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2. 2
Disclaimer
The materials contained in this presentation (“Presentation”) have been prepared solely for the use in this Presentation and have not been independently verified. No
representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of
the information or the opinions contained herein. None of OJSC “Magnit” (“the Company”), nor any shareholder of the Company, nor any of its or their affiliates,
advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its
contents or otherwise arising in connection with the Presentation.
No part of this Presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment
decision whatsoever.
This Presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or
other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within
such jurisdiction.
Matters discussed in this Presentation may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words “believe,”
“expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions identify forward-looking statements. Forward-looking
statements include statements regarding: strategies, outlook and growth prospects; future plans and potential for future growth; liquidity, capital resources and capital
expenditures; growth in demand for products; economic outlook and industry trends; developments of markets; the impact of regulatory initiatives; and the strength of
competitors.
The forward-looking statements in this Presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without
limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. These
assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control and it may not
achieve or accomplish these expectations, beliefs or projections. In addition, important factors that, in the view of the Company, could cause actual results to differ
materially from those discussed in the forward-looking statements include the achievement of the anticipated levels of profitability, growth, cost and its recent
acquisitions, the timely development of new projects, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general
business and global economic conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty,
express or implied, is made regarding future performance.
Neither the Company, nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking
statements contained in this Presentation or to update or to keep current any other information contained in this Presentation. The information and opinions
contained in this document are provided as at the date of this Presentation and are subject to change without notice.
By reviewing this Presentation and/or accepting a copy of this document, you acknowledge and agree to be bound by the foregoing.
3. 3
Table of Contents
1. Introduction
2. Business Overview
- Convenience Format
- Hypermarket Format
- General Overview
3. Financial Overview
4. Summary Conclusions
4. 4
Our History
1994 –– 1998
Early years:
wholesale
distribution
Foundation of wholesale
business by
Mr. Galitskiy
Tander becomes
one of the major
distributors of household
products and cosmetics
in Russia
Decision to expand into
food retail market
First
1998 –– 1999
Entrance
into
food retail
convenience store
opened
in Krasnodar
Experiments with format
Stores merged into
Magnit discounter
retail chain
2001 –– 2005
Extensive
roll-out
to capture
market share
Rapid regional
roll-out: 1,500 stores by
the end of 2005
Adoption of IFRS
Strict financial control
Performance-linked
compensation
2006 –– 2009 crisis
Continued growth
with focus on
margin expansion
and multi-format
Leading food retailer in
Russia by number of
stores
IPO in 2006
Independent director
elected to the Board
Audit Committee
established
Corporate governance
rules established to
comply with best practice
SPO – 2008, 2009
24 hypermarkets opened
in 2007-2009
636 convenience stores
opened in 2009 (the total
store base is 3,228 as of
December 31, 2009)
2010
Strong
performer
compared to peers
Flexible pricing and
assortment matrix
adjustable to volatile
disposable income
Large investment
programme for 2010:
plan to make Capital
expenditures of over $1
bn
Plan to open up to 800
convenience stores and
up to 30 hypermarkets
during 2010
Ongoing efficiency
improvement
5. 02-09 CAGR: 36%
3 600
3 000
2 400
1 800
1 200
600
Source: Company
3 693
($MM) (%)
4 000
3 000
2 000
1 000
5
Magnit Today
Leading market position with broad geographic coverage
Focus on cities and towns with population under 500,000
4,14% 2,81% 4,93% 6,78%
13,91%
18,84%
25%
20%
15%
10%
5%
0%
-5%
-10%
FY2007-
FY2006
FY2008-
FY2007
FY2009-
FY2008
1Q2010-
1Q2009
1H2010-
1H2009
9M2010-
9M2009
people
Strong platform for rapid hypermarket operations expansion
