DJ RALLYE S.A.: Annual results 2022
RALLYE S.A. RALLYE S.A.: Annual results 2022 22-March-2023 / 19:04 CET/CEST Dissemination of a French Regulatory News, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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Annual results 2022
The Board of Directors of Rallye has acknowledged the results announced by Casino for the financial year ended 31 December 2022 as well as the sale by Casino of 18.8% of Assaí's share capital for an amount of EUR723.2m, in order to accelerate its deleveraging. Rallye draws the attention of investors to the fact that the safeguard plans depend primarily on the ability of Casino to distribute sufficient dividends, the principle and amount of which will depend on Casino's financial position, the implementation of its strategic plan and, in particular, its disposal plan. Rallye therefore considers that the risk factor related to the implementation of the safeguard plans has increased (cf. Universal registration document 2021 of the company, page 49, « Risks relating to the implementation of the safeguard plans »).
Rallye will liaise with its creditors in order to examine the possibilities and possible ways of adjusting its safeguard plan.
The consolidated and annual financial statements for 2022 were closed by the Board of Directors on 22 March 2023. They were established on a going concern basis[1] taking into account the forecasts made by Rallye for the next twelve months, which show a cash position (EUR19m at 31 December 2022) compatible with the operating costs of the structure and the future commitments taken within the safeguard plan[2].
The audit procedures have been performed by the statutory auditors and the certification reports are about to be issued.
(in EURm) 2022 2020 (restated*) Net sales 33,615 30,555 EBITDA[3] 2,498 2,503 EBITDA margin 7.4 % 8.2 % Trading profit 1,107 1,173 Trading profit margin 3.3 % 3.8 % Net profit (loss) from continuing operations, Group share (235) (143) Net underlying profit (loss) from continuing operations, Group share (220) (108) Net profit (loss), Group share (254) (277)
Rallye's consolidated net sales amounted to EUR33.6bn and trading profit was EUR1,107m as at 31 December 2022. The net underlying loss from continuing operations, Group share, amounted to - EUR220m as at 31 December 2022.
1. Holding perimeter [4]
Global tender offer launched by Rallye on its unsecured debt
On 9 May 2022, the Paris Commercial Court approved the amendment to Rallye safeguard plan allowing the effective completion of the global tender offer on its unsecured debt launched on 23 March 2022. Rallye acquired a total amount of unsecured debt of EUR242.3m for a total repurchase price of EUR36.6m reducing the amount of its debt by EUR234.9m (including accrued interest). The tender offer was settled on 16 May 2022.
Net financial debt of Rallye's holding perimeter
The bridge between Rallye's holding perimeter gross financial debt and net financial debt is detailed below:
(in EURm) 31 Dec. 31 Dec. 2021
2022
Claims secured by pledges over Casino shares 1,268 1,228
Unsecured claims 1,293 1,518
Claims secured by pledges over shares of Rallye subsidiaries (other than Casino) 142 137
Total - claims under the safeguard plan 2,703 2,883
Financings issued after the enforcement of the safeguard plan 397 295
Total - gross financial debt 3,100 3,178
Cash and other financial assets (1) (20) (17)
Total - net financial debt (before IFRS restatements) 3,080 3,161
IFRS restatements (including the impact of the approval of the safeguard plan) (2) (265) (343)
Total - net financial debt 2,815 2,818 1. Of which EUR19m at Rallye company level at 31 December 2022, including the drawing in June 2022 of the EUR15mfinancing subscribed to Fimalac, vs. 16 MEUR at 31 December 2021 2. As part of the safeguard procedure, the restatement of financial liabilities in accordance with IFRS 9 -Financial Instruments - amounted to EUR265m at 31 December 2022 versus EUR343m at 31 December 2021. The decreaseobserved over the year is mainly due to the second global tender offer carried out early 2022.
The accounting treatment comprising a reduction of the financial liability and as counterpart the future increase of the interest expenses is the translation of the IFRS 9 standard and does not amend the repayments undertakings or the financial liability to be reimbursed.
Rallye's holding perimeter gross finacial debt stood at EUR3,100m as of 31 December 2022, down - EUR78m, mainly as a result of: - Financial interests (excluding IFRS) of EUR134m over 2022, which will be repaid in accordance with therepayments undertakings approved by the Paris Commercial Court on 28 February 2020 and 26 October 2021 and itscontractual documentation. - Unsecured debt tendered for a total amount of EUR242.3m for a total repurchase price of EUR36.6m reducing thetotal amount of its debt by EUR234.9m (including accrued interest).
