Detsky Mir announces date of AGM

16 April 2018. Moscow, Russia. – Detsky Mir PJSC (“Detsky Mir” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces that its Board of Directors at a meeting on 13 April 2018 approved a resolution to convene the Annual General Meeting of Shareholders (AGM) on 18 May 2018. The record date for shareholders eligible to participate in the AGM is 26 April 2018.

The agenda of the AGM includes among others the following items: approval of the annual report and annual financial statements for 2017; approval of dividends; election of members of the Company’s Board of Directors and Audit Commission; approval of the corporation charter and the auditors.

The Board of Directors recommended that the AGM approve a final dividend for the 2017 financial year of RUB 2.9 billion, representing a payment of RUB 3.88 per ordinary share. As a result, the total amount of the interim and final dividends paid for 2017 will be RUB 5.1 billion, which is equivalent to a dividend yield of 7.6% based on the average price of Company’s shares in 2017.

The Board of Directors also recommended that the AGM set the record date establishing eligibility to receive the dividend as 29 May 2018.

The materials for the General Meeting of Shareholders will be available at the Company’s website corp.detmir.ru and by request from the Company’s corporate secretariat at: 3/6 3rd Nizhnelikhoborsky proyezd, 127238 Moscow after 28 April 2018.

Detsky Mir Group Announces Operating Results for 1st Quarter 2018

12 April 2018. Moscow, Russia. – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces its operating results for the first quarter ended 31 March 2018.

1Q 2018 OPERATING HIGHLIGHTS 

• Group unaudited revenue increased by 14.0% year-on-year to RUB 24.0 bn.
  • Online revenue[1] increased by 64.9% year-on-year to RUB 1.5 bn.
• Like-for-like sales at Detsky Mir stores in Russia grew by 5.1%[2], with the number of tickets growing by 8.8% and decline in the average ticket price by 3.4%.
• Detsky Mir opened 5[3] new branded stores in the 1^st quarter 2018. The Group continued the development of the ELC chain, opening new stores in Moscow and Krasnodar, preserving the focus on optimizing business processes and improving the profitability of the business. Total stores of the Group amounted to 625[4] as of 31 March 2018.
• Total selling space increased by 15.1% to c. 686,000 sq. m.   
• The number of active Detsky Mir loyalty program cardholders increased by 24% year-on-year to 18.8 mln with c.76% of total sales made using the loyalty card.

MATERIAL EVENTS IN THE 1^st QUARTER 2018 

• MTS Bank and Detsky Mir launched co-branded cards with increased bonuses. Now customers can make purchases with a credit or prepaid card ” Detsky Mir – MTS Bank” and pay bonuses up to 100% of the cost of goods in Detsky Mir stores. The main advantage of the cards is that bonuses are accrued when paying with a card not only in Detsky Mir stores, but also in any retail chains.

Vladimir Chirakhov, PJSC Detsky Mir Chief Executive Officer, said:

“Despite the ongoing slowdown in inflation and a drop in the real disposable income of households, as well as the high base of the first quarter of the previous year, the company had a successful New Year season and significantly increased its turnover during the gender holidays in February and March. As a result, the consolidated unaudited revenue of the company rose by 14.0% up to RUB 24.0bn in Q1 2018. Detsky Mir’s turnover increased substantially by rum-up of the stores opened in 2017-2016, as well as like-for-like sales growth of 5.1% on the back of high traffic levels. 

The company continues developing its business in Kazakhstan: revenue doubled year-on-year and like-for-like sales went up 30%. 

Detsky Mir remains the most popular retail chain selling children’s goods in Russia, which enables the company to sign contracts with the largest toy producers and offer the best product range to the customers. For example, in Q1 2018 Detsky Mir entered into a contract with one of the world’s major toy producers Spin Master to sell interactive toys Hatchimals and Paw Patrol. Moreover, Detsky Mir has become the first retailer to launch an iconic brand Matchbox by Mattel.  

Although most of the new stores are traditionally opened in the second half of the year (a high season), in Q1 we opened 5 Detsky Mir stores, with such towns as Murom and Golitsyno (the Moscow region) added to the company’s geographic footprint. The company is planning to launch at least 70 new stores in 2018.

