In Q3 2011, sales revenues of the Emperia Trading Group generated by the continued business reached PLN 1,399.0 billion, up by 6.2 percent on the same period of the previous year. EBITDA stood at PLN 53.7 million, up by 18.9 percent, and net profit of 32.2 million meant an improvement by 29.2 percent.
“The Investment Agreement with Eurocash governing the acquisition of the Tradis Wholesale Group expired due to the failure of Eurocash to complete the transaction. Emperia reverted to the original strategy of the development of its wholesale business. We will strengthen the dominant position of Tradis in the assisted-service distribution market, among others by organic growth, mergers and acquisitions, attracting new clients, building up loyalty among the existing clients, and the expansion of our franchise chains, and partnership arrangements with Społem cooperatives. Q3 saw robust performance despite a very difficult environment in which we conduct our operations,” said Artur Kawa, Chairman of Management Board, Emperia Holding SA.
In June 2011, the Management Board of Emperia launched the auction process to attract an investor for its retail business. The transaction involves the Stokrotka, Delima, Społem Tychy, and Maro Markety retail chains, which operate over 230 outlets among them.
The bidders, which include both industry and financial investors, qualified to conduct the legal and financial due diligence of the retail companies have submitted their binding bids. In the next few days, based on the submitted binding bids and talks conducted with all the investors, the Management Board of Emperia, supported by a team of advisors, will shortlist a few investors to participate in the last stage of the process, i.e. negotiating and agreeing the final terms of the transaction, including the Conditional Share Purchase Agreement.
The Management Board of Emperia stands by its earlier opinion on the value of the transaction. If its retail companies are sold, the Management Board of Emperia expects to receive no less than PLN 900 million. The closing of the transaction is scheduled to take place in the first quarter of 2012.
In Q3 2011, since Eurocash SA failed to complete the Investment Agreement for the sale of the assets held by the Tradis Wholesale Group, Emperia reverted to the strategy adopted for Tradis last year. The underlying assumption of the strategy is for Tradis to become the leader of the Polish FMCG distribution. A strong group is proposed to be built around the company, comprising distribution companies, franchise formats, and partnering Społem cooperatives. Tradis will be the leading supplier for independent retailers and petrol station retail outlets in Poland. Its development will be based on mergers and acquisitions.
Tradis desires to fortify its market standing in the various regions of Poland by setting up branches and incorporating new distribution companies. The first step on this path was made in September of this year by execution of a Letter of Intent for the acquisition of the wholesale business of Nadwiślanka SA. Tradis is currently awaiting the consent of the Office of Competition and Consumer Protection (UOKiK) for the concentration.
In Q3 2011, the franchise chains operating as part of the Tradis Wholesale Group attracted new franchisees. The Groszek chain launched 43 new outlets, the Lewiatan chain was expanded by 93 stores, Euro Sklep by 22, and the Koliber chain was joined by 4 new drugstores. In September, Tradis also launched the Minutka partner chain targeted principally at clients of the self-service Cash&Carry facilities. By the end of the year, at least 100 Minutka outlets will have opened for business.
Through PSD, the Tradis Wholesale Group develops a partner chain with Społem Cooperatives and, together with its cooperative partners, it launched a new retail concept, the Gama chain, based on existing and newly set up cooperative outlets. Currently as many as 12 Gama supermarkets are operational, and their total number is expected to reach at least 20 by the end of the year. The target of the retail cooperatives and PSD at the end of next year is 100 outlets.
Emperia continues to repurchase its own shares. The first buyback, initiated in September 2010, cost the company PLN 40 million and resulted in 402,344 own shares carrying rights to 402 344 (2,662%) votes at the General Meeting of Shareholders and accounting for 2.662 percent of the share capital being repurchased. In October, the Supervisory Board of Emperia earmarked further PLN 25 million for another buyback to be completed by the end of this year. Since the commencement of the second buyback, the company has acquired 40,657 shares carrying rights to 40,657 (0.269%) votes at the General Meeting of Shareholders and accounting for 0.269 percent of share capital.
Emperia holds in aggregate 443,001 own shares carrying rights to 443,001 (2.931%) votes at the General Meeting of Shareholders and accounting for 2.931 percent of share capital.
In September, Emperia distributed dividend among its shareholders, allocating over PLN 39.2 million or some 40 percent of the 2010 consolidated net profit for that purpose. The dividend paid by the company amounted to PLN 2.63 per share.
Emperia Trading Group Outline:
The Emperia Trading Group is one of the largest and most active trading groups in Poland. It engages in retailing and wholesaling food, cosmetic, and household chemical products, facility management, and property development. Emperia has been present in the Polish market since 1990; it operates nationally and has a workforce of nearly 14,000. The coordinator of the Group’s operations, Emperia Holding SA, is listed on the Stock Exchange in Warsaw.
Emperia’s wholesaling operations are conducted by the Tradis Wholesale Group, its retail business is managed by the Supermarket Division, while the Real Property Division is responsible for its properties.
Tradis Wholesale Group engages in the distribution of FMCG products through Cash & Carry locations and Distribution Centres located all over Poland. The wide range of food, cosmetic, and household chemical products offered, attractive terms of business, cutting-edge IT and logistic systems, as well as the constant efforts aimed at satisfying client needs make it the leading business partner to over 50,000 Polish retailers. It is the objective of Tradis to become the leader of FMCG distribution in Poland.
Tradis Wholesale Group comprises companies involved in the distribution of FMCG products, and in a joint effort with other Polish wholesalers it operates franchise and partner chains of shops and supermarkets of varying formats. Tradis is also the strategic partner of Społem cooperatives and together with them it co-organises modern cooperative retailing in Poland. The franchise and partner chains operating as part of the Tradis Wholesale Group currently include over 5,200 outlets, and the 60 cooperatives working in partnership with Tradis manage over 560 outlets.
The Tradis Wholesale Group includes the following companies: Tradis (distribution of FMCG products, household chemical products, and cosmetics), Ambra (distribution of chemical products and cosmetics), DEF (distribution of FMCG products), Detal Koncept (franchisor for the Groszek and Milea franchise chains), Euro Sklep (franchise chain), Lewiatan (franchise chain), Koliber (franchise drugstore chain), and PSD which, in conjunction with Społem Cooperatives, co-organises modern cooperative retailing in Poland as well as operating the Gama chain.
The operations of the wholesale subsidiaries are structured geographically or functionally into eight regions covering the entire Poland. The companies operate in aggregate 63 distribution branches, including Distribution Centres and 44 Cash&Carry locations, of the total area of some 306,000 sq. m.
The Supermarket Division operates supermarkets located in residential estates, mini shopping centres, and major shopping malls. The retail outlets of the division offer up to 1,400 sq. m of selling space and from 4,000 to 10,000 assortment items, including food products, cosmetics and toiletries, household chemical products, and alcoholic beverages plus fresh products: bakery products, cured meats, fruit and vegetables. Local products, produced in the regions of the relevant store-chain’s location, complement the offering.
The Supermarket Division of the Emperia Trading Group comprises the Stokrotka, Delima, Maro Markety, and Społem Tychy chains. At the moment, the auction process is under way at Emperia to select the purchaser of the retail division. The closing of the transaction is scheduled to take place in the first quarter of 2012.
The Real Property Division is responsible for the Emperia Trading Group’s properties. It invests exclusively in supermarket, Cash & Carry, Distribution Centre, and mini shopping centre facilities. The division manages Emperia’s real properties, acquires new locations, and engages in property development.