company presentation august 2021 eurotorg the largest
TRANSCRIPT
Minsk, Belarus
Company presentationEurotorg – the largest retail chain in Belarus
August 2021
$184 mnAdj. EBITDA3,4
2
Undisputed market leader, …
19%
Market share
in total food
retail1
987Grocery stores
as of 30 June 2021
+10.8% Grocery retail sales growth,
1H 2021 vs 1H 2020
$2.1 bn
Revenue3 Adj. EBITDA margin4
Capex5 as % of revenue
… with strong financial performance,…
IAS 17, 2020
8.8%
2.4%
…and impeccable track record on international capital markets
«Most Impressive Debut
Issuer in Emerging Markets» «Debut of the year»
2018 2019 2020
35%
Net Debt / Adj. EBITDA6
2.81х USD
Adj. EBITDA4 /
Interest expenses7
3.7х
2017 2018
Credit ratings
on par with
Belarus’
sovereign
rating
Both agencies
revised the
ratings
upwards
В- stable
В- stable
В stable
В- positive
ruA- stable
2019
Eurotorg has become the 1st
non-Russian company to be
assigned a credit rating by a
Russian rating agency
В stable
В- positive
2020 – 2021
All ratings agencies affirmed
the Company’s credit ratings
(S&P in 2020, Fitch and
Expert RA in 2021)
ruA- stable
В negative
В- stable
Eurotorg overview
2021
Source: Company data, Eurotorg LLC consolidated IFRS financial statements, National Statistical Committee of Belarus. 1. Based on retail revenue in 1H 2021. Company’s estimation based on the National Statistical Committee data. 2. Calculated using average number of tickets per day in 1H 2021.
3. Metrics converted to USD at average USD/BYN rate according to the National Bank of Belarus, 1 USD = BYN 2.4349 in 2020. 4. Adj. EBITDA (IAS17) is net profit adjusted for income tax, financial expenses, depreciation and amortization of fixed and intangible assets and one-off expenses.
5. Including acquisition of related companies. 6. Net debt / adj. EBITDA in USD. Net debt is calculated as the sum of short-term and long-term loans (including obligations under finance leases and excluding obligations under lease rights) minus cash and cash equivalents. Net debt / adj. EBITDA is calculated in
USD, i.e. net debt and adj. EBITDA are converted in USD at the USD/BYN rate as of the end of the period and the average rate for the period, respectively. 7. Interest expense is accrued interest on loans, borrowings and financial leasing.
Market share
in modern food
retail1
~4x
Larger than player #21
Multi-format ~10% of populationFrom convenience format
to hypermarketsShop daily
in Company’s stores2
The award for Belarus’
1st corporate
USD 350 mn Eurobond
The award for debut
RUB 10 bn bonds on
the Moscow Exchange
RUB 5 bn bonds issue on
Moscow Exchange
Successful refinancing of the
1st Eurobond issue with
a new one of USD 300 mn
New RUB 3.5 bn
bonds issue on
Moscow Exchange
202120182015
1,5
2016 2017 2019 2020
2,0
2,5
3,0
2015
0.9%
20202016
3.4%
2014
2.8%
-5.9%-6.9%
2017
6.1%7.9%
2018 2019
4.7%
1H
2021
3
Stable macroeconomic indicators
Real disposable income of households has
slowed down, but remains positive
…которое было менее существенным в
сравнении с другими странами
GDP grew by 3.3% in Jan-July 2021, following a
slight decrease in 2020
Real GDP growth, % y-o-y
Inflation has accelerated, but still remains below
the crisis years
Key rate, %
In response to rising inflation the National Bank
of Belarus tightens monetary policy
Amid uncertainty the BYN exchange rate has
weakened
USD/BYN exchange rate dynamics
Gold and foreign exchange reserves remain
stable
Gold and foreign exchange reserves, USD bn
3.3%
1.7%
20192014 2015 20182016 2017 2020
(3.8%)
(2.5%)
2.5%3.0%
1.4%
(0.9%)
9.8%
4.6%
2016
16.2%
10.6%
2014
12.0%
2015 2017 July
2021
5.6%
2018
4.7%
2019
7.4%
2020
СPI, % December on December (July on July)
Source: National Statistical Committee
Source: National Bank of the Republic of Belarus
Source: National Statistical Committee
Real disposable income of households, %to the corresponding period of the previous year
Source: National Statistical Committee
Source: National Bank of the Republic of Belarus Source: National Bank of the Republic of Belarus, at the end of the period
5.14.2
4.9
7.3 7.2
9.4
7.5 7.4
2016 20182014 2015 1 Aug
2021
2017 20202019
Over >3.5 years Belarusian Ruble
has been stable
2.6424 March
2020 2.5125 August
2021
Jan-July
2021
5%
10%
15%
20%
25%
30%
Jan'16 Jan'17 Jan'18 Jan'19 Jan'20 Jan'21
Downward trend continued in
2017-20209.2521 July
20218.5
21 April
2021
2014 2016
36%
2015
64%
41%
56%59%
46%
1H 2020
54%
24
2017
48%
52%
46%
2018
44%
49%51%
2019
51%
2020
51%
49%
54%
1H 2021
1719
21
27
22
29
14 15
49%
The grocery market, mainly driven by modern food retail formats,
was less affected by the pandemic...