The online store and services remain the focus of the company’s development. We continuously improve the quality of customer service (Service Level) at all stages of order processing. The share of online orders ready for pick-up within one hour in any retail store of the chain increased from 45% to 80% in the reporting period. In Q1, the share of the online segment in the Group’s total revenue continued growing, having increased to 6%.”

Additional information is available on the Company’s corporate website www.corp.detmir.ru

***

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 625 stores, including 579 Detsky Mir stores in Russia and Kazakhstan located in 221 cities, as well as 46 ELC (Early Learning Centre) stores in Russia. The total selling space as of 31 March 2018 was approximately 686,000 square meters.

In accordance with the audited Financial Statements under IFRS Group revenue amounted to RUB 97.0 bn for FY 2017. Adjusted EBITDA totaled RUB 10.7 bn and adjusted profit for the period amounted to RUB 5.5 bn for FY 2017. 

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSC Sistema[5]  – 52.10%, Russia-China Investment Fund (RCIF) [6] – 14.03%, other shareholders owning less than 5% of the shares – 33.87%.  

Lear more at www.detmir.ru, corp.detmir.ru, elc-russia.ru.

Disclaimer

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) This channel includes online orders at www.detmir.ru, including in-store pick-up.

([2]) Like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

([3]) In Q1 2018, Detsky Mir closed four stores, including two stores in which a fire occurred.

([4]) The number of ELC stores amounted to 46.

(8) PJSC 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. Sistema’s global depositary receipts are listed under the symbol SSA on the London Stock Exchange. Sistema’s ordinary shares are listed under the ticker AFKS on Moscow Exchange.

(9) RCIF is an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), hold its stake in PJSC Detsky Mir through its funds: FLOETTE HOLDINGS LIMITED and EXARZO HOLDINGS LIMITED.

PJSC DETSKY MIR REPORTED NET PROFIT UNDER RAS OF RUB 5.1 BN FOR THE FULL YEAR 2017

02 April 2018. Moscow, Russia. – PJSC Detsky Mir (“Detsky Mir” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces its FY 2017 Net profit in accordance with Russian Accounting Standard (RAS) for the distribution of annual dividends.

Detsky Mir Management will recommend the Board of Directors and Shareholders of the Company to distribute all net profit as dividends according to the results of 2017.

Taking into account the paid interim dividends for 9 months of 2017, the retained earnings increased by 11.4% y-y to RUB 2,864 mln for 4Q 2017.

Additional information is available on the Company’s corporate website www.corp.detmir.ru

***

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 622 stores, including 556 Detsky Mir stores in Russia and 22 in Kazakhstan located in 219 cities, as well as 44 ELC (Early Learning Centre) stores in Russia. The total selling space as of 31 December 2017 was approximately 688,000 square meters.

In accordance with the audited Financial Statements under IFRS Group revenue amounted to RUB 97.0 bn for FY 2017. Adjusted EBITDA totaled RUB 10.7 bn and adjusted profit for the period amounted to RUB 5.5 bn for FY 2017.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSC Sistema[1]  – 52.10%, Russia-China Investment Fund (RCIF) [2] – 14.03%, other shareholders owning less than 5% of the shares – 33.87%. 

Lear more at www.detmir.ru, corp.detmir.ru, elc-russia.ru.

Disclaimer

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.

(8) PJSC 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. Sistema’s global depositary receipts are listed under the symbol SSA on the London Stock Exchange. Sistema’s ordinary shares are listed under the ticker AFKS on Moscow Exchange.

(9) RCIF is an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), hold its stake in PJSC Detsky Mir through its funds: FLOETTE HOLDINGS LIMITED and EXARZO HOLDINGS LIMITED.

Detsky Mir Group announces audited financial results for the full year 2017

05 March 2018. Moscow, Russia. – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces its audited financial results in accordance with International Financial Reporting Standards (IFRS) for the full year ended 31 December 2017.

