Slide 1: Action
Action Fast growing market leader in non-food discount retail 3i shareholder / research analyst company visit 10 June 2014
Slide 2: Confidentiality and disclaimer
Confidentiality and disclaimer No information contained in this presentation should be taken as a recommendation to buy, sell or hold the shares of 3i Group plc. (3i), Action Holding B.V. (Action) or any other securities. Nothing in this presentation constitutes or is intended to constitute financia
Slide 3: Agenda
Agenda 1. Introduction and Business Model 2. Store Operations 3. Sourcing 4. Merchandising 5. Logistics and Financials 6. Real Estate and International Expansion 7. Conclusion 8. Q&A
Slide 4: Introduction to presenters
Introduction to presenters Ronald van der Mark - CEO Professional experience 2004-2011 Maxeda, CFO/COO 1996-2004 Cementbouw Handel & Industrie, CFO 1984-1996 Various accounting/controlling positions Hajir Hajji – Director store operations Simon Hathway – Commercial Director Professional experience P
Slide 5: 1. Introduction and Business Model
1. Introduction and Business Model
Slide 6: Action – Leading Benelux non-food discounter
Action – Leading Benelux non-food discounter Leading non-food discount retailer in the Benelux Pan-European footprint Established in 1993, 20 years continuous growth track record > 400 stores > 15,000 employees > 2,500,000 customers per week > €1bn revenues p.a. Unique combination of a
Slide 7: Action is different
Action ts different //ACTION! |
Slide 8: The Action format
The Action format Extraordinary shopping experience Recognized by our customers Simple and differentiated business model Strong continuous growth track record
Slide 9: Lowest cost pricing
Lowest cost pricing Criteria for shopping at Action (% of respondents naming a criterion in the top 3) Price 92% Location 43% Product 35% range Quality 31% Changing 13% offer Service 10% A-brands 6% Atmosphere 2% Other 2% Source: OC&C BDD Commercial Due Diligence 2011
Slide 10: Best overall price perception
Best overall price perception Top 10 “low price” retailers (2013: OC&C Proposition Strength Index score (0-100))
Slide 11: Broad and surprising assortment
Broad and surprising assortment Well diversified sales by product category Breakdown of sales by type Category A Category B In/Out 60% Category … Fixed 40%
Slide 12: No concessions on quality
No concessions on quality HDMI cable of Action tested best in class by consumer program Radar Independent product quality test of HDMI cable • Action EUR 2.99 • ICIDU EUR 14.99 • Hama EUR 39.99 • Profigold EUR 69.99 • Monster EUR 139.99 1 Source: OC&C BDD Commercial Due Diligence 2011
Slide 13: Pleasant store environment
Pleasant store environment ACTION
Slide 14: Loyal customer base
Loyal customer base Action: favorite retailer in NL based on July 2013 survey from the largest NL consumer organization Action 29% Hema 17% Blokker 16% de Bijenkorf 12% V&D 11% marskramer 6% Xenos 6% kijkshop.nl 3% Source: Comsumentengids Magazine July-August 2013
Slide 15: Very satisfied customers
Very satisfied customers 81% of Action customers are (very) satisfied, only 1% is dissatisfied Source: GFK customer survey 2014: How satisfied are you with Action?
