3i Capital Markets Seminar - 19 March 2020 - 3i Group
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3i Capital Markets Seminar 19 March 2020
Action – liquidity event for EFV LPs completed
• Action remains 3i’s biggest investment and best compounder of returns
• Transaction completed in January 2020 to provide liquidity to Eurofund V LPs
• 3i-led governance model, which has been instrumental to Action’s success, unchanged
• 3i re-investment, with increased net interest of c.49%
• Transaction value of €10.25bn (18.2x September run-rate EBITDA) delivered an exceptional return to
EFV LPs, gross 31.3x euro money multiple, 75% gross IRR
• New and existing blue-chip institutions have invested alongside 3i in the next stage of the Action
journey
• 2019 results reinforce our confidence in the Action business model and its potential
2
Why 3i reinvested in Action
✓ Discount retail sector opportunity Action – 3i carrying value, £m1
• Increasing customer acceptance of underpenetrated discount retail sector Carrying valuation
3,461
• Counter-cyclical opportunity based on lowest prices £835m returned to 3i over the
period2
✓ Winning company with exceptional customer 2,731
value proposition and financial model
• Good quality products priced 30-60% below direct peers
2,064
• Sales densities 3x better than competitors
1,708
• Increasing scale benefits
✓ Significant white space remaining
• Simple, scalable, repeatable model 902
• Significant growth runway across existing and new geographies 592
501
• Average 12-month payback on new stores 280
143
✓ Material and enduring compounding benefit to 3i FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q3
FY20
(1) 3i financial years
(2) Excludes dividends received in Q4 2020 3
Today’s presenters
Sander van der Laan Joost Sliepenbeek
Chief Executive Officer Chief Financial Officer
• Joined in October 2015 • Joined in November 2018
• 29 years of Consumer & Retail experience • 19 years of Consumer & Retail experience
• 32 years experience in finance, 20 years as CFO
• Various positions at Ahold (1998 – 2015)
– CFO Vion (2015 – 2018)
– CEO Albert Heijn (2011 – 2015)
– CFO Van Gansewinkel (2013 – 2015)
– COO Ahold Europe
– CFO C1000 (2009 – 2012)
– General Manager Albert Heijn – CFO HEMA (2007 – 2009)
– CEO Giant Food Stores (Ahold USA) – CFO Albert Heijn (1999 – 2003)
– EVP Marketing & Merchandising Albert Heijn – Various positions at Ahold (1994 – 2007)
– General Manager Gall & Gall
4 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
Agenda 1. Introduction Simon Borrows 2. Business performance 2019 Sander van der Laan 3. Strategy update Sander van der Laan 4. Financial performance 2019 Joost Sliepenbeek 5. Wrap Up Simon Borrows 5 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
2019 was another year of strong performance and
investment for the future
€5,114 5.6% €541 230 77%
Million Like-for-like Million New stores Cash
net sales sales Operating opened conversion
+21% growth EBITDA1)
+20% 3
New DCs
opened
2nd year of significant investment in organisational
capability and supply chain
6 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) Excludes impact of IFRS 16
Our high growth track record continues
Net sales (€m) Operating EBITDA (€m)
5,114 541
4,216 450
3,418 387
2,675 310
1,995 226
1,506 166
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Store expansion (numbers) & # countries LfL sales growth (%)
1,552 7.6%
7.2% 6.9%
1,325
1,095 5.6%
5.3%
852
655
514 3.2%
#4 #6 #6 #7 #7 #7
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
7 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 # Number of countries
In 2019 we opened 230 new stores, continuing our
strong geographic expansion
+12
+32
387
57
+59
+15
347
182
+3
8
+16
+93 54
517
8 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) Net stores added was 227 as a result of three store closings in the Netherlands xx # of stores 2019 xx New stores opened in 20191)
Maturing DC network across countries
Peine, DE (2019) Osła, PL (2019)
Katowice, PL (2021)
Verrières, FR (2020)
Bratislava, SL (2020)
FR (2022) Belleville, FR (2019)
Marseille, FR (Hub, 2019)
9 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 DCs to open in ≥2020 DCs opened in 2019 DCs opened
Strong LfL driven by growth in footfall and development of
multiple customer touchpoints
Stores # of social media followers
+20% +74%
>8m 1.9m 1.2m
store visits Facebook Instagram
p/w fans followers
Bi-weekly leaflet Emails and website
+55% +6%
>24m 4.2m 5.6m
leaflets email web
/ 2 wks subscrib. visits/wk
reached1)
