Rallye

In 2009, Rallye's main subsidiary Casino posted solid results, proving that its business model is resistant against an unfavorable economic climate. Organically, sales (excluding fuel) were stable, proving the resistance of convenience stores in France and the sharp growth in international business. Organic EBITDA margins were also stable, and current operating income showed a slight decline of -4.5% (-2.5% organically), due to improved international margins and the rapid introduction of cost reduction plans. Casino significantly improved its operating efficiency and reinforced its financial flexibility, primarily thanks to improved free-cash flow and the asset disposal program, which is now two-thirds complete. Net financial debt fell significantly from €4,072 million at end 2009, and the Net financial debt/EBITDA ratio moved to 2.2x. The cash situation was also improved by a €1.5 billion bond issue in 2009 and through the February 2010 bond exchange.

In France, convenience stores proved to be resistant, since their positions are in line with consumers' expectations, while Cdiscount consolidated its position on top of the B-to-C e-commerce market, with double-digit growth in sales. Internationally, organic growth was strong, and current operating income was up significantly, boosted by cost- and inventory-cutting measures. Casino plans to continue and ramp up its action plans by reinforcing market share in France, pursuing strong, profitable growth internationally and improving operating efficiency. Finally, Casino aims to continue its action plan and has confirmed its target Net financial debt/EBITDA ratio of less than 2.2x by the end of 2010.

In 2009, GO Sport showed a more balanced situation, with current operating income of + €1.1 million, up by €14.9 million compared with 2008. Over the course of the year, GO Sport showed solid resistance despite the difficult economic circumstances, in particular in France, where GO Sport brand sales were down slightly by 2.8%, and in Poland, where like-for-like sales on a constant currency basis were up by 1.8%. Courir returned to positive growth in the fourth quarter following the executive management's measures taken to roll out an extensive textile offer and to rebalance the textile, accessory and footwear collections. GO Sport continued its action plan aimed at streamlining its store network and setting its brands apart from the competition. As GO Sport's solid 2009 resistance proves, these action plans are well-suited to the situation. GO Sport plans to continue improving profits by keeping a firm handle on costs and investments.

Finally, the investment portfolio, estimated at €517 million at December 31, 2009, made up €23 million of current operating income. In line with the stated objectives, €91 million in assets were disposed of during the fiscal year. The entire portfolio of high-quality assets should be sold off by 2012, with the objective of maximizing sale prices.

Overall, Rallye's consolidated sales and current operating income were down by -1.2% and -3.0% respectively, but net income, Group share, is positive again, standing at €101 million, compared with -€87 million in 2008. Rallye benefits from a strong cash situation, with €1.4 billion in unused, confirmed, immediately available credit lines, and over €680 million in cash and cash equivalents. Debt maturity was extended by raising €1 billion in bonds in 2009 and €500 million in March 2010, and by refinancing loans coming to term in 2010.

In light of this performance, the board of directors, in the May 19, 2010 General Meeting, will propose payment of a dividend of €1.83 per share, stable compared with 2008, partially paid in an interim dividend of €0.80 on October 2, 2009. The shareholders may choose to receive up to 50% of their dividend as shares. Foncière Euris, Rallye's majority shareholder, has stated that it will opt for payment in shares.

In conclusion, I would like to thank all of Rallye's employees and all our external service providers. Thanks to their enthusiasm and their commitment to their work, the Group can rest assured in its future.

Jean-Charles NAOURI