3i Capital Markets Seminar Action 9 March 2018 Agenda - PowerPoint PPT Presentation

3i Capital Markets Seminar Action 9 March 2018

Agenda Introduction to Action Simon Borrows Update on strategic delivery Sander van der Laan Refresher on Action Business model Sander van der Laan 2017 performance and beyond Sander van der Laan Financial performance Frederik Lotz 2

Introduction to Action Simon Borrows 3

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 4

Acceleration of international growth under 3i’s ownership Total no. of Action stores Milestones 2011-2017 • Transitioned from founders to 1095 professional management • Strengthened the team and built Buyout 852 systems and processes 655 • Accelerated international growth and expanded into seven 514 European markets 406 321 269 • New CEO and CFO appointed 245 220 190 170 in 2015 to lead next phase of 149 127 105 development 1 1993 >> 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Netherlands Belgium & Luxembourg Germany France Austria Poland 5 CAPITAL MARKETS SEMINAR

Strong value creation and continued potential Action – 3i carrying value, £m • £2,312m carrying value at December 2017 2,312 • Valued at 16.0x run-rate EBITDA multiple 2,009 post liquidity discount 1,708 1,549 • Action reported EBITDA of €387m in 2017 • 26.5x 3i gross money multiple in euro terms at 902 December 2017, including realisations up to 712 December 2017 (1) 592 573 501 299 c. 287 280 • Net proceeds of c.€321m to 3i from the 187 173 143 131 168 113 59 10 March 2018 recap Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Dec Mar 11 12 12 13 13 14 14 15 15 16 16 17 17 17 18 • March 2018 recap will increase gross realised Carrying valuation Realisations 3i money multiple over cost in euro terms to 8.1x Source: 3i Annual and Half-yearly reports. 6 6 (1) Gross cash proceeds over cash invested in euro terms. Valuations of remaining investment are included in the multiple.

Today’s speakers Sander van der Laan Frederik Lotz Chief Executive Officer Chief Financial Officer • Joined in October 2015 • Joined in August 2015 • 27 years of Consumer & Retail experience • >16 years of CFO experience • Various positions at Ahold (1998 – 2015) • Previous CFO roles: – CEO Albert Heijn (2011 – 2015) – CFO Arla Foods 2010 – 2015 – COO Ahold Europe – CFO Danfoss 2007 – 2009 – General Manager Albert Heijn – CFO Ferrosan 2002 – 2006 – CEO Giant Food Stores (Ahold USA) • Held various financial positions at Maersk – EVP Marketing & Merchandising Albert Heijn • Significant international experience (France, China) – General Manager Gall & Gall 7

Update on strategic delivery Sander van der Laan 08/03/2018 8 CAPITAL MARKETS SEMINAR

Update on strategic delivery: 2017 proved to be another successful year €3,418 €387 5.3% 243 2 1 Million Like-for- Million Stores New New revenue, Like sales Operating added distribution country +28% growth EBITDA centres 9 CAPITAL MARKETS SEMINAR

Update on strategic delivery Strengthen our unique (International) geographic 1 2 customer value proposition expansion A cost-effective, simple and scalable business model that delivers 3 our strategy 4 Build on the unique Action culture & values 10 CAPITAL MARKETS SEMINAR

Update on strategic delivery Strengthen our unique International geographic expansion customer value proposition Strengthen and protect brand Rapid expansion in Expansion & network Always the lowest price profile & company reputation Germany & France development in Benelux Roll out in Austria & Famous for surprise Accelerate Digital & 1:1 Entry into new countries Luxembourg To develop & deploy Action Build European distribution Trusted for quality Roll out in Poland Social Responsibility (ASR) network A simple, scalable, and cost-effective business model that delivers our strategy Effective organisation, Strengthen HR Build a technology World-class sourcing End-to-end leadership and Business insights operating model infrastructure and procurement supply chain processes Build on the unique Action culture & values Customer Focused | Cost Conscious | Teamwork | Discipline | Simplicity | Respect 11 CAPITAL MARKETS SEMINAR

Update on strategic delivery: significant international growth since the investment by 3i in 2011 367 6 149 216 4 # of stores 335 18 €m Revenue # of stores % NL revenue # of DCs 7 1 607 3,418 245 1,095 ~95% ~33% 1 1) Including 2 DCs under construction 2010 2017 12 CAPITAL MARKETS SEMINAR

