RALLYE 2015 First-Half Results

Casino Group total sales of €23.7bn in H1 2015 and return to organic growth in France in Q2 2015

Casino Group’s earnings affected by price cuts effects in France and the slowdown in Brazil

Strong decrease in Rallye’s H1 2015 cost of net financial debt by €34m, at €57m

Continuation of the sales momentum at GO Sport Group

PARIS--(BUSINESS WIRE)-- Regulatory News:

Rallye (Paris: RAL):

The consolidated financial statements for the first half of 2015, established by the Board of Directors on July 29, 2015, were reviewed by the Statutory Auditors.

H1 2015 KEY P&L DATA

Continuing operations (in €m)	H1 2014(3)	H1 2015
Net sales	23,556	23,995
EBITDA (1)	1,292	986
EBITDA Margin	5.5%	4.1%
Current operating income (COI)	811	507
COI Margin	3.4%	2.1%
Net income, Group share	(112)	(81)
Net underlying income (2), Group share	(60)	(79)
(1) EBITDA = current operating income + current depreciation and amortization expense
(2) Underlying net income corresponds to net profit from continuing operations adjusted for the impact of other operating income and expense, non-recurring financial items and non-recurring income tax expense/benefits (see details in the appendix) (3) The previously reported financial statements were adjusted further to the retrospective application of IFRIC 21

Rallye consolidated net sales amounted to €24.0bn, up +1.9% compared to H1 2014 restated. Current operating income reached €507m.

Rallye’s holding perimeter net financial debt stood at €2,783m as at June 30, 2015 compared to €2,798 as at December 31, 2014. The average maturity of credit lines was lengthened to 4.9 years (vs. 4.1 years as at end-2014), notably following the refinancing of Rallye’s €725m syndicated facility in May 2015.

Following refinancing using cheaper resources and the decrease in interest rates, Rallye’s cost of net financial debt was significantly reduced in H1 2015 at €57m, a decrease of €34m.

Net income, Group share improved in H1 2015, at -€81m.

Rallye’s net underlying income decreased, at -€79m as at June 30, 2015.

Casino Group: Consolidated sales of €23.7bn, up +1.8%. Current operating income (COI) of €521m, down compared with H1 2014. Increasing Net income, Group share of €75m and lower Net underlying income, Group share of €63m.

In the 2nd quarter of 2015, the Casino Group’s consolidated sales reached €11.8bn, virtually unchanged on an organic basis compared with Q2 2014 in spite of the macroeconomic context in Brazil.

In France, the quarter was marked by a return to growth (+0.4% in organic sales and +0.1% in same-store sales) driven by the growth of Géant and the recovery of Leader Price. Géant reported a +2.0% increase in same-store sales, boosted by increased traffic (+4.0%) and volumes (+5.0%). Leader Price reported a sequential improvement in same-store sales at -0.9% for the quarter with an increase in traffic (+7.0%) and volumes (+1.3%).

Food sales in Latin America were maintained at a good level (+6.1% in organic sales and +2.4% in same-store sales) driven by all subsidiaries. GPA Food posted robust performance with sustained organic growth that was better than in Q1 2015 (+7.3%) and increased traffic and volumes (+4.8% and +6.9% respectively) despite a high base effect (ending in July) and the macroeconomic environment. Exito continued to post satisfactory sales, with an increase in traffic in Colombia and good performance in Uruguay. In Brazil, the decline in Via Varejo sales can be explained partly by the base effect from the World Cup and partly by the decrease in consumption in the durable goods sector. The banner still continued to gain market shares in spite of the lacklustre context. Casino holds a 17.9% economic interest in Via Varejo.

The E-commerce business (Cnova) also reported a strong rise in gross merchandise volume (GMV) in Q2 2015, up +25.8% at constant exchange rates (CER)1. Traffic was up +38.9% with 396 million visits during the 2nd quarter. Marketplace growth remained high for both geographic regions, France and Brazil.