Rallye's holding perimeter net financial debt, before IFRS restatements, amounted to EUR3,080m as of 31 December 2022, compared to EUR3,161m as of 31 December 2021.
The change in Rallye's holding perimeter net financial debt over the year breaks down as follows:
(in EURm) 2022 2021 Net financial debt (opening) 2,818 2,839 Financial interests (excluding IFRS) 134 123 Holding costs 14 19 Net impact of the global tender offers on unsecured debt (1) (166) (113) Other 6 1 Variation of IFRS restatements (including the impact of the approval of the safeguard plan) 9 (52) Net financial debt (closing) 2,815 2,818 1. Excluding IFRS restatements (i.e. the accelerated amortization of liabilities under the IFRS 9 standardfor the acquired debt), the net impacts of the global tender offers carried out early 2021 and 2022 would amount toEUR156m and EUR235m respectively.
After taking into account the change in IFRS restatements (+EUR9m in 2022 and -EUR52m in 2021), Rallye's holding perimeter net financial debt amounted to EUR2,815m as of 31 December 2022.
The execution of the safeguards plans of Rallye and its parent companies depends mainly on Casino's distributive capacity as well as various refinancing options. The distributive capacity of Casino is framed by its financial documentation which authorises the distribution of dividends[5] when the ratio of gross financial debt to EBITDA including leases (France Retail + E-commerce) is below 3.5x. As at 31 December 2022, the gross financial debt to EBITDA including leases ratio was 6.86x versus 6.47x at 31 December 2021 (see table in Appendices).
Rallye company level annual result
Rallye's net loss for 2022 was - EUR1,696m (vs. - EUR334m in 2021). In particular, it incorporates a non-recurring financial product of EUR235m linked to the second buyback of unsecured debt and an impairment on Casino shares of an amount of - EUR1,768m in order to reduce their net book value to the value in use calculated at 31 December 2022, representing a value in use per share of EUR43.31 (vs. EUR74.49 as at 31 December 2021). As at 31 December 2022, Rallye's shareholders equity was thus negative -EUR601m[6] (vs. EUR1,095m as at 31 December 2021).
2. Casino's activity [7]
Casino Group's consolidated net sales amounted to EUR33.6bn in 2022, up +5.2 % on same-store basis4, up +3.8 % on an organic basis[8] and up +10.0 % as reported after taking into account the effects of exchange rates (+6.4%), fuel (+0.3%), calendar effect (-0.2%) and changes in scope (-0.3%). - In the France Retail scope, net sales rose +1.5% on a same-store basis, driven by a dynamic performancein buoyant formats. Including Cdiscount, same-store growth in France came to a negative 2.6%. - E-commerce (Cdiscount) gross merchandise volume (GMV) was EUR3.5bn[9], with an increase in the marketplacecontribution to 52% (+6 pts vs. 2021)5. - Sales in Latin America were up by +12.3% on a same-store basis4, mainly driven by the very goodperformance in the Cash & Carry segment (Assaí) and Grupo Éxito.
Casino Group's consolidated trading profit came to EUR1,117m, a change of -5.9% including currency effects (-3.6% excluding tax credits) and of -12.1% at constant exchange rates (-5.2% excluding tax credits). - In France (including Cdiscount), trading profit stood at EUR440m, including EUR482m on the France Retailscope and -EUR42m for Cdiscount. Trading profit for the retail banners (France Retail excluding GreenYellow andproperty development) was EUR421m (vs. EUR479m in 2021), with a trading margin of 3.0%. Trading profit came to EUR30m forproperty development and to EUR31m for GreenYellow. - E-commerce reported a -EUR42m trading loss (vs. EUR18m trading profit in 2021), impacted in particular by theincrease in depreciation and amortisation linked to investments made over the last few years to expand Octopia'soperations. - In Latin America, trading profit excluding tax credits was up +10.9% year on year, driven by Assaí (+44%excluding tax credits), in line with business growth. Including tax credits[10] (EUR28m in 2021 and EUR0m in 2022),trading profit was up +6.1% to EUR677m.
