“Cyberpowerinc-2019” the Company “Detsky Mir” has doubled revenue

4.02.2019 Moscow, Russia – «Detsky Mir» Group of Companies (MOEX: DSKY) – Russia’s largest retail operator of children’s goods, announces the sales results for the “Cyber Monday” action.

The sale of  «Cyber Monday-2019» took place in the online store detmir.ru from 27 to 330 January. About 12 thousand items of goods were available to buyers: toys, clothes, shoes, baby food, diapers, and much more, discounts for which reached 80%. 

The best sellers were products from such categories as “Clothes”, “Shoes”, “Diapers”

During the days of the campaign, 1.4 million users visited the detmir.ru website, traffic was 2.9 million sessions.

«On the days of «Cyber Monday-2019» buyers placed 197 000 orders. This is 2 times more than in the same period last year. At the same time, «Cyber Monday-2019» sales growth was 2,5 times higher than usual sales in January 2019» – commented Nadezhda Kiseleva, head of the department for external and internal communications of  «Detsky Mir» Group of Companies.

Detsky Mir Group Announces Operating Results for Q4 & FY 2018

17 January 2019. Moscow, Russia. – Detsky Mir Group (“Detsky Mir” or “the Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer and a Sistema company (LSE: SSA, MOEX: AFKS), announces its operating results for the fourth quarter and twelve months ended 31 December 2018.                

Q4 2018 OPERATING HIGHLIGHTS[1]

• Group unaudited revenue increased by 13.0% year-on-year to RUB 34.3 bn.
  • Online revenue[2] increased by 82% year-on-year to RUB 3.6 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 3.0%. The number of tickets grew by 5.4% while the average ticket price decreased by 2.3%.
• Detsky Mir opened 63 new branded stores in Q4 2018. The Group had 743 stores as of 31 December 2018.[4]
• Total selling space increased by 11.6% year-on-year to c. 768,000 sq. m.   
• The number of total outstanding Detsky Mir loyalty cards increased by 14% year-on-year to 20.7 mln, while the number of active loyalty cardholders[5] was 9.7 mln. Transactions using the loyalty card accounted for 70% of total sales.

 FY 2018 OPERATING HIGHLIGHTS  

• Group unaudited revenue increased by 14.3% year-on-year to RUB 110.9 bn
  • Online revenue[2] almost doubled year-on-year to RUB 8.8 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 4.3%. The number of tickets grew by 6.9% while the average ticket price decreased by 2.4%.
• Detsky Mir opened 100 new branded stores[6] in 2018.

Q4 2018 KEY EVENTS

• In December 2018, Detsky Mir paid interim dividends in the amount of RUB 3.2 bn, or RUB 4.39 per ordinary share, based on the results of the first nine months of 2018. The total amount of dividends declared in 2018 amounted to RUB 6.1 bn, which is equivalent to a dividend yield of 9% based on the average price of Company’s shares for the last 12 months.
• Detsky Mir launched a mobile application for customers. The app provides users with a virtual card for the Company’s loyalty program. In addition, online customers can check the current balance of bonus points and their transaction history, as well as follow promos, so as not to miss the most attractive discounts. Customers can seamlessly migrate from the app to the online store www.detmir.ru and place orders.
• The Company entered a new region – the Russian Far East – with the opening of stores in Blagoveshchensk, Vladivostok and Khabarovsk.
• Detsky Mir opened four pet supply stores under the Zoozavr brand. The stores present leading manufacturers’ products: pet food, as well as medical, veterinary drugs, cosmetics, hygiene products and grooming products, and a host of other goods. Pet supplies are also available at Detsky Mir’s online store (www.detmir.ru). Our customers can pick up an order at any Detsky Mir store in the Moscow region and St. Petersburg or make use of the courier delivery service.
• A new distribution center (DC) was launched at PNK Park Bekasovo, in the Naro-Fominsk district of the Moscow region. Total investment in the DC amounted to RUB 2.5bn, while the total area of the facility is 62,000 sq m.