4Q 2017 FINANCIAL HIGHLIGHTS

• Group revenue increased by 19.9% year-on-year to RUB 30.4 bn;
• In accordance with the methodology of calculation of like-for-like comparisons, which would be closer to methodologies used in operating and financial reporting of publicly traded food retailers in Russia, like-for-like revenue at Detsky Mir stores in Russia grew by 7.2%[1], with the number of tickets growing by 14.1% and the average ticket size declining by 6.0%.
• Gross profit increased by 19.0% year-on-year to RUB 10.8 bn, with a gross margin of 35.4%;
• Selling, general and administrative expenses as a percentage of revenue[2] decreased year-on-year from 21.8% to 21.4% driven by increased operational efficiency;
• Adjusted EBITDA[3] increased by 22.9% to RUB 4.3 bn for 4Q 2017 from RUB 3.5 bn for 4Q 2016; adjusted EBITDA margin reached 14.1%, while EBITDA[4] amounted to RUB 4.2 bn;
• Adjusted profit for the period[5] rose by 26.9% year-on-year to RUB 2.6 bn, while profit for the period amounted to RUB2.5 bn;
• Net debt /Adjusted EBITDA ratio decreased to 1.0x as of 31 December 2017 from 1.4x as of 31 December 2016.

FY 2017 FINANCIAL HIGHLIGHTS

• Group revenue increased by 21.9% year-on-year to RUB 97.0 bn;
• In accordance with the methodology of calculation of like-for-like comparisons, which would be closer to methodologies used in operating and financial reporting of publicly traded food retailers in Russia, like-for-like revenue at Detsky Mir stores in Russia grew by 7.2%1, with the number of tickets growing by 12.2% and the average ticket size declining by 4.4%.
• Gross profit increased by 21.0% year-on-year to RUB 32.8 bn, with a gross margin of 33.8%;
• Selling, general and administrative expenses as a percentage of revenue² decreased year-on-year from 23.7% to 22.8% driven by increased operational efficiency;
• Adjusted EBITDA³ increased by 30.0% to RUB 10.7 bn for FY2017 from RUB 8.2 bn for FY2016, adjusted EBITDA margin reached 11.0%, while EBITDA⁴ amounted to RUB 9.8 bn;
• Adjusted profit for the period⁵ rose by almost a half year-on-year to RUB 5.5 bn, while profit for the period amounted to RUB 4.8 bn;

Vladimir Chirakhov, PJSC Detsky Mir Chief Executive Officer, said:

“Detsky Mir Group had a successful first year in the status of a public company. The steady progress made by the company helped increase the appeal of Detsky Mir for business community.

Despite Russia’s retail market being under pressure, Detsky Mir managed to meet the expectations of its shareholders: the company outperformed its retail chain development plan by opening 104 stores and achieved the highest growth of like-for-like sales among publicly-traded Russian retailers. As a result, Detsky Mir’s consolidated revenue in 2017 increased by 22% to RUB 97.0bn, enabling the company to strengthen its leadership in the Russian children’s goods retail market.   

Detsky Mir’s sales volumes were also boosted by the successful implementation of projects aimed at improving online sales and resulting in a more than 50% increase in revenue from the e-commerce business. In 2017, Detsky Mir’s online store had more than 133m visits and delivered more than 2.4m online orders. The share of Detsky Mir’s online business in total revenue increased to 4.8%.

In 2017, the company continued to pursue its strategy aimed at enhancing operational efficiency, first of all, by improving productivity and cutting rental costs. Automation of business processes and introduction of new software enabled the company to cut time spent per transaction and reduce labour input per business process. As a result, selling, general and administrative expenses as percentage of revenue decreased by 0.9 p.p., with adjusted EBITDA margin reaching a record high of 11%.  

Moreover, thanks to its “asset light” business strategy, i.e. development of the retail chain on the basis of a rental business model, Detsky Mir managed to increase returns on invested capital to 86% in 2017.  

Detsky Mir increased its adjusted profit for the period by almost 50% to RUB 5.5bn and distributed RUB 4.8bn in dividends, a record-high amount.

The Company will continue acting as a consolidator of the children’s goods retail market due to its unique and diversified product range, affordable prices and a well-developed online sales channel. Detsky Mir retail chain has considerable growth potential in Russia and Kazakhstan and we plan to open at least 250 more stores in the medium term. Our management will do its best to ensure that our shareholders get a high return on their investments in the company.”

