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X5 RETAIL GROUPSTRATEGY

March 15, 2007

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DisclaimerDisclaimer

This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries or any depositary receipts representing such securities in any jurisdiction or an invitation or inducement to engage in investment activity in relation thereto. In particular, this presentation does not constitute an advertisement or an offer of securities in the Russian Federation.

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.

No representation, warranty or undertaking, express or implied, is given by or on behalf of X5 Retail Group N.V. or any of its directors, officers, employees, shareholders, affiliates, advisers, representatives or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein or any other material discussed at the presentation.  Neither X5 Retail Group N.V. nor any of its directors, officers, employees, shareholders, affiliates, advisors, representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or any other material discussed at the presentation or their contents or otherwise arising in connection with the presentation.

This presentation includes statements that are, or may be deemed to be, “forward-looking statements”, with respect to the financial condition, results, operations and businesses of X5 Retail Group N.V. 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, X5 Retail Group N.V’s actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements. X5 Retail Group N.V. assumes no responsibility to update any of the forward looking statements contained in this presentation.

This presentation is not for distribution in, nor does it constitute an offer of securities for sale, or the solicitation of an offer to subscribe for securities in Australia, Canada, Japan or in any jurisdiction where such distribution, offer or solicitation is unlawful. Neither the presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the United States of America, its territories or possessions or to, or viewed by any U.S. person as defined in Regulation S under the US Securities Act 1933 (the "Securities Act). Any failure to comply with these restrictions may constitute a violation of United States, Australian, Canadian or Japanese securities laws. The distribution of this presentation in certain jurisdictions may be restricted by law and persons into whose possession this document or any other document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities law of any such jurisdiction.

For Russian law purposes, the securities mentioned in this presentation (the "Securities") represent foreign securities. It is not permitted to place or publicly circulate the Securities on the territory of the Russian Federation at present. No prospectus for the issue of the Securities has been or is intended to be registered with the Federal Service for Financial Markets of the Russian Federation. The information provided in this presentation is not intended to advertise or facilitate the offer of the Securities in the territory of the Russian Federation. This presentation does not represent an offer to acquire the Securities or an invitation to make offers to acquire the Securities.

The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. Some of the information is still in draft form and neither X5 Retail Group N.V. nor any other party is under any duty to update or inform recipients of this presentation of any changes to such information or opinions. In particular, it should be noted that some of the financial information relating to X5 Retail Group N.V. and its subsidiaries contained in this document has not been audited and in some cases is based on management information and estimates.

Neither X5 Retail Group N.V. nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the statements contained in this presentation.

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Table of Contents:Table of Contents:

1.1. Russian Food Retail MarketRussian Food Retail Market2.2. CompanyCompany3.3. Expansion StrategyExpansion Strategy4.4. Format StrategyFormat Strategy5.5. Integration Integration 6.6. Support Functions (Strategy of Logistic, Support Functions (Strategy of Logistic,

IT, HR)IT, HR)7.7. ConclusionsConclusions

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6p.2

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7p.3

1p.3

6

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Russian Food Retail Russian Food Retail Market Market

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Russian Food Retail Market (overview)Russian Food Retail Market (overview)

Main characteristics: attractive, large, with high potential of growth, unsaturated, with low competition, with short period of advantages to catch

Official Russian Food Retail market (2006) – USD 146 bln

Total Russian Food Retail Market (2006) – USD 233 bln (incl. “grey” part)

Share of modern formats – 15% (of total market)

Share of Top 10 in modern retail chains – 53% (of total market)

Share of X5 Retail Group on the market – 1.7% (of total market)

Key Russian food retail operators

Source of info: FSGS, analysts, media reports

Place in

TOP 10Company

Revenue 2006,

USD excl VAT

Market share,

%

1 X5 Retail Group 3485 22%

2 Metro 2544 16%

3 Magnit 2504 16%

4 Auchan 2016 12%

5 Dixi 1080 7%

6 Lenta 1060 7%

7 Kopeyka 980 6%

8 Seventh Continent 958 6%

9 Victoria 900 6%

10 Ramstore 635 4%

Total TOP 10 16162 100%

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Forecast of Russian Retail Market Growth Forecast of Russian Retail Market Growth

2006 2006 yearyear

Official Russian food retail market

2011 2011 yearyear

$281 bln.

