Report
Esther Bouguet
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Proxy Report - 15/05/2018

A damning report released at the end of 2015 by famed New York short-seller Muddy Waters accused Groupe Casino of falsely inflating its EBITDA partially through transactions with its real-estate affiliate Mercialys. As its shares reacted negatively to the report, the Company swiftly reacted by denying the allegations levelled against it and announced a long-term de-leveraging strategy (with a planned €2 billion debt reduction) coupled with an international diversification plan in the food sector (ex: consolidation of its South American subsidiaries; sale of its South East Asia subsidiary). The most recent iteration of this strategy is Groupe Casino’s planned global partnership with Auchan.

Despite the purported de-leveraging strategy, debt levels in 2017 soared by 23% finishing the year at €4,126M. Making matters worse is a 3.8% decline in the top-line recorded for Q1 2018. The increased debt burden will surely put strain on an already stretched balance sheet and call into question the reason behind the company’s systematic reduction in capital expenditures if it were to maintain what we perceive to be an elevated dividend (€346M in 2017). Further clarity regarding this plan would be much appreciated.

 As far as regulated agreements are concerned, Groupe Casino continues to submit both new agreements as well older agreements to a vote in the same resolution. This is clearly counter to the spirit and letter of the law which calls for a separate vote on each agreement (resolution 4).

In closing, we urge shareholders to oppose the remuneration attributed to Jean-Charles Naouri, Charmain & CEO, in 2017 as well as his remuneration policy for 2018. As has historically been the case with Groupe Casino, quantum appears relatively low on a cursory look, but further analysis reveals that it fails to include the remuneration Mr. Naouri indirectly received from regulated agreements between the Company and holding companies that he controls (resolutions 5 and 6).

Underlying
Casino Guichard-Perrachon et Cie. S.A.

Casino Guichard-Perrachon is a food retailer based in France. Co. operates hypermarkets, supermarkets, discount stores, convenience stores and cafeterias. Co.'s stores are discount stores selling groceries and consumer goods, and providing services like financial and insurance services, real estate, and restaurants. Co. operates hypermarkets under the brand Geant Casino; urban and rural supermarkets under the brand Casino Supermarches; city-centre supermarkets under the brand Monoprix; convenience/national superettes under the brands Petit Casino, Vival and Spar; covenience-paris area stores under the brand Marche Franprix; and discount stores under the brand Leader Price.

Provider
Proxinvest
Proxinvest

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Analysts
Esther Bouguet

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