Guidance

The company’s management team plans to open at least 250 new Detsky Mir stores with a minimum IRR of 40% in the next 4 years. In 2018, the company expects that its like-for-like sales in Russia can grow faster than the children’s goods market in general and remain at single digits due to an increase in the number of tickets. 

Another key strategic goal of the Group is boosting its operational efficiency and maintaining adjusted EBITDA margin at double-digit levels in the medium term.    

Within the framework of Russian accounting standards the company’s management will recommend distributing the whole profit for the period as dividends according to the results of 2017.

KEY FINANCIAL & OPERATING HIGHLIGHTS

Key Operating Highlights

Key Financial Highlights

Additional information is available on the Company’s corporate website www.corp.detmir.ru

***

Conference Call Information

Detsky Mir’s management will host a conference call today at 18:00 (Moscow time) / 15:00 (London time) / 10:00 (New York time) to discuss FY 2017 Audited IFRS Financial Results.

The dial-in numbers for the conference call are:

Russia

+7495 646 93 15

8 800 500 98 63 (toll-free)

UK

+44 207 194 37 59

0800 376 61 83 (toll-free)

USA

+1 646 722 49 16

8442 860 643 (toll-free)

PIN: 37 027 932#

The conference title: “Detsky Mir Group – FY 2017 Audited IFRS Financial Results”.

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 622 stores, including 556 Detsky Mir stores in Russia and 22 in Kazakhstan located in 219 cities, as well as 44 ELC (Early Learning Centre) stores in Russia. The total selling space as of 31 December 2017 was approximately 688,000 square meters.

In accordance with the audited Financial Statements under IFRS Group revenue amounted to RUB 97.0 bn for FY 2017. Adjusted EBITDA totaled RUB 10.7 bn and adjusted profit for the period amounted to RUB 5.5 bn for FY 2017.

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSC Sistema[7]  – 52.10%, Russia-China Investment Fund (RCIF) [8] – 14.03%, other shareholders owning less than 5% of the shares – 33.87%. 

Lear more at www.detmir.ru, corp.detmir.ru, elc-russia.ru.

Disclaimer

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.

Attachment A

EBITDA is calculated as profit for the period before income tax expense, foreign exchange loss, finance expense, finance income, depreciation and amortisation, as well as profit from taking control in the subsidiary. EBITDA margin is calculated as EBITDA for a given period divided by revenue for the same period expressed as a percentage. Our EBITDA may not be similar to EBITDA measures of other companies; is not a measurement under accounting principles generally accepted under IFRS and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of profit and loss. We believe that EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of businesses and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. EBITDA is commonly used as one of the bases for investors and analysts to evaluate and compare the periodic and future operating performance and value of companies. 

Adjusted EBITDA and Adjusted profit for the period are used to evaluate the financial performance of the Group. This represents an underlying financial measure adjusted for one-off gains and losses. We believe that adjusted measures provide investors with additional useful information to measure our underlying financial performance, particularly from period to period, because these measures are exclusive of certain one-off gains and losses.

EBITDA and Adjusted EBITDA can be reconciled to our consolidated statements of profit and loss as follows:

Adjusted profit for the period can be reconciled to our consolidated statements of profit and loss as follows:

([1]) Like-for-like average ticket growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

([2]) Selling, general and administrative expenses exclude D&A expenses and adjusted for share-based compensation and cash bonuses under the LTI program

([3]) Adjusted EBITDA is calculated as profit for the period before income tax, FX loss, net finance expense, D&A; adjusted for share-based compensation and cash bonuses under the LTI program. See Attachment A.

([4]) See Attachment A for definitions and reconciliation of EBITDA to IFRS financial measures.

([5]) Adjusted for additional bonus accruals under the LTI program (together with related tax effects). See Attachment A.

(6) Like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

(8) PJSC 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. Sistema’s global depositary receipts are listed under the symbol SSA on the London Stock Exchange. Sistema’s ordinary shares are listed under the ticker AFKS on Moscow Exchange.

(9) RCIF is an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), hold its stake in PJSC Detsky Mir through its funds: FLOETTE HOLDINGS LIMITED and EXARZO HOLDINGS LIMITED.

