X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Non-Deal Roadshow (May 2012)
51 slides from X5 Corporate Center's roadshow presentation, May 2012
Slide 1: X5 Non-Deal Road Show
1 X5 Non-Deal Road Show US/UK/Europe/Scandinavia Andrei Gusev, X5 Chief Executive Officer Kieran Balfe, X5 Chief Financial Officer 21 – 31 May 2012
Slide 2: Disclaimer
Disclaimer 2 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 o
Slide 3: Agenda
Agenda 3 Topic Pg I Key Corporate Milestones 4 II Recent Accomplishments 5 III Company Overview 17 IV Strategy, Guidance & Targets 24 V Russian Retail Market & Macroeconomic Review 29 VI Summary 34 Appendix 1: Format Details 36 Appendix 2: Management Bios 47
Slide 4: Timeline of Key Events
Timeline of Key Events 4 Merger of Pyaterochka & Perekrestok X5 opens 3,000th store Renamed X5 Retail Group N.V. Over 1.6 bln customer visits More than 600 stores under management 577 stores added organically Presence in 21 regions Successful roll out of SAP IT platform Perekrestok
Slide 5: II Recent Accomplishments
»X5RETAI Tlamépouxa “z, NepekpecToK KAPYGEAB
Slide 6: Recent Accomplishments
Recent Accomplishments 6 • Business model reorganized to Multi-Format based from Functional based • Completed senior management appointments • Expanded SAP platform for sustainable growth • Stepped-up organic selling space expansion • Presence in 44(1) of the 62 regions comprising European Russia(2)
Slide 7: Multi-Format Organization
Multi-Format Organization 7 2012 & beyond: Customer-Centric 2007 – 2011: Functional Organizational Structure Multi-Format Organizational Structure X5 Central Office Customer • Purchasing dept. • Marketing / Pricing Soft Discounter Hypermarket Supermarket • Logistics • IT Format Format Format • Human
Slide 8: Multi-format - Capturing Wallet Share
Multi-format - Capturing Wallet Share 8 X5 Value Proposition – A Store for Every Lifestyle, Budget & Occasion is Nearby Soft Discounters Net selling space: ~ 350 sq. m. on average Assortment: ~ 3,500 SKUs Value proposition: Convenient and efficient shopping, every day low prices, unique private labe
Slide 9: Benefits of X5 Multi-Format Organization
Benefits of X5 Multi-Format Organization 9 Various purchase options in a one-to-one relationship with the customer behind different brands/value propositions More efficiently captures real Ensures a balance between growth estate/location opportunities and profitability in a regulated with varying si
Slide 10: Management Team
Management Team(1) 10 X5 Senior Management Team Since Mar. 2011 – Approx. 17 yrs experience in Russian CEO business development (at X5 since 2006) A. Gusev Since Jan. 2011 – Approx. 20 yrs finance CFO HR Since May 2011 – Approx. 20 yrs experience in experience in Russian Industry (Wrigley’s, Mars) K
Slide 11: Best In Class IT Platform
Best In Class IT Platform 11 Yesterday – Merger of Perekrestok & Pyaterochka Today – Largest SAP Rollout in Global Food Retail 2011 2011 2010 2010 Tomorrow: Rollout of JDA software solutions for January 2008: Homemade “IT Spaghetti” supply chain management Optimized IT Platform to Support Sustainabl
Slide 12: Step-Up in Managed Store Base
Step-Up in Managed Store Base 12 Q1 Regional Breakdown 2008 2009 2010 2011 2012 Moscow & Central 492 598 798 1,438 1,506 St. Petersburg & North-West 311 356 408 489 499 Central and North-West regions 803 954 1,206 1,927 2,005 Centralno-Chernozemny 35 37 57 167 173 Volgo-Vyatsky 54 64 92 215 221 Priv
Slide 13: Regional Presence
