X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Presentation (June 2008)
27 slides from X5 Corporate Center's investor presentation, June 2008
Slide 1: Leadership in Russian Food Retail
Leadership In Russian Food Retail June 2008 p. 1
Slide 2: Investment Highlights
Investment Highlights • # 1 position by revenue in a highly attractive Russian food retail market Leadership in a Highly – 2007 Russian food retail market size: USD 190 billion Attractive Market – Russian food retail market CAGR 2004-07: c.30% • Multi-format: Hypermarkets, Supermarkets, Soft Discoun
Slide 3: Russian Food Retail Market: A Highly Attractive Market
Russian Food Retail Market… … A Highly Attractive Market ... Consumer Spending • Russian consumer spending growing strongly -07 2006 f c.32% th o – 2003-06 CAGR of 29.5% and growing to 32.3% in Grow USD 578 bln 2007 -06 2003 f c.30% Ro USD 437 bln • The total Russian food retail market grew at 28.1%
Slide 4: X5 Retail Group: a Clear Leader in Russian Food Retail
X5 Retail Group… …a Clear Leader in Highly Attractive Russian Food Retail Market X5 today.. # Company FY2007 % in Sales Top 10 • #1 food retailer in Russia in terms of revenue (USD mln) • USD 5,320 million of revenues in 2007 • Strong international management team 1. X5 5,320 21.4% • 868 company-man
Slide 5: Strategy Diversified Across Formats
Strategy Diversified Across Formats… …The Largest Multi-Format Food Retailer In Russia Soft Discount 2007 LFL(1) Performance by Format Stores Based on RUR-denominated Data as of 31 December 2007 gross sales Basket Traffic 22% • 674 stores 19% 20% • Total net selling space – 17% 357,517 sq. m. 6% 14%
Slide 6: Strategy Diversified Across Geography
Strategy Diversified Across Geography… ...National Presence With Leading Position in Moscow and St. Petersburg 2007 Net Retail Sales by Region 2007 Sales, EOP Store Locations and Selling Space FY07 Net Retail Sales of USD 5,284 million Region FY07 Net Selling Net Retail No of Space 0.6% Sales Stores
Slide 7: Premium Growth Prospects
Premium Growth Prospects ...Sales Growth Driven By... • Pricing Initiatives • Improving loyalty • Optimising product programs Like-for-like Sales assortment • Improving merchandising / store layouts • Strong pipeline of new store openings New Store Openings – Commitment to Moscow & St. Petersburg –
Slide 8: Like-for-like Sales Drivers
Like-for-like Sales... …Driven By… Pricing Initiatives Group 2007 and Q1-08 LFL(1) Performance Based on RUR-denominated • Price offers for a group of SKUs during a gross sales Traffic Basket 29% certain period 25% • In/out actions 20% 18% 19% • Packaged offers 13% 5% 11% 11% Rationalizing Assortment
Slide 9: New Store Openings: Expansion into European Russia & Urals
New Store Openings … ... Through Expansion Into The European Part Of Russia & Urals Key priority area for expansion St. Petersburg Pskov Veliky Novgorod Total Area(1) Total Population(1) Cherepovez Regions Tver’ Vologda (million km2, %) (million, %) Smolensk Yaroslavl MOSCOW Kostroma European Part o
Slide 10: M&A: Selective Acquisitions of Small Chains and Karusel
M&A… … Through Selective Acquisitions Of Small Chains, Franchisee Buyouts and Strategic Acquisitions (Karusel(1)) Number of Stores Selling Total EV Additional Date Company Region D S H Space Space (USD mln) Real Estate (sq. m.) (sq. m.) (1) Multi- (2) July 2008 Karusel Up to 970 – – 23 115,000 – 234
Slide 11: Karusel Acquisition: Investment Proposition
Karusel Acquisition(1)… ...Compelling Investment Proposition Significant Step-Up in Scale of #1 Position in Russian Food Retail by Revenues – Increasing Lead over X5’s Business Closest Competitor by over 30%(2) Immediate Position as a Leading Position in the Fastest Growing Food Retail Format in
Slide 12: Karusel – Transaction Highlights
Karusel – Transaction Highlights Transaction Acquisition of 100% of shares in Formata Holding BV, owner of the Structure Karusel Hypermarket chain Value determined by formula in the Call Option Agreement(1) Transaction Value Equity value: Up to USD 970 million Includes estimated value of Kar
Slide 13: Karusel Overview
Karusel Overview Business Highlights # 5 Hypermarket Operator in Russia #5 hypermarket operator in Russia both by sales and net selling 4,600 Net Sales, USD mln space as at 31 December 2007 Strong presence in key markets 3,200 Net Selling Space, '000 sq. m. − 23 stores located in St. Petersburg