Analyst and investor conference call for full year 2017 audited ifrs financial results

We would like to announce that FY 2017 Audited IFRS Financial Results will be published on March 05, 2018.

On the same day, Detsky Mir Group will also hold a conference call for investors and analysts on the results.

Please find the details of the conference call below.

Date: Monday, March 05, 2018

Time: 18:00 (Moscow) 15:00 (London) 10:00 (New York)

Speakers:

•   Vladimir Chirakhov, Chief Executive Officer
•   Anna Garmanova, Chief Financial Officer
•   Sergey Levitskiy, Head of Investor Relations

Russia

+7495 646 93 15

8 800 500 98 63 (toll-free)

UK/ International

+44 207 194 37 59

0800 376 61 83 (toll-free) 

USA

+1 646 722 49 16

8442 860 643 (toll-free)

PIN

37 027 932#

Detsky Mir Group announces operating results for 4th quarter & full year 2017

17 January 2018. Moscow, Russia. – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces its operating results for the fourth quarter and twelve months ended 31 December 2017.                       

4Q 2017 OPERATING HIGHLIGHTS

• Group unaudited revenue increased by 19.8% year-on-year to RUB 30.3 bn.
  • Online revenue[1] increased by 79.5% year-on-year to RUB 2.0 bn.
• In accordance with the methodology of calculation of like-for-like comparisons, which would be closer to methodologies used in operating and financial reporting of publicly traded food retailers in Russia, like-for-like sales at Detsky Mir stores in Russia grew by 7.2%[2], with the number of tickets growing by 14.1% and decline in the average ticket price by 6.0%.
• Detsky Mir opened 62[3] new branded stores in the 4^th quarter 2017. Group stores amounted to 622[4] as of 31 December 2017.
• Total selling space increased by 15.4% to c. 688,000 sq. m.   
• The number of active Detsky Mir loyalty program cardholders increased by 24% year-on-year to 18.1 mln with c.73% of total sales made using the loyalty card.

FY 2017 OPERATING HIGHLIGHTS  

• Group unaudited revenue increased by 21.9% to RUB 97.0 bn vs. RUB 79.5 bn for FY 2016.
  • Online revenue¹ increased by 67.0% year-on-year to RUB 4.6 bn.
• In accordance with the methodology of calculation of like-for-like comparisons, which would be closer to methodologies used in operating and financial reporting of publicly traded food retailers in Russia, like-for-like sales at Detsky Mir stores in Russia grew by 7.2%², with the number of tickets growing by 12.2% and a decline in the average ticket price by 4.4%.
• Detsky Mir opened 104[5] new branded stores for FY 2017.

MATERIAL EVENTS IN THE 4^th QUARTER 2017

• In December 2017, Detsky Mir distributed dividends of RUB 2.2 bn on the result of 9 months 2017.
• Acting under the LTIP, Detsky Mir implemented buyback of 680,470 Detsky Mir ordinary shares for RUB 67 mln, which comprises 0.09% share capital of the Company.
• As part of the program to improve operational efficiency, Detsky Mir acquired its own store on Vernadsky Prospect, which is one of the key locations in Moscow and is the top-5 chain store in terms of sales. The deal price was RUB 550 mln including VAT. Detsky Mir plans to reconstruct the building and launch on its basis the largest modern children’s goods store in the South-West of Moscow.

Vladimir Chirakhov, PJSC Detsky Mir Chief Executive Officer, said:

“The New Year season and the fourth quarter overall made a significant contribution to yet another year of Detsky Mir’s record sales. Our focus on a diversified and affordable product range and our long-standing and broad presence in the market enabled us to increase the company’s consolidated unaudited revenue by 22% up to RUB 97.0bn in 2017. At the same time, we maintained a high level of EBITDA margin. According to the preliminary data of unaudited financial statements, Detsky Mir’s adjusted EBITDA rose by more than 26%.

In the last quarter, we opened 62 Detsky Mir stores, hitting a new all-time high. In 2017, the company launched the total of 104 new stores of the chain. The most rapid growth was delivered in the Moscow region with 23 new stores added to the retail chain. As of the end of 2017, the chain had a total of 166 supermarkets in the Moscow region and 34 stores in St. Petersburg.