Efficient logistics system
Sophisticated IT systems
Experienced management team
Strong financial performance
Number of Stores, eop
Financial Performance
21,7% 23,5% 22,3%
5 348 5 354 5 438
7,5%
9,5% 8,1%
5,1%
3,5% 4,4%
0
2008 2009 9M 2010
24%
16%
8%
0%
Sales Gross Margin EBITDA Margin NI Margin
Source: Company
Source: Company, IFRS accounts
Sales, Lfl Growth, Rub terms
3 204
3 658
2 197
3 228
2 568
2 194
2 582
1893
1500
1014
610
368
0
2002 2003 2004 2005 2006 2007 2008 2009 9M 2010
Convenience Stores Hypermarkets
6. 6
Strategy
Further expansion
of convenience
store operations
Hypermarket
roll-out
Efficiency and
profitability
improvements
7. Further Expansion of Convenience Store Operations
7
Medium term plans
Further expansion
of convenience
store operations
High level growth of convenience store operations
Plan to add up to 500 convenience stores annually
Acquisition of land plots to secure pipeline for future stores
Store opening
decision factors
Hypermarket
roll-out
Proximity to existing distribution centres
Ability to find suitable retail space
Level of modern format penetration and consumer disposable income
Further penetration
in existing regions
Areas with low modern format penetration
Expansion into towns with population as low as 5,000 people
Expansion into new locations within regions where Magnit is already present
Efficiency
improvement
Adjusting format to
customers’ needs
Flexible SKU matrix adjustable to consumer disposable income
Gradual shift to larger convenience store size to improve store attractiveness
Promotion of one-stop shopping concept for everyday needs
8. 8
Hypermarkets Roll-Out
Strong operational
platform
Strong brand name recognition and customer awareness generated by a large regional
network of convenience stores
Economies of scale in purchasing and efficient logistics system capable of supporting both
formats in existing and new locations
Existing retail expertise strengthened by a team of hypermarket specialists brought in to
manage execution risks
Increase of the number of owned stores
Target locations
Low or limited competition from other hypermarkets or modern retail formats
Relatively low prices of land plots for hypermarket construction in towns with population of
50,000 to 500,000 people
Benefiting from strong growth of disposable income and consumer spendings in the Russian
regions
Roll-out plan
Locations are chosen on the basis of competition from other hypermarkets in the area, the
strongest growth of disposable income of the population and minimum negative impact on
existing convenience stores
In small towns hypermarkets will be located in central locations which will give advantage of
targeting consumers who do not own cars
Hypermarkets total selling space (1) will vary from 2,000 to 12,500 sq. m. depending on
availability of land plots
Further expansion
of convenience
store operations
Hypermarket
roll-out
Efficiency
improvement
Note (1) Including selling space designated for leases to third parties
9. Efficiency and Profitability Improvement
Further expansion
of convenience
store operations
Further growth of the share of high margin products, including fresh food products, ready-made
9
meals and private label
Fresh food products and ready-made meals are expected to motivate customers to shop at
our stores more frequently
Achieve
synergies
Synergies arising from operation of neighbouring hypermarkets and convenience stores,
allowing to increase the effect of economies of scale
Hypermarket
roll-out
Efficiency
improvement
Increase the share
of products
distributed through
own logistics
system
Efficient utilisation of in-house logistics system
– Increase in the share of goods distributed through the company’s distribution centres from
approximately 78% of cost of goods sold in 9M 2010 up to 90-92% in the long term
– Reduction of third party logistics costs
Improve
the product mix
Increase
purchasing power
Increasing the penetration of convenience store operations in areas of presence
with relatively low market share, which is expected to result in greater purchasing or
negotiating power vis-à-vis local suppliers and landlords
Optimise
labor productivity
Investing in various technologies that have significant potential for productivity increases
Measures to improve retention rates for employees and management, that will reduce costs
associated with losing experienced employees and recruiting and training new ones
11. 11
A Shift to Multi Format
Convenience Store Hypermarket
Number of stores 3,658 as of 30 September 2010 35 as of 30 September 2010
Average store size
Total space – 466 sq. m.
Selling space – 307 sq. m.
Total space: 7,573 sq. m.
Magnit selling space (1): 3,323 sq. m.
