X5 Corporate Center · RUS:X5

X5 Corporate Center — X5 Retail Group — Q3 2014 Earnings Presentation

26 slides from X5 Corporate Center's earnings presentation, Oct 29, 2014

  1. Slide 1: Third Quarter & Nine Months 2014 Financial Results Presentation

    Third Quarter & Nine Months 2014 Financial Results Presentation Elena Milinova, CFO Moscow, Russian Federation 29 October 2014 X5 RETAIL GROUP

  2. Slide 2: 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

  3. Slide 3: Macro Environment

    MACRO ENVIRONMENT )XSRETAILGROUP © Tiamépowwa fonepznpecron Mx

  4. Slide 4: Russian Macro Environment

    RUSSIAN MACRO ENVIRONMENT Industrial Production Real Retail Food Sales Growth Food Inflation 2.5% 10.5% 9.4% 7.2% 7.3% 1.1% 1.9% 1.4% 1.5% 1.1% -0.1% -0.4% Q4'13 Q1'14 Q2'14 Q3'14 Q4'13 Q1'14 Q2'14 Q3'14 Q4'13 Q1'14 Q2'14 Q3'14 Real Wage Growth Unemployment Rate Consumer Confidence Index 4.5% 5.5% 5

  5. Slide 5: Russia's Fiscal Position Remains Strong

    RUSSIA’S FISCAL POSITION REMAINS STRONG International Reserves, mln USD Current Account Position as % of GDP Government Debt Ratio as a % of GDP Budget Balance as a % of GDP Source: Goldman Sachs, Russia: Equity Market Overview 5

  6. Slide 6: Financial Strategy

    FINANCIAL STRATEGY )XSRETAILGROUP © Tiamépowwa fonepznpecron Mx

  7. Slide 7: Financial Management Strategy

    FINANCIAL MANAGEMENT STRATEGY Liquidity Top-tier banks placements, limit cash concentrations Management Maintain available bank credit lines sufficient to cover short-term debt Centralized approach to funding and liquidity management Funding Establish diversified sources of funding by instrument

  8. Slide 8: Financial Policies & Guidance

    FINANCIAL POLICIES & GUIDANCE FY Original 2014 9M Updated 2014 Metric Covenants 2013 Guidance 2014 guidance Net Retail Sales Growth, % na 8.7% 10.0% - 12.0% 17.8% 17.0%-19.0% EBITDA Margin, % na 7.2% 6.8% - 7.2% 7.2% 7.2%-7.5% CAPEX, RUR billion na 23 ~40 17 ~34 Selling Space Growth, % na 12.9% 10.5

  9. Slide 9: Q3 2014 Financial Results

    Q3 2014 FINANCIAL RESULTS X5RETAILGROUP © Tiamépouwxa fone

  10. Slide 10: Financial Highlights

    FINANCIAL HIGHLIGHTS RUB million Q-o-Q Y-o-Y Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 (where applicable) +/( - )% +/( - )% Revenue 124,246 150,341 144,167 155,579 152,539 (2.0) % 22.8 % Net retail sales 123,534 149,786 143,898 155,109 152,028 (2.0) % 23.1 % COGS (93,155) (113,559) (109,521) (117,469)

  11. Slide 11: Revenue & EBITDA Dynamics

    REVENUE & EBITDA DYNAMICS 1,995 1,281 514 152,539 24,791 (88) (200) 124,246 Revenue Dynamics, Total: + 30.3% Total: + 8.1% Total: + 8.6% Total: + 26.3% RUB million Central + 29.8% Central: + 9.4% Central: + 22.8% Central: + 26.3% NW: + 17.9% NW: + 13.0% NW: - 0.1% NW: - Other: + 39.8% Other: + 1.5%

  12. Slide 12: SG&A Breakdown

    SG&A BREAKDOWN Q3 % of Q3 % of Q2 % of Q3 % of RUB mln 2013 Revenue 2014 Revenue 2014 Revenue 2014 Revenue 10,344 8.3% 12,468 8.2% Staff Costs 12,001 7.7% 12,468 8.2% 5,768 4.6% 7,038 4.6% Lease Expenses 6,719 4.3% 7,038 4.6% 3,369 2.7% 3,861 2.5% D&A 4,108 2.6% 3,861 2.5% 2,549 2.1% 3,057 2.0% Util

  13. Slide 13: Cash Flow Highlights

    CASH FLOW HIGHLIGHTS RUB mln Q3 2014 Q3 2013 +/( - ) +/ ( - ), % Net cash generated from operating activities 6,825 3,334 3,491 104.7 % Net cash from operating activities before changes in working capital 10,897 9,231 1,666 18.0 % Change in Working Capital 379 (2,979) 3,358 n/a (Increase) in trade a

  14. Slide 14: Capital Expenditures Overview

    CAPITAL EXPENDITURES OVERVIEW Q3 2014 Capital Expenditures(1) Net Investment Cash Flows, RUB mln Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 New Store Reconstruction Openings & Maintenance 50% 41% (4,289) (4,911) (5,183) (6,590) Logistics, IT & Other (7,885) 9% In Q3 2014, Capex Focused on Organic Expan