41 Detsky Mir stores were opened in some cities of Russia and Kazakhstan for the first time: the company made an entry into the markets of Pervouralsk, Michurinsk, Gudermes, Kaspiysk, Maikop, Solikamsk, Tuapse, Neftekamsk, Salavat, Pushkino and many other cities. 

Detsky Mir continued its expansion in the Republic of Kazakhstan by opening 10 new supermarkets and virtually doubling the retail chain in this country. The company’s stores are now operating in Aktau, Zhanaozen, Atyrau, Petropavlovsk and Semey. The company expanded its chain in Almaty, Uralsk, Shymkent and Kostanay. As a result, Detsky Mir chain in Kazakhstan now has 22 stores operating in 12 cities. In 2017, like-for-like sales in tenge increased by 25%.

The company’s key strategic goals include further expansion of its customer base and market consolidation. Detsky Mir’s 7.2% like-for-like sales growth in Russia was achieved due to the double-digit increase in the number of customers, confirming the company’s status of the key consolidator in the children’s goods market.

Detsky Mir keeps its focus on e-commerce by making continuous improvements in user experience and increasing the quality of online services. The online segment remains the fastest growing sales channel of the Group, in Q4 the revenue of the online segment increased by 80%.

We are planning to proceed with the expansion of our retail chain in all regions of the company’s operations and aim to open at least 200 new stores in the next three years, as well as continue pursuing our omni-channel strategy using its extensive chain of stores and opportunities of the fast-growing online market.”

Guidance

New openings guidance, as well as expectations for the LFL sales growth and the level of business operating profitability for 2018 will be published in March 2018 after the FY 2017 financial result announcement.

 ***

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 622 stores, including 578 Detsky Mir stores located in 207 Russian cities and in 12 Kazakhstani cities, as well as 44 ELC (Early Learning Centre) stores in Russia. The total selling space as of 31 December 2017 was approximately 688,000 square meters.

In accordance with the audited Financial Statements under IFRS Group revenue amounted to RUB 79.5 bn for the full year 2016. Adjusted EBITDA totaled RUB 8.2 bn and Adjusted profit for the period amounted to RUB 3.8 bn for 2016.

Detsky Mir Group’s shareholder structure is as follows: PJSC Sistema[8]  – 52.10%; Russia-China Investment Fund (RCIF) [9] – 14.03%; Other shareholders owning less than 5% of the shares – 33.87%. 

Lear more at www.detmir.ru, corp.detmir.ru, elc-russia.ru.

Disclaimer

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “intend”, “will”, “could,” “may” or “might” the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.

([1]) This channel includes online orders at www.detmir.ru, including in-store pick-up.

([2]) Alternative like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

([3]) In Q4 2017, Detsky Mir closed one store as part of the Company’s ongoing rationalisation programme.

([4]) The number of ELC stores amounted to 44

([5]) In 2017, Detsky Mir closed six stores as part of the Company’s ongoing rationalisation programme.

(6) Alternative like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

(7) LfL growth includes only DM stores in Russia that were in operations for one full prior calendar year. For example, the like-for-like comparison of retail sales between 2017 and 2016 would include revenue of all Detsky Mir stores that were opened prior to 31 December 2015 and that were in operation during the entirety of 2016 –  2017

(8) PJSC 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. Sistema’s global depositary receipts are listed under the symbol SSA on the London Stock Exchange. Sistema’s ordinary shares are listed under the ticker AFKS on Moscow Exchange.

(9) RCIF is an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), hold its stake in PJSC Detsky Mir through its funds: FLOETTE HOLDINGS LIMITED and EXARZO HOLDINGS LIMITED.

Withdrawal of Standard &Poor’s Corporate Credit Rating

21 December 2017, Moscow, Russia. Detsky mir PJSC (the “Company” or “Detsky Mir”), Russia’s largest specialised children’s goods retailer, announces that at the request of the Company, Standard & Poor’s corporate credit rating was withdrawn. Detsky Mir made the decision in connection with the absence of necessity to maintain the international corporate credit rating and the debt market reorientation to Russian ratings under Federal Law No. 222-FZ.

