CORPORATE

PRESENTATION November 2015

InRetail Overview

 Multi-format retailer with exclusive focus in Peru  Leading positions in its 3 segments

 #2 supermarket chain  #1 pharmacy chain  #1 shopping center operator  Controlled by Intercorp Peru, one of Peru’s largest business groups

2

InRetail is part of the retail arm of one of Peru’s leading business groups

100.0%

77.6%

Education Float1/ 28.8%

BVL: INRETC1

1/ Includes 6.3% of Nexus

3

InRetail at a Glance

Supermarkets

Pharmacies

Shopping Malls

1,303

734

138

33.8%

6.4%

LTM Q3 2015 (US$ millions) Revenues % of Revenues

59.9%

2,160

Adjusted EBITDA

80

64

86

228

Adj. EBITDA Margin1/

6.2%

8.7%

82.4%

10.6%

% of Adj. EBITDA

34.9%

27.9%

37.2%

102

874

18

273,594 m2

N/A

581,226 m2

13,967

10,370

369

# Stores / S.Centers Sales area / GLA # Employees

Note: FX of 3.087 (average LTM Q3’15, BCRP) 1/ For Shopping Malls is calculated over the Net Rental Income

4

KEY INVESTMENT HIGHLIGHTS

1 FAST GROWING

SECTOR

WITH SIGNIFICANT UPSIDE POTENTIAL

2 MARKET

LEADERSHIP

WITH A CONSISTENT GROWTH STRATEGY

3 STRONG FINANCIAL RESULTS

4 KEY INDICATORS

1

FAST GROWING SECTOR

WITH SIGNIFICANT UPSIDE POTENTIAL

Fastest growing economy boosts emerging middle class

Real GDP Growth

Population by Socio-Economic Category

(2008-2014 CAGR)

5.6% ~1.8x

SEC 3.1%

Annual Income

2005

2014

% of total population

A Perú

$ 45,962 5.1%

Latin America 1/

1/ Average Real GDP growth of Colombia, Brazil, Chile, Mexico Source: Peruvian Central Bank and IMF

GDP per Capita

12.5% +17.8 p.p.

B

$ 22,852

C

$ 14,455

14.3%

24.7%

D

$ 8,777

25.9%

24.6%

(2014, US$ 000) 14.9 12.8

11.1

Average: US$ 10.8

10.8 8.4

6.6

-17.8 p.p.

E

$ 6,163

54.7%

38.2%

Source: APOYO Consultoría 2015

Chile

Argentina

Mexico

Brazil

Colombia

Peru

Source: IMF

7

Significant upside potential for modern retail

Supermarkets

Pharmacies

Penetration as a % of Total Sales - 2014

Sales of Retail Pharma per capita US$ - 2014

59% 55% 51%

226

Mean ex-Peru: 139.8

~2.0x

4.8

130

4.4

Mean ex-Peru: 3.9

113

4.0

~2.6x

40%

90

~1.7x 2.3

25%

Peru

Malls per million people - 2014

Formal Pharmacies per 10’000 people: Peru 66 vs Chile 161

Sales area per capita: Peru 0.23 sqm vs Chile 0.67sqm

Mean ex-Peru: 51.2%

Shopping Malls

2.5

54

Colombia

Source: Euromonitor

Brazil

Mexico

Chile

Peru

Colombia Mexico

Source: Euromonitor

Brazil

Chile

Peru

Brazil

Colombia

Chile

Mexico

Source: International Council of Shopping Centers - 2015

8

2

MARKET LEADERSHIP

WITH A CONSISTENT GROWTH STRATEGY

Leading positions and highly recognized brands in all business segments Supermarkets

Pharmacies

Shopping Malls

2nd

1st

1st

Others 6.0%

18.2%

5.9% Others 34.2%

27.6% 37.1%

12.2% 14.2%

52.4%

23.5% 35.3%

8.8%

13.4% 11.1%

Plaza Vea is the most remembered brand among supermarkets

InkaFarma is the brand that more Peruvians aspire to consume

Real Plaza is the shopping center with more sales in 2014

Note: Market share based on sales LTM Q2’15 Source: Company filings as of LTM Q2’15 Brand awareness - IPSOS 2013

Note: Market figures refer to modern channel estimated sales LTM Q2 2015 Source: IMS, InkaFarma estimates. Brand awareness Arellano Marketing 2011

Note: Market share based on mall sales 2014 Source: Asociación de los Centros Comerciales del Perú (ACCEP) - 2015

10

Largest nationwide footprint of premier retail locations

Supermarkets

Pharmacies

102 Stores

874 Stores

18 Malls

(7) Sullana (2)

Talara Piura (2)

(29) (5)

(48)

Paita

Piura (2)

Cajamarca

Chiclayo

(40)

