NUEVAPOLAR NON-DEAL ROADSHOW January 2013
Company Overview
3 Where do we come from Aconcagua Plan October 2012: US$280 millions capital increase May 2012: Agreement with Chile s Customer Protection Agency (SERNAC, Class action) November 2011: Settlement with creditors is reached August 2011: New CEO is appointed (Patricio Lecaros) July 2011: New Board of Director takes office Jun 2011: La Polar goes into a severe financial crisis
4 Committed Board of Directors Company overview Georges de Bourguignon A., Vice-chairman Alberto Marraccini V., Director César Barros M. Chairman of the Board Juan Pablo Vega W., Director Jorge Id S., Director Aldo Motta C., Director Andrés Eyzaguirre A., Director Controller Control and transparency Reports directly to the Board Ph.D. and M.A. in Economics at Stanford University. Former Chairman of SalmonChile (2007-2011) Vast experience in Banking and Financial Industry Internal Audit Gino Manríquez Controller Committee Directors (1) Directors (2) Risk Retail Colombia Finance César Barros M. Georges de Bourguinon A. Alberto Marraccini V. Jorge Id S. Juan Pablo Vega W. Andrés Eyzaguirre A. (*) Aldo Motta C. (1) Committee from Jul/11 to May/12, (2) Committee from May/12 (*) Appointed on January 8, 2013 after the resignation of Fernando Tisné
5 New Management Team First-class team with a strong experience in the industry Company overview CEO Patricio Lecaros CEO + 23 years of exp. Ripley, C&I, Quintec Andrés Molina Apparel Mngr. + 17 years of exp. Ripley, Hites Rodrigo Karmy Home and Electronics Mngr. + 16 years of exp. Epson Chile Rodrigo Nazer Marketing Mngr. + 9 years exp. La Polar Ricardo Rubio IT Mngr. + 27 years of exp. Salcobrand Álvaro Araya CFO + 11 years of exp. SQM Olivia Brito H.R. Mngr. + 21 years of exp. Servipag and Corpgroup Andrés Escabini Legal Mngr. + 11 years of exp. V. Undurraga Colombia CEO Francisco Martínez CEO Colombia + 18 years of exp. Falabella Sergio López Risk Mngr. + 30 years of exp. Hites and Scotiabank Claudio Sierpe Costumers and Payment Mngr. + 27 years of exp. Din, Conosur, Ripley Fernado Silva Insurance Brokerage Mngr. + 34 years of exp. Banco Estado, others Enrique Vitar Collecting Mngr + 28 years of exp. Banefe, B. Falab., Johnson Eduardo Lobos Planning Mngr. + 22 years of exp. La Polar, BCI Marcelo Acosta Sales and Distrib. Mngr. + 21 years of exp. Ripley Johnson Carlos Arredondo Logistics Mngr. + 20 years of exp. Ripley
4 th Player in Department Stores Company overview with 9% Market Share in Sales Relevant Market Share in Chile Market Share by Revenues (Sept 2012 LTM) The retail market in Chile has significant barriers to entry La Polar has smaller stores, with an average of 4,021 m2 per store Source: Company Reports Monthly Revenues by Selling Space (Sept 2012 LTM) UF/M 2 Number of Department Stores N Avg. Avg. Avg.. Avg.. 6,634m 2 2,967m 2 6,777m 2 6,384m 2 Avg. 4,021m 2 Avg. 6,214m 2 Source: Company reports Cencosud: includes Johnson and A. Paris UF Unidad de Fomentto (Indexed Unit of Account Chilean Peso) For more information about the Chilean Retail Industry please see appendix 2 6 6
7 Unique Portfolio of Strategic Locations throughout Chile Company overview With stores in 20 of the 24 largest cities in the country, 50% of the stores are in the largest cities throughout Chile LOCATIONS are a significant barrier to entry The strategic locations of our stores, enables the company to reach a broad range of income segment of the population Chile Iquique Antofagasta Calama Copiapó Coquimbo La Serena Ovalle Valparaíso Viña del Mar Los Andes El Belloto Santiago San Antonio Rancagua Curicó San Fernando Talca Los Ángeles Linares Concepción Bío Bío Osorno Chillán Puerto Montt Valdivia Punta Arenas Santiago Panamericana 40 STORES Estación Central Las Rejas Maipú Mall Plaza Sur Plaza Norte San Bernardo Colina Puente Ahumada El Bosque La Florida Gran Avenida Puente Alto La Reina + 161,000 m 2 of SELLING SPACE
