The results of General Shareholders Meeting of PJSC “Detsky Mir”

PJSC “Detsky Mir” (“Detsky Mir”, or “the Company) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces the results of its General Shareholders Meeting (GSM) that took place on December, 04 2017.

The general meeting of shareholders passed the following resolutions:

1. Distribution of RUB 2,194,830,000 in dividends for 9 months 2017 (RUB 2.97 per one ordinary share). The list of persons entitled to dividends will be made on December, 15 2017.

2. Aproving of the new version of the Regulations on Payment of Remuneration and Compensations to the members of the Board of Directors.

Information for the General Meeting of Shareholders of PJSC Detsky Mir

Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, published the information (materials) for the General Meeting of Shareholders to be held on 4 December 2017.

AGENDA OF THE MEETING:

1. Approval of the procedures for the General Meeting of Shareholders.
2. Distribution of profits and losses of PJSC Detsky Mir (including dividend payout) based on the results of 9M 2017. 
3. Approval of the Company’s internal regulations.

The Board of Directors recommended that the General Meeting of Shareholders approved the payment of dividends for 9M 2017 in the amount of RUB 2.97 per one ordinary share of PJSC Detsky Mir. The total recommended amount of dividends is RUB 2,194,830,000.

The Company’s Board of Directors also proposed setting 15 December 2017 as the record date for the purpose of dividends.

The General Meeting of Shareholders will be held in the format of letter ballot. Postal address for sending completed and signed ballot papers: 20/1 Bolshoi Balkansky per., 129090 Moscow.

Final date for submission of ballots: 4 December 2017.

Date of compiling the list of individuals and legal entities entitled to participate in the General Meeting of Shareholders: 11 November 2017.

Identification parameters of the shares the owners of which are entitled to participate in the General Meeting of Shareholders: ordinary registered shares, state registration number of the issue: 1-02-00844-А dd 11 February 2014.

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.

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 557 stores, including 516 Detsky Mir stores in Russia and 13 in Kazakhstan located in 183 different cities, as well as 41 ELC (Early Learning Centre) stores in Russia. The total selling space as of 30 September 2017 was approximately 631,000 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[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. 

(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 unaudited financial results for 3rd quarter & 9 months 2017

Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter and nine months ended 30 September 2017.

3Q 2017 FINANCIAL HIGHLIGHTS

• Group unaudited revenue increased by 19.8% year-on-year to RUB 24.6 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 6.1%[1], with the number of tickets growing by 10.5% and decline in the average ticket price by 4.0%.
• Gross profit increased by 20.5% year-on-year to RUB 8.3 bn, with a gross margin of 33.7%;
• Selling, general and administrative expenses as a share of revenue[2] decreased year-on-year from 22.1% to 21.3% driven by increased operational efficiency;
• Adjusted EBITDA[3] increased by 30.5% to RUB 3.0 bn for 3Q 2017 vs RUB 2.3 bn for 3Q 2016; Adjusted EBITDA margin reached 12.4%. EBITDA[4] amounted to RUB 2.7 bn;
• Adjusted profit for the period[5] rose by more than a half year-on-year to RUB 1.9 bn; Profit for the period amounted to RUB 1.6 bn;
• Net debt /Adjusted EBITDA LTM ratio was 1.4x as of 30 September 2017.

9M 2017 FINANCIAL HIGHLIGHTS

• Group unaudited revenue increased by 22.9% year-on-year to RUB 66.6 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%1, with the number of tickets growing by 11.4% and decline in the average ticket price by 3.8%.
• Gross profit increased by 22.0% year-on-year to RUB 22.0 bn, with a gross margin of 33.1%;
• Selling, general and administrative expenses as a share of revenue² decreased year-on-year from 24.6% to 23.5% driven by increased operational efficiency;
• Adjusted EBITDA³ increased by 35.3% to RUB 6.4 bn for 9M 2017 vs RUB 4.7 bn for 9M 2016; Adjusted EBITDA margin reached 9.6%. EBITDA⁴ amounted to RUB 5.7 bn;
• Adjusted profit for the period⁵ rose by more than a half year-on-year to RUB 2.9 bn; Profit for the period amounted to RUB 2.3 bn;

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

“Due to significant revenue growth and further expansion of the retail chain, Detsky Mir Group has strengthened its position as a leader in the children’s goods market.

Despite the difficult social and economic conditions, Detsky Mir continues to attract new customers and consolidate the market, achieving a double-digit like-for-like growth in the number of tickets in the 9 months of 2017. As a result of ramp ups of stores opened a year earlier and the growth of like-for-like sales, the Company’s revenue increased by 22.9%.   