10 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) Peak week in Dec-192019 business performance
Excellent growth in sales and EBITDA
Strong, broad-based category performance underpinning strong LfLs
Much improved operational performance with further investment in supply chain, IT and
digital
Another year of significant investment in expansion, infrastructure and future proofing the
business
Increased focus on ESG and digital agenda
People & labour – we have added another ~5k employees to operate our stores, DCs and
offices
11 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Current trading 2020 • Trading performance to the end of week 11 has been strong • Action is ahead of budget for sales, LfL, EBITDA and cash flow • LfL sales growth to the end of week 11 was over 7% • Longer term growth story and competitive positioning remain intact • Cash position and liquidity are very strong 12 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
COVID-19 update (1/3)
I. General
• Governments are taking extreme measures with significant impact on society, businesses and Action
• We are forced to temporarily close stores in a number of countries. Rules vary by country and in Germany by region
• Taking all necessary actions to operate and supply the open stores
• Established a crisis management team, with daily reporting and alignment, and good support from the 3i team
• Implementing multiple measures to reduce cost and secure our cash position
13 ACTION | 3I CAPITAL MARKETS SEMINAR 2020COVID-19 update (2/3)
II. Stores
Country # stores (YTD) Status
Netherlands 388 All stores open
Sell full assortment
Belgium 183 All stores closed March 18 to April 6
Luxembourg 9 8 stores open
Allowed to sell only essentials (~55% of sales)
France 523 All stores currently closed, but set to reopen
Allowed to sell only essentials (~55% of sales)
Germany 353 Stores subject to local approvals, 94 stores closed
Allowed to sell only essentials (~39% of sales)
Austria 56 All stores closed March 16 to March 29
Poland 63 13 stores closed based in large shopping centers
Total 1,575
14 ACTION | 3I CAPITAL MARKETS SEMINAR 2020COVID-19 update (3/3)
III. Employees
• We want to provide a safe and secure work environment and have established clear protocols and guidelines
• So far we have been confronted with 11 confirmed COVID-19 cases
IV. Customers
• Action has a role in offering essential products to feed, protect and support our customers in their fight against
Coronavirus
• We aim to keep our stores open when allowed/possible even when we can only sell part of our assortment
V. Supply Chain
• Our DCs in the Netherlands, Germany and Poland are operational
• Our DCs in France (3) are temporarily closed
• In China, situation is improving, factories are open again and producing
VI. Expansion
• We were on track to open 240+ new stores including pilots in Czech and Italy
• We are taking a pause and assessing the situation
15 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Agenda 1. Introduction Simon Borrows 2. Business performance 2019 Sander van der Laan 3. Strategy update Sander van der Laan 4. Financial performance 2019 Joost Sliepenbeek 5. Wrap Up Simon Borrows 16 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
Within the retail environment, specific trends are driving
demand for value retail concepts
Premium Value
More hybrid shopping behaviour Reducing strength of branded
products
Consumers are moving to premium and
value shopping – the middle ground is Branded products command less value from
under increasing pressure consumers if they are not truly differentiated
Social acceptance of discount and Increasing awareness of value
value
Consumers are more educated on value for
Discount & value shopping has broad money - more expensive is not always
appeal across socio-economic groups better
17 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Action’s strategy remains simple and consistent
I II
Strengthen our unique
International expansion
customer value proposition
III
A simple, efficient, responsible and scalable operating model
IV
Organisation, people & values
18 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Action’s winning customer proposition and brand appeals
to everyone and is supported by a strong business model…
Brand promise - We go beyond expectations everyday at ACTION
150-200 new articles
per week
6,000 SKUs in Surprising Every day the Weekly Easy Quality and
14 categories assortment lowest price promotions shopping social responsibility
Non food discounter
Simple – Efficient – Cost conscious