In H1 2015, the Casino Group’s EBITDA amounted to €994m and COI totalled €521m.

In France, EBITDA and COI declined compared with H1 2014. The price cuts in 2013 and 2014, mainly at Géant and Leader Price, continued to have a significant impact on the commercial margins of these banners. This impact should wane in H2 2015. The other banners achieved a performance level similar to that of the previous year.

COI for Latam Retail dropped -7.8% at CER. In Brazil, the rapid inflation of costs (energy, wages) weighed on the margin of the 1st half-year. Operational efficiency plans were launched to offset this impact on the second half of the year. The other Latin American subsidiaries (Colombia, Uruguay and Argentina) maintained satisfactory margins.

COI for Latam Electronics decreased by -27.0% at CER, impacted by the strong contraction in activity from the 2nd quarter. Via Varejo implemented significant action plans to improve its store network and favour the most buoyant categories, in addition to cutting down its in-store and structural costs.

Asia reported a +6.4% growth in COI at CER. In Thailand, the semester was marked by a good operational control and solid performance of shopping malls. In Vietnam, Big C continued its profitable growth.

Excluding new countries, E-commerce commercial margins grew between Q1 and Q2 2015. EBITDA and COI improved sequentially during the half-year. Operating costs (logistics, marketing, IT, etc.) were up compared with H1 2014 due to development investments made by Cnova.

Underlying financial result for the period totalled -€223m, an improvement on the previous year (-€296m), with, in particular, tight control over financial costs in France as a result of refinancing operations and lower rates. In Brazil (GPA and Via Varejo), the very strong increase in local rates was offset through an optimised management of trade receivable discounting and foreign exchange rate effect. Cnova managed to decrease its financial expenses by maintaining a stronger balance sheet.

Underlying net profit (Group share) amounted to €63m, declining mainly due to the previous price cuts in France and the slowdown in Brazil. Reported net profit (Group share) reached €75m, up compared with H1 2014 (€35m).

Net financial debt at 30 June 2015 stood at €8,512m. The increase in debt, year on year can be explained as follows: €264m from translation differences (linked to the depreciation of the Brazilian real, the Columbian peso and the appreciation of the Thai baht) from cash assets in Brazil and Colombia and liabilities in Thailand, €205m from acquisitions made by Exito (mainly Super Inter) and €247m from changes in Via Varejo’s working capital. Due to the seasonality of Cash-flow, net financial debt at the end of 2015 should be below that of end 2014. Free cash-flow year on year totalled €354m.

1 Data published by the subsidiary

Other assets

GO Sport Group: Further sustained growth of GO Sport Group sales in H1 2015 (+5.3% on a same-store basis)

GO Sport Group’s consolidated net sales increased by +5.3% on a same-store basis and using constant exchange rates. GO Sport France continued its momentum as same-store sales continued to grow this semester, with an increase in both traffic and volumes. Courir accelerated its growth, especially through the gradual integration of 18 stores formerly under the Bata banner. Finally, successful franchised formats for both GO Sport and Courir banners knew accelerated development (with a network of respectively 15 and 14 stores as at end-June 2015).

GO Sport Group’s EBITDA and COI were up slightly versus the first half of 2014.

Investment Portfolio:

Rallye’s investment portfolio is valued at €127m as at June 30, 2015, following €22m of net cash-in1 over the semester.

2. CONCLUSION AND PERSPECTIVES

• In the second half, the Casino Group will continue to roll out its strategic priorities:
  • In France, return to growth and profitability improvement
  • In Brazil, reinforcement of operational and cost cutting action plans
  • Maintain the good performances at Exito and Big C
  • Continue strong growth at Cnova
  • Take a major step in further integrating its Latin American operations
• Rallye benefits from a very strong liquidity situation, with close to €1.9bn of confirmed, undrawn and immediately available credit lines, benefiting from an average maturity extended to 4.9 years.