Grocery retail market, BYN mn (VAT incl.)
Modern formats
Traditional formats
… while the modern grocery retail penetration in Belarus
remains structurally low
Modern grocery retail penetration, %
51%
54%
53%
58%
65%
53%
78%
53%
82%
87%
89%
Poland ’07
Romania ’19
Belarus ’20
Belarus ’1H 21
Ukraine ’19
Turkey ’19
Russia ’10
Russia ’20
Poland ’19
Germany ’19
UK ’19
Eurotorg’s market share is as big as its 5 closest peers’ combined,…
~35%
~9% ~8% ~7% ~7% ~7%
~37%
Players
#2 – #6
~4x
Share of modern food retail format1 among top 6 players, 1H 2021, %
Share of total food retail market1ХХ%
~19% ~5% ~20%
Gap between #1 and (#2+#3…+#6)
Source: Boston Consulting Group, Euromonitor, National Statistical Committee of Belarus, Company data.
1. Grocery retail sales.
Eurotorg remains the undisputed leader
on the growing grocery retail market in Belarus
…and grocery market still remains fragmented
Share of top 5 players on the grocery market, %
32%
35%
35%
43%
50%
57%
61%
74%
74%
UK ’20
Belarus ’20
Russia ’20
29%Turkey ’20
Poland ’20
Belarus ’1H 21
Spain ’20
France ’20
Czech Rep. ’20
Germany ’20
XX%Growth of total
grocery retail market
Growth of modern
grocery retail marketYY%
4
+7%
+12%
5
Eurotorg operating results in 2Q and 1H 2021
Comments
▪ Positive LFL metrics: LFL sales increased by 4.2% in 2Q 2021,
driven by 4.2% growth of the LFL average ticket. LFL sales in
1H 2021 increased by 3.6%.
▪ LFL traffic remained unchanged, as customers continued the
trend seen during the pandemic of making less frequent store
visits.
443
316
291
266
✓ Retail sales growth: +10.8% y-o-y1 in 1H 2021.
✓ Fast-tracking new openings in 1H 2021 with focus on leased premises:
▪ 60 – net store openings (added 69 new grocery stores, closed 9 stores);
▪ 351 sqm – average selling space of newly opened stores;
▪ 52.7% – share of revenue from convenience-format stores (+0.7 pp y-o-y);
▪ 100% of newly added stores in leased premises.
✓ Sales density in 1H 2021 increased by 3.5% y-o-y to BYN 1,140 (~USD 443) per 1 sqm
per month. By sales density, the Сompany is ~1.7x ahead of Magnit, ~1.5x ahead of
X5 Group, and ~1.4x ahead of Lenta.
✓ Traffic density in 1H 2021 totaled 2.9 tickets per 1 sqm per day, that is ~1.5x higher
than traffic densities of key Russian retailers (Х5 and Magnit).
Retail sales1,
net of VAT, BYN bn
USD per
1 sqm per
month
2.9
0.7
1.9
1.9
Sales and traffic density of grocery stores, in 1H 2021
Key operating highlightsSelling space and number
of stores, end of period
LFL metrics growth y-o-y, 2020 – 2021
LFL sales LFL traffic LFL average ticket
3.4%0.5%
5.0% 5.3%3.0%
4.2%
1Q
’20
2Q
’21
2Q
’20
3Q
’20
4Q
’20
1Q
’21
3.3%
(12.7%)
1Q
’21
(4.8%)
1Q
’20
0.0%
(9.5%)
(12.5%)
2Q
’20
3Q
’20
4Q
’20
2Q
’21
0.1%
14.9%
10.3%
16.3%17.9%
1Q
’21
2Q
’21
3Q
’20
4Q
’20
1Q
’20
2Q
’20
4.2%
1H ’20 1H ’21
2.2 2.4
10.8%
хх Number of stores
870 927
334.6
2Q ’211Q ’212019
350.2
2020
345.8 368.1
950 987
Selling space, ths sqm
Tickets per
1 sqm per
day
Source: Company data.