19 ACTION | 3I CAPITAL MARKETS SEMINAR 2020… which is both low-cost and scalable…
One brand, one format, one operating model
We buy No fixed Efficient Low overhead
big volumes assortment logistics costs
Low marketing Standardised store No high street Simple business
expenditure processes locations model
20 ACTION | 3I CAPITAL MARKETS SEMINAR 2020…with a sustainable advantage and best-in-class unit
economics
Action continues to reinvest in the
customer value proposition
through even lower prices, quality
and continuous surprise
Customer value proposition Competitive advantage
Action’s increasing scale Action’s attractive customer value
enhances profitability and builds a proposition led by low prices,
competitive advantage through quality and surprise drives top line
sheer size, purchasing power and growth
scale efficiencies
Store roll-out & growth Unbeatable financial model
Action’s operating model delivers
exceptionally compelling economics and
cash generation to support store expansion
21 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Strengthen our unique customer value proposition
Strengthen our unique customer value proposition
22 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Action operates an assortment of 14 complementary
categories Product types
~6,000 items across 14 categories A-brands1)
€0.95 €3.95 €1.95
Garden &
Sport Personal care
outdoor
Decoration DIY Pets Supplier brands2)
€0.85 €4.99 €0.99
Laundry & Toys &
Multimedia
cleaning entertainment
Stationery & Linen Clothing Private labels
hobby
Household Food & drink
Number of SKUs per category ranges between ~100 and ~900
(1) A-brands are purchased both from A-brand suppliers as well as traders
23 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 (2) Supplier brands incl. “white label” and “fancy label”Significant expansion of new private labels across
categories in 2019
1) 10 other private labels
€7.95 €9.95 €5.95 €5.95
24 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) Not a new Private Label, but also known as LSC Light Bulbs, extended with a range of Smart products: LSC Smart Connect21 awards won in 5 different countries across categories,
reinforcing quality and value to our customers
€3.99 €2.99 €2.99
€1.49 €0.99 €19.95
25 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Country award won for ‘Best product of the year’Surprising assortment offered to our customers with
unbeatable prices
Does Action have a surprising
Assortment structure Unbeatable prices
assortment?
63% 100
Average
Coca Cola (375ml) 29% 165
competitor
€0.73 52% 100
~1/3 fixed
Average
23% 145
competitor
57% 100
Sunscreen (SPF 20)
Average
25% 145
€1.95 competitor
46% 100
Average
~2/3 non-fixed 31% 158
competitor
Air cooler
56% 100
€9.95 Average
35% 146
competitor
48% 100
Assortment Average
Examples 36% 132
competitor
Action Competitor cheapest basket
26 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: GfK survey, Dec 2019 and company informationAction attracts a broad audience across all customer
demographics
Gender Age Education
Male Female 18-34 35-49 50+ Low Middle High
44% 56% 25% 27% 48% 23% 42% 35%
40% 60% 29% 28% 43% 28% 40% 32%
39% 61% 32% 24% 44% 34% 33% 33%
33% 67% 23% 33% 44% 35% 20% 45%
36% 64% 26% 34% 40% 21% 54% 25%
34% 66% 52% 30% 18% 54% 10% 36%
27 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: GfK survey, Dec 2019Action’s proposition delivers market leading sales
densities with customers purchasing more than intended
Purchase behaviour of customers during last shopping trip (%) Average sales density (sales / m2) vs. competitors
53 36 7 4 2.8x
Avg. competitors
62 29 7 2
2.7x
62 25 9 4
Avg. competitors
67 21 9 3
2.6x
Avg. competitors
69 19 8 4
71 21 7 2
3.7x
More than planned Exactly as planned Less than planned Nothing Avg. competitors
28 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: GfK survey Dec 2019 and company informationDriving Research Online, Purchase Offline (ROPO)
Store
Web (& app) sessions per year1)
Customer
Leaflets Service
PR
Email
Website +36%
Digital 198 M
marketing App (new) 146 M
Social
media
2018 2019 2020 2021 2022 2023
Integrated marketing approach drives store traffic and ticket size and is delivered at a cost of less than 1% of sales
29 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) App will be launched in 2020 in the NLLaunch of Action app and loyalty programme to drive
customer footfall
Early updates Polls & questionnaires
World of Action
Exclusive benefits..
Launch in
2020 in NL
Seasonal stamp card Shop (in store) & Win
..and many more
functionalities (product
catalogue, digital receipt,
wish list etc.)
