IMPORTANT IMPROVEMENT IN COMPANY S PERFORMANCE Total Revenues Gross Profit SG&A expenses EBIT Income before taxes Income from continued operations EBITDA LTM jun-17 1,643, ,600 (540,562) 73, ,966 84, , % +4.7% +2.3% +26.1% % +98.0% +8.4% LTM jun-16 1,578, ,228 (528,285) 57,942 47,815 42, ,989 Note: Amounts in MMCLP

27 LEVERAGE, LIQUIDITY & RATINGS As of H1-17, Ripley Corp showed high liquidity and low leverage as well as robust Basel indexes in its banks businesses in Chile and Peru Ripley Bank Chile Ripley Bank Peru Total Banks Retail, Real Estate & Central Offices Consolidated jun-17 Consolidated dec-16 Financial Debt 623, , , ,246 1,394,027 1,333,227 Accounts payable related companies 14,396 4,411 18,807-11,680 7,127 22,394 (+) Financial Debt + AP Related Parties 638, , , ,566 1,401,154 1,355,621 Cash & Cash Equivalents 98,747 61, , , , ,286 Accounts receivable related companies 4,211 3,694 7,905-6,033 1,871 3,622 (-) Cash + AP Related Parties 102,958 65, , , , ,908 Net Financial Debt 535, , , ,333 1,127,865 1,117,713 Equity 193,031 77, , , , ,436 Net Financial Debt/Equity 2.77x 3.83x 3.08x 0.46x 1.23x 1.25x Basel Index 19.0% 14.5% Bond credit rating / Perspective Outstanding (1) (2) Bonds Ripley Corp A/Positive A+/Stable 2 Ripley Chile A/Positive AA-/Stable 1 Ripley Bank Chile A+/Stable A+/Stable 5 Ripley Bank Peru AA-/Stable AA-/Stable 4

28 A. RETAIL BUSINESS B. FINANCIAL BUSINESS C. REAL ESTATE BUSINESS D. H RESULTS E. LOOKING FORWARD

29 REAL ESTATE BANK RETAIL LOOKING FORWARD MAIN FOCUS MAIN SOURCE OF GROWTH & PROFITABILITY - Fashion & Brands - Increase Profitability Increase in margins through strategic plan focused on brands Strengthening ecommerce channel Increase in square meters and higher store maturity - Competitive Credit Card - New Core Banking System Migrate known clients to MasterCard Conservative growth leveraging on known clients Keep healthy leverage ratios Implement electronic accounts, debit cards and other bank services - Grow in Mall operations Greater maturity of existing malls, new malls under associates and expansion of existing owned malls Developing new projects

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31 MOST RECENT HIGHLIGHTS Ripley Peru Bank carried out two financial instruments issuances during the quarter. NCDs: S/ 50 million up to a year CBs: S/ 50 million up to 2.5 years Additionally on June 27 th 2017, Ripley Bank in Peru distributed S/30 million of dividends to its parent company, for the concept of accumulated earnings from 2016 Peru s online channel received, for a second consecutive year, the e-commerce Award to the Leader of e-commerce in Retail During the first quarter of 2017, Mall Aventura sold a land located in Los Olivos, Lima Sale for an amount of MM$27,541 Land available for sale with no project associated to it Income before taxes reached MM$3,904 over the fair value registered During the month of July began the construction of the expansion of Mall Arequipa in Peru This project will add 7,000 m 2 of GLA of the mall Additional revenues estimated for the tenants of S/ 66 million Its opening is contemplated for the last quarter of 2017

32 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 Next trades from more than 500 stores in the UK and Eire and around 200 stores in 40 countries overseas

33 APPENDIX Created by Adolfo Cambiaso in 2004, La Dolfina Polo Lifestyle shares its collection inspired on the most genuine values of this sport 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 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

34 APPENDIX Others 22% MAIN SHAREHOLDERS Mutual Funds 1% Pension Funds 16% Calderon Volochinsky Family 50% Calderon Kohon Family 11% Calderon Family Company founded by Calderon Family. Participation in the company 3 members of the family are part of the board of directors. CEO of Ripley. Ripley represents the family s main investment. As of August 2017

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