03/03/2014

Detskiy Mir Group announces audited financial results for the full year ended December 31, 2013

March 3, 2014. Moscow, Russia - OJSC Detsky Mir Group ("Detsky Mir" or the "Group"), the largest children's goods retail chain in Russia, announces its audited US GAAP financial results for the full year ended December 31, 2013. 

2013 FINANCIAL  HIGHLIGHTS

  • Total revenue up 27.2% year-on-year to US$ 1,130 million (30.3% in RUB terms);
  • Like-for-like sales grew 13.4% (8.2% in number of tickets and 4.8% in average ticket);
  • Gross profit up 23.8% year-on-year to US$ 437 million with a gross margin of 38.6% (versus 39.7% in 2012);
  • SG&A expenses fell as percentage of revenue to 31.0% from 33.8% in 2012 due to increased operating efficiency and cost cutting measures;  
  • Adjusted EBITDA increased 61.7% year-on-year to US$ 91.5 million, with a margin of 8.1%;
  • Net profit more than doubled year-on-year to US$ 36 million;
  • Net debt/adjusted EBITDA stood at 1.7x at the end of 2013;
  • As of December 31, 2013, the Company's net debt amounted to US$ 154.7 million.

2013 KEY CORPORATE HIGHLIGHTS

  • Opened 41 new stores, including 33 Detsky Mir branded stores and 8 ELC branded stores, and increased its total selling space to 319.9 thousand sq.m. from 290.8 thousand sq.m. as of 31 December 2012;
  • Launched a new store design concept at the "MEGA Belaya Dacha" shopping mall in the Moscow region;
  • Repurchased 25%+1 share from Sberbank;
  • Paid out annual dividends for 2012 in the amount of US$ 12.7 million;
  • Expanded its online store coverage from 66 to 98 cities across Russia. 

Vladimir Chirakhov, Chief Executive Officer of Detsky Mir,commented: 

"2013 was a year of acceleration of top line growth and improved operational efficiency for Detsky Mir. While the Group had strong revenue growth stemming from the roll-out of new stores and steadily improving like-for-like sales to 13.4%, our focus throughout the year has been on optimising operational efficiency resulting in a sharp increase in the adjusted EBITDA margin to 8.1% in 2013 compared to 6.4% in 2012. 

Gross margin decreased slightly from the 2012 level as we expanded our product offering and actively pursued our price leadership strategy. This reduction has been more than offset at the EBITDA level as we aggressively improved operational efficiency by increasing the number of sales per square metre, optimising in-store personnel costs, improving logistics and reducing central office costs and rental expense as percentage of sales. 

While the Group's net debt increased mainly due to the buyout of 25%+1 of our shares from Sberbank, we remain fully committed to conservative financial policy, maintaining our leverage at a comfortable level. 

We are looking forward to 2014 as operational changes implemented in 2013 continue to bear fruit in 2014. We continue our nationwide expansion, introducing our new concept across the retail chain and vigorously pursuing further operational cost-savings at all levels of our business."

Download a full version of press release

Download results presentation

Financial statements

***

For further information:

Detsky Mir

Nadezhda Kiselyova,

Head of the PR Department

+ 7 (495) 781 08 09, ext. 2042

nkiseleva@detmir.ru

OJSC Detsky Mir is the largest children's goods retailer in Russia. The Group incorporates the nationwide retail store chain Detsky Mir, luxury centre Children's Gallery "Yakimanka", the Russian chain of ELC - Early Learning Center, and Detsky Mir and ELC Internet stores. As of December 31, 2013, Detsky Mir chain consisted of 224 Detsky Mir stores in Russia and Kazakhstan, and incorporated 27 ELC stores in Russia. The total selling space of the Group stores is c.320,000 sq.m. JSFC Sistema is the sole shareholder of Detsky Mir. For further information please refer to our corporate website:  www.det-mir.ru

JSFC Sistemais the largest publicly-traded diversified holding company in Russia and the CIS, which invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the Company reported revenues of US$ 9.3 billion for the third quarter of 2013, and total assets of US$ 44.4 billion as at September 30, 2013. Sistema's global depository receipts are listed under the symbol "SSA" on the London Stock Exchange. Sistema's ordinary shares are listed under the symbol "AFKS" on the MOEX Stock Exchange. Sistema was ranked number 315 in the 2012 edition of the Fortune Global 500 list. Website: www.sistema.com

Some statements in this document may contain assumptions or forecasts in relation to forthcoming events of Detsky Mir Group or JSFC Sistema. Such statements include words "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might", their negative forms or other similar expressions. It is important to note that these statements are only assumptions and actual events or results may differ materially from what was stated. We will not reconsider such statements in order to bring them in line with real events and circumstances that can occur after the stated date or reflect events not expected to occur. Due to many factors, theactual results of Detsky Mir Group and JSFC Sistema may differ materially from those contained in our assumptions or forecasts, including, among others, general economic conditions, competitive environment we are operating in, risks associated with operation in Russia, rapid technological and market changes in our lines of business, as well as many other risks directly related to Detsky Mir Group and JSFC Sistema.

distributed by