1. Retail sales represent revenue from grocery stores, net of VAT. This number differs from consolidated IFRS revenue, which also includes wholesale and other revenue, lease income, and revenue
of subsidiaries (StatusBank and others).
6
Key initiatives: further expansion of discounter network
and a roll-out of self-service checkouts
Self-service checkouts (SCOs) roll-out2
▪ In 1H 2020, Eurotorg began testing the SCO format in one
of its hypermarkets in Minsk. After all the processes and the software
(proprietary solution) were set up, the Company began to scale this project up to
other stores.
▪ Eurotorg focuses on convenience stores and supermarkets as it's easier
for a customer to make a purchase on their own if the shopping basket (ticket)
is small.
▪ SCO implementing allows: 1. to increase staff productivity; 2. to reduce queues
in stores (~2 SCOs occupy an area of one standard checkout counter);
3. to minimize the number of contacts between people (an important aspect
during the pandemic).
1 1220
5012
35
2
34
1
97
3Q ’20
1
1Q ’214Q ’20
2
2Q ’21
4
Convenience Supermarkets Hypermarkets 353
125186
Share of revenue generated via SCOs in upgraded stores2, %
хх
Further expansion of discounters network11
116
155
309
19
469
46
Soft discounters «Hit!»
Localities
covered
Average selling
space, sqm
Number of
stores
Hard discounters «Groshyk»
Localities
covered
Average selling
space, sqm
Number of
stores
Share of discounters in selling space, %
at the end of the period
Share of discounters in retail sales, %
for the period
# of stores with SCOs,
units at the end of the period# of SCOs installed, units
Source: Company data. 1. As of 30 June 2021. 2. The calculation was made for stores where SCOs had been in operation for at least two full months after installation. There were 46 such stores:
convenience format – 16, supermarkets – 28, hypermarkets – 2.
3.9% 4.6% 5.9%
1Q ’212018 2019 2Q ’21
13.0%13.6%
2020
13.8%0.6%
9.3%
17.5% 18.4% 18.9%
Hit! Groshyk
6.8% 8.8%
2018
16.8%16.2%
2019 1Q ’21
3.4%
2020
16.7%
2Q ’21
0.1%
9.2%
19.6%23.6% 25.5%
Hit! Groshyk
16.5% 17.2%12.8%
16.5%21.1% 20.7%
24.7%21.3%
HypermarketsConvenience TOTALSupermarkets
Revenue Traffic
7
Key summary financials
Revenue BYN mn 3,933 4,403 4,759 5,083
Revenue growth % 8.1% 12.0% 8.1% 6.8%
LFL sales growth % 1.1% 2.8% (4.3%) 3.6%
Gross profit BYN mn 1,023 1,155 1,140 1,264
Margin % 26.0% 26.2% 23.9% 24.9%
Adj. EBITDA1 BYN mn 372 396 312 448
Margin % 9.5% 9.0% 6.5% 8.8%
Adj. EBITDA IFRS 16 BYN mn - - 435 584
Margin % - - 9.1% 11.5%
Net profit BYN mn 103 68 34 (83)
Margin % 2.6% 1.6% 0.7% (1.6%)
Adj. net profit2 BYN mn 111 127 30 138
Margin % 2.8% 2.9% 0.6% 2.7%
Net profit IFRS 16 BYN mn - - 53 (162)
Margin % - - 1.1% (3.2%)
Net trade working capital3
as % of revenue% (3.4%) (4.7%) (4.0%) 0.5%
Capex4 BYN mn 48 88 89 122
% of revenue % 1.2% 2.0% 1.9% 2.4%
Free cash flow5 BYN mn 195 375 374 59
% of revenue % 5.0% 8.5% 7.9% 1.2%
Debt6 BYN mn 1,366 1,248 1,214 1,501
Cash and cash equivalents BYN mn 174 162 286 168
Net debt IAS 17 BYN mn 1,193 1,086 927 1,333
Net debt / adj. EBITDA (BYN) X 3.21x 2.74x 2.98x 2.97x
Net debt / adj. EBITDA (USD) X 3.14x 2.58x 2.96x 2.81x
Net debt IFRS 16 BYN mn - - 1,277 1,797
Net debt / adj. EBITDA (BYN) x - - 2.94x 3.08x
Net debt / adj. EBITDA (USD) x - - 2.92x 2.90x
Adj. EBITDA / interest expenses7 x 2.7x 3.0x 2.4x 3.7x
Comments
Revenue
1
Profitability
2
Free cash
flow
generation
3
Leverage
4
Key summary financials
1
IAS 17 metric(unless indicated otherwise)
2018 20192017 2020