Slide 16: Strong word-of-mouth and free publicity
Strong word-of-mouth and free publicity
Slide 17: Strong growth since first store – international since 2005
Strong growth since first store – international since 2005 450 # stores Entry 400 France 350 Entry Germany 300 250 Entry FR Belgium GE 200 BE 150 NL 100 50 0
Slide 18: Strong financial track record
Strong financial track record € 1,200m 1,155 14% 12.0% 11.6% € 1,000m 11.3% 11.1% 12% 873 9.4% 9.6% 9.3% 10% € 800m 718 607 8% € 600m 515 6% 426 € 400m 341 4% € 200m 128 2% 71 86 99 32 39 49 € 0m 0% 2007 2008 2009 2010 2011 2012 2013 Net sales EBITDA EBITDA margin %
Slide 19: Significant growth opportunities
Significant growth opportunities
Slide 20: Strategy
Strategy 1. Building on the success of Action 2. Fast but controlled growth in the Benelux and other countries
Slide 21: We are able to deliver
We are able to deliver //ACTION! |
Slide 22: The path to further success for Action
The path to further success for Action 3 Refinancing/Exit: Optimize capital structure Develop exit strategies Execute exit strategies 2 Drive the business: Put the right people in the right place International expansion Implement best practice retail processes 1 Transition from founders/
Slide 23: Strong and committed team
Strong and committed team CEO: Ronald CEO and CFO constitute statutory board van der Mark Commercial: Stores: Hajir CFO: vacant Support Simon Hathway Hajji Finance: Marco Sourcing: Hans Countries Supply Chain: Bremer van Hattem (BE/DE/FR) Vincent Bröring RE: David Buying: Pieter HR: Sandra Wesselius
Slide 24: Engaged employees
Engaged employees Action scores higher than Retail norm on all themes Compared to Retail norm Operating efficiency 79 9 Career development 67 8 Rewards & perf. management 67 7 Working relationships 89 6 Client & image 87 6 Supervision 85 6 Leadership 73 5 Empowerment 78 4 Engagement 84 1 Tower Watso
Slide 25: Strong Board and supportive shareholders
Strong Board and supportive shareholders Board: - Adrian Bellamy (Chairman of Reckitt Benckiser) was recently appointed as Chairman of Action - In addition to Adrian the Board consists of Menno Antal (3i), Robert van Goethem (3i) and Marc van Gelder (Mediq) - Board meets on average every 4 weeks
Slide 26: And an increasing reputation
And an increasing reputation Source: Management Team MT 500 May 2014
Slide 27: 2. Store Operations
2. Store Operations /ACTION |
Slide 28: A clear and consistent strategy since 1993
A clear and consistent strategy right from the start in 1993 lies at the foundation of Action’s success For customers For employees Very low prices Cost conscious Surprising assortment Simple processes Stores ‘full, clean and Taking care of tidy’ employees
Slide 29: Founders' strategy and company culture captured in business values
Founders’ strategy and company culture captured in the ‘new’ business values after acquisition in 2011 1. Customer focus 2. Cost conscious 3. Teamwork 4. Discipline 5. Simplicity 6. Respect We have kept the Founders’ fair, no-nonsense culture; the business proposition has become even stronger
Slide 30: Store operations stronger and flexible in fast international growth
Store operations have become stronger and remain flexible even in the context of fast, international growth Ability to open up to 6 new stores in 4 countries per week Process 150 new products a week and frequent ‘last minute deals’ from Buying 148 trucks daily replenish all 430+ stores from 2
Slide 31: Three-year project to optimize and standardize store processes
Launched a three-year project in 2012 to optimize and standardize store processes Project Satisfaction Key results Process blueprint for all stores in all countries Improved store look & feel higher sales Smarter execution of the daily work More structure higher labour productivity Act
Slide 32: Additional upside from new projects in store operations and supply chain
Additional upside from new projects being implemented for further optimization of store operations and supply chain From manually ordering to (semi) automatic store Auto replenishment replenishment - Less time spent in stores - Higher product availability From limited stock control to daily inve
Slide 33: The Action format and operating model are identical in all countries
The Action format and operating model are identical in all active countries
Slide 34: 3. Sourcing
3. Sourcing
Slide 35: Strong and flexible sourcing model (1|2)
Strong and flexible sourcing model (1|2) IMPORTERS A-brand Direct Supplier1 Supplier2 Supplier3 manufacturers Sourcing Supplier A Supplier X Very large (400 – 500) and flexible supplier base 1.Supplier with stock in warehouse 2.Supplier operating under supply to order model 3.Broker linking Action w
Slide 36: Strong and flexible sourcing model (2|2)
Strong and flexible sourcing model (2|2) Action does not depend on any single supplier Low cost, opportunity driven sourcing model with a (FY 2013) high degree of flexibility Wide range of “can have” products but almost no “must have” products Flexibility used to source products through wholes
Slide 37: CSR – investing in ethical sourcing capability and processes
CSR – we are investing in our ethical sourcing capability and processes CSR disclosure in Annual report and website (June 14) Appointed a new Quality and CSR Manager (June 14) Implementation of new code of conduct and ethical sourcing procedures (July to Oct 14)
