Future Retail — Q3 FY20 Earnings Presentation
28 slides from Future Retail's earnings presentation, Feb 13, 2020
Slide 1: Future Retail cover letter to exchanges
FUTURE RETAIUI 13th February, 2020 To, Dept. of Corporate Services {CRD) Listing Department BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Sandra Kurla Complex, Dalal Street, Sandra East, Mumbai-400 001 Mumbai - 400 051 Scrip Code: 540064 Symbol: FRETAIL Scrip Code o
Slide 2: Q3 FY20 Presentation
Q3 FY20 Presentation February 2020
Slide 3: Table of Content
Table of Content 1 Key Transformational Pillars: Update 03 2 Like for Like Financial Performance 12 3 Our Ecosystem Continues to Grow 18 3 Appendix: Impact of IND-AS116 20 FRL | Presentation | Feb 2020 2
Slide 4: Key Transformational Pillars: Update
Key Transformational Pillars: Update FRL | Presentation | February 2020 3 3
Slide 5: Key Management Focus Areas: Quick Recap of 14th Nov 2019
Key Management Focus Areas: Quick Recap of 14th Nov’ 2019 5 Pillars of FRL’s Transformation Journey Key Transformational Pillars 1 2 3 4 Efficiencies & Strong cashflow Balance sheet Full unwind of focused execution generation deleveraging RPTs with FEL Driving efficiency savings Deliver operating De
Slide 6: Update on Balance Sheet Deleveraging
Update on Balance Sheet Deleveraging Equity Infusion 1. Recap: On 04th Feb’ 2019, FRL had announced issuance of 3,96,03,960 equity warrants to Future Coupons Limited § The equity warrants amounted to Rs. 2,000cr 2. 23rd April’ 2019: Future Coupons Limited infused 25% of the overall consideration i.e
Slide 7: Update on unwinding of RPTs with FEL (1/2)
Update on unwinding of RPTs with FEL (1/2) Status on asset purchase from FEL 1. FRL has concluded the purchase of fixed assets from FEL for Rs. 3,500cr, backed by proceeds from the recent USD bond issuance and shall conclude the balance asset-purchase by March’ 20. 2. Resultant impact of asset purch
Slide 8: Update on unwinding of RPTs with FEL (2/2)
Update on unwinding of RPTs with FEL (2/2) Successful $500mn USD Bond Issuance 1. Future Retail raised Rs. 3,560cr through US$ denominated notes in Jan’ 2020 2. Key terms of the USD notes - § 5-year maturity term § Interest rate: 5.6% p.a. payable semi-annually § All-in cost: 7.39% p.a. (inclusive o
Slide 9: Update on Efficiencies & Focussed Execution (1/3)
Update on Efficiencies & Focussed Execution (1/3) Optimisations, Efficiencies and Expansions § FRL has pruned its fixed costs across Corporate overheads, Operations, People costs and Costs Marketing costs Optimization / Savings § The positive impact of these is expected to be seen over the next few
Slide 10: Update on Efficiencies & Focussed Execution (2/3)
Update on Efficiencies & Focussed Execution (2/3) § FRL and Amazon India signed two Business Co-operation Framework (BCF) agreements focusing on - Recap o Grocery and general merchandise: Prime Now – Hyperlocal 2 hour Delivery (and more to come) o Softlines, Fashion and footwear: Amazon.in § FRL has
Slide 11: Update on Efficiencies & Focussed Execution (3/3)
Update on Efficiencies & Focussed Execution (3/3) § In February 2019, FRL entered into an 80-years franchisee agreement with 7-Eleven Inc. Recap (SEI) to bring 7- Eleven convenience chain format to India § FRL plans to open the first 7-Eleven store by April’ 20 in Mumbai. o First store is an outcome
Slide 12: Update on Key Enablers
Update on Key Enablers Key leadership changes to realize FRL’s tranformational journey Key leadership changes proposed to strengthen institutional capacity and ensure seamless execution of the transformation journey. Focus areas (i) propagating process-driven culture, (ii) institutionalization of bu
Slide 13: Like for Like Financial Performance
Like for Like Financial Performance FRL | Presentation | February 2020 12 1 2
Slide 14: Quarterly Like for Like Operating Performance (Without IND-AS)
Quarterly Like for Like Operating Performance (Without IND-AS) Income from Operations Gross Margin Commentary (₹ cr) (% / ₹ cr) 1,474 1. In order to do a like for like comparison, the numbers 5,301 6.8% depicted here are pre IND-AS -3.2% 1,380 5,130 adjustments 28.7% 2. Overall revenue declined by 3
Slide 15: 9M Like for Like Operating Performance (Without IND-AS)