2
3
4
Source: Eurotorg LLC consolidated IFRS financial statements. 1. Adj. EBITDA is net income adjusted for income tax, financial expenses, depreciation and amortization of fixed and intangible assets and one-off expenses (in 2020) on accrual of provision for impairment of trade and other receivables in connection with
the closing of the pilot business controlled by the owners of the Group, i.e. a chain of drogerie stores, in the amount of BYN 26,372 ths. 2. Net profit adjusted for FX losses and change in the fair value of derivatives, as well as a corresponding income tax at the rate of 18%. 3. Net trade working capital includes
inventories, trade payables and receivables. 4. Includes expenses for acquisition of fixed and intangible assets, as well as expenses for acquisition of related companies, which in 2020 amounted to BYN 64,796 ths. 5. Calculated as net cash flow from operating activities minus capital expenditures plus proceeds from
sale of fixed assets and equipment. 6. Includes short-term and long-term debt obligations (including finance lease liabilities). 7. Includes interest on loans and borrowings, and interest on finance lease.
▪ Some growth in capital expenditures resulted from the
Company acquisition of five stores with total selling space
of 6.1 ths sqm, which had been leased by Eurotorg.
Nevertheless, Capex remained at a moderate level.
▪ Significant outflow in net trade working capital due to
one-off investments resulted in a lower free cash flow.
▪ Revenue increased thanks to:
✓ positive LFL sales (+3.6%);
✓ moderate openings rate (y-o-y selling space growth
+3.4%).
▪ Gross profit margin increased by 0.9 pp driven by:
✓ improved commercial terms from suppliers
in response to shortening payment cycles;
✓ optimization of logistics costs from 1.68% to 1.34% of
revenue.
▪ Adj. EBITDA margin improved to 8.8% due to higher gross
margin and lower administrative and selling expenses as a
share of revenue (mainly due to decrease in personnel
costs and marketing expenses);
▪ The net profit margin decreased on the back of FX losses;
▪ Net profit adjusted for FX losses demonstrated an upward
trend.
▪ Leverage in USD terms decreased to 2.81х;
▪ Leverage in local currency remained moderate due to BYN
depreciation against USD and EUR (by 22.6% and 34.7%
y-o-y, respectively);
▪ Interest expense coverage ratio rose to 3.7х on the back of
adj. EBITDA increase.
8
83 99
200
46
6460
2025
11
159
2Q-4Q 2021
17
2022 20242023
3
after 2025
527
147
219
57
Net debt2 and Net debt2 / adj. EBITDA3, e-o-p (IAS 17)
Net debt2 / adj. EBITDA3
Focus on maintaining moderate leverage
XX
Convenient debt repayment schedule
4.70x 3.21x 2.74x 2.98x
Debt repayment schedule1 by year, as of 31 March 2021, USD mn
31 March 2021
85
Cash and cash equivalents cover loan
repayments over the next 2 years
Debt portfolio
20192016 2017 2018 2020 1Q 2021
1,211 1,1931,086
927
1,333 1,387
Debt structure1, as of 31 March 2021
By currency
By lender
32%
40%
28%
Secured vs unsecured
2.97x
Net debt2, BYN mnBYN USD
Average debt portfolio maturity: ~3.9 years Available credit lines: ~265 USD mn
Eurobonds
RUB bonds
Other debt
Stable financial position and balanced debt portfolio
Total
2021-2022:32 USD mn
Eurobonds
RUB bonds
Bank and
other debt
89.6%
10.4%Unsecured
Secured
51%34%
15%
RUB USD EUR
38%
33%
29%
202020182016 2017 1Q 20212019
529618 605
503441
517
4.78x 3.14x 2.58x 2.96x 2.81x
Incl.
RUB-EUR
swap
Excl.
RUB-EUR
swap
Source: Eurotorg LLC consolidated IFRS financial statements.