For additional information:

***

Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan.

This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States.  The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.

This communication does not constitute an offer of the securities to the public in the United Kingdom.  No prospectus has been or will be approved in the United Kingdom in respect of the securities.  This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the “Order”); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as “Relevant Persons”).  Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons.  Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

Ad-Hoc Notice

15 December 2017, Moscow, Russia. Detsky mir PJSC (the “Company” or “Detsky mir”), Russia’s largest specialised children’s goods retailer, announces that in connection with the cancelation of the previously announced offering of Detsky mir shares, Sistema PJSFC continues to own 52.1% in the share capital of Detsky mir.

For additional information:

Nadezhda Kiseleva

Head of Public Relations

Office: +7-495-781-0808, ext. 2041

Cell: +7-985-992-7857

nkiseleva@detmir.ru

Sergey Levitskiy

Head of Investor Relations

Office: +7-495-781-0808 ext. 2315


Cell: +7-903-971-4365

slevitskiy@detmir.ru

***

Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan

This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States.  The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.

This communication does not constitute an offer of the securities to the public in the United Kingdom.  No prospectus has been or will be approved in the United Kingdom in respect of the securities.  This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the “Order”); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as “Relevant Persons”).  Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons.  Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

Sistema and RCIF successfully complete an offering of Detsky mir shares

12 December 2017, Moscow, Russia. Public Joint Stock Company “Detsky mir” (the “Company” or “Detsky mir”), Russia’s largest specialised children’s goods retailer, announces that Sistema PJSFC (“Sistema”), which is the majority shareholder of the Company, and the Russia-China Investment Fund (“RCIF”) have successfully completed accelerated bookbuilding offering (the “Offering”) of 46.5 million ordinary shares in Detsky mir, representing approximately 6.3% of the Company’s share capital.

The Offering was priced at RUB 90 per share.

Following the Offering, the Company’s free float is expected to reach approximately 40.2%, increasing the liquidity of Detsky mir’s stock. Sistema will retain 47.1% in the share capital of Detsky mir. RCIF, the second largest shareholder of Detsky mir, will own 12.7% of the Company’s ordinary shares.

For additional information:

***

Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan.

This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States.  The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.

This communication does not constitute an offer of the securities to the public in the United Kingdom.  No prospectus has been or will be approved in the United Kingdom in respect of the securities.  This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the “Order”); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as “Relevant Persons”).  Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons.  Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

Sistema and Russia-China Investment Fund announce launch of offering for up to 8% of Detsky mir shares

11 December 2017, Moscow, Russia. Public Joint Stock Company “Detsky mir” (the “Company” or “Detsky mir”), Russia’s largest specialised children’s goods retailer, announces that Sistema PJSFC (“Sistema”), which is the majority shareholder of the Company, and the Russia-China Investment Fund (“RCIF”) have announced the launch of an offering of up to 8% of the Detsky mir shares by way of accelerated book building (the “Offering”).

Completion of this transaction by Sistema may result in a decrease of Sistema’s shareholding below 50%+1 voting shares in the charter capital of Detsky mir, which gives certain eligible creditors of Detsky mir the right to request early repayment under their respective debt facility agreements.

As of the date of this announcement Detsky mir discloses that it has received written confirmations from all of such creditors indicating their consent to amend respective covenants in debt facility agreements, so that the completion of the Offering would not trigger early repayments. Respective amendments to the contractual credit documentation are expected to be signed by 31 December 2017.

Following the Offering, Sistema is expected to remain the majority shareholder of Detsky mir and anticipates that it will continue to consolidate Detsky mir in Sistema Group IFRS financial statements, even in the event that Sistema’s shareholding decreases below 50% of the Company’s share capital as a result of the Offering. The Offering is not expected to cause any material changes in the Company’s ongoing operations and business activities, nor in the Company’s governance including the composition of the Company’s Board of Directors.

Sistema’s announcement is available at www.sistema.com.

***

Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan

This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States.  The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.

This communication does not constitute an offer of the securities to the public in the United Kingdom.  No prospectus has been or will be approved in the United Kingdom in respect of the securities.  This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the “Order”); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as “Relevant Persons”).  Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons.  Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the Prospectus Directive) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.