Product range
3,249 SKUs on average
Private label – 13.08% of retail sales
14,265 SKUs depending on format
Private label – 7.16% of retail sales
Positioning (format)
Walking distance from home
Ground floor stores or freestanding
Open 12 hrs/7 days
All hypermarkets are built in convenient locations
All easily accessed by public transport
Target group People living within 500 metres from the store
People living within 15 minutes by car / 30 minutes
by public transport from the store. Effective radius –
7 km
Ownership 34% owned / 66% leased as of 30 September 2010 94% owned / 6% leased
Note: (1) Excludes selling space designated for leases third parties
13. 3 600
3 200
2 800
2 400
2 000
1 600
1 200
800
400
13
Format Description
Format Highlights
Low prices
Convenient locations
Carefully selected product mix
Standardised exterior and car parking
Functional interior design
Attention to customers
Increasing customer convenience
Main target group: all consumers living within 500 m
184 012
185 837
160 696
5341
145 207
6283 7477 5801
200 000
150 000
100 000
50 000
0
2006 2007 2008 2009
8000
6000
4000
2000
0
Rub USD
radius
Target locations: towns with potential high growth of
disposable income of population
Number of Convenience stores
610
1 014
1 500
1 893
2 194
2 568
3 204
3 658
Geographical Breakdown (% of total stores)
368 0
2002 2003 2004 2005 2006 2007 2008 2009 9M 2010
Operating Statistics
sales / sq. m. / year
Source: Company
Source: Company
Source: Company
Central
24,2%
Southern
28,2%
Volga
30,3%
North-West
5,0%
Urals
5,5%
North-
Caucasian
6,6%
Siberian
0,2%
14. 14
Typical Store Opening Process
Considerable experience of store openings
Acquisitions and construction are
preferred in existing markets with
already high penetration
Key store opening criterion is payback
period of not more than 3 years if leased;
6 – 7 years if owned
Average total cost of a new convenience
store is US$800 – 2,500 per sq. m. (excl.
VAT)
New stores reach their average traffic and
sales target within 6 months from opening
Rationalisation of store portfolio
Identification of a property
or a land plot
Feasibility report and
opening budget prepared
Approval by the regional
director and branch
director
MOU signed with landlord
Legal due diligence
Technical due diligence
Approval by Committee on
Store Openings
Lease agreement or SPA
signed
Repair and maintenance
Purchasing and
installation of equipment
Personnel hiring and
training
Sublet agreements signed
Store opened
W
1
W
2
W
3
W
4
W
1
W
2
W
3
W
4
W
1
W
2
W
3
W
4
Month 1 Month 2 Month 3
15. 2009
1,153
9M 2010
1,020
2008
1,005
2005
684
2006
783
2007
888
Southern
2003
387
2004
550
North-Caucasian 246
461
536
84
1,893
513
120
15
Store Opening Dynamics
802
950
160
888
1,111
183
638
743
115
379
368
61
545
628
88
Central
Volga
North-West
100
114
9
224
214
26
Urals 8 29 45 67 139 202
3,204
702
66
636
8
3,658
507
53
454
2,568
452
78
374
1,500
550
64
486
393
2,194
409
108
301
Siberian
Total
New openings
610
259
1,014
438
Closings 17 34
Net openings
242
404
53 convenience stores were closed as of September 30, 2010
– 11 due to poor performance
– 29 were relocated to better locations
– 13 were shut due to disagreements with landlords
16. As of 30 September 2010 the company owned 1,250 convenience stores and leased 2,408
Store ownership is gained on the basis of the following documents:
– Sale-purchase agreements
– Lease agreements with redemption rights
– Construction share holding agreements
– Investment contracts
Convenience stores Hypermarkets
16
Store Ownership Structure
34,2%
65,8%
Owned Leased
Store Ownership Structure
Source: Company as of 30 September 2010
94,3% 5,7%
Owned Leased
17. (tickets / sq. m. / day)
6,0
4,0
2,0
Source: Company
(sq. m.)