1. Debt includes loan, borrowings and bonds (financial lease is not included). 2. Net debt is calculated as sum of current and non-current loans and borrowings (including finance lease obligations minus operating lease liabilities if relevant) minus cash and cash equivalents. Net debt is
calculated in USD terms at the USD/BYN exchange rate according to the National Bank of Belarus at the end of the period. 3. Adj. EBITDA (IAS17) is calculated as net profit adjusted for income tax, finance costs, D&A and one-time write-offs. Adj. EBITDA is calculated in USD terms
at the USD/BYN exchange rate according to the National Bank of Belarus for the period.
9
Appendix
10
A. Legal structure and
corporate governance
11
Legal structure of Eurotorg Holding Plc
Legal structure as of 31 December 2020
• «Magia» drogerie stores
• Business is under liquidation
Eurotorg Holding Plc
Revenue1: USD 2,171 mn
Assets2: USD 1,093 mn
• e-Commerce business
100%
Wasas of the end
of 2020
• e-dostavka.by
online store
Eurotorg Online Limited
(e-Commerce business)
«GiperMall Trade» LLC CJSC «Internet-magazin Evroopt»
100% 100%
Legal structure as of 25 August 2021
As is
100%
• Grocery retail business
Companies within the perimeter
of Eurobond issue and bonds
issues on the Moscow Exchange
Share in Plc Group revenue1, %
Share in Plc Group assets2, %ХХ
ХХ
«Roznichny Standard» LLC
• The financial results described below relate to the perimeter of Eurotorg LLC, which
encompasses a chain of grocery stores and a banking business, OJSC Statusbank.
Eurotorg LLC is the borrower under the outstanding Eurobonds and bonds issues on
Moscow Exchange.
• The e-Commerce business, which was part of the Eurotorg Holding Plc Group, was
spun off into a separate entity in Q1 2021 to enable it to pursue an independent
financial strategy.
Comments
JSC «Statusbank»
Grocery retail and
other subsidiaries
Eurotorg LLC
CJSC «Internet-
magazin Evroopt»
97.5%94.7%
94.7%94.4%
2.9%0.3%
1.7%5.3%
0.7%
Source: Eurotorg Holding Plc consolidated financial statements. 1. The number for 2020 is converted to USD at the average USD/BYN rate according to the National Bank of Belarus, 1 USD = BYN 2.4349 in 2020.
2. The number as of 31 December 2020 is converted to USD at the USD/BYN rate according to the National Bank of Belarus, 1 USD = BYN 2.5789 as of 31 December 2020. Minor deviations in the calculation of %
changes and totals on this and other slides and tables in this presentation are due to rounding.
100%
• Grocery retail business
Eurotorg Holding Plc
100%
Eurotorg LLC «Roznichny Standard» LLC
100%
JSC «Statusbank»
Grocery retail and other
subsidiaries
• «Magia» drogerie stores
• Business is under liquidation
Board of Directors1 (Eurotorg LLC)
Key management
12
Well-established corporate governance practices
Vladimir
Vasilko
Member of
the Board of
Directors
Shareholders
Corporate governance structure
Ownership structure, %
Sergey
Litvin
Vladimir
Vasilko
Andrei ZubkouAlexandr
Litvin
Sergey
Litvin
Member of
the Board of
Directors
Alexandr
Litvin
Chairman of
the Board of
Directors
1.0%
49.75%
48.75%
0.5%
Vladimir Vasilko
Sergey Litvin Andrei Zubkou
Alexandr Litvin
Andrei
Zubkou
Chief
Executive
Officer
Alesia
Sapunova
Chief
Financial
Officer
Evgeny
Zhygimont
First
Deputy CEO
Alexander
Shuliak
Chief
Commercial
Officer
Igor
Vorobyov
Marketing
Director
Pilip
Artsemenka
Chief
Retail Officer
Dzianis
Zelianukha
Human
Resources
Director
Andrei
Shkadzinski
Logistics
Director
Yulia
Vasilko
Chief Corporate
Development
Officer
Vladimir
Kukuruzin
Chief
Legal Officer
Andrei
Belkavets
Chief
Investment
Officer
Source: Company data.