30 ACTION | 3I CAPITAL MARKETS SEMINAR 2020ESG: Action Social Responsibility is a core element of
our customer value proposition
Product Environment
We minimise our environmental impact across the
Our products are safe and responsibly sourced
supply chain
People Good citizenship
We contribute to society and serve local
We are a responsible employer
communities
31 ACTION | 3I CAPITAL MARKETS SEMINAR 2020We seek to source our products responsibly and
minimise our impact on the environment…
Product
Sustainability policies Supplier reviews Double decker and LNG trucks Packaging policies
specification sheets
Environment
Product compliance Ethical Sourcing Policy LED & usage monitors Solar panels (DCs & stores)
Product
Quality labels Quality processes Ban on single-use plastics Waste management
32 ACTION | 3I CAPITAL MARKETS SEMINAR 2020…and contribute to the wellbeing of our employees and
of society
Scholarship fund Inclusion
Weekly Promo: ‘Green Thumbs up’
People €9.95
Charity Local initiatives
Citizenship
€
€4.98
33 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Development of internal and external reporting tools in
order to accelerate ASR ambitions
4
Reporting on progress Complete study of business-wide
baseline footprint…
1
Establish a baseline of
the current footprint …incorporate UN S.D.G.
and bring focus…
2
Focus within the UN
S.D.G. on 4 priorities
9
New:
3
Accelerate short- and
long-term plans
Publication April 2020 …for all 4 ASR pillars e.g. packaging
policy, sustainability of wholesalers...
Annual updates
34 ACTION | 3I CAPITAL MARKETS SEMINAR 2020International expansion
International expansion
35 ACTION | 3I CAPITAL MARKETS SEMINAR 2020New store roll-out is the engine behind Action’s growth
story
The reason is simple… … and the economics are extremely attractive
1
One single and successful format 1 year average historical payback on
new store capex
2
Proven to travel across borders Every single LfL1 Action store is
profitable
3
First class store opening teams & Store expansion self-funding
processes
4
Increasing operating leverage
Massive white space opportunity through size and scale
36 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 (1) For all LfL stores which have been opened for more than 12 monthsOne format across all countries
1 1 1
brand store format store operating model
The Action name resonates in all All stores look the same Same policies
languages
Stores between 700 to 1,100m2 Same ordering systems
Marketing and packaging is consistent
Over 90% of assortment is the same Same processes
and standardised across all countries
across all stores and countries Same employee training
Same management structure
International expansion of the Focus on simplicity enables Same proven formula applied
brand is seamless rapid new store roll-out to every new store
A simple, repeatable and scalable business model
37 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Rapid store roll-out in current markets with considerable
white space potential
Population in millions
17 12 67 9 83 38
% of store potential
1,552 stores open as of 2019
NL BE LU FR AT DE PL
Rapid expansion in Remaining potential in existing
FR, GE, PL, and AT markets is ~2,300 new stores
38 ACTION | 3I CAPITAL MARKETS SEMINAR 2020France: continued exceptional performance driven by
improved supply chain performance
DC Echt
517
DC Biblis (2017) 424
335
220 • Population 67m 17m
DC
120 • Action stores 517 387
Moissy (2016) 52
1 13
• Population per store 130k 44k
DC 2012 2013 2014 2015 2016 2017 2018 2019
Verrieres (2020)
DC • Further store roll-out supported by expanded DC network and
significantly improved service levels
Belleville (2019)
(2022) • Continued investment in organisation to support both store roll-out and
DC
DC
embedding of store processes
Labastide (2017) Hub • Focus on demanding stores (very high sales but challenging to operate)
Marseille (2019) in e.g. Paris and Marseille
DC Existing DC
DC DC to be opened
39 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Germany: fastest growing non-food discounter in
Germany with another 59 stores opened
347
288
216
• Population 83m 17m
DC
136
45
76 • Action stores 347 387
Zwaagdijk DC
7 22
Peine (2019) • Population per store 239k 44k
DC DC 2012 2013 2014 2015 2016 2017 2018 2019
Echt Osla (2019)
• Continued expansion of store network with focus on more attractive
regions
DC
• Focus on improving average sales / store and more selective expansion
Biblis (2017)
criteria for new stores
• Increased investment in marketing to improve brand awareness