Consolidated net debt was EUR6.4bn (vs. EUR5.9bn at end-2021), including EUR4.5bn in France[11] (EUR4.9bn at end-2021) and EUR1.9bn in Latin America (EUR979m at end-2021). In France, the reduction in debt was notably due to bond redemptions and to the Segisor repayment (EUR150m). The increase in debt in Latin America is the result of higher debt at Assaí owing to its investment plan.
At 31 December 2022, the Casino Group's liquidity in France (including Cdiscount) was EUR2.4bn, with EUR434m in cash and cash equivalents and EUR2.0bn in confirmed undrawn lines of credit available at any time[12]. The balance of the unsecured segregated account was EUR36m at 31 December 2022, enabling the Casino Group to meet its January 2023 debt servicing obligations.
At 31 December 2022, the Group complied with the covenants contained in the revolving credit facility. The ratio of secured gross debt to EBITDA (after lease payments)[13] was 3.1x[14], within the 3.5x limit, representing debt headroom of EUR270m and EBITDA headroom of EUR77m. The ratio of EBITDA (after lease payments) to net finance costs stood at 3.0x (above the required 2.5x), representing EBITDA headroom of EUR115m.
3. 2023 Casino's priorities in France
Operational efficiency and development - Inventory reduction plan: -EUR190m in the first half of the year, offsetting end-2022 excess inventory - New cost reduction plan: -EUR250m in the retail banners - Acceleration of the expansion strategy in convenience formats: +1,000 stores representing more than EUR500min full-year gross sales under banner
Deleveraging - Completion of the disposal plan in France: EUR400m by the end of 2023 - Continued monetisation of assets in Latin America - Debt decrease
Press contact:
PLEAD
Étienne Dubanchet +33 6 62 70 09 43 etienne.dubanchet@plead.fr Disclaimer This press release was prepared solely for information purposes and should not be construed as a solicitation or an offer to buy or sell securities or related financial instruments. Similarly, it does not give and should not be treated as giving investment advice. It has no connection with the investment objectives, financial situation or specific needs of any recipient. No representation or warranty, either express or implicit, 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 exercise of their own judgement. All opinions expressed herein are subject to change without notice.
Appendices
Annual results 2022
(consolidated data)
(in EURm) 2022 2021 (restated) Net sales 33,615 30,555 EBITDA 2,498 2,503 Trading profit 1,107 1,173 Other operational income and expenses (590) (661) Cost of net financial debt (697) (494) Other financial income and expenses (221) (280) Profit (loss) before tax (401) (262) Income taxes 9 86 Share of net income of equity-accounted investees 11 48 Net profit (loss) from continuing operation, Group share (235) (143) Net underlying profit (loss) from continuing operations, Group share (220) (108) Net profit (loss), Group share (254) (277)
Rallye simplified balance sheet
(consolidated data)
(in EURm) 31 Dec.2022 31 Dec.2021 (restated) Non-current assets 23,723 22,074 Current assets 8,947 9,497 TOTAL ASSETS 32,670 31,571 Equity 3,861 3,814 Non-current financial liabilities 10,212 10,295 Other non-current liabilities 6,027 5,528 Current liabilities 12,570 11,934 TOTAL EQUITY AND LIABILITIES 32,670 31,571
Reconciliation of reported profit to underlying profit
Underlying net profit corresponds to net profit from continuing operations, adjusted for (i) the impact of other operating income and expenses, as defined in the "Significant accounting policies" section in the notes to the consolidated financial statements, (ii) the impact of non-recurring financial items, as well as (iii) income tax expense/benefits related to these adjustments and (iv) the application of IFRIC 23.
Non-recurring financial items include fair value adjustments to equity derivative instruments, the effects of discounting Brazilian tax liabilities, the restatements and impacts of the implementation of IFRS 9 following Rallye's safeguard plan approval, the deferment for two years of the payment dates and the net results of the global tender offers carried out by Rallye in 2021 and 2022.
