01/03/2016

Detskiy Mir Group announces audited financial results for the full year 2015

1 March 2015. Russia, Moscow. Detsky Mir Group ('Detsky Mir' or 'the Group'), Russia's largest children's goods retailer, announces its audited financial results under IFRS for the full year ended 31 December 2015.

KEY FINANCIAL RESULTS FOR FY 2015

  • The Group's revenue increased by 33.2% to RUB 60.5bn, vs RUB 45.5bn for FY 2014;
  • Detsky Mir's like-for-like sales improved 12.4% year-on-year (with the number of checks growing by 3.7%, and the average check growing by 8.4%);
  • Gross profit increased by 26.9% year-on-year to RUB 21.9bn, with a gross margin of 36.2%;
  • Selling, general and administrative expenses as a share of revenue decreased by 2 pp to 27.7%, compared with 29.8% a year earlier;
  • Normalized OIBDA, excluding additional bonus payments under the LTI program (in relation to Sistema JSFC's completion of the sale of 23.1% of Detsky Mir to the Russia-China Investment Fund), increased by 26.4% year-on-year to RUB 6.2bn, compared to RUB 4.9bn in 2014 (OIBDA margin reached 10.2%). OIBDA including the additional bonus payments amounted to RUB 5.1bn.;
  • Normalized net income, excluding additional bonus payments and other non-operating one-off costs, increased by 18.5% year-on-year to RUB 2.4bn compared to 2014. Net income including the additional bonus payments and other non-operating one-off costs amounted to RUB 1.0bn;
  • The Group paid RUB 3.0bn in dividends to its shareholders in 2015 (compared to RUB 2.5bn in 2014).

OTHER 2015 HIGHLIGHTS

  • The Group's total number of stores increased to 425, with total retail space of 491 th. sq. m. In 2015 the Group opened 104 new stores opened, including 103 new Detsky Mir stores and one ELC store;
  • The Group reported a net income in the first quarter of the year, as opposed to the seasonal loss traditionally seen in that period;
  • In June 2015, an in-store pick-up service was implemented in all Detsky Mir retail locations;
  • In August 2015, Detsky Mir launched its 72,000 sq. m. distribution centre in the Moscow region (Bekasovo). This is the largest specialised logistics terminal for children's goods in Russia;
  • In December 2015, the sale of 23.1% of Detsky Mir to the Russia-China Investment Fund was completed for a total consideration of RUB 9.75bn.

Vladimir Chirakhov, CEO of Detsky Mir Group said:

'In terms of business growth and efficiency improvements, 2015 was a key year for the Group. Detskiy Mir adapted to the new economic realities while maintaining its rapid growth rates, enabling it to strengthen its leading position in the children's goods market.

The Group continued to implement its expansion programme, opening 104 new stores, a Company record. The total number of stores increased to 425 in 2015. We continued to expand in Kazakhstan, with the opening of a new store in Astana.

The Group's revenue increased by 33.2% year-on-year. The main driver of revenue came from existing stores, which is reflected in a 12.4% year-on-year rise in like-for-like sales, while the like-for-like increase in the number of purchases made (number of checks) was 3.7% year-on-year.

Selling, general and administrative expenses as a share of revenue dropped by 2 pp, which we achieved primarily as a result of a number of operational efficiency initiatives. Launching our own DC in Bekasovo (Moscow region) was one of the key efficiency projects. Our own warehouse will enable us to reduce logistics costs, increase centralisation and improve inventory management, which will lead to higher turnover.

Detsky Mir Group paid record dividends in 2015 of RUB 3.0 billion, demonstrating once again our commitment to shareholder value.

Detsky Mir Group is the largest employer in the children's goods segment. In 2015, we created around 1,500 new jobs in dozens of regions around country and our average headcount increased by more than 20% year-on-year to 8,517 employees.

We are absolutely confident that 2016 will bring new opportunities for growth and efficiency improvements. We intend to continue implementing our retail chain development programme, and we intend to open at least 50 new stores in 2016.'

