NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM
THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
X5 RETAIL GROUP N.V. ANNOUNCES 1H 2007 RESULTS
NET SALES OF US $2,348 MILLION, UP +49%
GROSS PROFIT OF US $ 617 MILLION, UP +53%
EBITDA OF US $ 212 MILLION, UP +74%
Amsterdam, 17 September 2007 – X5 Retail Group N.V. (the “Group”), Russia's largest
food retailer in terms of sales, is pleased to present today financial results for the first half of
2007. In 2007, the Group adopted reclassification of costs related to distribution and
transportation of goods from OPEX to the Cost of Sales. For convenience of comparison, the
financial results in 2006 have been also reclassified when applicable.
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Net sales increased by 49% to US$ 2,348 million, which represents an acceleration of
growth in comparison to 43% in 1H 2006 (pro forma, not including Merkado store
operations).
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Gross profit increased to US$ 617 million, up 53% vs. 1H 2006.
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Gross profit margin increased from 25.6% to 26.3%.
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EBITDA, including new ESOP launch costs of US$ 22 million, increased to US$ 212
million, or 74% increase vs. 1H 2006 (EBITDA before new ESOP launch costs increased
to US$ 234 million).
The Group will publish its 1H-2007 IFRS audited accounts on 24th of September, 2007 which
will be available on the Group’s website - www.x5.ru.
Reclassification of handling and delivery costs
To align its reporting practices with the international retail sector, starting from January 2007
the Group adopted a change in the classification of expenses related to goods’ distribution
and transportation. These costs have been reclassified from Selling, General and
Administrative expenses to Cost of Sales, and comparatives for 2006 have been adjusted
accordingly. This new reporting lowered the Group’s reported gross margin by 1.1% to 25.6
% in 1H 2006, and by 1.3% to 26.3 % in 1H 2007. This new IFRS reporting format has no
P&L impact at EBITDA level or below.
New employee stock option program
Under the new Employee Stock Option Program (ESOP) as approved by AGM in June 2007,
the total number of share options has been capped at 10,824,008 GDRs. The program will run
through to 18 May 2010 and options to employees have been granted in four annual tranches
starting from June 2007. The exercise price of 1st tranche in amount of the 1,395,000 options
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was set at $18 per GDR (GDR price at the date of the merger of Pyaterochka and Perekrestok
on 18 May 2006), and the exercise price of the remaining unvested three tranches will be
equal to the average market value of the Group’s GDRs during the 30 days prior to the
vesting date of each of these options. The total number of participants is not limited and will
vary during the program’s lifetime, but it is expected to cover initially over 150 key
employees and managers of the Group in 2007.
Although the first tranche and a part of the second tranche are covered by the Group’s
treasury stock of approximately 3.6 million GDRs purchased in 2006 (the market value of
treasury shares as of 30th of June was US$ 106, million vs. the acquisition costs of US$ 77
million), the relevant full ESOP costs have been reflected in the Group’s results in
accordance with IFRS. Therefore in the 1H 2007 accounts, USD 22 million has been
included in Selling, General and Administrative expenses, related to the ESOP costs.
Operational highlights
 During 1H 2007, the Group continued to strengthen its positive like-for-like sales trends
to reach +23% in US Dollar terms (composed of traffic +10% and basket +13%) or +16%
in Rouble terms (composed of traffic increase of +10% and basket growth of +6%), with
the first positive traffic indicator in recent years for Pyaterochka stores in St. Petersburg
region, Russia’s most competitive market.
 In total during 1H 2007, the Group gained additional net selling space of approximately
50,000 sq. meters.
 In March 2007, the Supervisory Board approved the Group’s 5-year strategy and
objectives with clear identification of key formats, target market share and financial
objectives, geographic expansion and SCM performance targets.
 The Group has successfully completed integration of the ex-Merkado stores acquired in
November 2006: as of today 10 of the stores are operating under the Perekrestok brand
and 7 stores under the Pyaterochka brand.
 The Group continued its regional expansion by gaining control over 40 Pyaterochka exfranchised stores with a total net selling space of approximately 14,000 sq. meters in
Chelyabinsk region and integrating them into Pyaterochka filial in Ekaterinburg which
demonstrated exceptional 38 % LfL sales growth in 1H 2007, benefiting from operational
and commercial know-how of the Group.
 A new distributional center “Sholokhovo” was opened in the Moscow region with an
additional capacity of approx. 20,000 sq. meters.
 The former Merkado Distribution Centre became the new Group’s HQ, consolidating
three leased office locations in Moscow and resulting in savings on rental and operational
costs as well as facilitating business integration processes. The Group launched a service
centre in N. Novgorod, which is planned to centralise and transfer accounting, payroll and
other back-office functions from HQ, regional offices and stores in 2007 – 2008, which is
expected to streamline business processes and deliver tangible savings going forward.
