Casino, Guichard-Perrachon S.A.

Welcome to the 2024 Half Year Results Conference Call. I now hand over to Mr. Philippe Palazzi, Chief Executive Officer, and Ms. Angélique Christofari, Chief Financial Officer of Casino Group. Please go ahead.

Very good morning, everyone, and welcome to the presentation of our first Half 2024 Results. I'm Philippe Palazzi, CEO of Casino Group. Joining me today is our CFO, Angelique Christofari. After four months at the head of the group, I wanted to talk today about the challenges that have been left for us and what action we are and will take to overcome them. Angelique will then take us through the numbers, and I will close with some final remarks before we take your questions. The first half of 2024 has been challenging. Our financial results are still impacted by legacy challenges, but we will improve upon the entire factory performance as we move forward. In fact, we have already made significant progress. We are not far off completing our comprehensive and realistic assessment of the group's fundamental financials, commercial and operational situations that we are inheriting. but it does not stop us from acting decisively where we can. Our resettling projects are well underway, and we have launched a profound commercial transformation in order to improve our financial performance. The new casino is a group of proximity brands, with proximity being the common DNA of our banners. This proximity is geographical, as we have a network of exceptional and unique locations, including C-Discount, which is always within 50 centimeters of you through your mobile phone, representing another form of proximity. So, this gives us several competitive advantages to help drive our recovery. First, we have a powerful brand with a clear and impactful positioning alongside well-identified private labels. Second, We have a unique geographical presence with significant market share in city centers like Paris and high-quality location across urban and rural areas. In fact, 42 million people in France live near one of our stores. Third, we have a highly skilled, committed, and loyal employees dedicated to the group. And finally, we have extensive experience in franchise, management, and expansion. which now represent a significant portion of the new casino stores. Our goal is to simply be the best of proximity. Obviously, this transformation will not happen overnight, but the roadmap is clear. First, we need to restructure the group, then consolidate our positions, and finally, develop the business. In the very short term, the urgency is to finalize the restructuring already underway. A significant step has been achieved through financial restructuring, debt has been significantly reduced, and equity has been injected. It is also imperative to quickly improve our accounts and review our cash management to ensure the group's sustainability. To finalize the restructuring, we are focusing on three key areas. One, selling hypermarket and supermarket assets to cut losses and keep the group afloat. We have already sold or reached agreement to sell over 400 stores. We still have about 30 that will either sell or close by the end of the year. Two, we are adapting our logistic network to a new perimeter. preserving the integrity of our store delivery chain. In short, we need to take our delivery capacity to the HMSM that we are selling, but make sure that deliveries to our remaining network continue to function smoothly. The last one, we inherited four operational and corporate centers. We are reorganizing them to generate synergy and implement more cost-efficient operations. We have already put in place a residency plan at Saint-Etienne Headquarters and are currently looking for the saving plans that we will roll out in the second half of the year. Before ending over to Angelique, this is the last but not the least of our topic. Our commitment to environmental, social and governance principle remains strong and it is recognized in our industry. First, in terms of environmental responsibility, we are actively combating climate change. We have renewed our ISO 50001 certification, which underscores our ongoing efforts to improve energy efficiency across our operations. Second, we are promoting more responsible trade practices. All Casino, Franprix, and Monoprix products are now rated with a Nutri-Score, helping consumers make healthier choices. Third, we act as a responsible employer. Our dedication to this principle is reflected in the renewal of our top employer 2024 certification, acknowledging the quality of our social practices. Additionally, we are committed to supporting the unprivileged. Monoprix and Franprix have launched a roundup campaign at checkouts to support women in difficulty in partnership with organizations like Les Restos du Coeur. We also organize in-store food drives to help those in need. We have achieved a 57% reduction in CO2 emissions since 2015, demonstrating our significant progress in reducing our environmental footprint. So, I will now hand this to Angelique, who will take through the numbers. Angelique, over to you.