The fundamental element of the strategy of Detsky Mir Group is still the improvement of operational efficiency and, as a result, an increase in the profitability of the business. Due to a reduction of SG&A expenses as a percentage of revenue by 1.2 percentage points, the Company managed to improve the EBITDA margin by 0.9 percentage points to 9.6%.

The adjusted net profit grew by more than a half year-on-year, including through the optimisation of the debt portfolio. 

The Republic of Kazakhstan remains one of the most promising geographic areas for the development of the Group’s business. The growth in like-for-like sales in 9M 2017 was 25%.  Detsky Mir Group has opened 3 stores in Kazakhstan since the beginning of the year. Thus, the chain is represented by 15 stores in 8 cities of the country. We plan to open at least 5 Detsky Mir stores in Kazakhstan by the end of 2017.”

KEY FINANCIAL & OPERATING HIGHLIGHTS FOR 3Q & 9M 2017 VS 2016 (UNAUDITED)

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 17:00 (Moscow time) / 14:00 (London time) / 10:00 (New York time) to discuss 3Q & 9M 2017 Unaudited IFRS Financial Results.

The dial-in numbers for the conference call are:

Russia

+7 495 221 6523

UK

+44 203 043 24 40

USA

+1 877 887 41 63

PIN: 79 48 90 57#

The conference title: “Detsky Mir Group – 9M 2017 Unaudited 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 557 stores, including 516 Detsky Mir stores in Russia and 13 in Kazakhstan located in 183 different cities, as well as 41 ELC (Early Learning Centre) stores in Russia. The total selling space as of 30 September 2017 was approximately 631,000 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.

Attachment A

EBITDA is calculated as profit for the period before income tax expense, foreign exchange loss, finance expense, finance income, depreciation and amortisation. EBITDA margin is calculated as EBITDA for a given period divided by revenue for such 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 financial performance of the Group. This represents an underlying financial measure adjusted for a 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]) Alternative 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) 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 9M 2017 and 9M 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 and 9M 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.

9m 2017 Unaudited IFRS Financial Results

Dear All,

We would like to announce that 9m 2017 Unaudited IFRS Financial Results will be published on October 30, 2017.

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, October 30, 2017

Time: 17:00 (Moscow) 15:00 (London) 10:00 (New York)

Speakers:

Vladimir Chirakhov, Chief Executive Officer

Farid Kamalov, Chief Operating Officer

Anna Garmanova, Chief Financial Officer

Sergey Levitskiy, Head of Investor Relations

Russia

+7 495 221 6523

UK

+44 203 043 24 40 

USA

+1 877 887 41 63

PIN: 79 48 90 57#

Detsky Mir Group announces financial results for 1st half 2017

KEY FINANCIAL RESULTS FOR 1H 2017

• Group Revenue increased by 24.8% to RUB 42.1bn, vs. RUB 33.7bn in 1H 2016;
• 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 of Detsky Mir stores in Russia grew by 7.9%[1] , with number of tickets growth of 12.0% and a decline in the average ticket price of 3.7%;
• Gross profit increased by 22.9% year-on-year to RUB 13.8bn, with a gross margin of 32.7%;
• Selling, general and administrative expenses as a share of revenue[2] decreased year-on-year from 26.2% to 24.7% driven by increased operational efficiency;
• Adjusted EBITDA[3] increased by 39.9% to RUB 3.3bn for 1H 2017 vs RUB 2.4bn for 1H 2016; Adjusted EBITDA margin reached 7.9%. EBITDA[4] amounted to RUB 3.0bn;
• Adjusted profit for the period[5] rose by more than a half year-on-year to RUB 978mln; Profit for the period amounted to RUB 705mln;
• Net debt /Adjusted EBITDA LTM ratio was 1.7x at the end of 1H 2017.
• In July 2017, Detsky Mir paid dividends in the amount of RUB 2.6bn.

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

“Detsky Mir continues to steadily consolidate the market of children’s goods, showing a high revenue growth rate of 24.8% in the first half of 2017. The impact of abnormally cold weather on the sale of clothing and footwear during the first two months of the second quarter was partially offset by a significant influx of new customers. As a result, we reached a double-digit growth rate of 12.0% in the number of transactions (the number of checks) in the like-for-like stores of Detsky Mir chain in Russia.

We continue to automate business processes, as higher operational efficiency remains one of the Company’s priorities.