Total Russian food retail market $405 bln.

Share of modern formats in total Russian food retail market

TOP 10 modern food retail chains (share)

$bln, incl VAT$bln, incl VAT

35%35%

$106 bln. (75%)

Estimated share of «grey» market 30%

$146 bln.

$233 bln.

15%15%

$18.4 bln. (53%)

37%

• Forecasted annual average growth rate for 5 year period of Total Russian food Forecasted annual average growth rate for 5 year period of Total Russian food retail market isretail market is 1212% % per yearper year. .

• Average growth rate of top-10 in 5 year period is expected at a level of 42Average growth rate of top-10 in 5 year period is expected at a level of 42%.%.

Source of info: FSGS, analysts, media reports

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Perspectives of Modern FormatsPerspectives of Modern Formatsin Russian Retail Tradein Russian Retail Trade

The main formats in Russia are discounters, supermarkets, hypermarkets.

It’s expected that the fastest growing marketsegments in 5-year period will be

hypermarkets anddiscounters (CAGR respectively 39% and

33%).

Source of info: analysts and media reports

13 3315

639

46

34

37163

227

0

50

100

150

200

250

300

350

400

450

2006 2011

Other

Other formats

Hypermarket

Discounter

Supermarket

Perspectives of retail formats, Perspectives of retail formats, ((blnbln..$$))

233

405

CAGR 12%

CAGR of the formats:Hypermarket – 39%Discounter – 33%Supermarket – 20%

Change of the format structure in modern retail tradeChange of the format structure in modern retail trade, (%), (%)

14%

71%

5%4%

6%

9%

16%

11%

8%56%

2006 г. 2011 г.

Share of modern trade(of total Russian market)

15% 35%

* TRRM

* TRRM

* - Total Russian Retail Market

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CompanyCompany

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HistoryHistory

Key milestonesKey milestones

Perekriostok chain founded by Alfa Group Consortium

20 supermarkets opened 1st DC acquired

A.Rogachev and A.Girda founded Pyaterochka chain 16 stores opened in St.Petersburg

Pyaterochka enters to Moscow market

1st Perekriostok hypermarket opened Regional expansion start

Pyaterochka franchise operations start Private Label development program start

Templeton Investment foundation buys 7.7% of Perekriostok stock 75 supermarkets opened SPAR Middle Volga chain acquired

The largest DC opened in North-West Russia

«365» chain acquired in Yaroslavl’ Gastronomy production started 90 supermarkets opened

100th store opened Ukraine & Kazakhstan markets entry

Ukraine market entry via 4 Kiev stores chain acquisition

IPO at LSE 18 St. Petersburg and 25 Moscow Kopeyka stores acquisition

Pyaterochka & Perekriostok chains development in Pyaterochka & Perekriostok chains development in 2003-20072003-2007F periodF period

64 90 120 168

209.0

141.5102.4

79.5

0

225

450

675

900

2003 2004 2005 2006

0.0

100.0

200.0

300.0

400.0

Number of stores (eop) Trade area (eop)

185234

347451

257.2

205.5

145.9112.4

0

225

450

675

900

2003 2004 2005 2006

0.0

100.0

200.0

300.0

400.0

Number of stores (eop) Trade area (eop)

CAGR (03-06): 38%38% CAGR (03-06): 3322%%

PEREKRIOSTOK PYATEROCHKAth.m2 th.m2

Mergerof Pyaterochka

andPerekriostok

2006

1999 2001 2002 2003 2004 2005

1995 1998 2002 2003 2004 2005

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X5 Retail Group – is the leader of the X5 Retail Group – is the leader of the Russian Food Retail Market Russian Food Retail Market

Net sales – USD 3.485 bln

Number of company own managed stores – 619

Net selling space – 466,000 sq.m.

Geography of operations – Russia (9 regional offices), Ukraine, Kazakhstan (franchising stores)

Number of customers in 2006 – 445,871,769.

