Sligro Food N : Presentation Half-year figures 2020

Half-year figures 2020

Amsterdam, 23 July 2020

Agenda

•	Welcome	Koen Slippens
•	Half-year figures 2020	Rob van der Sluijs
•	Developments Netherlands	Koen Slippens
•	Developments Belgium	Koen Slippens
•	Outlook	Koen Slippens

2

Abridged statement of profit or loss1

Net sales

• Quarterly trend: from -55% to -35%.

• Relatively limited decline in petrol and healthcare, growth in tobacco products.

• Hospitality: 90% decline, gradual recovery.

• Catering and events 90%-100% decline, limited recovery.

• Ratio of DS/C&C changed from 68/32 to 59/41.

• De Kweker has also been hit.

3

COVID-19: impact on net sales

• Major impact of COVID-19 outbreak and subsequent government measures.

• Group net sales, excluding tobacco products and De Kweker has fallen by almost 55% since mid-March compared with 2019.

• Slow recovery in second quarter with gradual relaxation of government measures led to a decrease of approximately 35% towards the end of June.

4

COVID-19: measures

First half of 2020

• Temporary opening of C&C for retail customers (to 1 July), except for De Kweker.
• Cost reduction:
• • Reduction in temporary staff;
  • Reduction in third-party transport;
  • Various small initiatives and minimum vacancy-filling;
  • Maximum internal flexibility and mobility in relation to permanent jobs
• Careful investment choices.
• Working capital management, considering position of customers and suppliers (doing business fairly).
• No 2019 final dividend.
• Use of NOW scheme1 in the Netherlands and TWO2 scheme in Belgium.
• Sale & Leaseback DS Drachten, Maastricht and Breda.

Second half of 2020

• Recovery phase not expected until second half of 2021.
• Further adaptation of organisation with a view to the recovery phase.
• Set up amended medium-term and long-term financing structure.

5

Gross margin1

• Extra shrinkage as a result of Covid-19 is approximately €3 million.

• Impact of mix on gross margin %:

- C&C/DS  positive impact.

- Segments/Tobacco products  negative impact. - Less beer & cider = less fee  negative impact.

6

Other operating income1

• Drachten location sold for €8 million above carrying amount. In accordance with IFRS, €1 million has been recognised in profit or loss. €7 million will be recognised in profit or loss during the life of the lease agreement.

• Sale and leaseback transactions in Breda and Maastricht with no book profit.

• Book profit of €1 million for the sale of the shared premises in Amersfoort.

• EMTÉ service fee (TSA) of €5 million in H1-2019.

7

Operating costs1

• Additional costs De Kweker €11 million (mainly salaries and social security costs).

• Reduction of staff and transport.

• Use of NOW scheme2 in the Netherlands: €13 million.

• Use of TWO scheme3 in Belgium: €2 million.

• Extra provisions formed for receivables and loans provided of €3 million under costs to sell.

• Lots of small savings (e.g. training and maintenance costs).

• Temporary reduction in rent.

• Increase in energy tax.

8

Depreciation, amortisation and impairments1

• Impairment of €2 million for software in Belgium and SO 3.0 (SO 4.0 taken into use in July).

• Lease costs increase with €2 million per year as a result of sale and leaseback transactions in 2020 (depreciation and interest).

• Impairment Belgium see next slide.

9

Goodwill and intangible fixed assets1

			30 June		28 December
x € million			2020			2019
		125		168
		80		102
		15		15
			10			11
		105		128

Impairments Belgium

• Full confidence in Belgium.
• Recovery to profit due to COVID-19 taking longer than expected.
• End of 2019, limited headroom of €21 million.
• WACC assumptions and net sales growth modified due to COVID-19.
• Non-cashimpairment investments JAVA and ISPC:
• • Goodwill €43 million.
  • Customer relationships €17 million

Assumptions used impairments Belgium

								Nil hea droom
as %		Ba se scena rio		Applied		s cenario

10

Financial income and expenses and income taxes1

• Financing expenses on leases higher as a result of sale and leaseback transactions 2019/2020.

• Negative income tax expenses due to negative taxable profit, available for future tax offset.

• Release of €4 million of deferred tax liability in relation to impairment Belgium.

11

EBITDA for ratio calculation

• Reported EBITDA since 2019 including IFRS 16.

• Financing based on Net Debt/EBITDA ratio excluding IFRS 16.

• Excluding IFRS 16 provides better understanding of cash position.

12

Net profit and earnings per share1

• No final dividend for 2019.
• No basis for paying dividend over 2020.
• Priority is to recover financial position.

13

Abridged statement of cash flows1

• Lower cash flow from business operations owing to lower

EBITDA.

• Position of deferred tax payments as a result of COVID-19, €24 million.

• Limited dividends from associates in H1 2020 owing to COVID-19.

• Acquisition of Wheere (De Kweker) in 2019, for which loans have been entered into.

• Investments in DS network (€ 20 million), conversion C&C and SAP implementation.

