P&L HIGHLIGHTS(1)
|
USD millon
|
|
FY 2009 |
|
FY 2008(2) |
|
% change y-o-y |
| Net Sales |
|
8,717.4 |
|
8,892.4 |
|
(2) |
| incl. Retail |
|
8,674.5 |
|
8,843.8 |
|
(2) |
| Gross Profit |
|
2,107.9 |
|
2,278.5 |
|
(7) |
| Gross Margin, % |
|
24.2 |
|
25.6 |
|
|
| EBITDA |
|
736.0 |
|
803.2 |
|
(8) |
| EBITDA Margin, % |
|
8.4 |
|
9.0 |
|
|
| Impairment of CIP, Fixed Assets & Goodwill(3) |
|
(48.3) |
|
(2,257.0) |
|
(98) |
| Operating Profit / (Loss) |
|
467.8 |
|
(1,704.5) |
|
n/a |
| Operating Margin, % |
|
5.4 |
|
n/a |
|
|
| Net Profit / (Loss) |
|
165.4 |
|
(2,145.5) |
|
n/a |
| Net Margin, % |
|
1.9 |
|
n/a |
|
|
EFFECT OF RUR/USD EXCHANGE RATE MOVEMENTS
ON PRESENTATION OF X5’S RESULTS AND THEIR DYNAMICS X5’s operational currency is the Russian Ruble (RUR), while our presentation currency is the U.S. Dollar (USD). As RUR/USD rate has substantially changed in the past twelve months, comparisons of the Company’s financial results either with the corresponding period a year ago (for profit & loss statement) or with the beginning of the year (for balance sheet statement) have been substantially affected by these movements. Please see Note 2 to the IFRS consolidated financial statements in this Annual Report for additional information.
NET SALES & GROSS MARGIN PERFORMANCE
|
USD millon
|
|
FY 2009 |
|
FY 2008 |
|
% change y-o-y |
| Net Sales |
|
8,717.4 |
|
8,892.4 |
|
(2) |
| incl. Retail |
|
8,674.5 |
|
8,843.8 |
|
(2) |
| Hypermarkets |
|
1,687.9 |
|
1,678.0 |
|
1 |
| Supermarkets |
|
2,307.2 |
|
2,701.8 |
|
(15) |
| Soft Discounters |
|
4,676.3 |
|
4,464.0 |
|
5 |
| Online |
|
3.1 |
|
- |
|
n/a |
| Gross Profit |
|
2,107.9 |
|
2,278.5 |
|
(7) |
| Gross Margin, % |
|
24.2 |
|
25.6 |
|
|
For 2009 X5 reported net sales of USD 8,717 million – a year-on-year decline of 2% in USD terms and 25% growth in RUR terms on pro-forma basis driven by industry- beating like-for-like (LFL)(4) sales growth of 10% and strong continued expansion.
X5 drove the highest like-for-like sales and customer traffic of any Russian retailer in 2009, with a record of nearly 1 billion store visits, thanks to our “Close to the Customer” policy of reinvesting gross margin in stores' value propositions. As a result, X5's gross margin for the year totaled 24.2% compared to 25.6% in 2008 – a year-on-year margin investment of 140 bp in line with management's expectations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A)
|
USD millon
|
|
FY 2009 |
|
FY 2008 |
|
% change y-o-y |
| Staff Costs, incl. |
|
(761.2) |
|
(839.5) |
|
(9) |
| % of Net Sales |
|
8.7 |
|
9.4 |
|
|
| ESOP |
|
(59.3) |
|
2.5 |
|
n/a |
| % of Net Sales |
|
0.7 |
|
0.0 |
|
|
| Lease Expenses |
|
(264.2) |
|
(271.3) |
|
(3) |
| % of Net Sales |
|
3.0 |
|
3.1 |
|
|
| Other Store Costs |
|
(110.8) |
|
(129.5) |
|
(14) |
| % of Net Sales |
|
1.3 |
|
1.5 |
|
|
| D&A, incl. |
|
(268.2) |
|
(250.7) |
|
7 |
| % of Net Sales |
|
3.1 |
|
2.8 |
|
|
| CIP & Fixed Assets Impairment |
|
(48.3) |
|
- |
|
n/a |
| % of Net Sales |
|
0.6 |
|
0.0 |
|
|
| Utilities |
|
(154.6) |
|
(149.0) |
|
4 |
| % of Net Sales |
|
1.8 |
|
1.7 |
|
|
| Third Party Services |
|
(76.5) |
|
(102.2) |
|
(25) |
| % of Net Sales |
|
0.9 |
|
1.1 |
|
|
| Other Expenses |
|
(105.2) |
|
(86.4) |
|
22 |
| % of Net Sales |
|
1.2 |
|
1.0 |
|
|
| Total SG&A |
|
(1,740.6) |
|
(1,828.7) |
|
(5) |
| % of Net Sales |
|
20.0 |
|
20.6 |
|
|
Full year 2009 SG&A expenses decreased as a percentage of revenue by 60 bp
year-on-year to 20.0%. Before depreciation, amortization and one-off
non-cash impairment charge, SG&A expenses accounted for 16.9% of sales a year-on-year decrease of nearly 90 bp. Net of ESOP cost, this indicator declined by 160 bp year- on-year. SG&A decline as a percentage of sales was achieved through cost control initiatives and implementation of X5’s Strategic Efficiency Programme.