Slide 14: Significant Step-Up in Scale of Business
Significant Step-Up in Scale of Business 2007 Share in Top-10 Retailers+Karusel(1) EOP 2007 Net Selling Space 23.8% 724 ‘000 sq.m. 20.6% 652 609 17.8% 14.2% 12.4% 351 272 224 6.1% 5.8% 5.6% 177 5.1% 4.9% 151 147 4.3% 3.2% 115 100 96 7th Continent 7th Continent Auchan Auchan Dixy Dixy X5 + Karusel Ka
Slide 15: Vaulting into a Leading Position in Hypermarkets
Vaulting into a Leading Position in Hypermarkets Evolution of Russian Modern Food Retail(1) Russian Hypermarket Operators Store Count 2003 2010F [2] 16.6% 44.4% 39 37 29.4% 26 (2) 22 18 (2) 15 12 Metro X5 + Lenta Karusel Auchan X5 O'Key Karusel 40.4% Note: Figures as of 31 December 2007 43.0% 26.2%
Slide 16: Karusel - Excellent Geographic Fit
Karusel - Excellent Geographic Fit St. Petersburg St. Petersburg & North West region – 15 stores in operation Moscow region – 4 stores Pskov and 1 store under construction Veliky Novgorod Cherepovez Yaroslavl – 1 store under construction Tver’ Vologda Smolensk Yaroslavl Nizhny Novgorod & Dzerzhinsk
Slide 17: Karusel - Significant Synergy Benefits
Karusel - Significant Synergy Benefits Synergies Sources Improvement in sales per sq. m. of existing Karusel stores through Sales − Rebranding − Improvement in assortment − Layout improvement − More competitive pricing & active promotions Enhancement of X5-Karusel combined purchasing power & bet
Slide 18: Improving Performance of Karusel
Improving Performance of Karusel 2007 2008 2009 ▲ Full year contribution of stores opened in ▲ Opening of two new stores currently 2007 under construction ▲ One new store opened in March ▲ Like-for-Like normalizing at Mercado Net Sales level 831 ▲ Early benefits of Mercado re-branding (USD m) ▲ Comp
Slide 19: USD 1 bln Rights Offering
USD 1 bln Rights Offering… ... Successfully Completed in May to Finance the Acquisition of Karusel USD1,026 mln offering of rights to eligible(1) existing GDR holders to acquire new GDRs (48.1m new GDRs at USD 21.32 per new GDR (ratio of 2:9)) New GDRs which were not subscribed for by the end of
Slide 20: X5 Track Record of Operating Performance
X5 Track Record of Operating Performance LFL(1) Gross Margins Based on RUR-denominated % of net sales gross sales 29% 25.2% 26.7% 26.4% 20% 15% 2006 2007 Q1 2008 2005 2006 2007 Number Of Stores Net Selling Space 700 Thousand square meters 1,000 15 60 600 800 179 500 46 12 192 600 400 156 300 163 400
Slide 21: X5 Track Record of Financial Performance
X5 Track Record of Financial Performance ...Strong Growth Combined With Highly Attractive Margins USD mln 2007 2006 % change, y-o-y Net Sales 5,320.4 3,485.4 53% Retail 5,284.3 3,460.4 53% Gross Profit 1,403.9 928.9 51% % Gross Margin 26.4% 26.7% EBITDA 479.3 296.7 62% % EBITDA Margin 9.0% 8.5% Oper
Slide 22: X5 Track Record of Financial Performance: Cash Flow
X5 Track Record of Financial Performance ... And Strong Cash Flow Generation USD mln 2007 2006 Net Cash From Operating Activities 427.5 316.9 Net Cash (used in) / from Investing Activities (898.8) (40.9) Net Cash (used in) / from Financing Activities 470.0 (138.1) Effect of Exchange Rate Changes on
Slide 23: Q1 Operating and Financial Results
Q1 Operating and Financial Results …Continuing Strong Performance • 61% increase in net retail sales year-on-year in US dollar Q1 2008 LFL Breakdown per Format terms Based on RUR-denominated gross sales 34% • 29% LFL growth (in rouble terms) 29% 29% 26% 17% • 62 new stores opened adding 30,087 sq. m
Slide 24: Appendices
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Slide 25: Formata Call Option Formula
Formata Call Option Formula The amount payable by X5 Retail Group for the exercise of the Call Option (the Option Price) is the aggregate of: • (a) the lesser of: − (i) 1.1 multiplied by consolidated net sales of Formata; or − (ii) 14.5 multiplied by the greater of i. EBITDA; or ii. 5% of consolidat
Slide 26: X5 Share Capital Structure
X5 Share Capital Structure 25.3% 3.3% Alfa Group* 1.9% 48.4% Founders of Pyaterochka 21.1% X5 Management One of the Founders of Perekrestok Total number of shares – 66,146,71 Free Float Equivalent of 264,586,852 GDRs (1) Approximately 5% are subject to a financing arrangement with a bank p. 26
Slide 27: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or