X5 Retail Regulatory News (FIVE)

4 Sep 2006 07:03

Pyaterochka Holding N.V.04 September 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 4 September 2006 Pyaterochka Holding N.V. PYATEROCHKA HOLDING N.V. ANNOUNCES 1H 2006 RESULTS GROUP PRO FORMA SALES OF US $1,581 MILLION, UP +43% VS. 1H 2005 GROUP PRO FORMA GROSS MARGIN OF 26.6% VS. 24.5% 1H 2005 GROUP PRO FORMA EBITDA OF US $149 MILLION, UP +52% (1) VS. 1H 2005 Pyaterochka Holding N.V. today released its financial results for 1H 2006. Thefigures provided are management accounts. The first six months of 2006 has been an eventful and exciting period for theGroup. The merger between Pyaterochka and Perekrestok was closed on 18 May 2006and was immediately followed by intense internal work ensuring that the mergerbenefits are realised according to plan. Funding for the transaction as well asthe Group's ambitious growth plans has been secured through the successfularrangement of a 3-year US$800 million international unsecured syndicated loanfacility. The period has seen the addition of 135 new stores operating under our banners,and over one thousand stores are now trading under the Group's banners.Previously communicated store opening plans are remain on track and LFLstatistics remain strong. New state-of-the-art logistics centres have opened inMoscow and St. Petersburg which will support our growth and provide furtherefficiency gains. The expansion plans are executed by a strengthened managementteam and further appointments are forthcoming. Russian food retail marketdynamics remain strong and the Group looks towards 2H 2006 with confidence. Analyst and Investors Conference Call There will be a management presentation and simultaneous conference call todayfor analysts and investors at 15:00 Moscow time (12:00 UK time; 7:00 EST) hostedby Lev Khasis, Group CEO, and Vitaliy Podolskiy, Group CFO, to discuss the 1H2006 results, the integration process, and management's outlook for theremainder of the year. Investors and analysts are invited to attend the presentation in person inMoscow at the Swissotel Krasnye Holmy at 15.00, or to join by conference call: Monday, 4 September 2006 7:00 EST / 12:00 UK time / 15:00 Moscow time Participant access number(s): UK toll +44 20 7138 0827 Russia toll +7 495 545 0587 USA toll +1 718 354 1358 Replay service (available until 12:00am on 6 September 2006) UK toll +44 20 7806 1970 Russia toll free 810 800 2501 1012 USA toll +1 718 354 1112 Replay passcode: 4784031# 1H 2006 Financial Highlights The Group is pleased today to present a very strong set of financial results forthe first six months of 2006. On a pro forma basis, sales increased by 43% toUS$1,581 million. Through a successful effort by our purchasing teams we managedto raise gross margin from 24.5% to 26.6%, thereby generating gross profitgrowth of an impressive 56%. The Group has made very significant investments inthe business in terms of store openings and an increased marketing budget.Nevertheless, the operating cost base remains tight and pro forma EBITDA hasincreased 52% to US$149 million (excluding the effect of the Tushino Plazacapital gain in 2005). The IFRS consolidated financial statements for Pyaterochka Holding N.V. for thefirst six months of 2006 are calculated on the basis of the results of thePerekrestok chain from 1 January 2006 - 30 June 2006 and the results of thePyaterochka chain from 18 May 2006 - 30 June 2006 (i.e. from the date oftransaction closing). The IFRS consolidated financial statements for 1H 2005include only the Perekrestok chain; the Pyaterochka chain is not included inthese figures. In the same time, certain changes are made in Perekrestok'sreporting standards in order to fully align IFRS reporting standards for bothbusinesses. For comparison purposes, these changes are also made in 2005 IFRSaccounts for Perekrestok Holding Limited retroactively. These changes haveaffected EBIT, EBITDA, and EBITDAR and SG&A. The company's auditors, PricewaterhouseCoopers, have determined that this is themost representative way to express the company's combined financial statementpost-merger, as the transaction is being treated as a "reverse takeover" foraccounting purposes. Pyaterochka Holding N.V. has also provided below Pro Forma 1H 2006 financialhighlights for the combined entity, as well as stand-alone financial highlightsfor