• Divestments as a result of sale and leaseback transactions. Also assets for sale were sold (Bruges, Vleescentrale and Amersfoort).

14

Segmented cash flow1

15

Financing1

• Based on expectations at end of Q1, talks were started with financiers.

• Relaxation of short-term overdraft facility to €167 million, in particular, also more committed.

• Temporary relaxation of covenant Net interest-bearing debt/ EBITDA (excluding IFRS 16) to get through measurement date of 30 June.

• Solved in the short term, also with a view to repayment obligations (approximately €70 million) at the end of 2020.

• Talks in H2 to update medium-term and long-term financing (was already planned for this year pre COVID- 19).

• As a result of intervention and measures SFG in response to COVID-19, ultimately remained within original funding conditions.

16

Segment figures1

17

Jumbo Coop Claim

• On 13 March 2020, Sligro learnt of a writ of summons issued by the Jumbo & Coop consortium, resulting from the transaction concerning the sale of EMTÉ in 2018.
• The consortium alleges that in the context of this transaction, an incorrect picture had been painted of EMTÉ's historic profitability, as a result of which the performance following the acquisition fell short of the consortium's expectations.
• Sligro dismisses all accusations out of hand. The positions of the consortium do not have a factual or legal basis.
• • The witness hearing at the request of J&C last month further confirmed Sligro's stance.
• There is no reason whatsoever to compensate the consortium.
• • No provision has been formed for the claim.
• Sligro is therefore very confident about any legal actions.
• • Preparations are underway for substantive proceedings (session is likely to be in the winter of 2020/21).

18

Developments in the

Netherlands

General economic development in the Netherlands

• Sharp decline in consumer confidence as a result of COVID- 19.

• After COVID-19 there will still be an impact on consumer confidence and the unemployment rate.

20

Developments in the Netherlands

• Impact of COVID-19 on Dutch sales markets:
• • Shift from foodservice to retail;
  • Decline in net sales primarily in delivery owing to decline in segments such as restaurants, catering, events, sport and recreation;
  • Cash-and-carrynet sales growing, partly as a result of opening up to retail customers.
• COVID-19measures previously mentioned.
• Continued investment in important programmes for strong starting position in future:
• • Acceleration of integration of De Kweker and Heineken premises integration;
  • SAP online environment to go live for the first customers in early July. Heineken later this year;
  • In spite of steady progress in construction of ERP landscape, go-live postponed as a result of economic and physical restrictions of COVID-19.

21

De Kweker acquisition

Progress of integration

• Further implementation of planned organisational change, phasing out of head office.
• Integration of procurement contracts, benefit better than expected.
• Technical integration of Cash-and-carry and Delivery service accelerated to October.
• De Kweker also to leave its premises earlier.
• Development of De Kweker C&C new build, start of construction expected in H2 2021.
• Sale of VRC transport.

22

Heineken partnership

Looking back on first half of 2020

• Integration of premises nearing completion.
• Sligro Online 4.0 live is condition of one order invoice.

Looking ahead to second half of 2020

• Completion of integration of premises (18 July closure HDC Oss).
• Start of full-service for customer, as intended at start of partnership: from early November also one order and one invoice to the customer.
• Start of sales drive targeted at "filling" the customers (interesting for customer, Sligro, Heineken and the environment).

23

Heineken partnership: premises integration timetable

24

Network of sites

C&C postponed

• Heerlen (type III)
• Arnhem (type III)

DS already delivered 2020

• Maastricht (Q1)
• Breda (Q2)

DS further planned 2020

• Vianen (Q3)
• Relocation slowmover and Account Only DC from Den Bosch to Nieuwegein

25

C&C Next Gen: frictionless online and offline customer journey

Digitalise customer journey	Know the customers,		Offer choice
where online and offline	inspire them and
reinforce one another	approach them
		personally
Online
1. Look	2. Choose	3. Buy	4. Receive	5. After-Sales
Offline

26

C&C Next Gen: broad project portfolio

Stand out in customer

satisfaction C&C

Brand &

Customer

Order &

Deliver

Digitalise

format

elements

Product range & outlet

Price &

Promo

27

C&C Next Gen: growth opportunities also via hybrid order and delivery solutions

Customer

options

Customer orders online		Customer purchases in outlet

Work

Fulfilmentin progress

Sligro

DS		C&C hub		C&C full		Sligro Express		Cash-and-carry

28

C&C Next Gen: delivery from C&C started in week 8 2020

• Half of the C&C-outlets.
• There is a demand, rapid growth, week on week.
• Strengthen customer relationship.
• Building block in SFG network.

29

C&C Next Gen: use effective promotions with physical and digital reinforcing one another

Reduction in promotional material

More personal offers by e-mail

30

C&C customer: Food professional

Sees Rutte's press

conference. Can open again

from 1 June.

In the

picture

31

C&C customer: Food professional

Sees Rutte's press

conference. Can open again

from 1 June.

In the

picture

Sees 'Ready for

hospitality restart'

message.

32

C&C customer: Food professional

Sees Rutte's press

conference. Can open again

from 1 June.