1. As of 25 August 2021.
Alesia
Sapunova
Member of
the Board of
Directors
13
B. Operating and financial indicators
14
Grocery retail chain expansion: disciplined implementation of capex-light strategy
Selling space, sqm
Grocery retail overview
Share of newly added selling space which are rented, % of newly added selling
space during the period
45% 49% 52% 52% 53%
23%23% 24% 24% 24%
32% 28% 24% 24% 23%
Supermarkets
2020
Hypermarkets
2018 2019 1H
2020
1H
2021
Convenience
-1.4 pp
+0.6 pp
+0.7 pp
Change of share
in retail sales,
1H 2021 vs 1H 2020
Retail sales structure by formats, net of VAT, % Retail sales by size of localities1, net of VAT, BYN mn
164 180
556 585
471550
468517
543
609
Mid and small towns
Minsk
1H 20211H 2020
Regional centers
Large cities
Rural settlements
2,203
2,441
+12.2%
+16.9%
+5.0%
+9.7%
Growth, y-o-y, %
20172014 2015 2016 2020
192.5
2018 2019 1H 2021
250.6 270.7 278.5320.1 334.6 345.8 368.1
500
хх # of stores
762 870 927
Selling space and # of stores, at end of the period Breakdown of newly added selling space by ownership
453438298
60%
86% 90% 91% 96% 100%
Average for
2014-2016
20192017 20202018 1H 2021
Source: Company data.
1. Localities were classified based on the population: Minsk – more than 1,000 ths people, regional centers – 250-1,000 ths, large cities – 50-250 ths, mid-sized and small cities – less than 50 ths,
rural settlements – all localities outside cities.
987
+10.4%
15
Standard model
Soft discounter
Hard discounter
Average selling
space, sqm
Location
Hypermarket SupermarketUrban convenience Rural convenience
Rural settlements with
population of < 2 ths
people
Densely populated
urban districtsClose to transport routes
in towns with population
of > 50 ths people
Urban locations within
walking distance for target
customers
1
14
144
33
289
354
12
6
96
–
–
38
TOTAL
BY FORMATS
TOTAL BY
BANNERS
159 676 114 38
632
309
46
987
Pri
ce / o
pe
rati
ng
mo
de
l
SHARE IN
SELLING
SPACE
# of stores and selling space by formats and banners, as of 30 June 2021
SHARE IN SELLING
SPACE3% 41% 27% 29%
81%
13%
6%
Location / store size
Eurotorg operates a multi-format and multi-banner retail chain meeting the needs of
all customers
Source: Company data.
71 878 2,843220
16
Comments
Adj. EBITDA5 margin factor analysis based on IAS 17, % of revenue
% of revenue
SG&A structure (excl. D&A) based on IAS 17
2.0%
2018
8.7%
1.1%1.6%
1.0%
17.5%
2.0%
17.4%
0.8%2.0%
0.5%
2.3%
2.1%0.8%
2017
0.8%
2.6%
9.0%
0.7%2.0%
2.7%
9.3%
2019
1.7%0.3%
2.1%
2.7%
8.7%
16.4% 16.0%
2020
Other UtilitiesMarketing Taxes Rent Personnel1
SG&A (excl. D&A) as % of revenue decreased by 1.4 pp
6.55 pp
8.82 pp
0.86 pp0.62 pp 0.20 pp
0.48 pp 0.25 pp 0.04 pp
RentEBITDA2
2019
Personnel1 Change in the
allowance for
impairment of
financial assets4
Gross profit3 Utilities Taxes excl.
income tax
-0.03 pp
Marketing
expenses
Other SG&A Other income
and expenses
Adj. EBITDA5
2020
-0.10 pp-0.03 pp6.5%
SG&A overview and adj. EBITDA margin factor analysis
▪ Key factors of SG&A expenses decrease in 2020:
✓ decrease in personnel costs (by 0.6 pp);
✓ decrease in marketing expenses (by 0.5 pp);
✓ decrease in taxes, excluding income tax (by 0.2 pp).
▪ Personnel costs decreased due to the optimization of operational and
administrative staff including streamlining of the organizational structure and
merger of divisions with overlapping functions.
▪ Marketing expenses lowered due to a lower marketing activity and
changes in the “Udacha v pridachu” lottery, with longer rounds.
▪ Taxes were down by 0.2 pp as a result of a decrease in the marginal
coefficient for property tax from 2.5х to 2.0х.
Source: Eurotorg LLC consolidated IFRS financial statements. 1. Including personnel costs and social contributions. 2. EBITDA is net profit adjusted for income tax, financial expenses, depreciation and amortization of fixed and intangible assets. 3. Excluding the effect of depreciation
in the cost of goods sold. 4. Excluding one-off expenses on accrual of provision for impairment of trade and other receivables in connection with the closing of the pilot business controlled by the Group's owners, i.e. a chain of drogerie stores in the amount of BYN 26,372 ths.