X5 Retail Group TodayX5 Retail Group Today

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X5 Retail Group TodayX5 Retail Group Today

Tyumen

Ekaterinburg

MOSCOW

St. Petersburg

Perm

Izhevsk

Kirov

Ufa

Chelyabinsk

Orenburg

Samara

Toglyatty

Kazan

Yoshkar-OlaCheboksary

Arzamas

Penza

Saratov

Tambov

Ryazan

Ulyanovsk

Saransk

Ivanovo

Kostroma

Vladimir

Vologda

CherepovezTver’

Veliky NovgorodPskov

Smolensk

KalugaBryansk

Orel Tula

Kursk

Belgorod

Lipetsk

Voronezh

Rostov-na-Donu

Volgograd

Krasnodar

Sochi

Novorossiysk

Stavropol Elista

Astrakhan

Yaroslavl

Perekriostok stores - 47Pyaterochka stores - 25Combined:Moscow:

Perekriostok - 100Pyaterochka - 222

St. Petersburg:Perekriostok - 17 Pyaterochka - 204

(excl.4 stores in Ukraine)

Total Stores including Ukraine: - 619

2006: Total Retail Sales by the Regions (mln.$, VAT excl.)

Moscow 1’924North-West 1’124Nizhny Novgorod 158Samara 78 South 70Tatarstan 49Ural 35Ukraine 27Centr.- Chernozemny 20

TOTAL: 3485

2006: Share of Retail Sales by the Regions (%)

5%

2%

2%

1%

1%

1%

55%

33%

Moscow

North-West

N.Novgorod

Samara

South

Tatarstan

Ural

Ukraine

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MISSIONMISSION::«We are improving the quality of your life»

VISIONVISION::«Leadership. Always.»

New Mission, Vision and ValueNew Mission, Vision and Value

NEWNEW

VALUESVALUES::• Respecting individuality• Servicing customer needs• Striving for excellence

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Corporate RulesCorporate Rules

• Be proud of your company. Trust in it

• We are one team. Trust and support each other

• Employees of the company are its key value

• Be purposeful, energized, emotional and enjoy what you do

• Our opportunities are defined by our objectives

• Defining your priorities, focus on result

• We do what adds value to our customers only

• To stay competitive we must be the best in cost efficiency

• Learn from your competitors, to be more efficient and successful than theyare

• We are socially responsible company

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Building-up platform for further growthBuilding-up platform for further growth

The two key objectives for 2006 – start of integration and The two key objectives for 2006 – start of integration and uninterrupted fast growth – were being met successfullyuninterrupted fast growth – were being met successfully

In 2007 X5 plans to finalize the integration process and build In 2007 X5 plans to finalize the integration process and build up a solid multi-format platform for further growthup a solid multi-format platform for further growth

The Group’s long-term strategy is focused on investments The Group’s long-term strategy is focused on investments into multi-format growth and upgrading its technological into multi-format growth and upgrading its technological competitive advantages in logistics, IT, HR and other key competitive advantages in logistics, IT, HR and other key support functionssupport functions

The key strategic objectives of X5 going forwardThe key strategic objectives of X5 going forward

Maintain the leadership position on the Russian marketMaintain the leadership position on the Russian market Play role of the market consolidator in RussiaPlay role of the market consolidator in Russia Ensure highest return on shareholders capital in the sectorEnsure highest return on shareholders capital in the sector

Strategic objectivesStrategic objectives

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2007 key objectives and projections2007 key objectives and projections

2007: CapEx Projections (mln.$, VAT excl.)

TOTAL at least 700

New stores 2007 450

2007: New DCs opening (th.sq.m)

Rented 44.0

Owned 19.3

TOTAL: 63.3

add at least 150’000 sq.m. of net add at least 150’000 sq.m. of net selling spaceselling space

expand supermarket chain across expand supermarket chain across all regions of the European part of all regions of the European part of RussiaRussia

expand discounter chain in Moscow expand discounter chain in Moscow area, enter Samara and Nizhny area, enter Samara and Nizhny Novgorod regionsNovgorod regions

develop hypermarket format, with develop hypermarket format, with the aim of massive roll-out starting the aim of massive roll-out starting from 2009from 2009