Regional Presence(1) 13 Moscow & Central region Discounters: 1,211 Stores St. Petersburg & Supermarkets: 196 Hypermarkets: 17 North-West region Convenience stores: 82 • More than 567 locations Discounters: 448 Supermarkets: 34 Multi-format presence in 59 cities(2) of European Russia, Hypermarkets:
Slide 14: Internet Retail Channel - E5.ru
Internet Retail Channel - E5.ru 14 E5 Business Model E5 at a Glance • Simple navigation Russian E-commerce Market Highlights • Easy order – minimal clicks • Largest internet audience in Europe (monthly audience 50 mln) • Minimal personal information • Market size in 2011 – USD 9.0 bln, an increase o
Slide 15: Kopeyka – Starting to Deliver
Kopeyka – Starting to Deliver 15 Full Year 2011 Kopeyka Soft Discounters LFL Results 16 May 2012, MTD Kopeyka Soft Discounters LFL Results 12% 71% 7% 55% 23% 4% 10% 9% 7% 6% 44% 22% 2% 1% -2% 20% 28% 26% -2% 22% -7% -6% 48% 13% 8% -10% 8% 33% -1% -5% 24% 14% 15% 18% -8% -3% Central Sr. Volzhskiy Pri
Slide 16: 2011 Strategic Priorities Score Card
2011 Strategic Priorities Score Card 16 Customer • Focus on formats’ value propositions Focus • Further assortment improvements: local sourcing, private label, non-food • Step-up in new store openings − Special focus on soft discounters, selective openings of supermarkets and Organic hypermarkets Ex
Slide 17: III Company Overview
»X5RETAIL Tlamépouxa “z, NepeKpectToK ® IKAPYCEAB
Slide 18: X5 - Russia's #1 Retailer
X5 - Russia’s #1 Retailer(1) 18 Russia’s Leading Food Retailers Evolution of X5 Market Share RUR 9.1 trl Sales 2011, % in % in total # Company name USD mln(2) Top-10 market(3) RUR 7.1 trl 1 X5 15,397 29.0% 5.7% 2 Magnit 11,420 21.5% 4.2% RUR 4.9 trl 5.7% 3 Auchan 6,965 13.1% 2.6% 4.4% 4 Metro 5,405
Slide 19: Employees – Our Most Valuable Asset
Employees – Our Most Valuable Asset 19 Personnel Overview X5 Headcount and Average Salary Headcount 100 • Year-end 2011, number of X5 employees was approximately 100,000, including 79,000 in-store employees 76 68 Compensation package and benefits 21.9 • Gross average monthly salary of retail employe
Slide 20: Suppliers & Purchasing
Suppliers & Purchasing 20 Overview • Established relations with over ~5,000 leading domestic and international FMCG companies and continue to enhance and develop those relations on the back of the growing business scale • As of 2012, negotiations with suppliers based on customer-driven assortment •
Slide 21: Key Operating Metrics
Key Operating Metrics 21 Traffic, mln Average basket, USD, incl. VAT 1,639 12 11 11 1,218 10 10 995 816 605 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Net Sales and Gross Profit Dynamics Net Cash From Operations, USD mln 10,118 926 8,674 8,914 8,161 734 7,233 629 427 378 2,304 2,607 1,983 2,1
Slide 22: Corporate Governance
Corporate Governance 22 Corporate Governance Supervisory Board Audit Committee Independent Name Position (3 members) Directors(1) General Meeting of Shareholders Nomination and Mr. Hervé Defforey Chairman Remuneration Committee Mr. Mikhail Fridman Member (4 members) Supervisory Board Mr. David Gou
Slide 23: Share Capital
Share Capital(1) 23 Share Capital Shares and Trading Treasury • The Company’s shares are listed on the London Shares 0.11% Stock Exchange in the form of Global Depositary Receipts (GDRs) Free Float 32.06% • Each GDR represents an interest of 0.25 of one Alfa Group ordinary share 47.86% • Since 2008,
Slide 24: IV Strategy, Guidance & Targets
24 IV Strategy, Guidance & Targets
Slide 25: X5 Strategy