5. Adjusted EBITDA is EBITDA adjusted for one-off expense on accrual of provision for impairment of trade and other receivables.
8.8%
17
EBITDA1 margin bridge, % of revenue
Adj. net profit5 margin bridge, % of revenue
0.62 pp
2.71 pp2.95 pp2.28 pp
0.27 pp0.28 pp
0.14 pp
2.67 pp
Adj. EBITDA5 Adj. net
profit6
2020
(IAS 17)
Net finance
costs excl.
FX losses
Adj. net
profit6
2019
(IAS 17)
Other finance
costs excl.
FX losses
Income tax
expense
One-time
write-off of
receivables
D&A7 Interest
costs8
Rent Amortization
of right-of-
use assets
Income tax
expense
Adj. net
profit6
2020
(IFRS 16)
-0.52 pp -0.36 pp
-1.63 pp
-0.74 pp -0.05 pp
Comments
EBITDA margin bridge and adjusted net profit margin bridge
6.55 pp
8.82 pp
11.50 pp
0.48 pp 0.25 pp 0.04 pp
2.67 pp
Marketing
expenses
Other SG&A Adj.
EBITDA5
2020
(IAS 17)
Other income
and expenses
Adj.
EBITDA5
2020
(IFRS 16)
Change in
allowance for
impairment
of financial
assets4
Personnel3 RentTaxesGross profit2
-0.03 pp
EBITDA1
2019
(IAS 17)
0.20 pp-0.03 pp
Rent Utilities
0.86 pp0.62 pp
-0.10 pp6.5%
8.8%
SG&A (excl. D&A) as % of revenue decreased by 1.4 pp
11.5%
0.6%
2.7%3.0%
Source: Eurotorg LLC consolidated IFRS financial statements. 1. EBITDA is defined as net profit (loss) for the period, adjusted for income tax, finance costs and depreciation and amortization. 2. Excluding the effect of depreciation in the cost of goods sold. 3. Including wages and social security contributions.
4. Excludes one-time write-off of receivables in the amount of BYN 26,372 ths due to the closing of drogerie business in 2020, which was part of Eurotorg Holding Plc Group. 5. Adj. EBITDA is EBITDA, adjusted for one-time write-off of receivables. 6. Net profit adjusted for FX losses and change in the fair value
of derivatives plus the corresponding income tax at the rate of 18% 7. Change in D&A included in SG&A (BYN 86,422 ths in 2020 and BYN 90,985 ths in 2019) plus change in D&A included in COGS (BYN 4,262 ths in 2020 and BYN 6,968 ths in 2019). 8. Net interest costs and finance lease expenses.
9. Exchange rate as of 31 December 2020: 1 USD = BYN 2.5789, 1 EUR = BYN 3.1680; as of 31 December 2019: 1 USD = BYN 2.1036, 1 EUR = 2.3524 BYN.
▪ Adj. EBITDA5 margin increased
by 2.3 pp to 8.8% in 2020, driven
by a decrease in SG&A
(-1.4 pp as a percentage of
revenue) on the back of lower
marketing and tax expenses, and
optimization of personnel costs.
▪ Due to the modest pace of new
store openings in 2020, D&A7 as a
percentage of revenue decreased
by 0.3 pp.
▪ Interest costs8 also decreased by
0.3 pp as a percentage of revenue
in 2020 due to the loan portfolio
(including the swap transaction)
average interest rate reduction
from 8.0% at the end of 2019 to
7.6% at the end of 2020.
▪ In 2020, other finance costs excl.
FX losses increased by 0.4 pp as
% of revenue, in connection with
an early redemption of the first
Eurobond issue and a placement
of a new Eurobond issue.
▪ FX losses (incl. change in the fair
value of derivatives) increased by
5.4 pp due to BYN9 depreciation
on the back of the stronger EUR
and USD (by 22.6% and 34.7%
y-o-y, respectively).
18
Net trade working capital dynamics
Working capital
Net trade working capital1, BYN mn Turnover days2
(504)
(689) (671)
(465)(532)
300381 369 369
471
72
102 110 92
84
(133)(206) (192)
(4) 23
2017 2018 2019 1H 2020 2020
Trade payables
Inventory
Trade receivables
Net trade working capital
X.X%Net trade working capital
as % of revenue
(4.0%)(4.7%)(3.4%) 0.5%
(63)
(77)(68)
(46)(51)
38 43 37 36 45
78
8 76
(19)(26) (22)
(3)0
2017 2018 2019 1H 2020 2020
Days payable
Inventory days
Days receivable
Cash conversion cycle
(0.1%)
▪ The change in net trade working capital from -4.0% as a percentage of revenue in 2019 to 0.5% as a percentage of revenue in 2020 was due to a one-off
investment in shortening payment cycles with suppliers in 1H 2020 and an increase in inventory at the end of the year.