Key objectives

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Expansion StrategyExpansion Strategy

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Focus on Russia and UkraineFocus on Russia and Ukraine

X5X5

X5X5

RUSSIARUSSIAis the PRIMARYis the PRIMARY

course for expansion for course for expansion for nownow

«Х5»«Х5»target regionstarget regionsfor expansionfor expansion

UKRAINEUKRAINEexpansion strategyexpansion strategywill be finalised and will be finalised and announced during 2007announced during 2007

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Zone №1 – European part and UralsZone №2 – Siberian regionsZone №3 – Other regions of Russia

* Concentration of population, territory and * Concentration of population, territory and market volume by Russian regions in 2005market volume by Russian regions in 2005

In its 5-year strategy, X5 Retail Group concentrates on the regions of the European part of Russia, which have the highest density of population and represent the largest part (84%) of food retail market.

Geographical zone

Population(>100 th. people)

Area(mln.m2)

European part and Urals

53 000 2.8 16%

Siberia 7 300 2.7 16%

Other regions 10 000 11.5 68%

Total (townsWith population

more than 100 th.):

70 300(50%)

17.1Total

(all population):142 000

Share%

Market volume mln.$

100 800 84%

14 400 12%

4 800 4%

Share%

120 000

75%

10%

15%

Share%

100%

100%100%

Focus on the most attractive regionsFocus on the most attractive regions

1-st priority

2-nd priority

3-rd priority

Source of info: analysts and media reports * - official data

X5 Retail Group will grow both organically and by means of X5 Retail Group will grow both organically and by means of M&AM&A

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M&A StrategyM&A Strategy

Main objective for M&A is to provide sustainable growth of X5 shareholder value (price per share) through acquisition on financially attractive terms of strategically located and growing retail chains to enable Company’s strategy for long-term market leadership and to obtain access to new retail technologies and market segments

Regions with the own stores of X5 as at the end of 2006 year

European part and UralsEuropean part and UralsPurchasing of retail chains with trade areas,

suitable for organization of discounter, supermarket and hypermarket formats

and attractive for investments

Regions of western SiberiaRegions of western Siberia Creation of joint ventures or purchase of shares in the leading companies on the local market

(organization of self dependent growth centers under X5 control with out withdrawing

of operating resources of X5)

Other regions of RussiaOther regions of Russia

Selling of franchising contracts and possible creation of JVsto pass under X5 control in a longer term perspective

There are no own stores as at the end of 2006

No own stores are planed to be opened on this

territory during 5 years

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Format StrategyFormat Strategy

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To increase market penetration and maintain high growth rates,

X5 Retail Group focuses on MULTI-FORMAT STRATEGY:

Format StrategyFormat Strategy

Soft Discounters

Supermarkets

Hypermarket

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Soft Discounters Soft Discounters

20062006

Future Format DevelopmentFuture Format Development

Focus on efficiency Increase % of centralized deliveries Investment into price High speed of opening (multiple centers of growth) Optimization of assortment Advertising and Promo activities Loyalty programs Increase share of fresh food Increase contribution of Private Labels

As of 31 December 2006 X5 Retail Group operated 451 own discounter stores, with total net selling space of 257,000 sq.m., and net sales of 1,973 bln. USD

Format ConceptFormat Concept

Trade area (average) - 600 м²

Assortment (average) - 3500 SKUs

Non-food - 10%Price - EDLP

Next to customers apartments Low prices Balanced assortment Guaranteed quality of goods

Value PropositionValue Proposition

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Perekriostok is the best in fresh fruits and Perekriostok is the best in fresh fruits and vegetables, own bakery products, meat and fish vegetables, own bakery products, meat and fish productsproducts Good location: close to customers apartments or Good location: close to customers apartments or «on their way home». Easy access, convenient «on their way home». Easy access, convenient parking.parking. Saving customers’ timeSaving customers’ time

SupermarketsSupermarkets

20062006As of 31 December 2006, X5 Retail Group operated 168 supermarkets stores, with total net selling space of 209,000 sq.m, and net sales of 1.512 bln USD

Format ConceptFormat ConceptTrade area - 800, 1200, 1600, 4000 sq.m.