• Opening of new DCs to reduce supply chain and transport costs
DC Existing DC
40 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Poland: total number of stores increased to 57
57
Peine • Population 38m 17m
(2019) 25
• Action stores 57 387
DC
6 • Population per store 667k 44k
DC 2016 2017 2018 2019
Osła (2019)
• Stores continue to show strong growth in 2nd and 3rd year
DC
• Opened our Polish country office in Katowice
Katowice (2021)
• Initial roll-out was focused on the South West of Poland to leverage
proximity to Action’s existing DC network
• Store roll-out is focussing on areas with a higher per capita spend
DC Existing DC (South East)
• Further embedding store processes and focus on growth of quality and
DC DC to be opened
size of the (new) country organisation
Area of operation
• Expansion will be supported by a new Polish DC that will significantly
reduce transportation costs
41 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Significant potential from further new country expansion
Population in millions
226 61 11 210
% of store potential
1,552 stores
open as of 2019
Existing markets IT CZ Rest of Europe
Conservative estimate of white
2020: Entry IT + CZ
space potential in new and existing
≥ 2021: to be explored
markets (in scope) is ~4,800 stores
42 ACTION | 3I CAPITAL MARKETS SEMINAR 2020A simple, efficient, responsible and scalable
operating model
A simple, efficient, responsible and scalable operating model
43 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Action continues to grow its DC network to enable its
store roll-out strategy and reduce SC costs
Coverage within ‘one day delivery’ of a distribution centre Average delivery distance store to DC (2019-2023)
Existing DCs 5 ~(25)%
New in 2019 3
New DCs ≥2020 4 DC-A
DC-G
DC-H
DC-B
DC-K
DC-C DC-D
DC-I DC-J
DC-F
DC-E 2019 2023
DC-L
The average delivery distance from a store to a DC is
expected to be reduced by ~25% in 2023 vs 2019
44 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Development of multi-layer SC network
Hubs and XCC increase flexibility and efficiency in • Hubs will organise the deconsolidation of inbound
stock handling containers to support multiple DCs
• Cross-dock centres (XCC) will consolidate smaller orders
Suppliers More frequent and smaller volume supply from multiple suppliers and transport to an Action DC
Later stage:
Asia
• Allows for differentiated supply chain streams and for
Consolidation inventory to be kept upstream
Center
• More flexible purchasing options and efficient inventory
Hub XCC
management
• Stabilises the supply chain and facilitates higher service
levels to stores
DC layer
Store network
1) 2)
Legend: Hub XCC DC Store Large Inventory Small Inventory
1) Hub: transfer and stocking of direct sourcing containers operated by partners
45 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 2) XCC: a cross-dock point for small and mid sized suppliersContinued growth of our Direct Sourcing (DS) volume
Sourcing model (illustrative) Ambition to grow DS to 20% of sales
20%
Wholesalers
A-brands /
local sourcing 10%
Direct
sourcing
2018 2019 2020 2021 2022 2023
Traders
% of sales # of containers
1 2 3 4
Diversification of Control over quality Supplier selection &
Fixed assortment focus
countries processes management
46 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Supported by IT investments in existing and new
technologies enabling further growth and scalability
Customer facing processes Technology road map to deliver new capabilities Supply chain systems
(Digital) End-to-End
customer interface planning
Self Check-out Agile & scalable ERP Forecast & Demand
commercial Supply Chain Replenishment planning
processes execution
Store operations systems
Action.com website App & loyalty
Insights & Efficient
HR tools Analytics in-store operation
Scalable & reliable Engaged &
technology foundation connected workforce Point of Workforce
HR recruitment Recruitment Employee Sale & management
& various website engagement payment system
processes tool
47 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Organisation, people & values
Organisation, people & values
48 ACTION | 3I CAPITAL MARKETS SEMINAR 2020New organizational design accelerating new market
entries
Focus new markets
CEO
Sander Director Real
CFO HR Director
van der Laan Estate
Joost Sliepenbeek Luc de Baets Angus Booth
Director Commercial Director Head of East &
South Europe
Supply Chain Director Technology & IT Bart
Joost Bous Hajir Hajji Jens Burgers Raeymaekers
GM Start-Up
GM NL GM BeLux GM France GM DE GM Austria GM Poland GM Czechia
countries