X5 Strategy 25 Experienced Management Multi-Format Customer Positioning Focus on Food Trade Area Expansion Engaged & Motivated Personnel Customer Satisfaction Cost & Shrinkage Availability on Shelf Control Powerful, Technological Advantage
Slide 26: Guidance & Targets
Guidance & Targets 26 Objective 2012 Guidance Mid-term Targets(1) Focus on • Net RUR retail sales growth of 15% - 20% • Maintain EBITDA margin above 7% Sales & • Maintain EBITDA margin above 7% • Increase share in Russian retail market to ~7%-8% Margins • Stronger sales results, expected in 2H 2012
Slide 27: Investing in Growth & Regions
Investing in Growth & Regions 27 Selling Space Additions, th sq. m. Capital Expenditures, USD mln (net of VAT) Kopeyka Fully financed acquisition from internal CF ~1,500/yr. > 50%(1) 1,548 1,500 2,027(1) 1,727 300 274 1090 894 1,260 193 197 growth Stepped up organic 1,727 organic 1,063 1,260 Stepped
Slide 28: X5 Distribution Capabilities
X5 Distribution Capabilities 28 Distribution center (DC) locations Warehouse Space(1) Space, # of Stores Region # of DCs th sq. m. Serviced(2) Central 297.6 10 1,506 North-West 80.4 5 499 North-West V. Vyatsky Urals V.-Vyatsky 23.6 2 221 Urals 38.7 4 256 Central Chernozemny 30.7 2 173 Sr.-Volzhsky 2
Slide 29: V Russian Retail Market & Macroeconomic Review
29 V Russian Retail Market & Macroeconomic Review
Slide 30: Russian Retail Market Highlights
Russian Retail Market Highlights 30 Modern retail penetration in developing markets, 2010 Modern retail penetration in developed markets, 2010 Russia well below peers Russia well below peers 80% 78% 88% 87% 83% 80% 60% 71% 48% 45% 40% 40% Czech Hungary South Poland Turkey Russia Finland France UK Ge
Slide 31: Russian Retail Market
Russian Retail Market 31 Russian Retail Market, tln RUR Russian Retail Market Structure, 2010 4 year CAGR: 15% 19.1 16.5 13.9 14.6 Modern Retail 10.0 Other 10.9 8.5 40% 7.5 48% 7.4 6.0 7.1 8.0 9.1 4.9 6.5 2007 2008 2009 2010 2011 Open Markets Food retail Non-food retail 12% Sources: X5 estimates, Ro
Slide 32: Russian Trade Market Dynamics
Russian Trade Market Dynamics 32 Contribution of trade to Russian economy Comments 20% 18% 18% • Trade sector represents one of the key contributors 16% to Russian economy: 12% 8% 8% 6% 1990 Trade input to GDP has tripled from 1990 to 3% 2010 2010 4% 2% 0% Contribution to Contribution to Contribut
Slide 33: Understanding LFL Results
Understanding LFL Results 33 Key Factors Driving LFL Results in Developing Russian Food Retail Market Controllable – Highly Correlated: Non-controllable • New store/old store ratio (Growth rate) • Inflation • Store concentration • Population size • Geography – (Competitive vs. Less competitive • Inc
Slide 34: VI Summary
»X5RETAIL Tlamépouxa “z, NepeKpectToK ® IKAPYCEAB
Slide 35: X5 Investment Case
35 X5 Investment Case #1 Russian Retailer(1) With Substantial Growth Opportunities • Modern food retail is one of the fastest growing industries in Russia • Solid platform for growth in Russia’s still developing, modern retail Creating market Shareholder • Store base in the high density Central (Mos
Slide 36: Appendix 1: Format Details
36 Appendix 1: Format Details
Slide 37: Pyaterochka Soft Discounters
Pyaterochka Soft Discounters 37
Slide 38: Pyaterochka Soft Discounters
Pyaterochka Soft Discounters 38 Format highlights Format expansion, # of managed stores • Description: convenient and efficient stores for everyday shopping with unique private label offerings and attractive promo for diverse 2,525 low- and middle- income customer base • Pricing policy: every day lo