8 La Polar, a strong Brand Rebounding Established in 1920, the brand has been present in the Chilean market for almost a century December 22/2012 was the bestselling day in LA POLAR HISTORY Company Overview Customers are one of the most valuable asset of the company Sales show a significant recovery, reaffirming our BRAND VALUE Revenues Performance, a strong recovery after the crisis (UF/m2) July August September 4Q 12.7% 9% 9% 8.6% Source: La Polar / UF Unidad de Fomento (currency indexed to Chilean Peso)
Business Overview
10 New Business Model Retail the Core Business of the Company New products brand mix 55% sales from Apparel and Shoes 30% sales from Private Labels New store concept Business overview US$40 million in Capex in the next 2 years, for remodeling stores Searching for new premium customers % of Revenues by Source Monthly Revenues (recovering the focus in retail) UF/m2
11 Reducing the financial risk 453,473 customers with LA POLAR CREDIT CARD (TLP) with debt Attracting new customers New credit card New credit policy New collection policy Decrease Risk rate (1) (1) Provisions stocks /Gross receivables Business overview 12% Aconcagua Plan Source: La Polar New Visa / Master La Polar credit card New Benefit Plan La Polar Credit Card approved by SBIF New financial regulations in Chile
12 Capex Program for 2013 and 2014 Remodeling 14 stores in Chile of aprox. 100,000 m 2 Opening 6-8 new stores in Colombia Capex Program (US$ millions) Chile 2013-2014 Remodeling and others 50 Colombia New stores 60 Total 110
Remodeling Stores in Chile 2013-2014 100,000 m 2 with a CAPEX US$40 million 13 Jan-13 April-13 Jun-13 Aug-13 First half 2014 2 stores 3 stores 1 store 3 stores 7 stores
14 La Polar Colombia growth opportunity Business Overview Stores New Store Bucaramanga Mall Cacique Opening : November 2012 Area of 6,103 m 2 Carabobo Opening: August 2011 Centro Mayor Opening: October 2010 Los Molinos Opening: October 2011 Floresta Opening: November 2011
La Polar Colombia growth opportunity Business Overview Expansion Plan Barranquilla 3 years Capex USD 100 million Cartagena de Indias Medellín Pereira Cali Bucaramanga Bogotá Villavicencio 18 projects in development and study stages 2 new stores in 2013 Remodeling stores For more information about the Colombian Retail Industry please see appendix 2 15
Aconcagua Strategic Plan
17 Aconcagua La Polar has set specific goals for the Chilean operation, for the short and medium term, to be achieved in 2014 Strategic Plan ACONCAGUA Sept. 2012 LTM Monthly retail revenues in Chile (UF/M2) 10 6.5 Retail Direct Margin 30% 21% Apparel and shoes (% sales retail) 55% 39% Private labels (% sales retail) 30% 54% SG&A expenses / Retail revenues 30% 23% Financial revenues/retail revenues 30% 23% Risk rate 12% 15% Sales % with LP credit card 50% 49% Retail Ebitda margin > 10% -5.3%
Financial Highlights
Financial Performance Key indicators show an increase in revenues Company Financial Highlights overview Income Statement Retail Sales in Chile (CLP Billion) 1Q 12 2Q 12 3Q 12 CLP Billion (2) Plan Aconcagua REVENUES 81.1 91.6 86.5 Retail 64.8 76.4 72.1 Financial 16.3 15.2 14.4 +7% +4% +5% Gross profit -7.2 20.4 19.7 EBITDA -32.4-5.5-8.9 Chile -29.8-2.2-5.4 Colombia -2.7-3.3-3.5 Adjusted EBITDA -10.6-4.7-7 Chile -6.9-1.4-3.5 Colombia -2.7-3.3-3.5 Net Earnings -34.9-10.2-13.6 Ajusted EBITDA Margin (1) over Chile Retail (2) Plan Aconcagua (1) EBITDA adjusted nonrecurring expenses (2) Business Plan 19 19