Tjeerd Judia Wouter de Steffen Boyko Slawomir Milan
Monique
Bartels Elkadi Backer Rosenbauer Tchakarov Nitek Striezenec
Groeneveld
49 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Executive Committee General ManagersRetail is all about people
Value based Code of
Action Values Voice of Action
business conduct
2,506 26,777 training
240 apprenticeships
Develop our people promotions participants
in 2019
in 2019 in 2019
5k net new
~41k
Large employer ~26k FTEs2) employees added in
employees1)
20191)
Very diverse 129 Average age: 71% female, 29%
workforce nationalities 29 male employees
1) Excluding external personnel
50 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 2) Reported per YE 2019, including absence hoursOur values, at the heart of our organisation, ensure we
remain authentic and treat our employees respectfully
Action Value Booklet
The combination of a winning customer value proposition, competitive operating model,
and strong culture makes Action truly unique
51 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Strategy Wrap Up
Strategy wrap up
52 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Action’s business model becomes increasingly difficult
to replicate as scale grows
1
Customer value
proposition with the
lowest prices,
surprises and quality
7 Efficiencies from 2
scale re-invested to Creates market-
reinforce customer leading sales
proposition through volumes and
even lower prices densities
and quality
6 3
Store roll-out drives and competitive
scale and cost advantage from
efficiencies strategic suppliers
5 4
with a simple low-
Enabling self-funded
cost operating and
new store roll-out
economic model
53 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Agenda 1. Introduction Simon Borrows 2. Business performance 2019 Sander van der Laan 3. Strategy update Sander van der Laan 4. Financial performance 2019 Joost Sliepenbeek 5. Wrap Up Simon Borrows 54 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
Our repeatable financial model remains unchanged
1 2
• Low SKU count
• New store roll-out and country
expansion • Consistent gross margin across
Clear value Superior store categories
drivers • Like-for-like sales growth economics • All Like-for-like stores profitable
• EBITDA margin
• High sales density
3 4
• Proven
• Low capital intensity Strong
Excellent cash • Consistent
• Negative working capital economic
generation • Predictable
• Fast payback model
• Robust
Delivered with discipline and tight control
55 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Continued strong sales and EBITDA growth
Net sales (€m) Operating EBITDA (€m)
+21% +20%
5,114 541
4,216 450
3,418 387
2,675 310
(1)
1,995 (1)
1,506 226
166
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Source: company information
56 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 (1) Excluding impact of 53rd weekStrong like-for-like performance
7.6%
7.2%
6.9%
5.6%
5.3%
+240 bps
3.2%
2014 2015 2016 2017 2018 2019
57 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: company informationStore openings: continued rapid expansion in France,
Germany and Poland
(1)
244
(2) (3)
6 232 230
11
19
197 32
20
6 16
115
141
89
1 100 93
Poland
108
68 Austria
39 France
80 72 Germany
23 31 60 59
BELUX
25 24
18 18 19 18 Netherlands
21 17 13 14 13 12
2014 2015 2016 2017 2018 2019
(1) Net stores added was 243 as a result of one store closing in the Netherlands
(2) Net stores added was 230 as a result of two store closings in the Netherlands
58 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 (3) Net stores added was 227 as a result of three store closings in the NetherlandsConsistent margins across all categories
60%
50%
40%
30%
20%
10%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Categories
59 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Consistent profitability across all geographies
Average store contribution margin by country (%) – 20191)
Avg. store contribution margin of 21.5%
1993 2005 2009 2012 2015 2017
2)
Source: Company information xxxx Year of entry
1) Store contribution divided by net sales of active stores opened before 1 January 2019 (1,322)
60 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 2) First store opened in Luxembourg in 2015Attractive payback periods for new stores
• All stores show rapid ramp-up of sales and store
LTM store contribution1 (€) contribution after opening, underpinning exceptional
payback periods
1,000,000
• On average, the LTM store contribution exceeds the
average investment to open a store in about one year
800,000
Avg. LTM Store Contribution (€)
c.1 year average