Significant savings were obtained from administrative expense and staff cost optimization, renegotiation of leases and energy saving initiatives.
As at 31 December 2009 the Company employed 68,457 people compared to 60,467 as at 31 December 2008. The increase is primarily due to new store additions in 2009, when X5 added a net 271 new stores. Nevertheless, headcount growth of 13% was noticeably below the 22% increase in selling space for the year as X5 began to implement its store labour productivity improvement project. Achieved staff cost savings this year were partially offset by ESOP cost of USD 59 million for 2009 (compared to USD 2.5 million gain reported in 2008). ESOP charge is attributable to X5 GDR price appreciation of over 270% in 2009.
Impairment of CIP & Fixed Assets
Based on a regular impairment test of land, buildings and construction in progress (“CIP”) performed by X5 at the end of 2009, the Company has taken an impairment charge of USD 48 million with respect to certain real estate assets and construction projects suspended due to the financial crisis or otherwise affected by economic deterioration. This impairment charge is recorded on the profit & loss statement for 2009 along with depreciation & amortization, with a corresponding decrease in property, plant and equipment on the balance sheet. This impairment charge is a non-cash one-off item that does not impact the strategic value of X5’s assets or business and is not indicative of the Company’s overall ability to generate cash flow.
NON-OPERATING GAINS AND LOSSES
|
USD millon
|
|
FY 2009 |
|
FY 2008 |
|
% change y-o-y |
| Operating Profit / (Loss) |
|
467.8 |
|
(1,704.5) |
|
n/a |
| Finance Costs (Net) |
|
(154.1) |
|
(163.7) |
|
(6) |
| Net FX Result |
|
(45.7) |
|
(267.2) |
|
(83) |
| Share of Loss of Associates |
|
(4.0) |
|
(0.6) |
|
512 |
| Profit / (Loss) before Tax |
|
264.0 |
|
(2,136.0) |
|
n/a |
| Income Tax Expense |
|
(98.6) |
|
(9.4) |
|
944 |
| Current Income Tax |
|
(168.4) |
|
(185.7) |
|
(9) |
| Deferred Income Tax |
|
69.8 |
|
176.3 |
|
(60) |
| Net Profit / (Loss) |
|
165.4 |
|
(2,145.5) |
|
n/a |
| Net Margin, % |
|
1.9 |
|
n/a |
|
|
Finance Costs
Full year 2009 net finance costs decreased 6% year-on-year in USD terms and increased 20% in RUR terms due to higher interest rates on RUR funding, which were especially noticeable at the beginning of 2009 and moderated throughout the year. The effective interest rate on X5’s debt for the full year 2009 was approximately 8.0%.
Foreign Exchange (FX) Gain/(Loss)
The Company posted a USD 46 million FX loss for full year 2009 due to exchange rate volatility throughout 2009. This is a primarily non-cash item, resulting from revaluation of the Company’s USD-denominated debt.
INCOME TAX For 2009, X5 reported income tax expense in the amount of USD 99 million. Effective tax rate for the year totaled 37%, which is higher than the statutory tax rate for three main reasons: Inventory shrinkage is not tax deductable in Russia, ESOP cost is not tax deductable and FX loss is only partially tax deductable.
(1)Please note that in this and other tables of this Annual Report immaterial deviations in calculation of % change, subtotals and totals are explained by rounding.
(2) Profit & Loss figures for 2008 in this Annual Report are presented on pro-forma basis, unless otherwise stated. Pro-forma figures include results of the acquired Karusel hypermarket chain from 1 January 2008. We believe pro-forma numbers are useful because they allow investors to evaluate X5’s operating results and financial performance for different periods on a more comparable basis. These figures should be used in addition to, but not as a substitute for, the Consolidated Financial Statements included in this Annual Report, which include Karusel’s results only as from 30 June 2008, when the acquisition was completed.
(3) CIP stands for Construction in Progress. Please see section Impairment of CIP & Fixed Assets for additional information on 2009 impairment.
(4) Like-for-like (LFL) comparisons of retail sales between two periods are comparisons of retail sales in local currency (including VAT) generated by the relevant stores. The stores that are included in LFL comparisons are those that have operated for at least twelve full months preceding the beginning of the last month of the reporting period. Their sales are included in LFL calculation starting from the first day of the month following the month of the store opening. |