As part of its long-term incentive programme (LTIP), Detsky Mir repurchased 521,220 ordinary shares of Detsky Mir for RUB 47.1 mln, representing 0.07% of the share capital of the Company.

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

“The past year was a successful one for our Company. Despite stagnation of the market for children’s goods, we grew at a rapid pace: consolidated unaudited revenue for the year grew 14.3% YoY to RUB 110.9bn.

“Traditionally, the fourth quarter has had a significant impact on the growth of the Company’s annual revenue. Despite the high base effect of the holiday season, we managed to increase like-for-like sales in Russia by 3.0% in the fourth quarter 2018 thanks to effective work with pricing and the product mix. Increased sales were mostly achieved by increasing the number of purchases (the number of tickets) by 5.4%.

“Toys continue to be a key category demonstrating high growth in like-for-like sales. The share of this category in total sales of the Detsky Mir chain in Russia was 33% in 2018.

“The presence of exclusive products allows us to differentiate ourselves from competitors and increase consumer traffic and LfL sales. For example, for the holiday season we signed an exclusive agreement to sell the Mecard Mecardimals game by Mattel, which has already become the number one toy in the South Korean market. In December, Mecard Mecardimals cars became the second biggest item by the chain’s turnover in the category of toys for boys.

“In 2018, the Company fulfilled its own plans to expand the Detsky Mir retail chain: we launched 100 new stores, with more than half of them opened in the last quarter. In addition, Detsky Mir continued to actively grow in new regions and outside Russia. In 2018, we opened 33 stores in cities in Russia and Kazakhstan that had never had a Detsky Mir store before.

“Kazakhstan remains a promising market for the international development of the Detsky Mir retail chain. In 2018, the Company expanded its retail chain there by eight stores and almost doubled revenue, while the growth of like-for-like sales in Kazakh tenge terms was 30%. Detsky Mir has a total of 30 stores in 15 cities in the Republic of Kazakhstan.

“In 2018, the Company not only launched a new retail chain called ABC, but also entered a new segment – products for pets – by opening four pilot stores of the Zoozavr chain. We plan to further develop the new retail chain in 2019.  

“Strengthening our leading position in e-commerce in the Russian children’s goods market is a key strategic priority for the Company. This segment’s revenue almost doubled in 2018. Significant growth in online sales was achieved, among other things, due to improved product, services and expanded geography of deliveries.

“The Company’s plans to continue upscaling its business in 2019: we will open at least 80 new Detsky Mir stores, enter the Belorussian market, significantly improve the level of service for all delivery channels of online orders, and launch an updated online store.”

Guidance

New openings guidance, as well as expectations for the LFL sales growth and the level of business operating profitability for FY 2019 will be published in March 2019 following disclosure of FY 2018 financial results.

View the full press release here, www.corp.detmir.ru

 ***

For additional information:

([1]) Hereinafter the figures are presented excluding the effect of the new IFRS 16 accounting standards (“Lease”)

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

([3]) Like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on stores in operation for at least 12 full calendar months.

([4]) Including 66 ELC and ABC stores, as well as four Zoozavr stores.

([5]) Cardholders who made at least one purchase at Detsky Mir during the last 12 months to 31 December 2018 are considered active.

([6]) In 2018, Detsky Mir closed five stores.

Extraordinary General Meeting of Detsky Mir Approves Interim Dividends

Moscow, 19 December 2018 – Detsky Mir PJSC (“Detsky Mir” or “the Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer and a Sistema Group company (LSE: SSA, MOEX: AFKS) announces the results of its Extraordinary General Meeting of shareholders (“EGM”) that took place on December 15 2018.

The EGM approved the payment of interim dividends in the amount of RUB 3.2 bn, or RUB 4.39 per ordinary share, based on the results of the first nine months of 2018. The total amount of dividends declared in 2018 will be RUB 6.1 bn, which is equivalent to a dividend yield of 9% based on the average price of Company’s shares for the last 12 months.

The dividend record date will be 26 December 2018. Dividends will be transferred within 10 business days from this date.