Rallye confirms its strategy to maximize its assets’ value, especially Casino, as well as its objective to lower its financial cost of debt by at least €40m in 2015

For more information, please consult the company’s website: www.rallye.fr

1 Net from investments

APPENDICES

	RALLYE H1 2015 RESULTS (CONSOLIDATED DATA)
	(in €m)	H1 2014 (2)	H1 2015
	Net sales	23,556	23,995
	EBITDA (1)	1,292	986
	Current Operating Income (COI)	811	507
	Other operating income and expenses	(179)	69
	Cost of net financial debt	(405)	(315)
	Other financial income and expenses	30	(165)
	Income tax expense	(136)	10
	Income from associated companies	31	35
	Net income from continuing operations	153	141
	Net income from continuing operations, Group share	(112)	(81)
	Net income from discontinued operations	(0)	4
	Net income	153	144
	Net income, Group share	(112)	(80)
	Net underlying income, Group share	(60)	(79)
	(1) EBITDA = current operating income + current depreciation and amortization expense (2) The previously reported financial statements were adjusted further to the retrospective application of IFRIC 21

	RALLYE SIMPLIFIED H1 2015 BALANCE SHEET (CONSOLIDATED DATA)
	(in €m)	12/31/2014(1)	H1 2015
	Non-current assets	30,432	30,492
	Current assets	16,790	13,412
	TOTAL ASSETS	47,222	43,904
	Equity	13,934	13,121
	Non-current financial liabilities	11,611	11,334
	Other non-current liabilities	3,262	3,254
	Current liabilities	18,414	16,196
	TOTAL EQUITY AND LIABILITIES	47,222	43,904
	(1) The previously reported financial statements were adjusted further to the retrospective application of IFRIC 21

RECONCILIATION OF RALLYE’S REPORTED PROFIT TO UNDERLYING PROFIT

Underlying profit corresponds to net profit from continuing operations adjusted for the impact of other operating income and expense (as defined in the “Significant Accounting Policies” section of the notes to the consolidated financial statements), non-recurring financial items and non-recurring income tax expense/benefits.

Non-recurring financial items include fair value adjustments to certain financial instruments at fair value through profit or loss whose market value may be highly volatile. For example, fair value adjustments to financial instruments that do not qualify for hedge accounting and derivatives indexed to the Group’s listed shares’ price are excluded from underlying profit.

Non-recurring income tax expense/benefits correspond to tax effects related directly to the above adjustments and to direct non-recurring tax effects. In other words, the tax on underlying profit before tax is calculated at the standard average tax rate paid by the Group.

Underlying profit is a measure of the Group’s recurring profitability.

	(in €m)				H1 2014 restated of IFRIC 21 impact			Restated			Underlying H1 2014			H1 2015			Restated			Underlying H1 2015
	Current operating income (COI)				811						811			507						507
	Other operating income and expenses				(179)			178			(1)			69			(70)			(0)
	Operating income				633			178			811			576			(70)			506
	Cost of net financial debt				(405)						(405)			(315)						(315)
	Other financial income and expenses(1)				30			(18)			12			(165)			183			18
	Income tax expense(2)				(136)			(30)			(166)			10			(110)			(100)
	Income from associated companies				31						31			35						35
	Net income from continuing operations				153			130			283			141			3			144
	Of which minority interests(3)				265			79			344			222			1			223
	Of which Group share				(112)			51			(60)			(81)			2			(79)
	(1) The following are deducted from Other financial income and expenses: the impact of monetary discounting of tax liabilitiesin Brazil as well as fair value changes of the Total Return Swaps on GPA and Big C shares, forwards, GPA call options andfinancial instruments that do not qualify for hedge accounting
	(2) The following are deducted from tax charges: tax items corresponding to the items deducted above, as well as non-recurringincome and charges
	(3) The following are deducted from minority interests: the amounts related to the items subtracted above

View source version on businesswire.com: http://www.businesswire.com/news/home/20150729006916/en/

Rallye:
Franck HATTAB, + 33 (0)1 44 71 13 73

Source: Rallye

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