600
400
200
17
Key Operating Statistics
Average Ticket
Sales Mix
12,13% 11,7% 12,3% 11,3%
87,87% 88,3% 87,7% 88,7%
200
150
100
50
Source: Company
100,0%
80,0%
60,0%
40,0%
20,0%
0,0%
2007 2008 2009 9M 2010
Food Non Food
Traffic
3,6 3,3 3,1 3,2
0,0
2007 2008 2009 9M 2010
Average Floor Size
443 458 470 466
292 299 306 307
0
2007 2008 2009 9M 2010
Selling Space Total Space
Source: Company
Source: Company
07-09 $ CAGR: 14%
07-09 Total Space CAGR: 11%
149 158 164
122
4,8
6,0 5,4 5,0
0
2007 2008 2009 9M 2010
8
6
4
2
0
RUB US $
18. 30%
25%
20%
15%
10%
5%
18
Lfl Sales Analysis
Source: Company
Traffic, Lfl
Average Ticket, Lfl
3,8%
14,8%
21,7%
5,8%
3,2% 3,3%
2,0%
0,0%
-2,0%
30%
20%
10%
0%
2007 2008 2009 1Q 2010 1H 2010 9M 2010
RUB terms
-0,78%
-2,32%
-1,52%
1,20%
2,43%
-0,70%
-4,0%
2007 2008 2009 1Q 2010 1H 2010 9M 2010
Sales, Lfl
6,4%
4,6%
2,4%
4,1%
18,8%
13,9%
0%
2007 2008 2009 1Q 2010 1H 2010 9M 2010
RUB terms
Source: Company
Note: LFL analysis is based on the result of convenience stores that had been operating for not less than six months and have achieved a mature level of sales
19. FY 09 - FY 08
19
Lfl Sales Analysis
LFL growth
Traffic
Average ticket, RUR
Sales, RUR
1H 09 - 1H 08
(6)
(0.83%)
11.08%
10.16%
1Q 10 – 1Q 09
(3)
(0.70)%
3.17%
2.44%
1H 10 – 1H 09
(2)
1.20%
3.31%
4.55%
(4)
(1.52%)
5.75%
4.14%
9M 09 – 9M 08
(5)
(1.07%)
8.44%
7.28%
9M 10 – 9M 09
(1)
2.43%
3.84%
6.36%
1Q 09 – 1Q 08
(7)
0.37%
13.68%
14.05%
(1) Applicable to 2,070 convenience stores opened by July 01,2008
(2) Applicable to 2,149 convenience stores opened by July 01, 2008
(3) Applicable to 2,192 convenience stores opened by July 01, 2008
(4) Applicable to 1,739 stores opened by July 01, 2007
(5) Applicable to 1,783 stores opened by July 01, 2007
(6) Applicable to 1,815 stores opened by July 01, 2007
(7) Applicable to 1,849 stores opened by July 01, 2007
21. Number of hypermarkets and selling space
3%
small medium large
21
Format Description
23%
Source: Company
46%
20%
11%
50 - 100 100 - 250 250 - 500 500
Format Highlights
3 principal hypermarket sub-formats
– Small: total space of 2,500 - 7,000
sq. m., selling space of
1,800 - 3,000 sq. m.
– Medium: total space of 10,200 - 11,700 sq. m.,
selling space (1) of
3,500 – 6,000 sq. m.
– Large: total space up to 21,000 sq. m., selling
space (1) up to 12,500 sq. m.
The decision with regards to hypermarket format
principally depends on the following factors:
– Consumer disposable budget of the region
– 5-7 year budget forecast
– Percentage of the budget, attributable to
hypermarket
– Population of the region
– Competition
24
35
56 365
3 14
78 107
116 300
11 590
40
30
20
10
0
2007 2008 2009 9M 2010
Number of hypermarkets Selling space, sq.m.