each of the chains for the same period (1 January 2006 - 30 June 2006). Pro Forma Pyaterochka Holding N.V. Calculated on the basis of the results of both the Pyaterochka and Perekrestokchains from 1 January - 30 June 2006 • Net Sales of US $1,581 million; up 43.4% vs. 1H 2005 • Gross profit of US $420 million; Gross margin of 26.6% • EBITDA of US $149 million; EBITDA margin of 9.4% • Net profit of US $62 million; Net margin of 3.9% Pyaterochka chain stand-alone Calculated on the basis of the results of the Pyaterochka chain from 1 January -30 June 2006 • Net Sales of US $906 million; up 41.9% vs. 1H 2005 • Gross profit of US $234 million; Gross margin of 25.9% • EBITDA of US $101 million; EBITDA margin of 11.2% • Net profit of US $44 million; Net margin of 4.8% Perekrestok chain stand-alone Calculated on the basis of the results of the Perekrestok chain from 1 January -30 June 2006 • Net Sales of US$675 million; up 45.5% vs. 1H 2005 • Gross profit of US $186 million; Gross margin of 27.6% • EBITDA of US $47 million; EBITDA margin of 7.0% • Net profit of US $18 million; Net margin of 2.7% IFRS Consolidated Pyaterochka Holding N.V. Calculated on the basis of results of the Perekrestok chain from 1 January - 30June 2006 and the results of Pyaterochka chain from 19 May - 30 June 2006 • Net Sales of US $899 million • Gross profit of US $246 million; Gross margin of 27.4% • EBITDA of US $72 million; EBITDA margin of 8.0% • Net profit of US $22 million; Net margin of 2.5% 1H 2006 Operating Highlights The first six months of 2006 has been an eventful and exciting period for theGroup. The merger between Pyaterochka and Perekrestok was closed on 18 May 2006and was immediately followed by intense internal work ensuring that the mergerbenefits are realised according to plan. The first few months of this work hasconfirmed the logic of the combination. While results responsibilities remainswith the two operating divisions, back office centralisation is an immediatepriority. Integration workstreams are operating, a central commercial andnon-commercial purchasing teams have been set up, and a centralised logisticsteam is also ensuring optimal Group solutions in this area. A 3-year syndicated credit facility of US$800 million was successfully put inplace to fund the transaction as well as provide the Group with the necessaryfunds to pursue its ambitious growth plans. The Group has also launched a GDR repurchase programme in June to fund itsobligations under its current employee stock option programme. Expansion As of 30 June 2006, Pyaterochka Holding N.V. operated a total of 1,013 stores,including 524 company-managed stores and 489 franchised stores across bothchains. The Pyaterochka chain operated 391 company-managed stores as of 30 June 2006,including 187 stores in Moscow, 185 stores in St. Petersburg, and 19 stores inYekaterinburg. The Pyaterochka chain also has 479 branded stores operated byfranchisees as of 30 June 2006, across 20 regions of Russia, Ukraine andKazakhstan. The Perekrestok chain operated 133 company-managed stores as of 30 June 2006,including 8 city hypermarkets, 105 supermarkets, and 20 convenience stores. ThePerekrestok chain has 78 stores in Moscow, 14 stores in St. Petersburg, 37stores in the Russian regions outside of Moscow and St. Petersburg, and 4 storesin Kiev, Ukraine. The Perekrestok chain currently has 10 stores operated byfranchisees in Moscow. During 1H 2006 the Group opened 59 new company-managed stores in Moscow and St.Petersburg, taking the net selling space to 399,000 square metres. The Groupplans to open 130 new Pyaterochka stores and 40 new Perekrestok stores in 2006.A dedicated and experienced M&A team has been set up with the aim to acceleratethe external growth through acquisitions of parcels of stores from competingchains as well as franchisees. Store Operations As previously communicated, Pyaterochka Holding N.V. experienced encouragingLike-for-Like (LFL) sales trends during 1H 2006 across both chains. For 1H 2006, the group experienced LFL sales of +10% measured in RUR terms. ThePyaterochka chain experienced LFL sales performance of +7% for 1H 2006. ThePerekrestok chain experienced overall LFL sales performance of +15% for 1H 2006. During the first half of 2006, Pyaterochka stores in Moscow experienced LFLsales performance of +14%, composed of traffic of +2% and basket growth of +12%.During this same period, the Perekrestok stores in Moscow also experienced LFLsales performance of +14%, composed of traffic of +6% and basket growth of +8%. During 1H 2006, the Pyaterochka stores in St. Petersburg experienced LFL salesperformance of +1%, composed of traffic of -6% and basket growth of +7%.During this same period, the Perekrestok stores in St. Petersburg experiencedLFL sales performance of +12%, composed of traffic of +6% and basket growth of+6%. The performance during July and August has been strong in spite of thechallenges associated with the changes to the excise labels on imported wine andspirits. Quotes "The Pyaterochka Group is going from strength to strength. The merger ofPyaterochka and Perekrestok has combined the leading retailers in Russia interms of formats, locations, logistics and value proposition to our customers.The strong performance and achievements in 1H 2006 demonstrates these qualities.I am excited and confident about our future". Lev Khasis, Group CEO "The financial performance of Pyaterochka in 1H 2006 clearly shows our growthcontinuing unabated. A highly satisfactory gross margin improvement inconjunction with our tight cost control has led to a pro forma operating profitgrowth in excess of 50%. The successful arrangement of our US$800 millionfacility has also secured funding for our expansion, lower costs of capital andthe Group now stands well positioned to capitalise on new opportunities". Vitaliy Podolskiy, Group CFO PRO FORMA GROUP (PYATEROCHKA chain + PEREKRESTOK chain) INCOME STATEMENT HIGHLIGHTS For the six month periods ending 30 June 2006 and 30 June 2005 6m 2006: 1Jan-30June for Perekrestok & 1Jan-30June for Pyaterochka6m 2005: 1Jan-30June for Perekrestok & 1Jan-30June for Pyaterochka USD '000 USD '000 30 June 2006 30 June 2005 Sales 1,580,846 1,102,199Cost of goods sold (1,160,626) (1,160,626)Gross profit 420,220 420,220 Operating expenses (325,833) (325,833)including:Staff costs (154,610) (154,610)Operating lease expenses (55,047) (34,175)Depreciation of property, plant and equipment (30,917) (20,577)Utilities (15,143) (8,223)Supplies and materials (8,557) (5,865)Advertising (15,965) (15,965)Consulting and information services (4,717) (6,685)Security costs (6,637) (6,637)Repair and maintenance costs (8,180) (5,167)Taxes other than income tax (6,319) (2,635)Bank charges (3,412) (3,412)Impairment of trade and other accounts receivable (2,582) (2,205)Transportation costs (5,024) (2,861)Amortisation of intangible assets (422) (471)Other operating expenses (8,301) (5,234) Gain / (loss) from disposal of PP&E 5,516 15,898Lease / sublease income 17,422 11,734Operating profit 117,325 117,325 Finance costs, net (26,990) (26,990)Net foreign exchange gain 4,674 (4,069)Profit before tax 95,009 95,009 Income tax expense (32,824) (32,824) Profit for the period 62,185 68,098 Attributable to:Equity holders of the parent 62,185 68,038Minority interest 60Profit for the period 62,185 68,098 PYATEROCHKA chain stand-alone INCOME STATEMENT HIGHLIGHTS For the six month periods ending 30 June 2006 and 30 June 2005 Pyaterochka only USD '000 USD '000 30 June 2006 30 June 2005 Sales 905,870 638,178Cost of goods sold (671,670) (485,277)Gross profit 234,199 152,901 Operating expenses (157,798) (90,832)including:Staff costs (81,979) (42,896)Operating lease expenses (27,251) (15,571)Depreciation of property, plant and equipment (15,950) (9,622)Utilities (4,481) (2,466)Supplies and materials (2,799) (2,067)Advertising (2,789) (1,804)Consulting and information services (1,231) (3,359)Security costs (3,074) (3,626)Repair and maintenance costs (5,128) (3,176)Taxes other than income tax (2,854) (682)Bank charges (1,626) (972)Impairment of trade and other accounts receivable (1,005) (1,169)Transportation costs (3,347) (1,706)Amortisation of intangible assets (26) (101)Other operating expenses (4,258) (1,615) Gain / (loss) from disposal of PP&E 1,748 (2,658)Lease / sublease income 7,205 3,360Operating profit 85,354 62,771 Finance costs, net (18,560) (3,084)Net foreign exchange gain 2,362 (1,019)Profit before tax 69,156 58,668 Income tax expense (25,313) (11,336) Profit for the period 43,843 47,332 Attributable to:Equity holders of the parent 43,843 47,332Minority interestProfit for the period 43,843 47,332 PEREKRESTOK chain stand-alone INCOME