Thank you, Philippe. Hello to all, and I'm very glad to have this first call with you after four months with the new Casino XCOM and with Philippe in the driver's seat. Let me first remind you that the scope of consolidation for 2024 only reflects 62% of last year net sales for France, focusing on ongoing activities that are expected to have superior profit and cash flow profiles. Our consolidation perimeter now includes our core convenient brands, Monoprix, Franprix, and Casino Convenience Stores. This discount is our e-commerce activity. We are in the process of finalizing the disposal of all of our hypermarket and supermarket stores. We are also closing unprofitable convenience stores and converting integrated ones into franchisee stores. Our intention is to operate a business of profitable stores for both franchises and the casino group. In this context, expansion will be run in a controlled manner. Net sales for the first half of 2024 totaled 4.2 billion euros, down 3.5% on a like-for-like basis. This decline is primarily due to the planned reduction in direct sales of sales discounts, which show an 18.9% drop. Our convenience banners showed resilience with a slight decline of 0.3% like for like. These figures underscore our shift towards more profitable and stable segments. In terms of EBITDA, our adjusted EBITDA was 255 million euros, representing the year-on-year decline of 79 million euros. This decrease is mainly attributed to last year one-offs to operational expenditure inflation, to a less favorable margin rate, and to ongoing legacy headquarters costs related to our former hypermarkets and supermarket businesses. A BDA after lease payment stood at 26 million euros, a decrease of 86 million euros compared to previous year. To counter our challenges, supply enhancements and cost efficiency measures are being worked at, Those efforts are expected to stabilize and improve EBITDA performance moving forward. Despite operating in a no-growth market where inflation came down, our performance has been resilient. Monoprix and Naturalia showed positive growth with net sales reaching 2.15 billion euros, up 0.8% like for like. E-commerce at Monoprix grew by 15%. Franprix maintained a steady performance as well, with net sales of 815 million, up 0.4% like for like, despite adverse weather in June, which altered the like for like total performance, which at the end of May was plus 1.2%. Casino proximity sales were 700 million, down 3.8% like for like. hit by the hypermarket and supermarket disposals and poor weather conditions. The discount net sales were 468 million euros, reflecting an 18.9% decline due to the planned reduction in direct sales and promotion of its marketplace activity, which gross market value showed positive evolution in June and July. Our Adjusted EBITDA for the first half of 2024 was €255 million, a decline of €79 million year-on-year. The adjusted after-lease payment EBITDA was €26 million, down €86 million year-on-year. These results reflect, first, a €20 million of positive one-offs in last year's reported figures. Second, inflation in various costs, amongst which are rent increases. as well as 25 million of hypermarket and supermarket headquarter costs. Such costs at headquarter level are inherited from the hypermarket and supermarket businesses. They take, however, into account the consequences of the redundancy plan project. Our value creation plan will deal with this and restore EBITDA in the coming period. Our financial reasons have been significantly impacted by non-cash items. These include 422 million of FGW depreciation, as well as a fair value gain on converted and reinstated debts amounting to 3.5 billion euros. We have also expensed 81 million financial restructuring costs this year. As regards the FGW depreciation, It derives from two factors. First, the actual performance of Franprix, which is below what had been considered in the past. We had to take into account a restated recurring EDDA performance of Franprix. Second is our assessment of the EDDA target margin of Franprix and the capex to be invested in. As a result, We have achieved a net profit from continuing operations of 2.5 billion euros in the first half of 2024 compared to a loss of 1 billion in the same period last year. When you back out the non-cash fair value gain and other operating income and expense, the underlying net loss amounts to minus 349 million euros, a substantial reduction compared to last year. In half-year 2024, we reported a free cash flow deficit of 413 million euros, including deferred tax and social charge payments from our financial restructuring. We also faced challenges like inflation and cost, market mix adjustments, and franchise payable write-offs. Plus, the comparison is made difficult as the amount last year included $20 million of one-offs. That did not repeat this year. Lost operational financial capacity was $488 million last year. Excluding these and excluding the deferred payments of tax and social charges, free cash flow was minus $260 million last year versus $260 minus 248 million this year. Now starting from the free cash flow of the previous slide, our net debt position was substantially improved compared to the same period last year for four main reasons. By order of materiality, First, the financial restructuring on a net-debt basis reduced gross debt by €5 billion. This includes the capital increase of €1.2 billion and debt cancellation for €3.9 million. Second, asset sales of our LATAM and INFRAN, primarily the sale of our Tesino hypermarkets and supermarkets, raised €1.2 billion in total. Net interest expense declined by 71 million thanks to a smaller growth debt position over the period. And finally, the cash burn coming out from the H&M and supermarket was smaller thanks to debt sales. I would point out that this particular series of cash burn will be much lower in the second half of the year. As a result, net financial debt was reduced by 5.1 billion euros from 6.2 billion last year to 1 billion at the end of June. On the next slide, we see the composition of our debts. We can see that the RCF has been fully repaid thanks to asset sales. All the debt was done by €211 million, primarily due to repayment of bank overdrafts and increase in segregated accounts due to the sale of supermarkets and supermarkets. And I would like to remind you that we reached a deal to sell 200 million euros of real estate assets that secure the quatrain loan. When this transaction closes, quatrain debt will go down by a similar amount. On this slide, we can see our debt maturity profile. Our next material maturity would be in March 26 in relation to our various RCFs. If we decide not to decide, there are options to extend out to March 27th. Quatrain is due in January 27th, and this instrument has also an extension option out to January 28th. The reinstated terminal B comes due in March 2027, so we are pretty comfortable for the coming quarters. Now let's move to our liquidity position at the end of June, which stands at 1.79 billion euros. It includes $0.72 billion available cash at Casino Financery, which is the cash pool entity of the French business, $0.71 billion in fully unrolled reinstated Monoprix RTF, and $0.35 billion in other unrolled and immediately available revolving credit facilities, mainly related to Monoprix Exploitation RTF, Monoprey holding bilateral credit lines and overdrafts. Just as a reminder, under the new loan documentation, available cash is defined as cash and cash equivalent excluding the float and any trapped cash. Now moving on to my last slide, post-restructuring, we have new financial components. With the first test date, being set off for September 2025, following an 18-month holiday period. The financial covenants under the new financing agreement then include a minimum liquidity, which must at least reach 100 million on the last day of each month. At the end of each quarter, the liquidity forecast for each month of the subsequent quarter must also be at least at a minimum of $100 million. And the total net leverage ratio at the end of each quarter must be below the specified thresholds. As of June 2024, this ratio was 5.41, based on the $230 million for formal EBITDA and $1.2 billion total net debt. Please note that the ceiling of the net financial debt covenant out of adjusted EBITDA The governance ratio is set at 8.34 for September 2025. So that concludes my presentation, and now I turn the floor back to Philippe for his closing remarks.