Update on strategic delivery: consistent high growth track record Strong net sales growth (€m) Strong EBITDA growth (€m) 3,418 387 310 2,675 1,995 226 1,506 166 1,155 128 873 99 86 718 71 607 515 426 49 39 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Rapid store expansion Increasing DC network 7 1,095 852 655 3 514 5 406 2 2 321 269 245 220 190 1 1 1 1 1 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CAPITAL MARKETS SEMINAR 13

Refresher on Action Business model Sander van der Laan 08/03/2018 14 CAPITAL MARKETS SEMINAR

Unique business model providing sustainable competitive advantage One brand & Price Surprise one format Scalable Customers business People model 15 CAPITAL MARKETS SEMINAR

One concept across all countries One brand 1 1 1 brand store format store operating model • Stores between 700 to 1,100 sqm • More than 90% of assortment is the same across all countries • Focus on simplicity enables fast growth 16 CAPITAL MARKETS SEMINAR

Unbeatable prices offered to our customers Price % of products in different price ranges Unbeatable prices for competition (1) ~ 35% 100 ~ 30% 154 ~ 25% 100 163 100 ~ 7% 160 ~ 2% 100 161 €0 -1 €1 -2 €2 -5 €5 -10 >€10 Action Competitor minimal basket Primary offering (1) GfK Image and Awareness Study December 2017 / Source: Company information 17 CAPITAL MARKETS SEMINAR

Unbeatable prices offered to our customers Price Sesame snaps Freija cat food Lifecare pregnancy Oral-B Power Electric test Toothbrush Green Boots green mould remover Panasonic AAA Sento Caring Shampoo Batteries 18 CAPITAL MARKETS SEMINAR

Unbeatable price offering based on Price multiple factors We buy big No fixed Efficient logistics Low overhead volumes assortment costs Low marketing Standardised store No high street Simple business expenditure processes locations model 19 CAPITAL MARKETS SEMINAR

Surprising assortment essential for our strong Surprise customer proposition 2/3 of the assortment is constantly changing > 150 new articles every week Weekly specials Seasonal offers 20 CAPITAL MARKETS SEMINAR

Loyal customer base is spreading the word Customer Total country-wide brand awareness and catchment area brand awareness (1) Total country Catchment area 97 97 79 79 70 58 42 22 Prizes won in 2017 (country wide awards) Living Department Department Best price Household General Gifts accessories Discount store store level goods & gifts (1) GfK Image and Awareness Study December 2017 / Source: Company information 21 CAPITAL MARKETS SEMINAR

Strong brand with a very strong conversion Customer towards buying at Action Awareness 97% 79% 58% 70% Conversion from awareness 75% 59% 74% 54% to consideration Consideration 73% 47% 43% 38% Conversion from 96% 95% 73% 95% consideration to purchase Buying behaviour (2) 70% 45% 31% 36% National Within catchment area (1) GfK Image and Awareness Study December 2017 / Source: Company information (2) % clients that purchased one or more products at Action in the previous six months 22 CAPITAL MARKETS SEMINAR

Proposition travels across borders, allowing fast Scalable roll-out in several countries simultaneously 1,095 2012 2013 2014 2015 2016 2017 852 655 341 324 367 514 354 335 303 406 262 321 220 216 135 153 117 136 120 93 76 68 51 52 45 22 18 13 7 7 6 1 1 # of stores across countries Total # of stores 23 CAPITAL MARKETS SEMINAR

Scalable supply chain with 2 new DCs in 2017 Scalable and 2 more DCs under construction DC-G (Peine, DE) DC-A (Zwaagdijk, NL) Open Under Existing construction 2003 New in 2017 Under construction DC-B (Echt, NL) Open Q2 2014 DC-D (Biblis, DE) Open Q2 2017 DC-C (Moissy, FR) Open Q2 DC-F (Belleville, FR) 2016 Under DC-E (Labastide, FR) construction Open Q3 2017 24 CAPITAL MARKETS SEMINAR

Company culture is fundamental to our success People Customer focus 1 Cost consciousness 2 Teamwork 3 Discipline 4 Simplicity 5 Respect 6 07/11/2017 25 CAPITAL MARKETS SEMINAR