RALLYE ANNUAL REPORT 2013 - AUTORITÉ DES MARCHÉS FINANCIERS This Registration Document was filed with the French Financial Markets Authority on April 16, 2014, in accordance with Article 212-13 of the general regulations of the Financial Markets Authority. It may be used in connection with a financial transaction only if accompanied by a transaction note approved by the Financial Markets Authority. This document includes all information relating to the Annual Financial Report. It was prepared by the issuer under the responsibility of the persons who signed it. Rallye French Public Limited Company (SA) with share capital of €146,222,922 No. 054 500 574 in the Paris Company and Trade Register Registered office: 83, rue du Faubourg Saint-Honoré – 75008 Paris Phone: 01 44 71 13 73 - Fax: 01 44 71 13 70 Web site: http://www.rallye.fr – E-mail: [email protected] Contents Rallye 03 Chairman’s Message 174 Company Financial Statements 04 Group overview 174 Income Statement 175 Balance Sheet 04 Organizational chart 176 Cash Flow Statement 05 Key fi gures 177 Notes to the Financial Statements 06 Management report 192 Subsidiaries and equity interests as at December 31, 2013 06 Signifi cant events 194 Statutory Auditors’ report 11 Business review on the fi nancial statements 17 Financial overview 196 Financial performance of the Company over the last fi ve years 21 Recent highlights and outlook 23 Capital and shareholding structure 197 Shareholders’ Meeting 34 Risk factors and insurance 197 Draft resolutions 39 Social, societal and environmental responsibility 201 Additional Information 46 Certifi cate of Presence and Limited Assurance Report by the independent 201 General information auditor with regard to social, environmental and societal information 208 Stock Market information 210 Person responsible for the reference 48 Corporate governance document and the annual fi nancial report 210 Statement of the person responsible 48 Board of Directors for the reference document and 61 Executive management the annual fi nancial report 67 Statutory Auditors 210 Historic fi nancial information included by reference 69 Chairman’s report 211 Person responsible for audit 78 Report of the Statutory Auditors on the Chairman’s report 212 Cross-reference tables 80 Consolidated Financial Statements 80 Consolidated Income statement 81 Consolidated statement of comprehensive income 82 Consolidated statement of fi nancial position 84 Consolidated cash fl ow statement 85 Statement of changes consolidated shareholders’ equity 86 Notes to the consolidated fi nancial statements 165 List of main consolidated companies as of December 31, 2013 172 Auditors’ report on the consolidated fi nancial statements This information forms an integral part of the Annual Financial Report as provided for in article L. 451-1.2 of the French Monetary and Financial Code. Corporate bodies and Auditors - BOARD OF DIRECTORS Jean-Charles NAOURI (1) Chairman of the Board of Directors Philippe CHARRIER (1) Independent Director Jean CHODRON de COURCEL (1) Independent Director Jacques DUMAS (1) Director catherine fulconis (2) Independent Director Jean-Marie GRISARD Representing Finatis (1) Didier Lévêque Representing Foncière Euris (1) Odile MURACCIOLE Representing Eurisma (1) Gabriel NAOURI Representing Euris (1) Christian PAILLOT (1) Independent Director André Crestey (1) Non-voting observer (advisor to the Board) | JEAN-CHARLES NAOURI Chairman of the Board of Directors EXECUTIVE MANAGEMENT Didier CARLIER Chief Executive Officer Franck HATTAB Deputy Managing Director STATUTORY AUDITORS ERNST & YOUNG et Autres Represented by Pierre BOURGEOIS KPMG Audit – Department of KPMG SA Represented by Catherine CHASSAING (1) Reappointments to the General Shareholders’ Meeting of May 13, 2014. (2) Proposed appointments to the General Shareholders’ Meeting of May 13, 2014. 2013 Annual Report | RALLYE 02 Chairman’s message - or the Casino Group, 2013 marked a key milestone and Groupe GO Sport finished the year with revenue of €641.9 million, was the result of considerable work carried out over a 4.6% like-for-like drop compared with 2012, with a significant the past few years. The completed takeover of GPA in improvement in sales trends in the fourth quarter. Groupe GO Brazil and Monoprix in France is perfectly aligned with the Group's Sport will continue its recovery efforts in 2014 and will draw on growth strategy, both in France and abroad, in the formats with the the success of the Courir brand which registered an increase Fmost growth potential which are premium, discount, convenience in sales (+2.3% in LFL) in 2013 for the fourth year in a row. and e-commerce. The Group therefore consolidated its positions The development of Groupe GO Sport will also continue with the in 2013 with a