Slide 39: Pyaterochka: Key Operating Statistics
Pyaterochka: Key Operating Statistics 39 Ticket and store visits LFL analysis, % +/- Average basket (RUR) Average basket (USD) Basket, LFL 274.2 18 244.4 253.9 257.7 217.3 9.8 13 8.5 8.5 9.3 8.0 7 8 6 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Customer visits mln Traf
Slide 40: Perekrestok Supermarkets
Perekrestok Supermarkets 40
Slide 41: Perekrestok Supermarkets
Perekrestok Supermarkets 41 Format highlights Format expansion, # of stores • Description: conveniently located stores with focus on fresh and 330 service, wide choice of goods for middle- and upper-income people, + 29 stores who value quality and trust 301 • Pricing policy: price leader across supe
Slide 42: Perekrestok: Key Operating Statistics
Perekrestok: Key Operating Statistics 42 Ticket and store visits LFL analysis, % +/- Average basket (RUR) Average basket (USD) Basket, LFL 17 14.1 13.3 391.9 12.1 11.9 8 8 349.5 361.1 362.0 11.4 310.4 4 4 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Customer visits, mln
Slide 43: Karusel Hypermarkets
\algamel | 4 woidey > Bo), ea” .-¥: ea ea a |
Slide 44: Karusel Hypermarkets
Karusel Hypermarkets 44 Format highlights Format expansion, # of stores • Description: Economical one-stop shopping with wide range of + 6 stores quality food and non-food assortment; efficient service at cash 77 registers and engaging weekly catalogues 71 • Pricing policy: lowest price on the marke
Slide 45: Karusel: Key Operating Statistics
Karusel: Key Operating Statistics 45 Ticket and store visits LFL analysis, % +/- Average basket (RUR) Average bakset (USD) Basket, LFL 594.5 616.2 619.5 632.4 23.9 15 19.4 20.4 21.5 415.4 16.2 6 7 2 3 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Customer visits, mln Tra
Slide 46: Store Opening Process
Store Opening Process 46 Soft Discounter Supermarket Hypermarket • Regional Investment Committees have autonomy to open leased Investment Committee • Format Investment Committee • CIC approval is needed stores. Owned real estate requires approval Central Investment Committee (CIC) approval is needed
Slide 47: Appendix 2: Management Bios
47 Appendix 2: Management Bios
Slide 48: Executive Board
Executive Board 48 Andrei Gusev, Chief Executive Officer Year of birth: 1972 Expertise: Andrei joined X5 in 2006, prior to that he executed the merger between Perekrestok and Pyaterochka. He has been deeply involved in X5 strategy development to drive top line growth. Andrei has had over 10 years of
Slide 49: Executive Board
49 Executive Board Frank Michael Mros, General Director of Soft Discounter Format Year of birth: 1963 Expertise: Frank will join X5 in June 2012. He has over 18 years of retail industry experience in Europe with the leading German discounter chain Lidl. He began his career at Lidl as a retail clerk
Slide 50: Executive Board
Executive Board 50 Alexander Ermolenko, Logistics Director Year of birth: 1960 Expertise: Alexander joined X5 in August 2011. From 1987 to 2000, he was deputy Director of Communication, Electro-navigation and Information Department of the Novorossiysk shipping company. From 2000 to 2010 he served as
Slide 51: Contact Information
Contact Information 51 IR Department Contact Details Gregory Madick Anastasiya Kvon Andrey Napolnov Executive IR Director IR Director Senior IR manager X5 Retail Group N.V. X5 Retail Group N.V. X5 Retail Group N.V. 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr.