DIXY GROUP ANNOUNCES CONSOLIDATED UNAUDITED IFRS RESULTS FOR THE FIRST HALF OF 2011

Transcription

1 PRESS RELEASE DIXY GROUP ANNOUNCES CONSOLIDATED UNAUDITED IFRS RESULTS FOR THE FIRST HALF OF 2011 Moscow, September 20, 2011 DIXY Group (RTS, MICEX: DIXY) one of Russia s leading retailers of foods and everyday products - announces consolidated unaudited IFRS results for the first half of Main Events of the First Half of ) In June 2011 DIXY Group acquired 100% of shares of Victoria Group (please see As a result of this transaction, the DIXY Group increased turnover by more than 50% and became the third largest among Russian national food retail operators by revenue, selling area and number of stores. Acquisition of Victoria retail chain significantly strengthened the DIXY Group s competitive positions in the two key regional markets: Russia s Central and Northwestern Federal Districts and allowed to gain access to new regional markets in Kaliningrad and Tula regions. Due to a significant increase of scale in the trade operations, DIXY Group will be able to significantly improve purchasing terms and to realize the existing potential with regard to optimization of logistics and transportation costs at the united Company. 2) DIXY Group started to implement new marketing strategy encompassing full marketing operation flow including, pricing, assortment management, loyalty programs, standards of service and communications, external and internal design of stores. In the first half of 2011 the Company started a redesign of the DIXY chain s brand identity, and on 1 June 2011 launched a nationwide advertising campaign aimed to develop a more striking, modern, and memorable company brand and clearer positioning (please see 31_Dixy_Press-Release_ENG.pdf ). 3) DIXY Group shares were included into the RTS Index (RTSI) and into the MICEX Consumer Goods and Services Index (MICEX CGS) based on capitalization and liquidity criteria. 1

2 Key Results of the First Half of 2011 During the first half of 2011, the combined Company opened 94 new DIXY stores, including 93 neighborhood stores (DIXY and Kvartal) and 1 supermarket Victoria. All new stores were opened in the Central, North-Western and Urals Federal Districts through long-term lease agreements, except for one acquired store (DIXY format in Yaroslavl). In the first half of 2011 the combined Company demonstrated positive revenue dynamics yearon-year (revenue growth of 27.6% according to the DIXY Group consolidated financial statements), as well as a significant increase in gross margin, EBITDA margin and net profit margin over the same period last year. Positive revenue dynamics for the combined Company is a result of the increase of selling space of the DIXY Group on the pro-forma basis (including Victoria Group results from the beginning of the year) by 10% (including 11% growth of selling space of the DIXY Group standalone and 6% increase of the Victoria Group standalone selling space) and like-for-like (LFL) sales growth over the same period last year. During the first half of 2011, DIXY Group LFL sales grew by 7.8% in RUR (7.6% for the first quarter, and 8.0% for the second quarter of 2011). You can find details at Victoria Group LFL sales during the first half of 2011 grew by 6.1% in RUR (5.4% for the first quarter, and 6.9% for the second quarter of 2011). You can find details at Significant increase in gross margin and EBITDA margin for the first half of 2011 is a result of improved pricing and flexible front margin management started from the beginning of 2011, as well as a positive effect of the efforts aimed at decreasing cost of sales and focus on operational costs management. Sales per square meter of selling space on the combined Company level have increased by 11% over the same period last year. In the first half of 2011 DIXY Group continued to implement initiatives launched by the new marketing team that joined DIXY in autumn of These initiatives include optimization of assortment and floor space, improvement of external and internal design of stores and their clearer positioning, as well as improvement of customer service and marketing communications. These efforts have led to an increased number of middle class consumers visiting DIXY Group stores and to a progressive acceleration of sales growth over the same period last year throughout the first half of The efficiency of the promotional activities targeting sales growth was made possible also by means of increased levels of centralization of deliveries (rate of deliveries through own distribution centers) and logistical service (success of delivery rate). DIXY format centralization rate has reached 84% in the second quarter of 2011, and general logistics service level has reached 88%. 2

3 DIXY Group Financial Results for the First Half of 2011 DIXY Group unaudited consolidated IFRS results for the first half of 2011 include Victoria Group IFRS results, beginning from the date of acquisition on 15 June This type of reporting of consolidated financial results for DIXY Group will be used in all future releases. However, in order to facilitate understanding of the combined Company business, we present in the current release several additional types of IFRS financial results reporting. Current release discloses in detail the following: 1. DIXY Group unaudited standalone IFRS financial results, not including Victoria Group results We also present for reference: 2. Victoria Group unaudited standalone IFRS financial results Financial results and their period-on-period comparison are presented for reference, since Victoria Group results cannot be compared period-on-period directly, since Victoria Group results for the first half of 2011 and second quarter of 2010 do not include results of Tula region (retail chain Semeynaya Kopilka was acquired on ), reported in DIXY Group unaudited consolidated financial results, including Victoria Group results from the date of acquisition on 15 June 2011 Financial results and their period-on-period comparison are presented for reference, since 1) Victoria Group results are included into DIXY Group results only from 15 June 2011 (acquisition date) and do not have a significant effect on DIXY Group financial results for the first half of 2011, 2) consolidated results are preliminary because some items, such as goodwill, NMA, PPE, deferred taxes, favorable/unfavorable lease obligations are based on a preliminary auditor estimates, and can be changed later upon finalization of the valuation. All changes will be reflected in the audited IFRS financial statements for the full year of ) Victoria Group results, included into DIXY Group results, cannot be compared directly period-on-period since Victoria Group results for the first half of 2011 and second quarter of 2010 do not include results of Tula region (retail chain Semeynaya Kopilka was acquired on ) these results are reported in DIXY Group unaudited pro-forma interim financial statements, including Victoria results from the beginning of the year Corresponding three reporting forms are presented for reference in the Appendix to this release. Pro-forma financial statements differ from a simple sum of financial results of DIXY Group and Victoria Group in particular because of a change in reporting policy regarding recognition of sales through agent agreements in Kaliningrad region (please refer to Page 6 of the Notes to the Pro-forma Interim Financial Statements that can be found at the DIXY site please see Investor Relations, IFRS Statements at You can find unaudited IFRS financial statements (three forms) in English in the Appendix to this release. Unaudited IFRS financial statements with notes can be found at the DIXY site please see Investor Relations, IFRS Statements at 3

4 1. DIXY GROUP UNAUDITED STANDALONE FINANCIAL RESULTS, NOT INCLUDING VICTORIA GROUP RESULTS First Half of 2011 Year-on-year Revenue in RUR increased by 21.8% (28.0% in USD) to RUR 37.4 bln. (USD 1.3 bln). Gross Profit in RUR increased by 29.3% (35.8% in USD) to RUR 9.4 bln. (USD 328 mln). Gross Margin increased by 140 bp year-on-year to 25.1% of sales compared to 23.7% for the same period of EBITDA in RUR increased by 39.4% (46.4% in USD) to RUR 2.5 bln. (USD 86 mln). EBITDA margin increased by 80 bp year-on-year to the level of 6.6% from 5.8% in the same period of Net Profit in RUR increased by 340.3% (362.5% in USD) year-on-year and amounted to RUR 555 mln. (USD 19 mln). Net Margin increased by 110 bp year-on-year to 1.5% of sales from 0.4% of sales over the same period last year. Net Cash from Operating Activities in RUR increased by 63.2% (71.4% in USD) over the same period of 2010 to RUR 1.3 bln. (USD 46 mln). Second Quarter of 2011 Year-on-year Revenue in RUR increased by 23.3% (32.4% in USD) to RUR 19.4 bln. (USD 688 mln). Gross Profit in RUR increased by 33.4% (43.6% in USD) to RUR 5.1 bln. (USD 181 mln). Gross Margin increased by 200 bp year-on-year to 26.3% of sales compared to 34.2% for the same period of EBITDA in RUR increased by 48.5% (59.1% in USD) to RUR 1.5 bln. (USD 52 mln). EBITDA margin increased by 130 bp year-on-year to the level of 7.5% from 6.3% in the same period of Net Profit in RUR amounted to RUR 390 mln. (USD 14 mln) for a Net Margin of 1.5% of sales compared to a net loss for the same period of Net Cash from Operating Activities in RUR increased by 25.1% (35.1% in USD) over the same period of 2010 to RUR 627 mln. (USD 22 mln). 4

5 DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Income Statement Highlights. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 19,414 15, % 37,389 30, % incl. Retail 19,288 15, % 37,155 30, % Cost of Sales 14,337 11, % 27,991 23, % as % of Sales 73.9% 75.8% 74.9% 76.3% Gross Profit 5,077 3, % 9,399 7, % as % of Sales 26.1% 24.2% 25.1% 23.7% EBITDA 1, % 2,465 1, % EBITDA, % 7.5% 6.2% 6.6% 5.8% Operating Profit % % as % of Sales 4.5% 3.4% 3.8% 2.9% Net Profit % as % of Sales 2.0% 0.0% 1.5% 0.4% DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Revenue by Format. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 19,414 15,745 23,3% 37,389 30,692 21,8% incl. Retail 19,288 15,644 23,3% 37,155 30,494 21,8% By Format DIXY 16,689 13,313 25,4% 32,172 25,985 23,8% MEGAMART 1,978 1,770 11,7% 3,813 3,448 10,6% MINIMART ,7% 1,169 1,061 10,2% Gross Profit 5,077 3,805 33,4% 9,399 7,270 29,3% as % of Sales 26,1% 24,2% 25,1% 23,7% DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Cost of Sales. RUR, mln. 2Q Q 2010 % 1H H 2010 % Cost of Goods Sold 13,801 11, % 27,008 22, % as % of Sales 71.1% 73.4% 72.2% 73.7% Transportation Costs % % as % of Sales 0.6% 0.5% 0.5% 0.5% Shrinkage of Inventories % % as % of Sales 2.2% 2.0% 2.1% 2.2% TOTAL 14,337 11, % 27,991 23, % as % of Sales 73.9% 75.8% 74.9% 76.3% 5

6 DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Selling, General & Administrative Expenses (SG&A). RUR, mln. 2Q Q 2010 % 1H H 2010 % Salaries 1,920 1, % 3,751 2, % as % of Sales 9.9% 9.6% 10.0% 9.6% Lease Expenses % 1,531 1, % as % of Sales 4.1% 4.0% 4.1% 4.0% D&A % % D&A, % 2.5% 2.8% 2.5% 2.8% Utilities, Repair and Maintenance Expenses % % as % of Sales 1.9% 1.9% 1.9% 1.8% Transportation and Handling Expenses % % as % of Sales 0.1% 0.1% 0.1% 0.1% Advertising Expenses % % as % of Sales 0.5% 0.4% 0.4% 0.4% Other Expenses % % as % of Sales 2.7% 1.9% 2.3% 2.1% TOTAL SG&A 4,208 3, % 7,985 6, % as % of Sales 21.7% 20.7% 21.4% 20.8% Selling, General & Administrative Expenses for the first quarter of 2011 increased by 27.5% year-onyear, while increasing as a percentage of Revenue by 60 bp over the same period of 2010 from 20.8% to 21.4% of Revenue. This was largely due to Salaries Expense increase by 50 bp from 9.6% to 10.0% of Revenue as a result of social tax increase. Lease Expenses for the first half of 2011 increased by 10 bp to 4.1% of Revenue as a result of increase in the number of leased properties and rent indexation, and Utilities, Repair & Maintenance Expenses increased by 10 bp, largely due to increases in electrical power tariffs. However, the increase in separate items of SGNA was offset by a positive dynamics of decreasing expenses in other items. Depreciation and Amortization decreased by 30 bp over the same period last year to 2.5% of Revenue. Also, Advertising Expense decreased decreased by 10 bp to 0.3% of Revenue. DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Non-operating Gains and Losses.* RUR, mln. 2Q Q 2010 % 1H H 2010 % Operating Profit % % Finance Costs (Net) (221) (551) -59.8% (443) (359) 23.3% Net FX Result (9) (235) -96.3% (10) (95) 89.6% Profit before Tax % % Income Tax Expense (258) (148) 74.7% (426) (338) 25.9% Net Profit 390 (3) % Net Margin, % 2.0% 0.0% - 1.5% 0.4% *effective tax rate for the first half of 2011 is 43% 6

7 DIXY Group Unaudited Standalone IFRS Financial Results, Not Including Victoria Group Results. Cash Flow Statement Highlights. RUR, mln. 1H H 2010 % Net Cash Flows (Used in)/generated from Operating Activities 1, % Net Cash from Operating Activities before Changes in Working Capital 2,486 1, % Change in Working Capital (279) (141) 98.3% Net Interest and Income Tax Paid (899) (797) 12.9% Net Cash Used in Investing Activities (15,464) (598) - Net Cash Generated from/(used in) Financing Activities (1,001) - Effect of Exchange Rate Changes on Cash & Cash Equivalents Net Increase/(Decrease) in Cash & Cash Equivalents Cash and Cash Equivalents at the End of the Period (10) (95) -89.6% (730) (797) % 7

8 2. FOR REFERENCE. VICTORIA GROUP UNAUDITED STANDALONE IFRS FINANCIAL RESULTS Financial results and their period-on-period comparison are presented for reference, since direct period-on-period comparison of Victoria Group results, included into DIXY Group results cannot be compared directly, since Victoria Group results for the first half of 2011 and second quarter of 2010 do not include results of Tula region (retail chain Semeynaya Kopilka was acquired on ) these results are reported in First Half of 2011 Year-on-year Revenue in RUR increased by 22.6%to RUR 19.5 bln. Gross Profit in RUR increased by 23.5% to RUR 6.2 bln. Gross Margin increased by 30 bp year-onyear to 31.8% of sales compared to 31.5% for the same period of EBITDA in RUR decreased by 14.7% to RUR 1.4 bln. EBITDA margin decreased by 50 bp year-onyear to the level of 7.2% from 7.7% for the same period of Net Profit in RUR increased by 30.0% year-on-year and amounted to RUR 471 mln. Net Margin increased by 10 bp year-on-year to 2.4% of sales from 2.3% of sales over the same period last year. Second Quarter of 2011 Year-on-year Revenue in RUR increased by 21.4% to RUR 9.7 bln. Gross Profit in RUR increased by 34.0% to RUR 3.4 bln. Gross Margin increased by 320 bp year-onyear to 34.5% of sales compared to 31.3% for the same period of EBITDA in RUR increased by 6.6% to RUR 684 mln. EBITDA margin decreased by 100 bp year-onyear to the level of 7.0% from 8.0% in the same period of Net Profit in RUR decreased by 0.8% to RUR 223 mln. Net Margin decreased by 50 bp to 2.3% of sales from 2.8% for the same period of Victoria Group Unaudited Standalone IFRS Financial Results. Income Statement Highlights Victoria Group. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 9,707 7, % 19,558 15, % incl. Retail 9,639 7, % 19,023 15, % Cost of Sales 6,352 5, % 13,334 10, % as % of Sales 65.4% 68.6% 68.1% 68.4% Gross Profit 3,355 2, % 6,224 5, % as % of Sales 34.5% 31.3% 31.8% 31.5% EBITDA % 1,411 1, % EBITDA, % 7.0% 8.0% 7.2% 7.7% Operating Profit % % as % of Sales 4.7% 6.0% 4.9% 5.2% Net Profit % % as % of Sales 2.3% 2.8% 2.4% 2.3% 8

9 Victoria Group Unaudited Standalone IFRS Financial Results. Revenue by Format. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 9,707 7, % 19,558 15, % incl. Retail 9,639 7, % 19,023 15, % Kvartal/Deshevo/Kopilka 6,843 5, % 13,176 10, % Victoria 2,680 2, % 5,582 4, % CASH % % Gross Profit 3,355 2, % 6,224 5, % as % of Sales 34.5% 31.3% 31.8% 31.5% Victoria Group Unaudited Standalone IFRS Financial Results. Cost of Sales. RUR, mln. 2Q Q 2010 % 1H H 2010 % Cost of Goods Sold 6,217 5, % 13,022 10, % as % of Sales 64.0% 65.2% 66.5% 65.5% Transportation Costs % % as % of Sales 0.4% 1.5% 0.3% 0.9% Shrinkage of Inventories % % as % of Sales 0.9% 1.8% 1.3% 1.9% TOTAL 6,352 5, % 13,334 10, % as % of Sales 65.4% 68.6% 68.1% 68.4% Victoria Group Unaudited Standalone IFRS Financial Results. Selling, General & Administrative Expenses (SG&A). RUR, mln. 2Q Q 2010 % 1H H 2010 % Salaries 1,581 1, % 2,716 2, % as % of Sales 16.3% 14.1% 13.9% 13.3% Lease Expenses % % as % of Sales 5.0% 5.0% 4.9% 4.8% D&A % % D&A, % 2.4% 2.0% 2.4% 2.5% Utilities, Repair and Maintenance Expenses % % as % of Sales 3.0% 2.3% 2.7% 2.1% Transportation and Handling Expenses % % as % of Sales 0.6% 0.8% 0.6% 0.6% Advertising Expenses % % as % of Sales 0.5% 0.5% 0.5% 0.5% Other Expenses % % as % of Sales 4.0% 2.6% 3.8% 4.4% TOTAL SG&A 3,069 2, % 5,613 4, % as % of Sales 31.6% 27.3% 28.7% 28.3% 9

10 Victoria Group Unaudited Standalone IFRS Financial Results. Non-operating Gains and Losses.* RUR, mln. 1H H 2010 % Operating Profit % Finance Costs (Net) (208) (277) -12.9% Net FX Result (58) Profit before Tax % Income Tax Expense (254) (325) -21.7% Net Profit % Net Margin, % 2.4% 2.3% *effective tax rate for the first half of 2011 is 35% Victoria Group Unaudited Standalone IFRS Financial Results. Cash Flow Statement Highlights. RUR, mln. 1H H 2010 % Net Cash Flows (Used in)/generated from Operating Activities % Net Cash from Operating Activities before Changes in Working Capital 1,658 1, % Change in Working Capital (714) (113) 732% Net Interest and Income Tax Paid (535) (516) 3.6% Net Cash Used in Investing Activities (369) (87) 323% Net Cash Generated from/(used in) Financing Activities 197 (547) -- Effect of Exchange Rate Changes on Cash & Cash Equivalents (58) Net Increase/(Decrease) in Cash & Cash Equivalents % Cash and Cash Equivalents at the End of the Period 1,052 1, % 10

11 3. FOR REFERENCE. DIXY GROUP UNAUDITED CONSOLIDATED FINANCIAL RESULTS, INCLUDING VICTORIA GROUP RESULTS FROM THE DATE OF ACQUISITION ON 15 JUNE 2011 Financial results and their period-on-period comparison are presented for reference, since 1) Victoria Group results are included into DIXY results only from 15 June 2011 (acquisition date) and do not have a significant effect on DIXY Group financial results for the first half of 2011, 2) consolidated results are preliminary because some items, such as goodwill, NMA, PPE, deferred taxes, favorable/unfavorable lease obligations are presented based on a preliminary auditor estimates, and can be changed later upon finalization of the valuation. 3) Victoria Group results, included into DIXY Group results, cannot be compared directly period-onperiod since Victoria Group results for the first half of 2011 and second quarter of 2010 do not include results of Tula region (retail chain Semeynaya Kopilka was acquired on ) these results are reported in First Half of 2011 Revenue in RUR increased by 27.6% to RUR 39.2 bln. Gross Profit in RUR increased by 36.8% to RUR 10.0 bln. Gross Margin increased by 170 bp year-onyear to 25.4% of Revenue compared to 23.7% for the same period of EBITDA in RUR increased by 43.3% to RUR 2.5 bln. EBITDA Margin increased by 70 bp year-on-year to the level of 6.5% of Revenue from 23.7% for the same period of Net Profit in RUR increased by 342.3% year-on-year and amounted to RUR 557 mln. Net Margin increased by 100 bp to 1.4% of Revenue compared to 0.4% over the same period last year. Second Quarter of 2011 year-on-year Revenue in RUR increased by 34.6% to RUR 21.2 bln. Gross Profit in RUR increased by 47.8% to RUR 5.6 bln. Gross Margin increased by 230 bp year-onyear to 26.5% of Revenue compared to 24.2% for the same period of EBITDA in RUR increased by 55.5% to RUR 1.5 bln. EBITDA Margin increased by 100 bp year-onyear to the level of 7.2% of Revenue from 6.2% for the same period of Net Profit in RUR reached 393 mln. compared to the Net Loss over the same period last year. Net Margin amounted to 1.9% of Revenue compared to a Net Loss for the same period last year. DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Income Statement Highlights. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 21,193 15, % 39,169 30, % incl. Retail 21,035 15, % 38,902 30, % Cost of Sales 15,570 11, % 29,224 23, % as % of Sales 73.5% 75.8% 74.6% 76.3% Gross Profit 5,623 3, % 9,945 7, % as % of Sales 26.5% 24.2% 25.4% 23.7% EBITDA 1, % 2,533 1, % EBITDA, % 7.2% 6.2% 6.5% 5.8% Operating Profit % 1, % as % of Sales 4.1% 3.4% 3.6% 2.9% Net Profit 393 (3) % as % of Sales 1.9% 0.0% 1.4% 0.4% 11

12 DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Revenue by Format. RUR, mln. 2Q Q 2010 % 1H H 2010 % Revenue 21,193 15, % 39,169 30, % incl. Retail 21,035 15, % 38,902 30, % Neighborhood DIXY 16,689 13, % 32,172 25, % Kvartal/Deshevo/Kopilka 1,210-1,210 - Supermarket Victoria Minimart % 1,169 1, % Hypermarket Megamart 1,978 1, % 3,813 3, % Cash&carry CASH Gross Profit 5,623 3, % 9,945 7, % as % of Sales 26.5% 24.2% 25.4% 23.7% DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Cost of Sales. RUR, mln. 2Q Q 2010 % 1H H 2010 % Cost of Goods Sold 14,985 11, % 28,193 22, % as % of Sales 77.2% 73.4% 72.0% 73.7% Transportation Costs % % as % of Sales 0.6% 0.5% 0.5% 0.5% Shrinkage of Inventories % % as % of Sales 2.4% 2.0% 2.3% 2.2% TOTAL 15,570 11, % 29,224 23, % as % of Sales 73.5% 75.8% 74.6% 76.3% DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Selling, General & Administrative Expenses (SG&A). RUR, mln. 2Q Q 2010 % 1H H 2010 % Salaries 2,124 1, % 3,955 2, % as % of Sales 10.0% 9.6% 10.1% 9.6% Lease Expenses % 1,607 1, % as % of Sales 4.1% 4.0% 4.1% 4.0% D&A % 1, % D&A, % 2.5% 2.8% 2.6% 2.8% Utilities, Repair and Maintenance Expenses % % as % of Sales 2.0% 1.9% 1.9% 1.8% Transportation and Handling Expenses % % as % of Sales 0.1% 0.1% 0.1% 0.1% Advertising Expenses % % as % of Sales 0.5% 0.4% 0.4% 0.4% Other Expenses % 1, % as % of Sales 3.1% 1.9% 2.6% 2.1% TOTAL SG&A 4,748 3, % 8,525 6, % as % of Sales 22.4% 20.7% 21.8% 20.8% 12

13 DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Non-operating Gains and Losses.* RUR, mln. 1H H 2010 % Operating Profit 1, % Finance Costs (Net) (462) (359) 28.7% Net FX Result (10) (95) -89.3% Profit before Tax % Income Tax Expense (413) (338) -22.2% Net Profit % Net Margin, % 0.9% 0.4% *effective tax rate for the first half of 2011 is 42% DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group Results from the Date of Acquisition on 15 June Cash Flow Statement Highlights. RUR, mln. 1H H 2010 % Net Cash Flows (Used in)/generated from Operating Activities 1, % Net Cash from Operating Activities before Changes in Working Capital 2,555 1, % Change in Working Capital (348) (140) 149% Net Interest and Income Tax Paid (899) (797) 12.9% Net Cash Used in Investing Activities (14,412) (598) -- Net Cash Generated from/(used in) Financing Activities 13,426 (1,001) -- Effect of Exchange Rate Changes on Cash & Cash Equivalents (10) (95) -89.3% Net Increase/(Decrease) in Cash & Cash Equivalents 321 (797) -- Cash and Cash Equivalents at the End of the Period 1, % 13

14 KEY STATISTICS OF THE COMBINED COMPANY FOR THE FIRST HALF OF 2011 Key Operational Statistics 1H H 2010 % Total Number of Stores % New Store Openings* % DIXY Group % Victoria Group % Total Space, sqm 825, ,782 9% Total Selling Space, sqm 363, ,433 10% Neighborhood Stores 288, ,065 DIXY 202, ,235 14% Kvartal/Deshevo/Kopilka 85,330 82,830 3% Supermarkets 42,189 37,196 Victoria 36,703 31,710 16% Minimart 5,486 5, Hypermarkets 33,172 33,172 Megamart 30,121 30, CASH 3,051 3, Total Number of Permanent Employees 32,427 30,673 5% DIXY Group 18,649 17,479 7% Victoria Group 13,427 13,194 2% Average Basket Size by Format (VAT included) RUR 2Q Q 2010 % 1H H 2010 % Neighborhood Stores % % DIXY % % Kvartal/Deshevo/Kopilka % % Supermarkets % % Victoria % % Minimart % % Hypermarkets % % Megamart % % Cash&carry CASH 2,131 1,859 15% 2,250 1,841 22% Number of Stores and Store Openings Number of stores as of 30 June 2011 Number of New Store Openings* Neighborhood Stores DIXY Kvartal/Deshevo/Kopilka Supermarkets Victoria 20 1 Minimart 8 0 Hypermarkets Megamart 15 0 Cash&carry CASH 1 0 TOTAL * For the period from to there were closed 13 DIXY stores and 13 Kvartal stores. 14

15 Combined Company Debt (Pro-forma) as of 30 June 2011 As of 30 June 2011 % of Total Total debt* 17,986,046 Short-term Debt 5,078,468 28% Long-term Debt 12,907,578 72% Net Debt 16,495,697 Net Debt/EBITDA 2.28 *Total debt does not include financial lease obligations Exchange rates (Central Bank of the Russian Federation) 30 June June 2010 RUR/USD eop RUR / USD average (six months)

16 OJSC DIXY Group (RTS, MICEX: DIXY) is one of Russia s leading retailers of foods and everyday products. The first DIXY store opened in 1999 in Moscow and, after the period of intense organic development and purchase of Victoria Group in June, 2011, as of August 31, 2011, the Group operated 994 stores, including 721 DIXY neighborhood stores, 228 stores under the Kvartal, "Deshevo", Semeynaya Kopilka brands, 20 Victoria supermarkets, 16 MEGAMART (compact hypermarket) stores, 8 MINIMART (supermarket) stores and 1 CASH (cash&carry) store. The Company operates in three Federal Districts of Russia: Central, Northwest, Urals, and in Kaliningrad region. As of August 31, 2011, the Company had a total of 369,431 square meters of selling space. The Company is the third largest among Russian national retail operators in the food retail market by revenue, selling area and number of stores and employs over 32,000 people. In May 2007 the Company raised USD 360 million in its IPO on the RTS and MICEX. A controlling stake in DIXY Group, OJSC (54.4%) is owned by the Mercury Group of Companies, a diversified holding company. In 2010, DIXY's total revenue reached RUR 64.7 billion, Victoria s total revenue reached RUR 34 billion. The Russian business magazine Expert rates DIXY Group as one of the Top-100 largest Russian companies. Contacts: Olga Popova Head of Investor Relations, DIXY Group Tel: Fax: Mobile: O.Popova@hq.dixy.ru Lavrentiy Gubin Press Representative DIXY Group Tel: Fax: Mobile: l.gubin@hq.dixy.ru 16

17 APPENDIX 1. DIXY Group Unaudited Standalone IFRS Financial Statements (Not Including Victoria Group) 1.1. BALANCE SHEET In thousands of Russian Roubles ASSETS 30 Jun Dec 2010 Non-current assets Property, plant and equipment Capital advances Goodwill Other Intangible assets Initial lease costs Loans Trade and other receivables Deferred tax asset Investment in equity Current assets Inventories Trade and other receivables Taxes recoverable and prepayments Loans Initial lease costs Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Parent Share capital Additional paid-in capital Retained earnings Non-controlling interest - - TOTAL EQUITY Non-current liabilities Bonds - - Borrowings Finance leases Deferred tax liability Current liabilities Trade and other payables Borrowings Current portion of Bonds Finance leases Advances from customers Tax liability, other than income taxes Income taxes payable Provisions for liabilities and charges TOTAL EQUITY AND LIABILITIES

18 1.2. INCOME STATEMENT In thousands of Russian Roubles 1H H 2010 Continuing operations Revenue Cost of sales ( ) ( ) Cost of goods sold ( ) ( ) Transportation costs ( ) ( ) Shrinkage of inventories ( ) ( ) Gross profit General and administrative expenses ( ) ( ) Operating profit Finance income Finance costs ( ) ( ) Foreign exchange (loss)/gain, net (9 877) (94 960) Profit/ (loss) before income tax Income tax expense ( ) ( ) Profit for the year Total comprehensive profit for the year Attributable to: Equity holders of the Parent Equity holders of the non-controlling interest

19 1.3. CASH FLOW STATEMENT In thousands of Russian Roubles 1H H 2010 Cash flows from operating activities : Profit/(loss) before income tax Adjustments for: Depreciation of property, plant and equipment Аmortisation of intangible assets Amortisation of initial lease costs Gain less losses on disposals of property, plant and equipment and intangible assets (2 119) (27 807) Increase in provision for impairment of taxes recoverable and prepayments Increase in provision for impairment of trade and other receivables Reversal of write-down of inventory to net realizable value (421) (11 983) Finance costs Interest income on loans and cash deposits (19 667) (18 995) Provision for impairment of assets Unrealised foreign exchange losses/(gains) on borrowings Operating cash flows before working capital changes Decrease/(increase) in trade and other receivables (35 676) Decrease in inventories (Increase)/decrease in taxes recoverable and prepayments ( ) (18 318) Decrease in trade and other payables ( ) ( ) Increase in tax liabilities other than income tax Decrease in advances from customers (34 924) Cash generated from operations Income taxes paid ( ) ( ) Interest paid ( ) ( ) Net cash from operating activities-continuing operations Net cash from operating activities-discontinued operations Net cash from operating activities Cash flows from investing activities: Purchase of property, plant and equipment ( ) ( ) Proceeds from sale of property, plant and equipment Initial Lease costs paid (3 799) (3 959) Loans repaid Disbursement of loans ( ) ( ) Interest received Purchases of intangible assets (16 926) (12 910) Acquisition of subsidiaries ( ) Net cash used in investing activities-continuing operations ( ) ( ) Net cash used in investing activities ( ) ( ) Cash flows from financing activities Proceeds from loans and borrowings Repayment of loans and borrowings (2 633) ( ) Repayment of bonds ( ) - Buy-out of shares ( ) Proceeds from new issuance of shares Proceeds from sale of treasury shares Contributions from shareholders Finance lease payments ( ) (65 829) Net cash from financing activities-continuing operations ( ) Net cash from financing activities ( ) Net decrease in cash and cash equivalents ( ) ( ) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

20 2. Victoria Group Unaudited Standalone IFRS Financial Statements 2.1. BALANCE SHEET 30 Jun Dec 2010 Assets Non-current assets Property, plant and equipment Capital advances Goodwill Other intangible assets Loans Trade and other receivables Deferred tax asset Current assets Inventories Prepayments of tax profit Taxes recoverable and prepayments Deferrals or prepayments Accounts receivable Loans Cash and cash equivalents Total assets Equity and liabilities Share capital Additional paid-in capital Retained earnings Equity attributable to equity holders of the Parent Uncontrolled stake Total capital Non-current liabilities Borrowings Finance leases Deferred tax liability Current liabilities Trade and other payables Borrowings Finance leases Advances from customers Tax liability, other than income tax Income taxes payable Others current liabilities Total equity and liabilities

21 2.2. INCOME STATEMENT 1H H 2010 Revenue Cost of sales Gross profit Доходы от аренды и субаренды Selling, general and administrative expenses Operating profit Finance income Finance costs Foreign exchange loss, net Profit before income tax Income tax expense Profit for the period Total comprehensive income for the period

22 2.3. CASH FLOW STATEMENT Cash flows from operating activities: 1H H 2010 Profit before income tax Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible assets Finance costs Finance income Write-down of inventory to net realizable value Gains less losses on disposals of property, plant and equipment and intangible assets Decrease in provision for impairment of trade and other receivables Decrease in provision for impairment of prepayments Unrealised foreign exchange losses on borrowings Operating cash flows before working capital changes (Increase) / decrease in trade and other receivables (Increase) / decrease in inventories Decrease in VAT and other taxes recoverable Increase in taxes recoverable and prepayments Decrease in trade and other payables Increase in tax liability, other than income tax Increase / (decrease) in advances from customers Cash generated from operations Income tax paid Interest paid Net cash from operating activities Cash flows from investing activities: Purchase of property, plant and equipment Acquisition of intangible assets Proceeds of loans and borrowings Disbursement of loans Proceeds from sale of property, plant and equipment Interest received Net cash used in investing activities Cash flows from financing activities: Divident payment Repayment of bonds Proceeds from bonds Proceeds from loans and borrowings Repayment of loans and borrowings Net cash from / (used in) financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

23 3. DIXY Group Unaudited Consolidated Financial Results, Including Victoria Group from the Date of Acquisition on 15 June BALANCE SHEET 30 Jun Dec 2010 Assets Non-current assets Property, plant and equipment 22,322,132 12,835,446 Capital advances 1,096, ,112 Goodwill 14,592, ,478 Other intangible assets 5,819, ,851 Initial lease costs 124, ,205 Loans 4,725 5,047 Trade and other receivables 2,724 Deferred tax asset 599, ,482 44,559,841 14,984,345 Current assets Inventories 5,709,371 3,873,123 Trade and other receivables 2,418,836 1,514,900 Taxes recoverable and prepayments 1,542,801 1,113,736 Loans 913, ,066 Initial lease costs 37,502 45,446 Cash and cash equivalents 1,917,901 1,596,680 12,540,008 8,277,951 Total assets 57,099,849 23,262,296 Equity and liabilities Equity attributable to equity holders of the Parent Share capital 1, Additional paid-in capital 20,437,555 4,111,405 Retained earnings 2,473,220 1,916,147 22,912,023 6,028,412 Non-current liabilities Borrowings 12,907,578 6,038,938 Finance leases 152, ,377 Unfavourable operating lease commitments 143,200 Deferred tax liability 2,168, ,733 15,371,860 6,516,048 Current liabilities Trade and other payables 11,233,979 7,208,994 Contingent consideration payable 1,000,000 Borrowings 5,078,468 6,442 Current portion of Bonds 2,929,452 Finance leases 150, ,878 Advances from customers 157,953 69,270 Tax liability, other than income tax 850, ,217 Income taxes payable 255,055 62,375 Unfavourable operating lease commitments 54,748 Provisions for liabilities and charges 35,150 1,208 18,815,966 10,717,836 Total equity and liabilities 57,099,849 23,262,296 23

24 3.2. INCOME STATEMENT 1H H 2010 Revenue 39,168,557 30,691,996 Cost of sales (29,223,911) (23,421,526) Gross profit 9,944,646 7,270,470 Selling, general and administrative expenses (8,525,197) (6,370,932) Operating profit 1,419, ,538 Finance income 23,185 18,995 Finance costs (461,919) (359,048) Foreign exchange loss, net (10,145) (94,960) Profit before income tax 970, ,525 Income tax expense (413,497) (338,285) Profit for the period 557, ,240 Total comprehensive income for the period 557, ,240 Attributable to: Equity holders of the Parent 557, ,940 Equity holders of the non-controlling interest 300 Profit per ordinary share attributable to the equity holders of the parent, basic and diluted (in Russian roubles per share)

25 3.3. CASH FLOW STATEMENT 1H H 2010 Cash flows from operating activities: Profit before income tax 970, ,525 Adjustments for: Depreciation of property, plant and equipment 907, ,139 Amortisation of intangible assets 64,083 40,453 Amortisation of initial lease costs 31,471 49,060 Amortisation of unfavorable lease commitments (2,808) Gains less losses on disposals of property, plant and equipment and intangible assets (2,119) (27,807) Provision for impairment of assets under construction 113,662 Increase in provision for impairment of taxes recoverable and prepayments 2,849 5,112 Increase in provision for impairment of trade and other receivables 21,119 5,433 Reversal of write-down of inventory to net realizable value (421) (11,983) Finance costs 461, ,048 Finance income (23,185) (18,995) Unrealised foreign exchange losses on borrowings 10,145 94,960 Operating cash flows before working capital changes 2,554,768 1,738,945 (Increase) / decrease in trade and other receivables (35,676) 86,645 (Increase) / decrease in inventories (45,327) 402,580 Increase in taxes recoverable and prepayments (146,841) (18,318) Decrease in trade and other payables (203,567) (660,116) Increase in tax liability, other than income tax 54,217 83,314 Increase / (decrease) in advances from customers 29,500 (34,924) Cash generated from operations 2,207,074 1,598,126 Income tax paid (415,085) (418,770) Interest paid (484,129) (377,790) Net cash from operating activities 1,307, ,566 Cash flows from investing activities: Acquisition of subsidiaries, net of cash acquired (12,411,963) Purchase of property, plant and equipment (2,078,609) (632,943) Proceeds from sale of property, plant and equipment 67,731 42,418 Initial lease costs paid (3,799) (3,959) Loans repaid 547, ,061 Disbursement of loans (529,800) (380,595) Interest received 13,066 11,957 Purchases of intangible assets (16,926) (12,910) Net cash used in investing activities (14,412,316) (597,971) Cash flows from financing activities: Proceeds from loans and borrowings 6,448,788 5,092,634 Repayment of loans and borrowings (2,633) (6,027,637) Repayment of bonds (2,852,822) Buy-out of shares (411,010) Proceeds from sales of treasury shares 1,220,973 Contribution from shareholders 392,258 Proceeds from new issuance of shares 8,734,892 Finance lease payments (104,769) (65,829) Net cash from / (used in) financing activities 13,425,677 (1,000,832) Net increase / (decrease) in cash and cash equivalents 321,221 (797,237) Cash and cash equivalents at the beginning of the period 1,596,680 1,331,856 Cash and cash equivalents at the end of the period 1,917, ,619 25

26 4. DIXY Group Unaudited Pro-forma Interim Financial Statements, Including Victoria from the Beginning of the Year 4.1. BALANCE SHEET 30 Jun Dec 2010 Assets Non-current assets Property, plant and equipment 22,322,132 12,835,446 Capital advances 1,096, ,112 Goodwill 14,826, ,478 Other intangible assets 5,802, ,851 Initial lease costs 124, ,205 Loans 4,725 5,047 Trade and other receivables 2,724 Deferred tax asset 599, ,482 44,776,064 14,984,345 Current assets Inventories 5,709,371 3,873,123 Trade and other receivables 2,401,427 1,514,900 Taxes recoverable and prepayments 1,542,801 1,113,736 Loans 913, ,066 Initial lease costs 37,502 45,446 Cash and cash equivalents 1,917,901 1,596,680 12,522,599 8,277,951 Total assets 57,298,663 23,262,296 Equity and liabilities Equity attributable to equity holders of the Parent Share capital 1, Additional paid-in capital 20,437,555 4,111,405 Retained earnings 2,689,443 1,916,147 Total equity 23,128,246 6,028,412 Non-current liabilities Borrowings 12,907,578 6,038,938 Finance leases 152, ,377 Unfavourable operating lease commitments 143,200 Deferred tax liability 2,168, ,733 15,371,860 6,516,048 Current liabilities Trade and other payables 11,233,979 7,208,994 Contingent consideration payable 1,000,000 Borrowings 5,078,468 6,442 Current portion of Bonds 2,929,452 Finance leases 150, ,878 Advances from customers 157,953 69,270 Tax liability, other than income tax 850, ,217 Income taxes payable 255,055 62,375 Unfavourable operating lease commitments 54,748 Provisions for liabilities and charges 17,741 1,208 18,798,557 10,717,836 Total equity and liabilities 57,298,663 23,262,296 26

27 4.2. INCOME STATEMENT 1H H 2010 Revenue 58,817,936 30,691,996 Cost of sales (42,856,916) (23,421526) Gross profit 15,961,020 7,270,470 Selling, general and administrative expenses (13,913,184) (6,370,932) Operating profit 2,047, ,538 Finance income 61,288 18,995 Finance costs (651,068) (359,048) Foreign exchange loss, net (67,401) (94,960) Profit before income tax 1,390, ,525 Income tax expense (617,359) (338,285) Profit for the period 773, ,240 Total comprehensive income for the period 773, ,240 27

28 4.3. CASH FLOW STATEMENT 1H H 2010 Cash flows from operating activities: Profit before income tax 1,390, ,525 Adjustments for: Depreciation of property, plant and equipment 1,293, ,139 Amortisation of intangible assets 423,019 40,453 Amortisation of initial lease costs 31,471 49,060 Amortisation of unfavorable lease commitments (33,690) Gains less losses on disposals of property, plant and equipment and intangible assets 9,297 (27,807) Provision for impairment of assets under construction 113,662 Increase in provision for impairment of taxes recoverable and prepayments 249 5,112 Increase in provision for impairment of trade and other receivables 885 5,433 Reversal of write-down of inventory to net realizable value (13,497) (11,983) Finance costs 651, ,048 Finance income (61,288) (18,995) Unrealised foreign exchange losses on borrowings 67,401 94,960 Operating cash flows before working capital changes 3,872,915 1,738,945 Decrease in trade and other receivables 131,530 86,645 Decrease in inventories 416, ,580 Increase in taxes recoverable and prepayments (88,723) (18,318) Decrease in trade and other payables (1,448,916) (660,116) Increase in tax liability other than income tax 179,484 83,314 Increase / (Decrease) in advances from customers 88,682 (34,924) Cash generated from operations 3,151,014 1,598,126 Income tax paid (744,581) (418,770) Interest paid (689,240) (377,790) Net cash from operating activities 1,717, ,566 Cash flows from investing activities: Acquisition of subsidiaries, net of cash acquired (12,649,724) Purchase of property, plant and equipment (2,346,753) (632,943) Proceeds from sale of property, plant and equipment 95,791 42,418 Initial lease costs paid (3,799) (3,959) Loans repaid 633, ,061 Disbursement of loans (759,800) (380,595) Interest received 55,621 11,957 Purchases of intangible assets (43,481) (12,910) Net cash used in investing activities (15,018,747) (597,971) Cash flows from financing activities: Proceeds from loans and borrowings 7,155,313 5,092,634 Repayment of loans and borrowings (314,011) (6,027,637) Repayment of bonds (2,852,822) Buy-out of shares (411,010) Proceeds from sales of treasury shares 1,220,897 Contribution from shareholders 392,258 Proceeds from new issuance of shares 8,734,892 Dividends paid to former shareholders of OJSC GK Victoria (197,973) Finance lease payments (104,769) (65,829) Net cash used in financing activities 13,622,775 (1,000,832) Net increase / (Decrease) in cash and cash equivalents 321,221 (797,237) Cash and cash equivalents at the beginning of the year 1,596,680 1,331,856 Cash and cash equivalents at the end of the year 1,917, ,619 28