(in EURm) 2022 Adjusted 2022 2021 Adjusted 2021 restated
items underlying restated items underlying
Trading profit 1,107 1,107 1,173 1,173
Other operating income and expenses (590) 590 (661) 661
Operating profit 517 590 1,107 512 661 1,173
Cost of net financial debt (1) (697) (17) (714) (494) (51) (545)
Other financial income and expenses (2) (221) (136) (357) (280) (113) (393)
Income taxes (3) 9 (185) (176) 86 (147) (61)
Share of net income of equity-accounted 11 11 48 48
investees
Net profit (loss) from continuing (381) 252 (129) (128) 350 222
operations
o/w attributable to non-controlling (146) 237 91 15 315 330
interests (4)
o/w Group share (235) 15 (220) (143) 35 (108)
1. Cost of net financial debt restatements mainly relates to the implementation of IFRS 9 - Financial
Instruments following Rallye's safeguard plan approval in 2020 and amended in 2021, as well as the cancellation of
the interest calculated, since the start of the safeguard procedure, on Rallye's unsecured debt repurchased during
the tender offer made in the 1st half of 2022.
2. Other financial income and expenses have been restated for the positive net impacts of Rallye's global
tender offers carried out in the first half 2021 and 2022.
3. Income taxes have been restated in accordance with items restated above.
4. Non-controlling interests have been restated for amounts associated with the above restated items.
Estimated repayment profile of Rallye's liabilities
(in EURm)
The estimated repayment profile of Rallye's liabilities incorporates the impact of the tender offer on the unsecured debt (see "1. Holding perimeter" of this press release) and the impact of the forward yield curve.
It is detailed in the press release attached to this article and available on the company' website: https:// www.rallye.fr/en/press/press-releases.
Additional Information Gross debt to EBITDA ratio governing the distribution of dividends
in Casino's financial documentation
Financial information for the 12-month period (France Retail + E-commerce scope) ([15])
(in EURm) 31 Dec.2022 31 Dec.2021 Net sales 15,825 16,101 EBITDA 1,321 1,464 (-) impact of leases ([16]) (601) (622) (i) EBITDA including leases 721 842 (ii) Gross debt ([17]) 4,945 5,450 (iii) Cash and cash equivalents 468 569 Gross debt to EBITDA ratio (ii/i) 6.86x 6.47x
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* The 2021 financial statements have been restated to reflect the retrospective application of IFRS IC decision with regard to the costs of implementing, configuring and customizing software in SaaS mode.
[1] The notes to the annual financial statements will indicate that there is significant uncertainty about Rallye's going concern related to Casino's ability to distribute sufficient dividends and/or the possibility of amending Rallye's safeguard plan by the deadline of February 2025.
[2] As a reminder, no payment is due under the safeguard plan in 2023
[3] EBITDA = trading profit + current depreciation and amortization expense
[4] Rallye's holding perimeter is defined as Rallye and its subsidiaries holding the investment portfolio
[5] Beyond ordinary dividend representing 50% of net profit attributable to owners to the parent, with a minimum of EUR100m per year from 2021 and an additional EUR100m that may be used for one or several distributions during the life of the debt instruments.
[6] The company Rallye, benefiting from a safeguard plan, shall not be required to apply the procedure for convening an extraordinary general meeting for the purpose of deciding whether or not to dissolve and the reconstitution of equity if the dissolution is not pronounced in accordance with the provisions of Article L 225-248 paragraph 7 of the Commercial Code.
[7] More detailed information about Casino activity is communicated directly by the subsidiary
[8] Excluding fuel and calendar effects
[9] Data published by the subsidiary
[10] Tax credits restated by subsidiaries in the calculation of adjusted EBITDA and adjusted trading profit
[11] France including Cdiscount, GreenYellow and Segisor
[12] Subject to compliance with covenants tested at the end of each quarter
[13] As defined in the refinancing documentation
[14] Secured debt of EUR2.1bn and EBITDA after lease payments of EUR690m
[15] Unaudited data, scope as defined in bond refinancing documentation with mainly Segisor and Wilkes accounted for within the France Retail + E-commerce scope (including GreenYellow)
[16] Interest paid on lease liabilities and repayment of lease labilities as defined in the refinancing documentation
[17] Loans and borrowings
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Regulatory filing PDF file File: PJ
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Language: English
Company: RALLYE S.A.
103 rue la Boétie
75008 Paris
France
Phone: 01 44 71 14 00
Internet: http://www.rallye.fr/
ISIN: FR0000060618
Euronext Ticker: RAL
AMF Category: Inside information / News release on accounts, results
EQS News ID: 1589771
End of Announcement EQS News Service
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1589771 22-March-2023 CET/CEST
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March 22, 2023 14:04 ET (18:04 GMT)