▪ Improved commercial terms from suppliers in response to accelerated payments had a positive impact on gross margin, i.e. a contribution of 0.6 pp to gross margin
increase (overall, gross margin in 2020 rose by 0.9 pp to 24.9%).
Comments
Source: Eurotorg LLC consolidated IFRS financial statements.
1. Net trade working capital includes inventory, trade payables and trade receivables. 2. Inventory days: inventory * 365 / cost of goods sold; days payable outstanding: trade payables * 365 / cost of goods sold; days receivable outstanding: trade receivables * 365 / revenue;
cash conversion cycle: inventory days + days receivable outstanding – days payable outstanding. Minor deviations in the calculation of the cash conversion cycle are due to rounding.
312
318
358
374
388
125
7
(14)
66
(13)
(89)
105
1
(18)
(72)
(119)
(41)
EBITDA
Другие корректировки
Чистые денежные средства, от опер.деятельности до измен. обор. капитала
Изменение торгового оборотного капитала
Изменение прочего оборотного капитала
Уплаченный налог на прибыль
Чистые денежные средстваот операционной деятельности
Капитальные затраты
Поступления от реализации ОС,приобретение дочерних предприятий
Свободный денежный поток
Свободный денежный поток, до изменения торгового оборотного капитала
Прочие инвестиции
Прочие финансовые потоки
Изменение долга
Уплаченные проценты
Выплаченные дивиденды
Чистое увеличение/(уменьшение)денежных средств
19
Cash conversion (free cash flow or free cash flow before changes in trade working capital / adj. EBITDA)XX.X%
Eurotorg free cash flow in 2020 and 2019, BYN mn (IAS17)
▪ In 2020, the Company
continued to implement its
asset-light expansion strategy,
focusing on the development of
smaller-format stores in leased
premises. As a result, capex
remained moderate.
▪ In 2020, free cash flow
decreased on annual basis
mostly due to significant
investments in trade working
capital, aiming to decrease
trade and other payables.
▪ In 2020, free cash flow
conversion before changes
in trade working capital
amounted to 61.1%, despite
the decrease in proceeds from
sale of PP&E (in 2019, cash
inflow from sale of PP&E was
due to the sale of a large
shopping center in Minsk).
XX.X%
In 2020, Eurotorg free cash flow decreased due to significant investments in
trade working capital
448
447
104
59
274
(124)
(2)
(215)
(110)
(17)
(57)
12
5
(2)
(6)
(115)
(65)
Adj. EBITDA
Other adjustments
Net cash from operating activities beforechanges in working capital
Change in trade working capital
Change in other working capital
Income tax paid
Net cash from operating activities
Capex
Proceeds from the sale of PP&E, acquisitionof subsidiary
Free cash flow
Free cash flow before changes in tradeworking capital
Other investing
Other financing
Change in debt
Interest paid
Dividends paid
Net incease / decrease in cash
2020Monetary item Comments2019
Source: Eurotorg LLC consolidated IFRS financial statements. 1. Includes a change in the allowance for impairment of financial assets (excluding a one-time write-off of receivables in the amount of BYN 26,372 ths due to the closing of drogerie business in 2020, which was part of
Eurotorg Holding Plc Group) plus loss on disposal of PP&E plus impairment of PP&E plus proceeds from acquisition of subsidiaries. 2. Includes expenses for acquisition of PP&E, intangible assets and excludes expenses for acquisition of related companies, which amounted
to BYN 64,796 ths in 2020. 3. Includes proceeds from acquisition (sale) of subsidiaries, deposit interests received plus repayment of loans granted. 4. VAT under finance lease. 5. Debt includes loans and borrowings, and finance lease. 6. Including interest paid on loans and
borrowings, as well as on finance lease.
120.0%
124.4%
13.2%
61.1%
4
1
6
3
5
2
20
Contact details
Andrei Belkavets
Eurotorg, Chief Investment Officer
Investor Relations
Denis Denisov
EM
+7 985 410 3544
Peter Morley
EM
+43 676 684 5252
International Media