portfolio of strengthened banners. Internationally, opening of new GO Sport and Courir franchise outlets in France and where it reinforced its leading positions in strong growth markets. abroad, as well as the expansion of e-commerce. In France, where it focused on the fundamentals that ensure the Rallye's consolidated revenue was €49.3 billion, up 15.6% success of its business model: a multi-format, multi-banner and multi- compared to 2012. Current operating income was €2,364 million, channel approach as well as a dual growth model combining retail up 17.8%. and real estate. The net financial debt of the Rallye holding company's scope remained The Group's 2013 results, which reflect the relevance of this stable over the year at €2,697 million. strategy, were marked by excellent international performances and Rallye's investment portfolio was valued at €212 million at the end an improvement in France. The Casino Group's revenue was up of 2013, following €52 million of net cash-in during the year. 15.9% compared with 2012, boosted by the full consolidation of GPA and Monoprix and by sales growth at all international subsidiaries. Rallye has a solid position in terms of liquidity with more than €530 million Underlying net income, which measures recurrent profitability, in cash and cash equivalents and €2.1 billion in confirmed, undrawn registered strong growth of 9.7%. and immediately available credit lines as at December 31, 2013. The maturity of bond debt was extended and the average maturity The contribution made by international business to revenue (60%) and of credit lines was stable at 4.4 years, in particular thanks to the current operating income (74%) continued to increase. The Group is two-year extension of Rallye's syndicated loan which was signed now positioned among the global leaders in the retail market. in mid-July 2013. As its growth is based on solid fundamentals, the Group continued to The Board of Directors will recommend the payment of a dividend strengthen its financial structure in 2013. The Group's debt remained per share of €1.83 at the May 13, 2014 Shareholders’ Meeting under control despite a year that saw major investments, including the (stable compared to 2012), which will be paid on May 21, 2014. buyback of 50% of Monoprix. High free cash flow generation, financial transactions to increase equity capital and the successful initial The Group and its teams continue to promote the values which public offering of Via Varejo in Brazil helped stabilize net financial debt underlie its success. These values combine a deep respect for at €5,416 million, down slightly compared with 2012. Net debt was local cultures, a conquering and innovative spirit aimed at serving 1.62 x EBITDA, versus 1.91x in 2012. the needs of customers, and the strong belief that diversity is an asset. This year, Casino celebrates 20 years in France of promoting In 2014, the Casino Group will step up its strategy in all of its markets, diversity and has been awarded Professional Equality Certification. and thus intends to roll out its discount banners, strengthen its position At the same time, its international subsidiaries are rolling out ambitious in premium formats, continue to expand its convenience format and social and environmental responsibility policies: a guarantee develop its non-food e-commerce. of their continuing long-term development. At Groupe GO Sport, 2013 saw the launch of numerous major projects to boost GO Sport France's recovery as well as the appointment of Jean-Paul Onillon as Chairman of the Board of Directors and André Ségura as the Group's General Manager at the end of the year. JEAN-CHARLES NAOURI 03 RALLYE | 2013 Annual Report SIMPLIFIED GROUP ORGANIZATIONAL CHART as of December 31, 2013 - Rallye 48.40% 93.72% (59.50% OF VOTING RIGHTS) (94.62% OF VOTING RIGHTS) INVESTMENT PORTFOLIO COMPANIES LISTED ON THE STOCK MARKET KEY INCOME STATEMENT ITEMS Continuing operations (in € millions) 2012 2013 Change Net sales 42,663 49,306 +15.6% EBITDA (1) 2,881 3,358 +16.6% EBITDA margin 6.8% 6.8% +6 bp Current operating income (COI) 2,006 2,364 +17.8% COI margin 4.7% 4.8% +9 bp Net profi t, Group share 246 174 Net underlying profi t (2), Group share 72 75 (1) EBITDA = current operating income + current depreciation and amortization expense (2) Underlying net income corresponds to net profi t from continuing operations adjusted for the impact of other operating income and expense, non-recurring fi nancial items and non-recurring income tax expense/benefi ts 2013 Annual Report | RALLYE 04 KEY FIGURES as of December 31, 2013 - NET SALES NET SALES BY LINE OF BUSINESS BY GEOGRAPHIC AREA AT DECEMBER 31, 2013 (IN %) AT DECEMBER 31, 2013 (IN %) 1.32 Food and general 7.2 France retailing 50.2 9898.7 South America Sporting