3i Capital Markets Seminar Action 8 June 2016
Agenda 3i’s investment in Action 1 2 Action presentation • Sander van der Laan, CEO Action • Frederik Lotz, CFO Action 2
3i acquired Action in September 2011 • Acquired from founders in primary buyout for 8.3x EBITDA • Investment triggered by proactive approach from 3i • Six months exclusive off-market due diligence process 3
Strong value creation and continued potential Action – 3i carrying value Selected observations £m • £902m carrying value 1,000 902 900 • 14x EBITDA multiple post-liquidity 800 712 discount 700 573 592 600 • Action reported EBITDA 2015 € 226m 501 500 400 • 11.6x money multiple over cost (1) 280 299 300 131 143 173 168 200 • 3.5x money realised from distributions 113 59 100 10 (recaps) 0 Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar • 24% of 3i’s PE portfolio 11 12 12 13 13 14 14 15 15 16 Carrying valuation Realisations Source: 3i Annual and Half-yearly reports. 4 (1) Cash proceeds over cash invested. For partial realisations and refinancings, valuations of any remaining investment are included in the multiple.
Acceleration of international growth under 3i ownership Milestones 2011-2016 655 • Transition from founders to professional management # Stores Buyout 514 • Strengthen the team, build 406 systems and processes 321 • Accelerate international 269 245 220 growth 190 170 149 127 105 • New CEO, CFO appointed in 2015 to lead next phase 1 of development 1993 >> 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Netherlands Belgium Germany France Luxembourg Austria 5
Action 3i Capital Markets Seminar 8 June 2016, London 6
Today’s speakers Sander van der Laan Frederik Lotz Chief Executive Chief Financial Officer Officer 7
Joined October 2015 25 years Consumer & Retail experience Various positions at Ahold (1998 - 2015) • CEO Albert Heijn (2011 - 2015) • COO of Ahold Europe • General Manager Albert Heijn Sander van der Laan Chief Executive Officer • President & CEO Giant Food Stores (Ahold USA) Age 47 • General Manager Gall & Gall 8
Action: Leading European non-food discount retailer 700+ stores (June 2016) # of stores (Dec 2015) All stores profitable 2015 Sales € 2.0bn (+32% yoy) 341 2015 Like for Like Sales Growth 7.6% 76 2015 EBITDA € 226m (+36% yoy) 116 >28,000 employees across six countries 1 >50% of sales outside the Netherlands in 2016 120 1 Source: Company information 9 Note: 2015 figures adjusted on a 52 week basis
Action has a unique proposition Winning customer proposition & brand 1 2 3 4 Unique and Lowest Convenient Proud surprising prices shopping employees assortment environment 8 Loyal and growing customer base Simple, low risk and scalable business model 5 6 7 One Robust sourcing Centralised and standardised model efficient format distribution 10
We have 13 distinct categories presented in a standardized floorplan General 1 DIY Typical Action store blueprint merchandise 2 Toys and Entertainment 3 Stationary and Hobby 4 Decoration 5 Multimedia 6 Household 7 Seasonal Fast Moving 8 Laundry and Cleaning Consumer Goods 9 Food and Drink 10 Personal Care 11 Pet Food Textile 12 Basic and Fashion 852m 2 , Aalsmeer, The Netherlands 13 Linens Unique and Surprising Assortment 11 Source: Company information 1 2 3 4 5 6 7 8
Balanced revenues across the 13 categories with majority of SKUs in-out Net sales by product category (FY15A) Net sales split by product type (FY15A) 7% 12% 10% 2% 4% 39% 11% 7% 9% 5% 61% 3% 7% 11% 12% Fixed SKUs In-Out SKUs Net sales split by product category (1) c.150 – 200 new products per week Balanced assortment Multiple price point offering Unique and Surprising Assortment Source: Company information 12 1 2 3 4 5 6 7 8 (1) Each colour in the chart indicates a different product category
We continue to surprise our customers Illustrative new articles introduced in a 6 week period Does Action have a surprising assortment? (1) Week 1 2 3 4 5 6 73% DIY NL Average 48% Competitor Toys and Entertainment Stationary and Hobby 59% Decoration BE Average 44% Multimedia Competitor Household Seasonal 62% GE Average 30% Laundry and Cleaning Competitor Food and Drink Personal Care 46% FR Average Pet Food 39% Competitor Basics and Fashion Linen Unique and Surprising Assortment 13 1 2 3 4 5 6 7 8 (1) GfK Image and Awareness Study Jan 2015