Breakdown by sub-format (1) Breakdown by population, ths
57%
40%
(1) Based on selling space
23. 1,156 locations in
7 federal districts
23
Geographical Coverage
North-Western
1 hypermarket
183 convenience stores
1 distribution center
Central
6 hypermarkets
888 convenience stores
3 distribution centers
Volga
7 hypermarkets
1,111 convenience stores
2 distribution centers
Southern
21 hypermarkets
1,020 convenience stores
3 distribution centers
North-Caucasian
246 convenience stores
Urals
202 convenience stores
1 distribution center
Siberian
8 convenience stores
24. 24
Typical Store Opening Process
M
1
M
2
M
3
M
4
M
5
M
6
M
7
M
8
M
9
M
10
M
11
M
12
M
13
M
14
M
15
M
16
M
17
M
18
Identification
Land plot audit
Land plot approval
SPA signed
Ownership right received
Construction permit
Building design
Construction
Financing
Interior design / equipment
Licences approval
Hypermarket launch
Ownership rights received
Key store opening criterion is payback
period from 5 to 8 years
Average total cost of a new hypermarket
varies between US$1,500 – 3,800 per sq.
m. depending on format (excl. VAT)
Expected store maturity pattern: 8 - 15
months from opening
26. Youth (Up to 30 Years Old)
26
Pensioners (60+ Years Old)
Priorities
Price
Location
Assortment
Comfort
Key Features
Shopping habits formed in Soviet time
Conservative shoppers
Most are low income
Key Focus Areas
Increased offering of Private Label
products to reduce prices for
essential goods
Priorities
Assortment
Location
Comfort
Price
Key Features
More open to western lifestyles and
oriented towards modern retail
formats
Key Focus Areas
Offering product categories
appealing to young audience
Target Audience
Families (30 – 60 Years Old)
Priorities
Location
Assortment
Price
Comfort
Key Features
Time is of greater value than for
other groups
Growing car ownership
High level of responsibility for quality of
purchased food and family budget
Key Focus Areas
Increased share of fresh dairy,
semi-prepared products and
ready meals
Ensure quick shopping, avoid
bottlenecks in rush hour
One stop shopping: ATMs, pharmacies,
payment of mobile phone bills, etc
Building more parking spaces at the
stores
64% 12%
24%
Shopping Motivation
Convenience Stores
Daily fresh shopping
First need products
Hypermarkets
Weekly shopping
27. Mark-up for a given
27
product
Overall necessity of a product
Target audience for a product
Purchasing frequency of a product
Share in consumer basket
Mark-Up Adjustments
Target weighted average mark-up
for the Group
Competition in the area
Geographical location
(urban / rural matrix)
Mark-Up Criteria
Price assessment for convenience stores is
based on an every day product basket
(bread, milk, etc…)
Hypermarket pricing model focuses on
SKUs needed on a weekly basis
Each product category is assigned
a certain mark-up
Revised every 4 months
Seasonality
Weighted average mark-up is established at
the Group level
based on the monitoring of competitors’
prices for 200 key SKUs
Mark-up monitored on a daily basis using
the powerful MIS
Revised on a bi-weekly basis
Can be changed within
several hours
Centralised matrix-based
pricing system
Pricing Model
28. Suppliers, Purchasing and Private Label
28
Share of Private Label Products in Revenue
(%)
508 551
700 700
530
620
6,3%
265
8,2%
10,9%
12,1% 12,1% 12,3% 12,5%
800
600
400
200
0
2004 2005 2006 2007 2008 2009 9M 2010
15%
12%
9%
6%
3%
0%
Number of Items Share in Retail Sales
Magnit is the largest buyer for many domestic and
international FMCG producers
Weekly Assortment Committee approves the assortment
and suppliers
Direct purchasing and delivery contracts
Economies of scale and wide geographical presence
enable low prices and favorable contract terms
– Volume discounts
– Compensation of external and internal logistics costs
– Average credit term in 2009 was 46 days and could
be up to 60 days
– Contract term is typically 1-year
– Often can be unilaterally terminated by Magnit with
no penalties
Supplier bonuses criteria is based on
– Meeting sales targets
– Store promotions
– Loyalty
Private label products are designed to replace the
cheapest SKUs to maximise returns on each metre of
shelving space
620 private label SKUs
Private label products accounted for 13.08%
(convenience format)/7.16%(hypermarket) share of
retail revenue in 9M 2010
Approximately 85% of private label products are food
Share of non-food products in private label is
expected to increase
Source: Company
29. Stores Main Office
29
2006-2009 IT Systems Update
Transport management system
– Optimal route planning
– All cars are equipped with GPS locating systems
Warehouse management systems
– Introduction of WiFi operated data collection terminals
– Warehouses are customised to work with hypermarket product traffic
Oracle IT platform introduced to convenience store format
New price management system introduced to both formats
Electronic document traffic system with suppliers
Introduction of Corporate Information System based on 1C platform
Cashiers
Internet
Database
Server
Store
Director
Mail Server
ADSL / GPRS
Database Server (cluster)
Distribution Centres
Tasks Processor (robot)
30. Federal
District
Southern
Southern
Effective Space sq.m.