In the first six months of 2017, we managed to reduce SG&A expenses as a percentage of revenue by c.1.4 p.p., getting significant discounts from lessors and improving labour productivity in the chain’s stores. As a result, adjusted EBITDA grew by 39.9% year-on-year.

The debt portfolio optimisation, including the effective placement of the bond issue in April 2017, also had a positive impact on the growth of the Company’s profitability. Adjusted net profit rose by more than a half year-on-year.

The Company continues its expansion in Kazakhstan this year: a new store was opened in Aktau in June, and at least four supermarkets will be opened in different cities of the country by the end of 2017.

As in previous years, the rate of business expansion will grow in the second half of the year. We will open a total of at least 70 stores in 2017.”

KEY FINANCIAL & OPERATING HIGHLIGHTS – 1H2017 VS 1H2016 (UNAUDITED)

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 17:00 pm (Moscow time) / 15:00 pm (London time) / 10:00 am (New York time) to discuss 1H 2017 Unaudited IFRS Financial Results.

The dial-in numbers for the conference call are:

Russia

+7 495 221 6523

UK

+44 203 043 24 40

USA

+1 877 887 41 63

PIN: 33405978#

The conference title: “Detsky Mir Group – 1H 2017 Unaudited 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 528 stores, including 475 Detsky Mir stores in Russia and 13 in Kazakhstan located in 181 different cities, as well as 40 ELC (Early Learning Centre) stores in Russia. The total selling space as of 30 June 2017 was approximately 604,000 square meters.

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

Detsky Mir Group’s shareholder structure is as follows: PJSC Sistema[14]  – 52.10%; Russia-China Investment Fund (RCIF) [15] – 14.03%; Other shareholders owning less than 5% of the shares – 33.87%. 

Lear more at www.detmir.ru, corp.detmir.ru or 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. EBITDA margin is calculated as EBITDA for a given period divided by revenue for such 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 financial performance of the Group. This represents an underlying financial measure adjusted for a 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]) Alternative 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]) Alternative 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 operation for at least 12 full calendar months.

([7]) LfL growth includes only DM stores in Russia that were in operation for one full prior calendar year. For example, a like-for-like comparison of retail sales between 1H 2017 and 1H 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 and 1H 2017.

([8]) Online store includes all online orders on the website – www.detmir.ru, including home delivery to customers and in store pick-up

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

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

([11]) 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.

([12]) Adjusted for the one-off effect relating to additional bonus accruals under the LTI program (together with related tax effects). See Attachment A.

([13])Adjusted Net debt is calculated as total borrowings less cash and cash equivalent / adjusted for the loan issued to CJSC “DM-Finance” (Sistema’s subsidiary) in 2013, fully repaid on February 27, 2017

([14]) 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.

([15]) 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.

Unaudited IFRS Financial Results of 1H 2017

We would like to announce that 1H 2017 Unaudited IFRS Financial Results will be published on August 24, 2017.

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: Thursday, August 24, 2017

Time: 17:00 (Moscow) 15:00 (London) 10:00 (New York)

Speakers:

Anna Garmanova, Chief Financial Officer

Sergey Levitskiy, Head of Investor Relations

Russia

+7 495 221 65 23

UK

+44 203 043 24 40  

USA

+1 877 887 41 63

PIN: 33 40 59 78#

The Board of Directors of PJSC “Detsky Mir” approved the new 3-year Long-Term Incentive Plan for the Company’s senior management

A Long Term Incentive Plan (LTIP) for the senior management of Detsky Mir has been approved by the Board of Detsky Mir PJSC (“Detsky Mir”, or “the Company) (MOEX: DSKY) with a view to further encouraging continuing focus on creation of sustainable value for all shareholders. The LTIP is developed in accordance with the previously announced plans to update the Detsky Mir’s incentive program as a public company and is based on the best market practices.

Under the new LTIP, which covers the three-year period to February 2020, the third anniversary of the Company’s IPO, senior management in continuing employment by the Company as of that anniversary will be eligible for share grants from a share pool equivalent in value to up to 2% of the increase in the Company’s stock market value (including dividend payments) over the period. The LTIP will include more than 20 key employees of the Company.

The LTIP also provides for cash payments expected to total around RUB 500 million (plus any social taxes); of this amount, around RUB 250 million will be paid in January 2018, while payment of the balance remains subject to Board approval.

Detsky Mir Group announces operating results for 1st half 2017

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 first half ended 30 June 2017.                                 