Assortment - 15 000 – 25 000 SKUs

Price - high/low

Quality - high

Environment - friendly, welcoming

Non-food - 20-30%

Value PropositionValue Proposition Future Format DevelopmentFuture Format Development

Accent on effectiveness Increase % of centralized deliveries Rationalization of assortment Increase participation in fresh up to 60% Increase contribution of Private Labels Focus on standardization Increase efficiency of ratio between trade and total areas

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The segment of hypermarkets is expected to be the most attractive The segment of hypermarkets is expected to be the most attractive and fast growing in the next five years and fast growing in the next five years

Among international operators only and are Among international operators only and are represented in the market, which gives huge room for growthrepresented in the market, which gives huge room for growth

Consumer profile: a customer gives a premium to the format Consumer profile: a customer gives a premium to the format (everything under one roof)(everything under one roof)

The hypermarkets can provide the necessary speed of growth and The hypermarkets can provide the necessary speed of growth and increase the purchasing powerincrease the purchasing power

Hypermarkets – New FormatHypermarkets – New Formatfor the Companyfor the Company

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• Hypermarkets will allow to maintain high growth rates, increase Hypermarkets will allow to maintain high growth rates, increase market share and purchasing powermarket share and purchasing power

• This format has high turnover and efficient low-cost operations, This format has high turnover and efficient low-cost operations, uses a smart pricing strategy (high/low) to create a low-price imageuses a smart pricing strategy (high/low) to create a low-price image

• Supported by highly disciplined commercial and operational policy Supported by highly disciplined commercial and operational policy based on negative working capitalbased on negative working capital

Trade area 5.000, 7.000, 10.000 sq. m

Assortment 40,000-60,000 SKUs

HypermarketHypermarket

Price: When I shop in Frank I do a cheap shopping

Atmosphere: I’ll find a happy (friendly) atmosphere

Promotions-Campaigns: I’m always surprised. I’ll get a good deal

Staff: The people is friendly, willing to help, they know the business and what they are talking about

Assortment: They did the best selection for me. I can cover almost all my needs

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Building up platform for massive roll-out of hypermarkets starting Building up platform for massive roll-out of hypermarkets starting from 2009 from 2009

land bank in process of creation (over 20 land plots secured, land bank in process of creation (over 20 land plots secured, other 60 in progress)other 60 in progress)

X5 plans to open around 70 hypermarkets organically over next X5 plans to open around 70 hypermarkets organically over next 5-7 years5-7 years

Focus on Development projects - building own bigger trade centers in Focus on Development projects - building own bigger trade centers in priority regionspriority regions

Karusel chain acquisitionKarusel chain acquisition

option excersisable from January 1, 2008option excersisable from January 1, 2008

ca. 25 hypermarkets by the beginning of 2008ca. 25 hypermarkets by the beginning of 2008

the potential acquisition fits well into X5 format strategythe potential acquisition fits well into X5 format strategy

Drivers for Hypermarket format developmentDrivers for Hypermarket format development

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IntegrationIntegration

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Integration objectivesIntegration objectives

that means

• Integrate “Perekriostok” and “Pyaterochka” chains:Integrate “Perekriostok” and “Pyaterochka” chains:

• Implement the best practices from both companies

• Find and implement synergies to increase operating profit and reduce expenses

• Create organizational structure and business processes Create organizational structure and business processes (including multi-format regional offices) to support high growth (including multi-format regional offices) to support high growth rate of the companyrate of the company

• Create mechanism to integrate all companies from future M&A Create mechanism to integrate all companies from future M&A deals to support our growth and consolidation of the sectordeals to support our growth and consolidation of the sector

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Priorities of IntegrationPriorities of Integration

People People PurchasingPurchasing Non-commercialpurchasing

Non-commercialpurchasing FinanceFinance ITIT LogisticsLogistics

SY

NE

RG

IES

Commercial Non-commercial Headcount Support

•Cross compare•Retroactive application•Scale Negotiation•Franchising Scale negotiations

•Cross compare•Retroactive application•Scale Negotiation•Franchising Scale negotiations

Cross compare suppliers informationNegotiate scale (Discount Credit)