STATEMENT HIGHLIGHTS For the six month periods ending 30 June 2006 and 30 June 2005 Perekrestok only USD '000 USD '000 30 June 2006 30 June 2005 Sales 674,977 464,021Cost of goods sold (488,956) (346,795)Gross profit 186,021 117,226 Operating expenses (168,035) (111,269)including:Staff costs (72,630) (50,651)Operating lease expenses (27,796) (18,604)Depreciation of property, plant and equipment (14,968) (10,955)Utilities (10,662) (5,757)Supplies and materials (5,759) (3,798)Advertising (13,176) (4,438)Consulting and information services (3,486) (3,326)Security costs (3,564) (2,487)Repair and maintenance costs (3,053) (1,991)Taxes other than income tax (3,466) (1,953)Bank charges (1,786) (1,129)Impairment of trade and other accounts receivable (1,576) (1,036)Transportation costs (1,677) (1,155)Amortisation of intangible assets (396) (370)Other operating expenses (4,040) (3,619) Gain / (loss) from disposal of PP&E 3,767 18,556Lease / sublease income 10,217 8,374Operating profit 31,970 32,887 Finance costs, net (8,431) (5,241)Net foreign exchange gain 2,314 (3,050)Profit before tax 25,853 24,596 Income tax expense (7,511) (3,830) Profit for the period 18,342 20,766 Attributable to:Equity holders of the parent 18,342 20,706Minority interest 60Profit for the period 18,342 20,766 PYATEROCHKA HOLDING N.V. IFRS CONSOLIDATED BALANCE SHEETS As of 30 June 2006 and 31 December 2005 30 June 2006 includes both Pyaterochka and Perekrestok chains31 December 2005 includes Perekrestok chain only USD '000 USD '000 30 June 2006 31 Dec 2005 ASSETS Non-current assets PP&E 908,858 324,598Intangible assets 21,144 19,040Goodwill 2,831,704 24,153Prepaid lease 14,259 4,218Loan to related party 5,250 5,250Other non-current assets 389 -Deferred tax assets 9,690 - 3,791,294 377,259 Current assets Inventories of goods for 116,857 68,576resale STI 2,946 12Trade and other accounts 101,237 24,528receivable VAT and other taxes recoverable 87,507 59,084Cash 48,658 30,067 357,205 182,267 Total assets 4,148,499 559,526 PYATEROCHKA HOLDING N.V. IFRS CONSOLIDATED BALANCE SHEETS (Continued from page 9) As of 30 June 2006 and 31 December 2005 30 June 2006 includes both Pyaterochka and Perekrestok chains31 December 2005 includes Perekrestok chain only USD '000 USD '000 30 June 2006 31 Dec 2005EQUITY AND LIABILITIES Equity attributable to equity holders of the 2,842,889 181,986parent Minority - -interest Total equity 2,842,889 181,986 Non-current liabilities Long-term borrowings 681,159 144,089Long-term liability for share-based payments 17,773 -Finance lease payable 3,852 -Deferred tax liabilities 36,032 16,674Other non-current liabilities - 146 738,816 160,909 Current liabilities Trade accounts payable 313,535 119,634Short-term borrowings 136,992 52,602Finance lease payables 2,284 -Other accounts payable 131,983 44,395 566,794 216,631 Total liabilities 1,305,610 377,540 Total equity and liabilities 4,148,499 559,526 PYATEROCHKA HOLDING N.V. IFRS CONSOLIDATED INCOME STATEMENT For the six month periods ending 30 June 2006 and 30 June 2005 6m 2006: 1Jan-30June for Perekrestok & 19 May-30 June for Pyaterochka6m 2005: 1Jan-30June for Perekrestok; Pyaterochka is not included USD '000 USD '000 30 June 2006 30 June 2005 Sales 898,783 464,021Cost of goods sold (652,797) (346,795)Gross profit 245,986 117,226 Operating expenses (210,225) (111,269)including:Staff costs (93,310) (50,651)Operating lease expenses (34,650) (18,604)Depreciation of property, plant and equipment (18,787) (10,955)Utilities (11,883) (5,757)Supplies and materials (6,529) (3,798)Advertising (13,959) (4,438)Consulting and information services (3,382) (3,326)Security costs (4,381) (2,487)Repair and maintenance costs (4,674) (1,991)Taxes other than income tax (4,637) (1,953)Bank charges (2,139) (1,129)Impairment of trade and other accounts receivable (2,436) (1,036)Transportation costs (2,438) (1,155)Amortisation of intangible assets (400) (370)Other operating expenses (6,620) (3,619) Gain / (loss) from disposal of PP&E 3,729 18,556Lease / sublease income 12,843 8,374Operating profit 52,333 32,887 Finance costs, net (15,851) (5,241)Net foreign exchange gain 1,723 (3,050)Profit before tax 38,205 24,596 Income tax expense (15,813) (3,830) Profit for the period 22,392 20,766 Attributable to:Equity holders of the parent 22,392 20,706Minority interest 60Profit for the period 