Cajamarca

(28)

Chiclayo

(21)

Trujillo (5)

Trujillo

(58) Huanuco

Chimbote (3)

Chimbote

(30) (15) Pucallpa

Huacho

(5)

Huancayo (2)

(42)

Lima (7) (4)

Cusco(2) (3)

Juliaca (38) Ica

Huancayo Cusco

(2) Chincha Pisco

Huánuco

(16)

(381)

Lima (71)



Shopping Malls

(17) (16)

(10)

Juliaca

Arequipa (2)

16 secured locations

Puno

Only modern supermarket

Tacna

Arequipa

(40) (8)

First mover in 16 out of the 21 cities outside of Lima  Total sales area (m2): 273,594  59% of stores are owned1/

Only modern shopping mall

(11)

 

Note: As of September 2015 1/ Owned by Supermercados Peruanos or through a related party

Present in all of Peru’s 25 Regions 100% of stores are rented

 

First mover in 5 out of the 11 cities Total GLA (m2): 581,226

11

Supermarkets Segment Formats • • • •

Attractive price positioning through High/Low strategy Fastest growing chain with largest presence across Peru

Brand

Revenues (LTM) S/.3,952 mm

Sales area range (m2)

# of Stores Total / Provinces

2,000 – 5,000

62 / 25

Compact Hypermarkets 79%

500 – 2,000

29 / 6

Supermarkets 14%

900 – 1,200

8/0

High-end 7%

Compact sized formats provide flexibility to grow First to enter 16 out of the 21 cities outside Lima where there is a modern supermarket present

• 16 additional locations secured • Ranked 8th among the best places to work in Peru

Market Share Evolution 52.0% 40.4% 30.0% 18.0%

2008

41.0%

40.2%

32.9%

33.6%

35.3% 24.3%

2011

38.1%

37.1% 35.3%

34.7% 26.1%

26.2%

27.3%

2012

2013

2014

Cencosud

SPSA

Tottus

27.6%

LTM Q2’15

Figures as of September 2015 Note: 3 legacy stores not included

Source: Company Filings, Nielsen

12

Pharmacies Segment Pharmaceutical Retail Market  Sustainable “Every Day Low Price” strategy…  High market-share

Modern Market US$1.3bn

Total Market US$2.2bn

Player

# of Stores

Annual sales per store

Mom & Pops

~7,000

~ US$ 0.1mm

Other chains

1,552

~ US$ 0.5mm

48%

29%

874

US$ 0.9mm

52%

32%

 Strong bargaining power with suppliers  High penetration of profitable private labels  Operational efficiencies

39%

 …with fast store growth  Small, standardized formats (~120 sqm)  Limited Capex of US $60,000 per store

 100% leased stores with proven renewal track record Assisted Sales Model

Note: Figures LTM Q3 2015 Source: IMS

13

Shopping Malls Segment Shopping Malls Sales Sales (US$ millions) 2014

 Nationwide premium portfolio of 18 locations

1,229.0

 581k sqm of GLA

957.0

 GLA has expanded 73.1% over the last 24 months, including: LTM Q3’15 Real Plaza Sullana Expansions Total

Date

GLA

May 2015

14k

LTM

25k 39k

906.5 750.0 595.0

Source: ACCEP 2015

Occupancy Rates  Preferred partner for local and international tenants:

94%

92%

93%

94%

96%

2011

2012

2013

2014

Q3’15

 High tenant renewal rates and low concentration of renewal per year  High occupancy levels despite recent important additions in GLA  Secured access to landbank to sustain growth

14

Profitable Growth Initiatives

Value proposition to client • Develop customer identification and loyalty programs • Optimize promotions and discounts • Enhance product portfolio (including private labels) and tenant mix • Launch digital and e-commerce strategies • Increase penetration of Tarjeta Oh!

Operational efficiencies and cost reduction • Capture in-store and supply chain efficiencies • Continue capturing synergies across formats

Expansion • Leverage in-house landbank team to secure growth • Open new stores and malls to capture untapped demand

15

3 STRONG FINANCIAL RESULTS

Consolidated Financial Results Million Soles (S/. mm)

Highlights Q3’15

Revenues 11.8%

Growth in Revenues, Adj. EBITDA and Net Income

4,930 4,408

• Revenues: +8.4% vs. Q3’14 8.4%

• Adj. EBITDA: +10.6% vs. Q3’14 • Adj. EBITDA Margin: 10.2% vs.10.0% • Net Income: +968.2% vs Q3’14. Excluding FX and mark to market, net income increased 15.7%