Cross compare suppliers informationNegotiate scale (Discount Credit)

Central Head OfficeRegional StructureStores

Central Head OfficeRegional StructureStores

•Logistics consolidation and delivery centralization

•Logistics consolidation and delivery centralization

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New Management Team New Management Team

that means

Following the mergerFollowing the merger a new international management team composed of professionals with extensive a new international management team composed of professionals with extensive

and successful experience in major Russian companies and leading international and successful experience in major Russian companies and leading international retail chains was built up retail chains was built up • Lev Khasis, CEO, former Chairman of Perekrestok Supervisory Board, Lev Khasis, CEO, former Chairman of Perekrestok Supervisory Board,

over 10 years in retail business, PhD in Retail Economics, Chairman of Russian over 10 years in retail business, PhD in Retail Economics, Chairman of Russian Retail AssociationRetail Association

• Vitaliy Podolskiy, CFO, MBA from the University of Chicago, over 10 Vitaliy Podolskiy, CFO, MBA from the University of Chicago, over 10 years of finance experience with leading investment banks and years of finance experience with leading investment banks and multinationalsmultinationals

• Antonio Melo, COO, around 20 years of experience in retail with Antonio Melo, COO, around 20 years of experience in retail with MakroMakro

• Pawel Musial, CCO, 10 year experience in retail with Tesco, Hit and Pawel Musial, CCO, 10 year experience in retail with Tesco, Hit and PerekrestokPerekrestok

• Dariush Bator, Perekrestok GM, over 10 years of experiense in retail Dariush Bator, Perekrestok GM, over 10 years of experiense in retail with Tesco and Perekrestokwith Tesco and Perekrestok

• Andrei Gusev, M&A Director, Andrei Gusev, M&A Director, MBA from the University of Pensylvania, over MBA from the University of Pensylvania, over 5 years of M&A activity with Alfa-Group5 years of M&A activity with Alfa-Group

• Yuri Kobaladze, Corporate Affairs Director, probably Russia’s best Yuri Kobaladze, Corporate Affairs Director, probably Russia’s best professional in this areaprofessional in this area

• Yulia Anokhina, HR Director, over 10 years in HR with leading Russian Yulia Anokhina, HR Director, over 10 years in HR with leading Russian (YUKOS) and international companies (YUKOS) and international companies ((Bristol-Myers Squibb, Reemtsma)Bristol-Myers Squibb, Reemtsma)

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Support FunctionsSupport Functions- Logistic Strategy- Logistic Strategy- IT- IT- HR- HR

p. 32

2006 Logistic operations and objectives2006 Logistic operations and objectives

Locations – DCs in Moscow and St PetersburgLevel of centralization – 50% for discounters; 25% for supermarketsDCs total area – 69’000 sq.m. (excl. 3PL operators):

- Rented area – 6’000 sq.m.- Owned area – 63’000 sq.m.

Strategic objective of X5 Retail GroupStrategic objective of X5 Retail Group

• to build uniform logistic infrastructure (DC network with transportation to build uniform logistic infrastructure (DC network with transportation fleet) to support operations in all formatsfleet) to support operations in all formats

Target level of centralization: - 85% for discounters- 75% for supermarkets and hypermarketsDC types:- Regional DC (FMCG and Fresh)- National DC (SMCG, strategic goods: import & private label)- Both DC types will be company managed

p. 33

X5 DCs Locations in European RussiaX5 DCs Locations in European Russia

PskovSt. Petersburg

Veliki Novgorod

Tver’

Cherepovets

Vologda

Smolensk

Bryansk Kaluga

Yaroslavl

Kostroma

Tula

RyazanOrelKursk

Belgorod

Lipetsk

Tambov

Voronezh

MoscowVladimir

IvanovoNizhniNovgorod

CheboksaryYoshkar-Ola

Kirov

Saratov

Rostov-na-Donu

Volgograd

Penza

Saransk

Samara

Togliatti

Ulyanovsk

KazanIzhevsk

Perm

Ufa

Orenburg

Chelyabinsk

Ekaterinburg

Tyumen

Stavropol

Astrakhan

Sochi

Krasnodar

Novorossiysk

- National DC location

Planned total area of national and regional DC’sPlanned total area of national and regional DC’sin 2011 about 600’000 - 700’000 sq.m.in 2011 about 600’000 - 700’000 sq.m.