In the

picture

Googles...

Sees 'Ready for

hospitality restart'

message.

Looks at the tips and inspiration Sligro.nl/Horeca- Herstart.

33

C&C customer: Food professional

Sees and orders Sligro safety

pack.

In the

picture

Googles...

Sees 'Ready for	Looks at the tips
and inspiration
hospitality restart'	Sligro.nl/Horeca-
message.	Herstart.

Visits Sligro Amsterdam and makes purchases for first guests.

34

C&C customer: Food professional

	Sees and orders Sligro safety
Sees Rutte's press	pack.
conference. Can open again
from 1 June.

In the

picture

Googles...

Sees 'Ready for	Looks at the tips
and inspiration
hospitality restart'	Sligro.nl/Horeca-
message.	Herstart.

Visits Sligro Amsterdam and makes purchases for first guests.

Loyal

customer

Aftercare or

service

35

Developments in Belgium

General economic development in Belgium

• Consumer confidence:

- Sharp fall as a result of COVID-19;

- Was already negative before COVID-19, and has not been as positive as in the Netherlands in recent years.

• Unemployment rate:

- Figure for 2020 Q2 not yet available.

37

Developments in Belgium

• Relatively limited decline in JAVA net sales owing to large share in healthcare.
• Sligro-ISPCnet sales:
• • Delivery net sales to hospitality in particular almost collapsed;
  • Losses from delivery net sales offset partly by cash-and-carry net sales;
  • Cash-and-carrynet sales in Antwerp has more than doubled, with explosive rise in number of new customers.
  • C&C open for retail customers until 1 September.

38

Network of sites

Already delivered in 2020

• New signing Sligro-ISPC Ghent and Liège (Q1).
• Refurbishment of head office in Rotselaar (Q2).
• Land in Bruges sold (Q2).
• Layout of Antwerp updated in line with C&C/DS ratio (Q2).

Also planned in 2020

• Expansion (internal) of refrigeration and freezer space for delivery in Antwerp (Q4).

Development 2020/2021

• DS Ghent region.
• C&C Leuven, orientation C&C Brussels region.

39

Update SAP

SAP ERP implementation: achieved so far

Construction phase

• The development of the prototype of the SAP system that we will use to manage our business processes is at an advanced stage.
• Our business processes have been widely updated so that they can be managed using SAP software in the future.
• Our colleagues are being trained step by step to use the new systems and processes.

Pre Go-Live projects

• Parts of the Belgian organisation are already being redesigned so that they can work with the SAP system
• Change processes are underway, a quarter of which have already been completed and the remaining projects are on track to be finished before the SAP go-live.

41

SAP ERP implementation: planning

Planning in second half of 2020 and first half of 2021

1. Finalise the development of the SAP system prototype.
2. Continue testing the SAP system based on all relevant business scenarios.
3. Train the users to work with the SAP system and the new way of working.
4. Migrate the current data to the SAP system.
5. Roll out the SAP system in Belgium, with the first go-live scheduled in Q2 2021.

42

Sligro Online 4.0: to 1 portal Sligro.nl

From	To
Different customer experience, site and shop are	Better customer experience, seamless transition of
independent	content and commerce to a single URL: sligro.nl

43

Sligro Online 4.0: faster, more stable and simpler

Performance:	Design:
Pages load faster	More user friendly

Less than one second per page

For example, easy to drag order list in preferred order

44

Sligro Online 4.0: phased, controlled roll-out

First customers - SE Customer selection Train Telesales Customer communication Customer feedback Support process

National Accounts

Evaluate &	Scale up nationally	NA
improve	Customer selection
	Train Telesales
	Customer
	communication
	Customer feedback
	Support process

Preparation pilot 0.8	Preparation pilot 0.9	Preparation full roll-out	Full roll-out 40,000 customers
Monitor & evaluate 0.8	Monitor & evaluate 0.9
22/6	27/7		September / October
45

Sligro Online 4.0: including Heineken and De Kweker

Test / UAT	Start roll-out	Full roll-out
Q2	June	August	October	November

46

Outlook

Outlook

Market conditions

• Continued pressure of government measures concerning COVID-19 on sales markets.
• Economic aftermath of COVID-19 is affecting consumer confidence and unemployment, separate from potential 'second wave'.
• Pre COVID-19 net sales levels will not be achieved until at least second half of 2021.

Sligro

• Adapting the organisation to this outlook, with a long-term perspective.
• Tight cost control and targeted investment.
• Previous choices in the organisation structure and priorities are being reconsidered:
• • Further integration of work in the Netherlands and Belgium;
  • In the Netherlands, own transport activities put on hold and De Kweker transport colleagues moved to transport partners.
• In case of net sales recovery, efficiency benefits will be achieved quicker as a result of accelerated (premises) integration of De Kweker and Heineken.
• Benefits from delivering on one order, one truck and one invoice as a result of the new web environment on SAP-Hybris.
• We refrain from forecast of the full year result.

48

Abridged statement of financial position1

50