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 Recognizing X5’s strengthened positions in the Russian food retail market, Standard &
Poor’s Rating Services upgraded its outlook for X5 Retail Group N.V. and its subsidiaries
to stable from negative, and Moody’s Investors Service upgraded the outlook on the B1
corporate family rating to positive from stable in July 2007.
 X5 completed restructuring its borrowing portfolio by repurchasing 3 issues of
Pyaterochka and Perekrestok rouble bonds, and simultaneously, issuing the first tranche
of X5 Finance’s 7-year rouble bonds with a total nominal value of 9 billion roubles. It
was the first transaction of this nature in the Russian rouble bond market history and it
allowed the Group to improve its debt structure, decrease its funding costs and provide
the Company with additional resources to fund further expansion.
 In June, X5 raised US$ 1.0 billion through a loan facility to refinance the existing
syndicated loan and short-term credit lines on attractive terms to optimize the Group’s
capital structure and lower funding costs.
Quotes
Lev Khasis, Group CEO:
“Our financial results figures reinforce our leadership position in the Russian market. The
Group is showing outstanding progress in all formats and across its areas of operation, with
especially encouraging results in the Russian regions. We are continuing to implement our
growth strategy and see major opportunities for the Group in the market in the remaining
months of 2007.”
Vitaliy Podolskiy, Group CFO:
“Strong and positive trend in underlying store profitability as well as the chains’ integration
savings and purchasing scale more than off-set our integration costs and strategic investments
into the future of the Group. Current performance allows us to improve our outlook on the
Group’s future capital structure and its financial projections, which gives us a higher
confidence in ability to finance our ambitious growth plans as well as flexibility to respond to
new growth opportunities.”
1H 2007 Financial Highlights
X5 Retail Group N.V.
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Net Sales of US $2,348 million; up 49% vs. 1H 2006;
Gross profit of US $617 million, up 53% vs. 1H 2006;
Gross margin of 26.3% vs. 25.6% 1H 2006;
EBITDA including ESOP costs of US $212 million, up 74% vs. 1H 2006; EBITDA
margin of 9.0% vs. 7.7% 1H 2006;
EBITDA excluding ESOP costs of US $ 234 million, up 44% vs. 1H 2006, EBITDA
margin of 10.0% vs. 10.3% 1H 2006.
Pyaterochka chain stand-alone
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Net Sales of US $1,306 million; up 44% vs. 1H 2006
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Gross profit of US $326 million, up 46% vs. 1H 2006; Gross margin of 25.0% vs.
24.7% 1H 2006
Perekrestok chain stand-alone
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Net Sales of US $1,042 million; up 54% vs. 1H 2006
Gross profit of US $291 million, up 61% vs. 1H 2006; Gross margin of 27.9% vs.
26.7% 1H 2006.
Note to Editors:
X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. As of 30 June 2007,
the Group had 539 company-managed "Pyaterochka" soft discount stores located in the
Moscow (241), St. Petersburg (223) and other Russian areas (75), and 170 company managed
"Perekrestok" supermarkets across Central Russia and Ukraine, including 98 stores in
Moscow.
As of 30 June 2007, franchisees operated 591 Pyaterochka branded stores across Russia and
Kazakhstan. Perekrestok had 10 stores operated by franchisees in the Moscow area.
Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 to create the
the leading company in the Russian food retail market by sales.
The Group’s Net sales for the 1H 2007 were US $2,348 million, up +49% vs. 1H 2006.
Pyaterochka chain provided US $1,306 million of net sales, the Perekrestok chain contributed
US $1,042 million of net sales.
Forward looking statements:
This announcement includes statements that are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements can be identified by the fact that they do not
only relate to historical or current events. Forward-looking statements often use words such
as” anticipate”, “target”, “expect”, “estimate”, “intend”, “expected”, “plan”, “goal” believe”,
or other words of similar meaning.
By their nature, forward-looking statements involve risk and uncertainty because they relate
to future events and circumstances, a number of which are beyond X5 Retail Group N.V.'s
control. As a result, actual future results may differ materially from the plans, goals and
expectations set out in these forward-looking statements.
Any forward-looking statements made by or on behalf of X5 Retail Group N.V. speak only as
at the date of this announcement. Save as required by any applicable laws or regulations, X5
Retail Group N.V. undertakes no obligation publicly to release the results of any revisions to
any forward-looking statements in this document that may occur due to any change in its
expectations or to reflect events or circumstances after the date of this document.
Enquiries to:
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X5 Retail Group N.V.
Gennady Frolov
Head of Corporate Communications
Office +7 495 950 5577 ext. 10130
Mobile +7 495 998 3335
Email gennady.frolov@x5.ru
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