Statement from Chairman and CEO

Peter Györffy, Chairman of the Board of Directors
Alexander Tynkovan, Chief Executive Officer

To all our shareholders!

2011 was again an excellent year in the history of M.video. With an annual revenue of over 132 billion rubles (including VAT), M.video’s total business grew by nearly 30 billion rubles or almost 30% versus the previous year.

This exceptional performance is not only based on the opening of 44 stores in the course of the last 12 months, which increased the total number to 261 in 115 cities all over Russia. Even more, the strong like-for-like growth of 10% clearly proves that the Company’s strategy is meeting the expectations of the target audience very well. As a consequence, our Company was able to further extend the leading position as the number one Consumer Electronics retailer in Russia by revenue.

By putting our customers in the focus of all our activities, our slogan “We do care” became reality, whilst customer centricity and service-orientation is reflected in customer feedbacks and market researches as one of our major competitive edges. With “My customer – My responsibility” all M.video employees are fully commited to this winning philosophy.

Our experienced management team is commited to implementation of our approved strategy. This all lead to a further increase of our gross margin %, cash position, EBITDA and net profit to record levels. For the third year running the board of Directors has proposed a dividend payment to our shareholders. The dividend is almost 50% higher than was paid in 2010.

However, all over the world retailing in general and Consumer Electronic retailing in specific are undergoing significant changes of their business models.

We are experiencing different consumer behaviour, influenced by fast developing digital technology, the use of new media and the ambition of being permanently connected creates a completely new business environment. Most of the resulting effects on the business are not even predictable. Only the best and most forward thinking companies can keep up to and adapt to these changes.

As a company we take these changes very seriously, as we believe that they will be significant and sustainable. As the number one in Russia’s offline sales of Consumer Electronics, we see it as our duty to be the leading force in the upcoming online business. Working hard on our internal cost structure in order to balance pressure from lower product prices due to the Internet, whilst maximizing our sales in our stores shall give customers the choice to decide how to buy at M.video.

After the introduction of “self-service” and the launch of “discounting”, the impact of the Internet will lead to the “third revolution” of bricks & mortar retailing.

With our full commitment to an Omni-Channel strategy, we are convinced of managing and shaping this new digital world successfully.

Peter Györffy
Alexander Tynkovan