p. 34

IT Mission and Goals IT Mission and Goals

Provide X5 with competitive Provide X5 with competitive advantages throughadvantages through

stability, development and stability, development and innovationsinnovations

Increase IT costs efficiency as % of turnover

Provide stability & support for company operations optimization

Support company expansion with IT capabilities

Build effective process-oriented IT organization

Build professional united team

Future IT landscapeFuture IT landscape

New IT Platform ImplementationNew IT Platform Implementation

Decision Support System

Decision Support System

Financial Management

Financial Management

HR Management

HR Management

SC planning and execution

SC planning and execution

StoresStores

MerchandisingMerchandising

Category Management

Category Management

Customer Management Customer

Management

Data warehouseData warehouse

Integration Bus

Competitor Chain

Competitor Chain

LDAPLDAP

Access Control Management

Access Control Management

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Human Resources StrategyHuman Resources Strategy

The main asset are the employeesThe main asset are the employees

The main priorities of HR

• Create a uniform corporate culture

• Build efficient system of recruiting, training and retaining employees to support high growth

• Increase staff efficiency, improve productivity and decrease staff turnover

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ConclusionsConclusions

p. 37

X5 Retail Group has corporate 5-year strategic plan in Russia* and objectives, supported X5 Retail Group has corporate 5-year strategic plan in Russia* and objectives, supported by its Supervisory Board and key shareholders, new core management team in place and by its Supervisory Board and key shareholders, new core management team in place and access to necessary resources;access to necessary resources; X5 Retail Group’s key long-term objective is to maintain and reinforce its position as the X5 Retail Group’s key long-term objective is to maintain and reinforce its position as the leading Russian chain in each format and market in which it operates, to provide our leading Russian chain in each format and market in which it operates, to provide our shareholders with superior return on investment in the industry;shareholders with superior return on investment in the industry; X5 Retail Group is a multi-format chain, with primary focus on three core retail formats, X5 Retail Group is a multi-format chain, with primary focus on three core retail formats, namely discounters, supermarkets and hypermarkets;namely discounters, supermarkets and hypermarkets; X5 has been and intend to remain the consolidator of the fragmented Russian retail marketX5 has been and intend to remain the consolidator of the fragmented Russian retail market::

X5 Retail Group plans to grow both organically and by M&A X5 Retail Group plans to grow both organically and by M&A Organic growth will remain the primary growth engine, with X5 Development and “green filed” Organic growth will remain the primary growth engine, with X5 Development and “green filed” construction as fast-growing area of its expansion especially in hypermarketsconstruction as fast-growing area of its expansion especially in hypermarkets X5 will actively develop JVs and partnerships with other market players such as developers, X5 will actively develop JVs and partnerships with other market players such as developers, financial institutions, suppliers and other partners to promote growth and new products and financial institutions, suppliers and other partners to promote growth and new products and services to its consumersservices to its consumers

X5 key internal priorities will be:X5 key internal priorities will be: Completion of integration of two organizations, development of “know-how” and organizational Completion of integration of two organizations, development of “know-how” and organizational platform for a fast and efficient integration of retail companiesplatform for a fast and efficient integration of retail companies Creation of own SCM chain, including of DCs network and transport fleet to ensure unparallel Creation of own SCM chain, including of DCs network and transport fleet to ensure unparallel and sustainable competitive advantageand sustainable competitive advantage Implementation of “best-in-class” IT system to support efficiently growing business needs, Implementation of “best-in-class” IT system to support efficiently growing business needs, including SCM, CRM and IMSincluding SCM, CRM and IMS Become an Employer of Choice, by building HR processes of recruiting, training and retaining Become an Employer of Choice, by building HR processes of recruiting, training and retaining employees to support growing demand of employees on each levelemployees to support growing demand of employees on each level

* X5 strategy in Ukraine will be finalised and announced during 2007* X5 strategy in Ukraine will be finalised and announced during 2007

KEY TAKE-OUTSKEY TAKE-OUTS