9M Like for Like Operating Performance (Without IND-AS) Income from Operations Gross Margin Commentary (₹ cr) (% / ₹ cr) 15,673 1. In order to do a like for like 6.1% 4,360 comparison, the numbers 14,768 depicted here are pre IND-AS 10.7% adjustments. 3,939 27.8% 2. 9M overall revenue increased by 6
Slide 16: Like for Like Q3 Revenue Bridge
Like for Like Q3 Revenue Bridge “Quarterly” Income from Operations 6,000 275 9.6% 344 4,000 5,301 5,130 4,682 2,000 - Reported for Dec' 2018 Revenue from stores Revenue from De- Pro-forma Revenue for Reported for Q3FY20 closed in Q3 FY20 Prioritised Business Q3FY19 1. Above numbers represent revenue
Slide 17: Quarterly (Q3) Y-o-Y Income Statement: With and Without Ind AS 116
Quarterly (Q3) Y-o-Y Income Statement: With and Without Ind AS 116 Particulars (₹ cr) Without IND AS 116 Without IND AS 116 With IND AS 116 For 3 months ended 31-Dec-18 31-Dec-19 Y-o-Y 31-Dec-19 Y-o-Y Total income from 5,301 5,130 -3.2% 5,130 -3.2% Operations Gross Profit 1,380 1,474 6.8% 1,474 6.8%
Slide 18: 9M Y-o-Y Income Statement: With and Without Ind AS 116
9M Y-o-Y Income Statement: With and Without Ind AS 116 Particulars (₹ cr) Without IND AS 116 Without IND AS 116 With IND AS 116 For 9 months ended 31-Dec-18 31-Dec-19 Y-o-Y 31-Dec-19 Y-o-Y Total income from 14,768 15,673 6.1% 15,673 6.1% Operations Gross Profit 3,939 4,360 10.7% 4,360 10.7% Gross Ma
Slide 19: Quarterly Q-o-Q Income Statement: Without Ind AS 116
Quarterly Q-o-Q Income Statement: Without Ind AS 116 Particulars (₹ cr) Without IND AS 116 Without IND AS 116 Without IND AS 116 For 3 months ended 31-Dec-18 31-Dec-19 Y-o-Y 30-Sep-19 Q-o-Q Total income from 5,301 5,130 -3.2% 5,394 -4.9% Operations Gross Profit 1,380 1,474 6.8% 1,464 0.7% Gross Marg
Slide 20: Quarterly Income Statements: As Reported
Quarterly Income Statements: As Reported Particulars (₹ cr) 31-Dec-18 31-Dec-19 Y-oY 30-Sep-19 Y-o-Y For 3 months ended Total income from 5,301 5,130 -3.2% 5,394 -4.9% Operations Gross Profit 1,380 1,474 6.8% 1,464 0.7% Gross Margin % 26.0% 28.7% 27.1% Employee benefits expense 277 234 -15.6% 232 0.
Slide 21: Our Ecosystem Continues to Grow
Our Ecosystem Continues to Grow FRL | Presentation | February 2020 20 2 0
Slide 22: FRL's Retail Network
FRL’s Retail Network As on 30 September 2019 As on 31 December 2019 Net Store Formats Area Additions Area Stores Cities Stores Cities (mn sqft) (mn sqft) 293 147 12.63 (3) 290 148 12.62 Large fbb 95 47 1.04 - 95 48 1.07 Stores 9 4 0.13 - 9 4 0.13 Small 1,147 344 2.55 (157) 990(1) 315 2.20 Stores Oth
Slide 23: Big Bazaar Profit Club: Growing at 2x monthly rate
Big Bazaar Profit Club: Growing at 2x monthly rate, now in fashion also BBPC Members (mn) 1.0 ~10 lakh members With 1 lakh+ 0.3 ~20 Average Yearly store visits Dec '18 Dec '19 Average ticket size of > ₹2,000 ~ ₹40,000 Average annual spend per user FRL Presentation | Feb 2020 22
Slide 24: Easyday Savings Club: Engine of throughput to small stores
Easyday Savings Club: Engine of throughput to small stores Easyday Club Members (in mn) 1.4 Average Total Members Members visit ~1,800 4-5 times >1.4 members per 0.96 a month million store Dec '18 Dec '19 Membership Annualized active in spend per member 794 stores ~₹ 30,000 Member-centric high-value
Slide 25: APPENDIX: Impact of IND AS 116
APPENDIX: Impact of IND AS – 116 FRL | Presentation | Feb 2020 24 2 4
Slide 26: Key Aspects of IND AS 116
Key Aspects of IND AS 116 • New lease standards effective from 1st April 2019. • No distinction between finance lease & operating lease. • All leases to be recognized in the balance sheet as an Asset and Liability. • The lease liability is measured at present value of minimum lease payments to be ma
Slide 27: Quantification of Adjustments
Quantification of Adjustments Standalone Income Statement Impact Consolidated Income Statement Impact (Q3FY20) (Rs cr) (Q3FY20) (Rs cr) - - Revenue Revenue Operating costs -386 Operating costs -404 (excluding depreciation and amortization) (excluding depreciation and amortization) EBITDA + 386 EBITD
Slide 28: Future Retail: Right Next To You
FUTURE RETAIL: RIGHT NEXT TO YOU This report contains forward-looking statements, which may be identified by their use of words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’, or other words of similar meaning. All statements that address expectations