16,314
30,048
Number of Serviced
Stores
385
440
Bataysk
Kropotkin
Slavyansk-on-Kuban Southern 20,496 272
Engels Volga 19,495 481
Togliatti Volga 18,724 444
Tver Central 10,714 200
Oryol Central 12,197 481
Ivanovo Central 43,365 318
Convenience stores Hypermarkets
30
Logistics System
As of September 30, 2010 approximately 78%
of COGS vs. 57% in 2005 were distributed
through the company’s distribution centers
and the long-term target is to increase this
share up to 90-92% for convenience stores
and up to 80% for hypermarkets.
At the moment Company’s logistics system
includes:
Automated stock replenishment system
10 distribution centers with approximately
208 565 sq. m. capacity
Fleet of 2,262 vehicles
Veliky Novgorod North-Western 21 060 226
Ural
16,152
208 565
446
3 693
Chelyabinsk
Total
City
DC Processed Goods
Source: Company
9M 2010 9M 2010 Target
19%
81%
Outsourced
Owned
92%
8%
Outsourced
Owned
80%
20%
Outsourced
Owned
59%
41%
Target
Owned
Outsourced
Source: Company
31. Well trained dedicated personnel
Average number of employees vs. average
80 000
60 000
40 000
20 000
31
salary, 2007-2009*
48 194 59 135
13 714
75 745
10 679
13 100
0
2007 2008 2009
15 000
10 000
5 000
0
in RUR
Average headcount Average monthly salary
The average number of employees in the Group amounted to
86,330 as of September 30, 2010:
• 62,305 in-store personnel,
• 16,030 people engaged in distribution,
• 5,588 people in regional branches,
• 2,407 people employed by head office
The average age of our employees is approximately 25 years
The gross average monthly salary in 2009 was RUR 13,714 of
which approximately 75% was basic salary
Special performance-linked bonuses and incentives help to motivate
the employees at all levels
Key members of the Management hold Company’s shares
Performance monitoring and evaluation on a regular basis
Career development programs for all levels to ensure
• Lower staff turnover
• Increased motivation
• Higher productivity
Personnel training
• 174 classrooms for trainings at all levels
• Regular meetings and seminars between mid-level managers to
exchange best practices
• Coaching for top-management
Strong corporate culture aimed at development of loyalty of
employees
• The Company publishes a corporate newspaper every two months
• Team building events to ensure integrity of the team
Source: Audited IFRS Financial Statements
34. Gross Margin Bridge / SGA Expense Structure
34
Gross Margin Bridge
54,1% 54,4%
21,3% 20,9%
11,8% 11,8%
6,6% 7,1%
2,6% 2,4%
2,1% 1,7%
* As % of Sales
Source: Company, IFRS accounts
SGA Expense Structure
16.35%* 16.24%*
1,5%
1,7%
1H2010 1H2009
payroll and related taxes
rent and utilities
depreciationamortization
other expenses
taxes, other than income tax
packaging and raw materials
repair and maintanance
21,48%
(0,39%)
(1,07%)
(0,54%)
23,48%
(0,25%)
0,20%
1,85%
21,68%
24%
22%
20%
18%
16%
14%
12%
10%
GM 2008 Trading
Margin %
Transport Losses GM 2009 Trading
Margin %
Transport Losses GM
1H2010
35. 35
EBITDA Bridge
EBITDA Bridge
As % of Sales
7,5%
1,8%
12%
10%
8%
6%
4%
Source: Company, IFRS accounts
(0,1%)
0,1%
0,1% 0,1%
9,5%
(2,0%) (0,1%) (0,2%)
0,1%
7,3%
2%
EBITDA
2008
GM Bank
services
Rent and
utilities
Foreign
exchange
gain
Other
expenses
EBITDA
2009
GM Rent and
utilities
Salaries Other
expenses
EBITDA
1H2010