KEY OPERATING RESULTS FOR 1H 2017

• Group unaudited revenue increased by 24.8% to RUB 42.1bn, vs. RUB 33.7bn in 1H 2016;
• 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 7.9%[1], with the number of tickets growing by 12.0% and a decline in the average ticket price by 3.7%;
• Group stores amounted to 528[2] with total retail floorspace of approximately 604,000 sq. m. in the first half of 2017, twelve Detsky Mir branded stores[3] were opened.

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

“The overall consumer market demonstrated a negative trend in the first half of 2017. Despite the fact that the Company’s revenue in “Clothing” and “Footwear” categories was impacted by the cold weather in Central Russia, Detsky Mir Group managed to achieve a significant revenue growth rate of 24.8%. The consolidated unaudited revenue amounted to RUB 42.1bn. One of the key drivers behind the revenue growth was the like-for-like sales growth rate of 7.9%, resulting from the 12.0% growth in the number of transactions (the number of tickets). To increase its LFL sales growth, the Company will launch a number of marketing initiatives within a year.

As a result of the first half of 2017, gross margin is expected to remain at the level of same period of the previous year. The unaudited adjusted EBITDA growth was more than 35%.

In 2017, Detsky Mir Group will continue to implement its strategy aimed at market consolidation: we plan to open at least 70 new super- and hypermarkets this year, including at least 5 stores in Kazakhstan.

Twelve new Detsky Mir stores were opened in the reporting period, including four stores in the Moscow region and one store in Kazakhstan. The chain’s first stores were opened in such cities as Pervouralsk, Oktyabrsky and Aktau.

Rapid development of e-commerce remains a key trend in the consumer market, including the segment of children’s goods, therefore Detsky Mir pays a lot of attention to the development of its own online store. In the first six months of 2017 the online segment’s revenue increased by 63.5% year-on-year. The key driver was the growth of conversion“.

***

Conference call information

Detsky Mir’s management will host a conference call today at 17:00 pm (Moscow time) / 3:00 pm (London time) / 10:00 am (New York time) to discuss 1H 2017 Trading Update.

The dial-in numbers for the conference call are:

Russia

+7 495 221 6523

UK

+44 203 0432440

USA

+1 877 8874163

PIN: 67528794#

The conference title: “Detsky Mir Group – 1H 2017 Trading Update”.

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 528 stores, including 475 Detsky Mir stores in Russia and 13 in Kazakhstan located in 181 different cities, as well as 40 ELC (Early Learning Centre) stores in Russia. The total selling space as of 30 June 2017 was approximately 604,000 square meters.

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

Detsky Mir Group’s shareholder structure 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 or 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])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.

([2]) The number of ELC stores amounted to 40 due to the relocation of retail properties. The opening of new stores is scheduled for the second half of 2017.

([3]) In 1H 2017, four Detsky Mir stores were closed for further relocation.

([4]) 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 1H 2017 and 1H 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 and 1H 2017.

([5]) 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.

([6]) 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.

Purchase of Detsky Mir’s ordinary shares

PJSC “Detsky Mir” (“Detsky Mir”, or “the Company) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces that from the 23rd to the 23th of June 2017, its 100% owned subsidiary, JSC “Detsky Mir-Orel”, acquired 433,670 of Detsky Mir’s ordinary shares, representing 0.06% of Detsky Mir’ issued share capital, for RUB 42.9 million. The shares were purchased for the Company’s management long-term incentive program.

The results of Annual General Meeting of Shareholders of PJSC “Detsky Mir”

PJSC “Detsky Mir” (“Detsky Mir”, or “the Company) (MOEX: DSKY), Russia’s largest specialized children’s goods retailer, announces the results of its Annual General Meeting of shareholders (AGM) that took place on June, 28, 2017.

The general meeting of shareholders passed the following resolutions:

1. Distribution of RUB 2.57bn in dividends for FY 2016 (RUB 3.48 per one ordinary share). The list of persons entitled to dividends will be made on July, 17, 2017.

2. Election of the Board of Directors of PJSC Detsky Mir as follows:

1. Christopher Baxter


2. Vitaly Vavilov  


3. Alexander Gorbunov


4. Artyom Zasursky  


5. Andrey Kamensky


6. James McArtur  


7. Christopher Parks  


8. Olga Ryzhkova  


9. Gevork Sarkisyan  


10. Vladimir Chirakhov

3. Approval of the annual report and annual financial statements for FY 2016 and revised Charter of PJSC Detsky Mir.

4. Election of CJSC Deloitte and Touche CIS as auditor of the RAS and IFRS financial statements of Detsky Mir for FY 2017.

5. Election of the Audit Review Commission as follows:

1. Marina Zhuravleva


2. Lyudmila Ivanova

3. Alexander Patyukov