payback period
600,000
400,000
200,000
FY1 FY2 FY3 FY4 FY5 FY6
0
Source: Company information
61 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 (1) New stores opened 2014-2019 (1,152)CAPEX development
5%
11%
• CAPEX growth overall mainly driven by new DCs, IT
and digital investments
• Lower CAPEX for new stores reflecting continuous
reduction of CAPEX per square meter
• Continued investment in IT
Other
DC maintenance
Store maintenance / RERs
IT
New DC (incl. IT)
2017 2018 2019 Store expansion
62 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: company informationStrong cash flow: 2019 cash conversion of 77%
• 2019 cash conversion
100%
600 100 increased versus 2018,
92% notwithstanding significant
86%
investment
500
77% 80
70%
• Low capital intensity, negative
419
working capital and fast
400
58% payback for new stores lead
60
314 to strong cashflow
300
268
225 223 40
200
153
20
100
0 0
2014 2015 2016 2017 2018 2019
Operating cashflow (excl. capex for new DCs)
Cash conversion = Operational cashflow / Operating EBITDA
63 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 Source: company informationImpact of IFRS16 on Action 2019 financials
OPERATING EBITDA (€m)
RIGHT-OF-USE ASSET AND • The average lease period of Action’s store
LEASE LIABILITIES (€m) portfolio is 3 years but differs per country
+33% • Action is desired as a tenant by landlords as it
719 735 drives traffic to the destination
718
541 • At the end of a lease Action receives
competitive pricing for renewals
• IFRS16 impact on other financials 2019:
• Lease adjustment: €179m
• Depreciation right-of-use asset: €170m
IAS 17 IFRS 16 Right-of- Lease • Interest cost outstanding lease liability:
use asset liabilities
€20m
64 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Overview of high-level financials
2018 2019 Change
Net sales (€m) 4,216 5,114 +21.3%
Like-for-like sales growth 3.2% 5.6%
Operating EBITDA (€m) 450 541 +20.2%
EBITDA margin 10.7% 10.6%
Cash conversion 70% 77%
Number of stores (end of
1,325 1,552 +2271)
year)
65 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) New stores opened 230, relocated / closed 3 stores in the NetherlandsSummary 2019 financial performance
• Strong numbers across all countries
Strong LfL performance
• FR LfL supported by well performing supply chain
5,114
4,216
• Continued improvement in FR, GE, AU and PL
Country EBITDA
• Margin pressure NL and Belux related to labour being addressed
• Strongly improved performance
Supply Chain
• Good cost control
2018 2019
+
541 • Start-up costs of new DCs
450
• Significant step-up in IT
2nd year of significant
• Incremental investments to strengthen capabilities in commercial,
investment in organisational planning and supply chain
capability and supply chain
• Expansion of the Digital team
• Expansion of Polish team and creation of Italy and Czech team
2018 2019
66 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Current trading 2020 • Trading performance to the end of week 11 has been strong • Action is ahead of budget for sales, LfL, EBITDA and cash flow • LfL sales growth to the end of week 11 was over 7% • Cash position and liquidity are very strong • Completion of event financing of €625m in January 2020 results in gross debt of €3,035m (incl. RCF) • Since the event financing was structured Action has effectively de-geared by c0.8x run-rate PF EBITDA1) 67 ACTION | 3I CAPITAL MARKETS SEMINAR 2020 1) SFA definition
COVID-19 impact too early to predict
• COVID-19 will disrupt 2020 especially over the next few months - too early to predict outcome
• Store openings and sales traditionally weighted to Q4
• Action is preparing for severe disruption in Q2
• (Financial) response to COVID-19:
o Opex measures being taken
o Substantial possibilities to reclaim wages from governments
o Tax payments postponed
o Working capital:
▪ Stock reduction in DCs
▪ Extension of payment terms
▪ Close cooperation with landlords
• Significant liquidity to navigate the current uncertainty
68 ACTION | 3I CAPITAL MARKETS SEMINAR 2020Agenda 1. Introduction Simon Borrows 2. Business performance 2019 Sander van der Laan 3. Strategy update Sander van der Laan 4. Financial performance 2019 Joost Sliepenbeek 5. Wrap Up Simon Borrows 69 ACTION | 3I CAPITAL MARKETS SEMINAR 2020
Action’s business plan
2011 2019 Business plan 2023
Sales €0.7bn 7.3x €5.1bn c.€9.0bn
EBITDA €86m 6.3x €541m > €1bn
# Stores 269 5.8x 1,552 c.2,750
# Countries 3 7 > 12
# DCs 1 8 c.15
70Thank you for your attention! Thank you for your attention!
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