  15. Slide 15: Condensed Balance Sheet

    CONDENSED BALANCE SHEET RUB mln 31 December 2013 30 September 2014 +/( - ) +/( - )% Total current assets 76,488 73,136 (3,352) (4.4) % Cash & cash equivalents 7,611 3,520 (4,091) (53.8) % Inventories 37,465 37,429 (36) (0.1) % Total non-current assets 225,415 229,228 3,813 1.7 % Net PP&E 134,998 140

  16. Slide 16: Debt Structure

    DEBT STRUCTURE Debt Profile Debt Portfolio Maturity RUB mln 30 Sep 2013 31 Dec 2013 30 Sep 2014 47.0% Total Debt 121,346 110,523 107,619 Short-Term Debt 44,273 30,680 17,003 % of total debt 36.5% 27.8% 15.8% 14.7% 31.2% Long-Term Debt 77,073 79,843 90,616 7.1% 6.1% % of total debt 63.5% 72.2% 84.2%

  17. Slide 17: Going Forward

    GOING FORWARD KEY FOCUS  Redesign internal financial procedures to support new operating model  Implement benchmarking analysis as a tool to improve efficiency  Develop new sources of financing to support growth strategy 17

  18. Slide 18: Appendix I - Geography of Operations

    Appendix I - Geography of Operations

  19. Slide 19: X5 Regional Presence

    X5 REGIONAL PRESENCE Number of stores by region as of September 30 2014 (2) Overview • Multi-format presence in 62 cities of European Russia, the Urals and Western North region Siberia with population > 200,000 (3) Pyaterochka: 71 • Total stores – 5,005, including: North-West region Petrozavodsk ― 4

  20. Slide 20: X5 Distribution Capabilities

    X5 DISTRIBUTION CAPABILITIES Distribution Center (DC) Locations Warehouse Space (1) Space, Region # of DCs th sq. m. Central 331.1 13 5 North-West 84.3 5 St. Petersburg Volgo-Vyatsky 29.1 1 Ural 46.8 5 MOSCOW Central-Chernozemny 30.0 2 Povolzhsky 62.5 3 13 South 49.2 2 1 Total 633.2 31 N. Novgorod 2

  21. Slide 21: Appendix II - 2014 Monthly Results

    Appendix II - 2014 Monthly Results

  22. Slide 22: Q3 2014 Expansion

    Q3 2014 EXPANSION Q3 2013 - 156 stores added(1) 93 90 Q3 2014 - 226 stores added(2) 76 78 69 Number of 54 57 56 45 49 Stores Opened, 38 net 34 39 18 20 22 5 3 Jan Feb Mar Apr May Jun Jul Aug Sep Q3 2013 – 33 thd sqm added 35 34 Q3 2014 – 80 thd sqm added 742 stores added 24 29 25 21 15 16 15 Selling

  23. Slide 23: Q3 2014/2013 Net Retail Sales Growth

    Q3 2014/2013 NET RETAIL SALES GROWTH X5 Retail Group Pyaterochka 30.9% 31.0% 29.1% 24.0% 23.4% 24.4% 21.7% 22.4% 20.9% 16.7% 19.0% 15.3% 16.6% 16.4% 17.5% 16.7% 17.6% 17.2% 13.7% 10.4% 13.0% 14.0% 18.2% 14.2% 11.1% 6.7% 14.2% 9.4% 10.7% 8.5% 8.6% 8.5% 10.4% 10.6% 8.9% 9.2% 9.7 % 12.7 % 11.5 % 11.9 %

  24. Slide 24: Q3 2014/2013 LFL Sales Dynamics

    Q3 2014/2013 LFL SSALES DYNAMICS (1) X5 Retail Group Pyaterochka 18.2% 17.9% 17.0% 12.0% 8.1% 13.9% 13.8% 12.1% 10.5% 10.6% 5.4 % 4.5 % 8.6% 7.6% 9.1% 7.5% 8.2% 5.9 % 7.2% 4.4 % 3.3 % 6.5% 5.2% 4.2 % 0.5 % 0.6 % 12.1% 10.0% 10.5% 11.3% 13.5% 12.7% 10.5% 7.6% 0.5 % 8.9% 8.7% 10.9% 9.1% 10.2% 6.8% 6.2

  25. Slide 25: Q3 2014/2013 Express Stores Results

    Q3 2014/2013 EXPRESS STORES RESULTS Net Retail Sales Growth, % LFL Sales Growth (1), % 34.1% 34.9% 0.3% 30.9% 4.8% 4.4% 5.9% 28.9% 28.0% 27.6% 4.8% 2.9% 26.7% 29.5% 3.3% 4.9% 23.3% 3.5% 9.7 % 1.0 % 7.3 % 7.3 % 3.9 % 5.6 % 5.1 % 21.5 % 4.3 % 3.3 % 4.9 % 27.4 % 13.3 % 1.0 % 21.4 % 33.2 % 19.8 % (1.0 %

  26. Slide 26: IR Department Contact Details

    IR DEPARTMENT CONTACT DETAILS Gregory Madick Andrey Napolnov, CFA Executive IR Director Deputy IR Director Tel.: +7 (495) 502 97 83 Tel.: +7 (495) 662 8888 ext. 22-455 Mob.: +7 (910) 459 73 56 Mob.: +7 (926) 654 6262 E-mail: Gregory.Madick@X5.ru E-mail: Andrey.Napolnov@X5.ru Address: 4/28, Sr. Kalit

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