22,392 20,766 PYATEROCHKA HOLDING N.V. CONSOLIDATED STATEMENT OF CASH FLOWS For the six month periods ending 30 June 2006 and 30 June 2005 6m 2006: 1Jan-30June for Perekrestok & 19 May-30 June for Pyaterochka6m 2005: 1Jan-30June for Perekrestok; Pyaterochka is not included 6M 2006 6M 2005 USD '000 USD '000 Profit before tax 38,206 24,596Adjustments for:Depreciation and amortisation 19,187 11,097Gain on disposal of property, plant and equipment (2,102) (18,556)Gain on disposal of intangibles 38 0Inventory shrinkage 8,436 4,695Finance costs, net 12,238 5,241Impairment of trade and other accounts receivable 2,414 1,036Loss on disposals of subsidiaries 110 0Share-based payment expense 3,021 0(Gains)/losses on measurement of investments to fair value 3,225 0Amortization of deferred expenses 565 0Net foreign exchange loss (1,723) 3,050Net cash from operating activities before changes in working capital 83,615 31,159 Increase in VAT recoverable 13,759 (16,956)Increase in trade and other accounts receivable (45,797) (3,702)Increase in inventories 2,033 (918)Decrease in trade accounts payable (18,758) (11,433)Decrease in other accounts payable 23,811 (2,967)Translation effect on working capital 3,367 (1,272)Cash used in operations 62,030 (6,089) Interest paid (10,310) (3,592)Interest received 141 97Income tax paid (15,278) (1,480)Net cash used in operating activities 36,583 (11,064) Cash flows used in investing activitiesPurchase of property, plant and equipment (72,625) (85,326)Proceeds from sales of property, plant and equipment 2,314 2,500Acquisition of subsidiaries (8,750)Cash acquired in subsidiaries 27,504 0Long-term loan originated (5,250)Acquisition of investments available for sale (1,771) (1,211)Proceeds from sale of investments available for sale 16 1,149Other LTI (389) 0Long-term deferred expenses prepaid (6,338) 0Purchase of intangible assets (53) (603) PYATEROCHKA HOLDING N.V. CONSOLIDATED STATEMENT OF CASH FLOWS (Continued from page 12) For the six month periods ending 30 June 2006 and 30 June 2005 6m 2006: 1Jan-30June for Perekrestok & 19 May-30 June for Pyaterochka6m 2005: 1Jan-30June for Perekrestok; Pyaterochka is not included 6M 2006 6M 2005 USD '000 USD '000 Net cash used in investing activities (51,342) (97,491) Cash flows from financing activitiesProceeds from short-term loans 92,629 224,163Repayment of short-term loans (48,889) (135,690)Proceeds from long-term loans 154,878 0Repayment of long-term loans (165,309) (15,000)Net cash from financing activities 33,309 73,473Effect of exchange rate changes on cash and cash equivalents 42 (670)Net decrease in cash and cash equivalents 18,592 (35,752) Movements in cash and cash equivalentsCash and cash equivalents at the beginning of the period 30,066 52,618Increase / Decrease 18,592 (35,752)Cash and cash equivalents at the end of the period 48,658 16,866 Note to Editors: Pyaterochka Holding N.V. is Russia's largest food retailer in terms of sales.The group has 391 company-managed "Pyaterochka" soft discount stores located inthe Moscow (187), St. Petersburg (185) and Yekaterinburg (19) areas, and 133company-managed "Perekrestok" supermarkets across 14 regions of Central Russiaand Ukraine, including 78 stores in Moscow, as of 30 June 2006. As of 30 June 2006, franchisees operated 479 Pyaterochka branded stores in 20regions of Russia, Ukraine and Kazakhstan. Perekrestok has 10 conveniencestores operated by franchisees in the Moscow area. Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 tocreate the clear leader in the Russian food retail market. Pyaterochka's 2005 net sales (pre-merger) reached USD 1,359 million, with grossbanner sales in 2005 of over USD 2 billion. Perekrestok net sales reached USD1,015 million in 2005. The Group's pro forma (assuming both chains contribution from 1 January 2006)net sales for the first half of 2006 were US $1,581 million. During 1H 2006,the Pyaterochka chain provided US $906 million of net sales, while thePerekrestok chain contributed US $675 million of net sales. - End - Enquiries to: Pyaterochka Holding NV Tanja Djurdjevic Investor Relations Tel +7 495 724 6414 Email ir@e5.ru -------------------------- (1) For comparability excludes the capital gain of USD $19 million on the saleof Tushino Plaza in 2005 This information is provided by RNS The company news service from the London Stock Exchange