Action offers unbeatable prices – main reason for shopping Strong low-price points (1) Main reasons for visiting Action (2) 100 1 For the lowest price Netherlands 171 2 Category variety 100 Belgium 207 3 Changing assortment 100 Germany 186 4 Shop is nearby 100 France 5 For specific products I always buy there 223 Action Price Competitor Group Basket Lowest Prices (1) Chart shows comparison of shopping baskets between countries. Price index excluding promo pricing. The Netherlands, Belgium, Germany and France as per March 2016 14 1 2 3 4 5 6 7 8 (2) Source: GFK Image and Awareness Study Jan 2016
Why our prices are so low We buy big volumes Low overhead costs No fixed assortment Efficient logistics Simple business Stores at B/C Low marketing Standardised store model locations expenditure processes Cost benefit building blocks that enable us to provide our customers the lowest prices Lowest Prices 15 1 2 3 4 5 6 7 8
Good quality can come at a low price Implementing Action quality system Strengthen quality & sustainability function Action Ethical Sourcing Policy 100% factory audits of all direct import Formulate & communicate our objectives and efforts Lowest Prices 16 1 2 3 4 5 6 7 8
Convenient shopping experience for our customers Proximity continues to improve due to network expansion Unique combination of 13 distinct categories Standardized floorplan and routing Mainly EDLP (Every Day Low Pricing) Easy in – Easy out Many locations offer good parking facilities Convenient Shopping Environment 17 1 2 3 4 5 6 7 8
Our company culture is fundamental to our success Company culture 1 Customer focused 2 Cost conscious 3 Teamwork 4 Discipline 5 Simplicity 6 Respect Proud Employees 18 1 2 3 4 5 6 7 8
Engaged and proud employees committed to the journey ahead 2015 employee perception Total favourable score (1) Compared to international retail norm Leadership 78 +8 Supervision 86 +8 Operating Efficiency 85 +12 Career Development 73 +7 Client & Image 89 +6 Working Relationships 90 +10 Empowerment 80 +8 Safety 78 +7 Rewards & Performance 70 +9 Engagement 86 +4 Proud Employees Source: Tower Watson 19 1 2 3 4 5 6 7 8 (1) On a scale of 1-100
One standardised format which is easily scalable European single format retailers (# of countries) One brand 61 One store format 37 Majority of stores 700m 2 – 1,100m 2 26 One store operating model 6 ~95% of the 6,000 SKUs are the same across Action Ikea H&M Lidl all stores and countries One Standardised Format 20 Source: Company information 1 2 3 4 5 6 7 8
Action builds 3 tier strategic sourcing approach DC 15% Zwaagdijk Top 3 Wholesale 12% Top 4-10 400 Suppliers – 73% Other majority Dutch DC Echt-Susteren 140 DC Direct Imports $m Moissy-Cramayel 57 Partnership: 1 Li & Fung 2014 2015 2016 YTD DC D FMCG Supplying national DC brands € E Increasing number of pan-European deals 700+ stores - 4 – 5m customers per week and relations Robust Sourcing Model 21 Source: Company information 1 2 3 4 5 6 7 8
Proven DC expansion with 3 DC operational and 2 more in pipeline Prime area of current Action stores Headquarters and DC-A (Zwaagdijk-Oost, NL) Capacity: 120 Stores Capacity: 300 Stores DC-C DC-B 2 new DCs to be realised in Toulouse and Mannheim areas (Moissy-Cramayel, FR) (Echt-Susteren, NL) Centralised and Efficient Distribution 22 (1) As of Mar 2017, current capacity: 170 1 2 3 4 5 6 7 8
Efficient logistical platform in place We have a ‘supermarket like’ Supply Chain servicing our non-food stores. Warehousing Transport State of the art facilities European network management European Blueprint >300 cost efficient double-deck trucks 2 shifts 5x times/ week delivery. Each store. Full assortment. Partnership in France with ID Logistics 25% of the stores 6-day delivery Centralised and Efficient Distribution 23 Source: Company information 1 2 3 4 5 6 7 8
Action’s loyal customer base spreading the word 4 - 5 million customers per week 71% penetration in the Netherlands Retailer of the year Europe 2014 and 2015 Happy employees = Happy customers 23 years of like-for-like growth Loyal and Growing Customer Base 24 Source: Company information 1 2 3 4 5 6 7 8
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