Financial Debt Financial Debt Restructuring Original Debt CLP$ 450 billion Senior Bond CLP$ 185 billion Junior Bond (UF) CLP$ 236 billion Present Value Settlement ** CLP$ 200 billion Legal settlement PS 27 CLP$ 24 billion @ rate UF + 10 * * Discount rate to be defined by an external study Senior Bond Amortization Semiannual starting in 2015 Interests From 2013 to 2022 with a rate between 4% and 10% Bond Amortization Profile (CLP$ billion) Junior Bond (UF) Amortization One coupon in 2032 Interests No interest payments Tranche C (PS 27) Amortization Semiannual starting in July 2018 until July 2024 Interests BCP 10 Rate + 1% starting July 31, 2013 20 20
21 Balance Sheet Pro-forma Balance Sheet As of September 2012 Balance Sheet (CLP Billion) Dec 11 Sep 12 Proforma Sep 12 * Cash and equivalents 35 10 143 Accounts Receivables 132 92 92 Main Impacts of the Capital Increase Cash Effect: + CLP$ 133 billion due to Capital Increase Inventories 44 52 52 Fixed Assets 69 67 67 Other Assets 55 75 75 Total Assets 335 296 429 Financial Debt 476 488 232 Financial Debt Effect: - CLP$ 256 billion financial debt restructuring Current 470 483 14 Non-current 6 5 218 Accounts Payables 68 59 59 Other Liabilities 20 37 37 Equity -228-288 101 Total Liabilities and Equity 335 296 429 Efect on Equity : + CLP$ 133 billion due to Capital increase + CLP$ 256 billion financial debt restructing (*) Effect of the capital increase
HIGHLIGHTS November 2012: A new store was opened in Bucaramanga, Colombia December 2012: release credit card restrictions from regulator (SBIF) December 2012: New Senior and Junior bond filling as part of the Settlement January 2013: NUEVAPOLAR part of the IPSA Chilean Stock Exchange Index NEXT STEPS January 2013: Customer Compensation Plan (SERNAC) January 2013: Start store remodeling 1Q 2013: New web page for Investors www.nuevapolar.cl March 20, 2013: 2012 Financial Statements March 22, 2013: Conference Call 4Q 2012 Results Investor Relations Contact: María Paz Ortega,,Head of Investor Relations Phone (562) 2383226 (mortega@lapolar.cl) 22
Appendix 1
24 Products Full renovation of the apparel department New mix of exclusive brands 2.0 Increase square meters of exclusive brands in stores Improvements in the purchasing process New design department New mix of private brands and local suppliers
251 New Brands Private Brand Customer: woman 28-35 years Business area: apparel, accesories, shoes, handbags and home Price level: Medium High Style: Sport Fashion
26 New Brands } Private Brand Customer: women 18-25 years Business area: apparel, and shoes Price level: Medium High Style: Sport casual
27 New Brands Private Brand Customer: woman and man 18-25 years Business area: apparel Price level: Medium High Style: Sport Casual
28 New Brands } Private Brand Customer: man 30-40 years Business area: apparel Price level: Medium Style: Sport Casual
29 New Store Proposal Change of image/ layout Remodeling 100.000 m 2 in the next 2 years Capex: USD 40 MM 1st place award: Shop window of the year by the Santiago Chamber of Commerce
30 Store proposal main goals are. Increase sales and returns by m 2 Improve visual merchandising to make more efficient takeoffs spaces Upgrade stores Increase market share
Appendix 2
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Disclaimer This presentation contains forward-looking statements, including statements regarding the intent, belief or current expectations of the Company and its management. The forward-looking statements are not guarantee of future performance and involves a number of risks and uncertainties including, but not limited to, the risks detailed in the company s financial statements, and the fact that actual results could differ materially from those indicated by such forwardlooking statements.