1,544

1,674

Q3’14

Q3’15

Adj. EBITDA

YTD’14

YTD’15

Net Income 25.1%

-50.6% 503

92

402

10.6% 154

45

968.2%

170

19 2

Q3’14

Q3’15

YTD’14

YTD’15

Margin 10.0%

10.2%

9.1%

10.2%

Margin

Q3’14

Q3’15

YTD’14

YTD’15

0.1%

1.2%

2.1%

0.9%

17

Financial Results by Segment Million Soles (S/. mm)

Revenues

Adj. EBITDA 10.6%

10.6% 4,647

4,200

311

Supermarkets

281

37%

37%

InRetail Consumer

Pharmacies

8.0%

5.9%

1,460

1,578

38%

38%

62%

62%

Q3’14

Q3’15

63%

63%

YTD’14

YTD’15 Margin:

99

105

52%

49%

48%

51%

Q3’14 6.8%

52%

52%

Q3’15

YTD’14

YTD’15

6.7%

6.7%

6.7%

32.3%

46.2%

317

196

240

InRetail Shopping Malls

134 21.0%

14.4%

95

Q3’14

48%

48%

108

Q3’15

55

YTD’14

YTD’15

Net Rental Margin:

67

Q3’14

Q3’15

YTD’14

YTD’15

81.2%

83.3%

79.2%

82.5%

18

InRetail Consumer Financial Results Million Soles (S/. mm)

Revenues

Adj. EBITDA

12.9%

10.0%

3,757

232

210

3,329 2,925

162

7.8%

Supermarkets

12.5%

912

983

Q3’14

Q3’15

2013

2014

YTD’15 Margin:

48

54

Q3’14

Q3’15

2013

2014

YTD’15

5.0%

5.4%

6.3%

6.2%

5.6%

19.5%

14.4%

185

2,086 1,824

Pharmacies

155

1,722

149

-0.3%

8.5%

548

595

Q3’14

Q3’15

2013

2014

YTD’15 Margin:

51

51

Q3’14

Q3’15

2013

2014

YTD’15

8.9%

9.2%

8.5%

8.9%

8.7%

19

Consolidated Net Income Million Soles (S/. mm)

Excluding FX and mark-to-market, Net Income increased 15.7% vs Q2’14 Net Income

• EBITDA growth of 10.6%

-50.6% 92

• +20.3% increase in depreciation expenses due to new supermarkets and pharmacy stores 45

+968.2% 19 2

Net Margin

Q3’14

Q3’15

YTD’14

YTD’15

0.1%

1.2%

2.1%

0.9%

• +14.8% increase in financial expenses mainly explained by one-time expense of S/.9.3 mm from bond repurchases • Forex:

• Q3’15: Loss of S/.35 mm • Q3’14: Loss S/.58 mm

Net Income excluding after-tax FX and mark-to-market gains: +24.1%

127

• YTD’15: Loss of S/.132 mm • YTD’14: Loss of S/.57 mm

103

• Mark-to-market:

+15.7%

Net Margin

• Q3’15: Gain of S/.4 mm • Q3’14: Gain of S/.10 mm

36

41

Q3’14

Q3’15

YTD’14

YTD’15

2.3%

2.5%

2.3%

2.6%

• YTD’15: Gain of S/.15 mm • YTD’14: Gain of S/.42 mm 20

Consolidated Capex and Financial Debt Million Soles (S/. mm)

Consolidated Financial Debt

Consolidated CAPEX 2014: S/. 792 mm

4.0x

4.0x

3.8x 3.6x

3.6x

3.6x

YTD 2015: S/.314 mm

3.7x

3.4x

333

3.4x

2.9x

3.2x 242

134 114

2012

105

104

1.3x

74

2013

2014

Net debt / EBITDA

LTM Q1’15 LTM Q2’15 LTM Q3’15

Q1’14

Q2’14

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

Debt / EBITDA

Debt

1,668

1,722

2,446

2,499

2,467

2,599

Cash

1,125

324

285

302

242

190

Net Debt

542

1,398

2,160

2,197

2,225

2,410

Free Cash Flow YTD 2015: S/.106 mm

21

Debt by Segment Million Soles (S/. mm)

Total Consolidated Debt: S/.2,599 mm Debt / EBITDA: 3.7x Net Debt / EBITDA: 3.4x

3.2x 2.9x

3.0x

2.8x

3.2x 2.9x

3.3x

8.2x

3.1x 2.7x

2.4x

3.0x 5.4x

2.0x

5.5x 5.0x 4.5x

4.3x

4.1x

4.1x

4.9x 4.3x

4.7x

0.4x

2012

2013

2014

LTM Q1’15 LTM Q2’15 LTM Q3’15 Net Debt/EBITDA

2012

2013

2014

LTM Q1’15 LTM Q2’15 LTM Q3’15

Debt/EBITDA

Debt

976

1,095

1,347

1,374

1,339

1,456

691

624

1,111

1,139

1,128

1,144

Cash

306

215

168

148

144

127

656

81

124

161

93

66

Net Debt

670

880

1,179

1,226

1,195

1,329

35

543

967

977

1,035

1,078

22

Exposure to USD

1

2

3

Repurchased US$ 172.8 mm of our Bonds up to date •

US$ 122 mm Consumer and US$ 50.8 mm Shopping Malls

•

One-time expense of ~ US$ 5.8 mm

•

Funded US$ 100 mm with medium term loans in PEN at interest rates of ~ 6.7% and the difference with cash from operations