36. In US$ MM 2008 1H2010
ASSETS
Property plant and equipment 1,331.1 1,896.0
Other non-current assets 19.8 31.1
Cash and cash equivalents 115.1 51.5
Trade accounts receivable 0.9 0.1
Merchandise 323.3 469.0
Other current assets 53.9 65.6
TOTAL ASSETS 1,844.1 2,513.3
Equity 836.8 1,479.2
Long-term debt 162.7 243.1
Other long-term liabilities 18.4 36.4
Trade accounts payable 484.9 563.0
Short-term debt 243.2 90.5
Other current liabilities 98.1 101.1
TOTAL EQUITY AND LIABILITIES 1,844.1 2,513.3
36
Balance Sheet
2009
1,638.5
28.5
371.0
0.2
415.2
75.1
2,528.5
1,424.8
152.3
27.3
572.3
266.6
85.2
2,528.5
EQUITY AND LIABILITIES
Source: IFRS accounts
37. 37
1H 2010 Capex ((1)) Analysis
US’ MM
52
13%
Source: IFRS accounts
268
70%
17
4%
52
13%
Notes (1) Capex calculated as additions + transfers of PPE in each period
Other assets
Construction in progress
Buildings
Machinery and equipment
Land
Total 1H 2010: $388.7 mn
38. 38
Cash Flow Statement
2008
404.8
420.1
(575.4)
200.2
44.8
115.1
2009
508.7
376.2
(448.1)
339.2
267.2
371.0
1H2010
251.4
156.8
(390.8)
(97.9)
(319.5)
(51.5)
In US$ MM
OPERATING ACTIVITIES:
Operating cash flows before movements in working capital
Net cash generated from operating activities
INVESTING ACTIVITIES:
Net Cash used in investing activities
FINANCING ACTIVITIES:
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, end of the year
Source: IFRS accounts
39. 34
30
26
22
18
14
1,0
0,5
39
Working Capital Analysis
46,4
37,7
-
(40)
(80)
(120)
(160)
40
30
20
2009 1H2010
Inventory Management Days (2)
32,4
29,4
10
2009 1H2010
Trade Accounts Payable Days (3)
Source: Company
Source: Company, IFRS accounts
Working Capital (1)
(173,7)
(123,8)
(200)
2009 1H2010
Source: Company
Net Debt (4)/ EBITDA, USD
0,09
0,53
0,0
2009 1H2010
Notes: (1) Current assets (less CCE and short-term investments) – current liabilities (less short-term debt)
(2) 2008-2009: 360 / (Cost of sales/year average inventory)
(3) 2008-2009: 360 / (Cost of sales/year average trade accounts payable)
(4) Net debt = long / short-term bonds and borrowings + finance lease liabilities – cash and cash equivalents
41. Strong foothold in Russia’s cities and towns with population under 500,000 people: first
mover advantage (first retailer in many locations to establish a modern format); low competition
from other chains outside of Russia’s large cities
41
Summary Conclusions
Leading Russian retailer: broadest geographic coverage with 3,693 stores (as of 30 September
2010) in more than 1,156 cities in seven out of eighth federal districts in Russia
Further organic growth of store operations: continued roll-out of established business model
in existing markets and selective expansion into new geographic areas
Expanding hypermarket operations: leveraging strong existing platform (operations, logistics,
brand, scale) to develop a leading hypermarket chain in the European part of Russia
Additional measures to improve profitability: enhancing product mix, shifting to direct import
contracts, increasing private label and increasing distribution through own logistics system to
achieve margin improvements and cost savings
Financing of expansion program: implementation of the Company’s mid-term strategy will be
executed through a mix of operating cashflow and debt (bank loans and bonds)