FINANCIAL RESULTS FOR 2011-2015

2011

2012

2013

2014

2015

2014-2015, % change

Number of stores

150

216

252

322

425

32%

Detsky Mir stores

149

195

224

278

381

37%

ELC stores

0

20

27

43

44

2%

Selling space (K sq m)

236

291

320

390

491

26%

Revenue

23,007

27,624

36,001

45,446

60,544

33%

% of LFL sales growth

14.9%

5.6%

13.4%

13.6%

12.4%

Revenue per sq m

102

105

118

128

137

7%

(RUB thousand /sq. m)

Online sales

40

127

227

443

1,260

184%

Share of online sales

0.2%

0.5%

0.6%

1.0%

2.1%

COGS

14,235

16,681

22,093

28,183

38,640

37%

% of revenue

61.9%

60.4%

61.4%

62.0%

63.8%

Gross income

8,772

10,943

13,908

17,263

21,904

27%

Margin, %

38.1%

39.6%

38.6%

38.0%

36.2%

Gross income per sq m

39

42

46

48

50

4%

(RUB thousand /sq m)

SG&A

8,026

9,326

11,155

13,523

16,771

24%

% of revenue

34.9%

33.8%

31.0%

29.8%

27.7%

Normalized OIBDA

806

1,655

2,771

4,910

6,205

26%

Margin, %

3.5%

6.0%

7.7%

10.8%

10.2%

OIBDA

806

1,655

2,771

4,910

5,122

4%

Margin, %

3.5%

6.0%

7.7%

10.8%

8.5%

Normalized Net income

-217

428

1,153

2,043

2,421

19%

Margin, %

-0.9%

1.5%

3.2%

4.5%

4.0%

Net income

-217

428

1,153

2,043

976

-52%

Margin, %

-0.9%

1.5%

3.2%

4.5%

1.6%

TOTAL Debt

4,039

2,998

5,922

9,716

18,359

89%

Cash and cash equivalents

2,423

1,631

860

1,670

1,934

16%

Adjusted Net Debt

1,616

1,366

5,062

8,046

11,550

44%

Net debt

1,616

1,366

5,062

8,046

16,425

104%

Adjusted Net Debt /normalized OIBDA

2,0x

0,8x

1,8x

1.6x

1.9x

Net debt/ OIBDA

2,0x

0,8x

1,8x

1.6x

3.2x

***

For additional information contact:

Nadezhda Kiseleva

Head of PR

+7 (495) 781-08-08, ext. 2041

Cell: +7 (903) 969-00-86

nkiseleva@detmir.ru

Sergey Levitskiy

Head of M&A and Business Valuation

+7 (495) 781-08-08, ext. 2315

Cell: + 7 903 971 43 65

slevitskiy@detmir.ru

The Detsky Mir Group is the largest children's goods retailer in Russia. The Group includes the national-wide retail chain Detsky Mir, the ELC retail chain, and two online stores (DM and ELC). As of 31 December 2015, Detsky Mir's chain is represented by 381 stores in Russia and Kazakhstan, the ELC retail chain is represented by 44 stores in Russia. The total retail floorspace of the chain is 491 th sq.m. Detsky Mir's principal shareholder is Sistema JSFC. Websites: www.detmir.ru, corp.detmir.ru

Sistema is a publicly-traded diversified Russian holding company serving over 100 million customers in the sectors of telecommunications, high technology, pulp and paper, radio and space technology, banking, retail, mass media, tourism and healthcare services. Founded in 1993, the company reported revenues of RUB 184 billion for IIIQ 2015 and total assets of RUB 1.2 trillion as September 30, 2015. Sistema's global depository receipts are listed under the symbol 'SSA' on the London Stock Exchange. Sistema's ordinary shares are listed under the 'AFKS' ticker on the Moscow Exchange. Website: www.sistema.com.

Some of the information in this document may contain projections or other forward-looking statements regarding future events of the Detsky Mir Group and Sistema JSFC. Such statements contain phrases like 'expected', 'estimated', 'intended', 'will', 'could', negatives of such statements, and other similar expressions. We would like to warn you that such statements are assumptions only and the actual course of events and their results may differ significantly from such statements. We do not intend to revise such statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Due to numerous factors, the actual results of the Detsky Mir Group and Sistema JSFC may differ significantly from those stated in our assumptions and projections. Such factors may include general economic conditions, competitive environment in which we operate, risks related to the operations in Russia, rapid technological or market changes in our sphere of business, and many other risks directly related to the Detsky Mir Group and Sistema JSFC and their activities.

Afk Sistema OAO issued this content on 01 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 01 March 2016 08:56:03 UTC

Original Document: http://www.sistema.com/press/press-releases/detail/article/21705/