Purchased US$ 200 mm Call Spread for InRetail Shopping Malls •

Exchange rate fluctuations coverage between S/. 3.225 and S/. 3.75

•

Annual cost of 1.84%

Converted US$30 mm Principal-Only Swap to US$100 mm Call Spread for InRetail Consumer •

Exchange rate fluctuations coverage between S/. 3.22 and S/ .3.75

•

Annual cost of 1.56%

23% of Total Debt exposed to USD (vs. 72% in Dic-14)

38% 72% 23%

39% 28%

dic-14 Hedge

sep-15 USD

PEN 23

Outlook 2015-2017 Secured Growth 2015

US$700 MM for CAPEX 2015-2017 By Segment Supermarkets

Supermarkets

+16K sqm of sales area (+5.9% growth in 2015)

40.3% Shopping Malls

52.4%

Pharmacies

Pharmacies

7.3%

+100 new pharmacies (+11.9% growth in 2015)

By Type of Investment Logistics, IT, other

6.0% Refurbishing of stores, mall expansions

Shopping Malls

+27K sqm of GLA

21.6%

(+4.9% growth in 2015) New stores, malls, landbank

72.5%

24

4

KEY INDICATORS

Quarterly Openings and SSS by Segment Openings

Same Store Sales (SSS)

Supermarkets

Supermarkets

Sales Area (‘000 sqm) 249

253

261

270

273

273

274

4.8%

5.6%

5.2%

4.9% 4.1%

4.3%

Q2’15

Q3’15

2.6%

No Stores

Q1’14

Q2’14

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

98

98

100

101

102

102

102

787

837

838

848

874

Pharmacies No Stores

Q1’14

754

731

Q2’14

SSS Averages

Q3’14

Q4’14

2013: 0.4%

Q1’15

2014: 4.4%

YTD’15: 4.7%

Pharmacies 10.8% Q1’14

Q2’14

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

9.3% 8.2%

Shopping Malls GLA (‘000 sqm) 425

5.9%

499

542

553

558

572

6.4% 5.2%

581

2.1%

No Malls

Q1’14

Q2’14

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

15

16

17

17

17

18

18

Q1’14

Q2’14

SSS Averages

Q3’14

Q4’14

2013: 2.7%

Q1’15

2014: 8.5%

Q2’15

Q3’15

YTD’15: 4.6% 26

Composition of Stores by Age Supermarkets

10% 9%

10% 9% 10%

7% 12%

4% 14%

9%

10%

72%

70%

72%

72%

72%

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

9%

12%

11%

11% 7%

14%

10% 6%

10% 4%

73%

72%

Q1’14

Q2’14

0-1 years

1-2 years

2-3 years

Mature

Pharmacies 18%

17%

16%

15%

15%

14%

12%

15%

25%

18%

14%

23%

15%

24%

6%

8%

11%

18%

21%

20%

52%

51%

51%

48%

49%

51%

54%

Q1’14

Q2’14

Q3’14

Q4’14

Q1’15

Q2’15

Q3’15

0-1 years

1-2 years

2-3 years

20%

Mature

27

Cash Cycle Supermarkets 100 90

99

94

93

90

93

93

92

80 70 60 0

52

4

56

59

4

2

3

-32

-35

-10 -20 -30

-38

-39

52

59

2

-31

59

54

3

2

-31

-36

-40 Q1’14

Q2’14

Q3’14

Days Acc Receivables

Q4’14 Days Acc Payables

Q1’15

Q2’15

Inventory Turnover

Q3’15 Cycle

Pharmacies 130 120 110 100 90 80

126 116

103

3

0 -10 -20 -30 -40 Q1’14

-10

107 103

87

104 82

81

3

4

4

3

-18

-17

-19

Q2’14

Q3’14

Days Acc Receivables

112

Q4’14 Days Acc Payables

-27

Q1’15 Inventory Turnover

116

112

83

78

3

3

-32

-30

Q2’15

Q3’15 Cycle

28

This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Peru and in Latin America as a whole. The words “believes”, “may”, “will”, “estimates”, “continues”, “anticipates”, “intends”, “expects”, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forwardlooking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material.

This material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material.

For more information contact: [email protected] www.inretail.pe