Slide 38: 4. Merchandising
4. Merchandising /ACTION |
Slide 39: Action attracts a broad audience across all customer segments
Action attracts a broad audience across all customers segments Total Action Action Total Action Action Total Action Action customer Non- customer Non- customer Non- customer customer customer Source: Customer survey by GFK Q4 2013
Slide 40: Wide range of surprising low priced assortment
Wide range of surprising low priced assortment Wide and non-specialized Weekly promo add example Selection of new article introductions Highly variable assortment 35% fixed assortment 65% in-out articles 100-150 new articles introduced weekly Format: keep customer surprised and committed
Slide 41: Increase share of Own-Brand and A-brand assortment
Increase share of Own-Brand and A-brand assortment A-BRANDS: A-Brand Non-Branded Own-Brand NON-BRANDED: OWN-BRAND (not Action brand):
Slide 42: Category Management aligned to the Action model
Category Management aligned to the Action model
Slide 43: Shelf planning to improve presentation and support
Shelf planning to improve presentation and support Changes: 6 Shelves to 3 Peg hook used Products facing the customer Easier to maintain Small articles on top, large on bottom BEFORE AFTER
Slide 44: Development of roadmap to support auto replenishment
Development of roadmap to support auto replenishment Central Centralised (fully) Level of central control Centralised (partially) Order suggestion Supportive Information “Eye balling” Local (current) Time
Slide 45: Online and social media increasingly important for engaging customers
Online and social media are becoming more important in communicating with and engaging our customers
Slide 46: The Action Facebook fan page has nearly 150,000 followers
The Action Facebook fan page has nearly 150,000 followers
Slide 47: 5. Logistics and Financials
5. Logistics and Financials /ACTION |
Slide 48: Centralized and efficient distribution
Centralized and efficient distribution First distribution center in Zwaagdijk (DC-A) of 100,000 m2 Second distribution center (DC-B) opened in Q1 2014 to facilitate further international growth
Slide 49: DC and trucks
DC and trucks ACTION
Slide 50: DC-B: operational since Q1 2014
DC-B: operational since Q1 2014 9 months from beginning of construction to first delivery Built on time and below budget Sale and lease back signed in May 2014
Slide 51: Strong and profitable revenue growth
Strong and profitable revenue growth P&L (€m) 2007 2008 2009 2010 2011 2012 2013 Sales 341 426 515 607 718 873 1,155 Sales growth % 25% 21% 18% 18% 22% 32% EBITDA 32 39 49 71 86 99 128 % of sales 9% 9% 10% 12% 12% 11% 11% EBITDA growth % 23% 25% 43% 22% 15% 29% Run rate EBITDA 114 147 (used for 3i v
Slide 52: Highly cash generative – even after expansion capex
Highly cash generative – even after expansion capex Cash flows (€m) 2008 2009 2010 2011 2012 2013 EBITDA 39.4 49.3 70.7 86.2 99.1 128.0 Changes in working capital 6.8 10.1 (13.2) 5.5 21.8 11.4 Maintenance capex & Other (0.8) (0.7) (1.4) (4.4) (5.1) (10.1) % of sales (0.2%) (0.1%) (0.2%) (0.5%) (0.6%
Slide 53: 5. Real Estate and expansion
5. Real Estate and expansion /ACTION |
Slide 54: High availability of low-cost real estate
High availability of low-cost real estate Flexibility on store locations (B and C locations): - abundance of available locations (“white spots”) Strong position: - limited competition from other retailers - highly attractive tenant Dedicated Real Estate team (HQ) supported by local RE teams in
Slide 55: Examples of locations
Examples of locations ACTION!)
Slide 56: Acceleration of store roll out since buyout
Acceleration of store roll out since buyout # store openings 120 100 80 FR Buyout GE 60 BE 40 NL 20 0
Slide 57: c430 stores in The Netherlands, Belgium, Germany and France
c430 stores in The Netherlands, Belgium, Germany and France Stores in The Netherlands Stores in Belgium
Slide 58: Growth strategy
Growth strategy Current store roll-out strategy: - fill white spots in the Netherlands and Belgium - continue profitable expansion in Germany and France: • new store locations to be reached from DC-A or DC-B within one day - continue acceleration of growth (100+ openings in 2014, potential to grow
Slide 59: 6. International Expansion
6. International Expansion /ACTION |
Slide 60: International expansion | Belgium
International expansion | Belgium First store opened in 2005 Current stores in Belgium Initial step outside Dutch home market Established player Acceleration of roll-out since buyout
Slide 61: International expansion | France
International expansion | France First store opened in December 2012 Current stores in France Positive performance of current stores Positive market environment Huge store opening potential
Slide 62: International expansion | Germany
International expansion | Germany First store opened in 2009, Current stores in Germany acceleration since 2012 Positive performance of current stores Positive market environment Huge store opening potential Success in the advanced German discount market shows further international potenti
Slide 63: THE discounter agrees!
THE discounter agrees! Karl Albrecht (94) Founder of Aldi Richest man in Germany Net worth >€20bn
Slide 64: Conclusions
Conclusions 7. Conclusion
Slide 65: Conclusions
Conclusions Action is different Significant growth opportunities We are able to deliver
Slide 66: /ACTION |
/ACTION |