For additional information:

Detsky Mir Group (MOEX: DSKY) is multi-format retailer, Russia’s largest specialized children’s goods retailer. The Group comprises the Detsky Mir retail chain, the ELC (Early Learning Centre in Russia) and the ABC retail chains, as well as the Zoozavr retail chain of pet supplies. The company operates a network of 610 Detsky Mir stores in Russia and Kazakhstan located in 215 cities of Russia and 13 cities of Kazakhstan, as well as 54 ELC (Early Learning Centre in Russia) and two ABC stores as of 30 September 2018. The total selling space was approximately 714,000 square meters.

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

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%.

Learn more at www.detmir.ru, corp.detmir.ru, and elc-russia.ru.

(1) Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children’s goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality.

(2) 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 and ELC doubled their revenue on Black Friday 2018

Detsky Mir Group of Companies, the largest operator selling children’s goods in Russia and Kazakhstan, reports the results of the Black Friday promotion.

The sale in Detsky Mir online store (www.detmir.ru) was held from November 20 to November 25. About 12 thousand items were made available to the buyers; discounts reached 80%: toys, clothes, shoes, baby food, diapers and much more.

“Compared to last year’s Black Friday, online store’s revenue increased 2.2-fold. Diapers, erector sets, baby food, and hygiene products became the most popular purchases,” said Nadezhda Kiseleva, Head of the External and Internal Communications Office of the Detsky Mir Group.

Buyers of online ELC store (www.elc-russia.ru) could also buy goods with up to 70% discounts. 3500 SKUs took part in the promotion.

“During Black Friday, our online sales more than doubled as compared to the last year’s promotion. Big City Garage, Forest Fairy Tree House, the HappyLand Country Train Set, Little Cook’s Kitchen with accessories, and various erector sets were the most popular toys,” said Aleksandr Roganov, ELC Director General.

Documents for EGSM meeting

On our website available documents for the extraordinary general meeting of shareholders scheduled for December 15, 2018.

http://corp.detmir.ru/shareholders-and-investors/corporative-governance/general-meeting-of-shareholders-1/information-on-the-general-meetings-of

Detsky Mir Amended Date Of GSM

Moscow, 09 November 2018 – Detsky Mir PJSC (“Detsky Mir” or “the Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer and a Sistema Group company (LSE: SSA, MOEX: AFKS) announces that its Board of Directors has changed the date of the Extraordinary General Meeting of shareholders (“EGM”) to 15 December 2018. The record date for registering the shareholders eligible to participate in the EGM is 20 November 2018.

The Board of Directors recommended that the EGM approve an interim dividend for the nine months of 2018 in the amount of RUB 3,244 million, representing a payment of RUB 4.39 per ordinary share. The Board of Directors also recommended that the EGM set the dividend record date for 26 December 2018.

The general meeting of shareholders will be held in person instead of absentee at the address: 20/1 B. Balkansky per., 129090, Moscow. The EGM materials will be available on the Company’s website (corp.detmir.ru), as well as on Interfax website (e-disclosure.ru) and upon request at the Company’s corporate secretariat: 3/6 3rd Nizhnelikhoborsky proyezd, 127238 Moscow after 23 November 2018.

Shareholders may register for the EGM, fill out the electronic ballot forms and vote via the electronic voting service (www.aoreestr.ru/shareholders/e-voting).

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 666 stores, including 610 Detsky Mir stores in Russia and Kazakhstan located in 228 cities, as well as 54 ELC (Early Learning Centre) and 2 ABC stores in Russia. The total selling space as of 30 September 2018 was approximately 714,000 square meters.

In accordance with the audited financial statements under IFRS for FY 2017, the Group’s revenue amounted to RUB 97.0 bn, adjusted EBITDA totaled RUB 10.7 bn and adjusted profit amounted to RUB 5.5 bn.

Detsky Mir Group’s shareholding 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%.

Learn more at www.detmir.ru, corp.detmir.ru, and 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 such terms 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, inter alia, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries where Detsky Mir operates, as well as many other risks specifically related to Detsky Mir and its operations.

(8) Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children’s goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality.

(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 Announces Date Of GSM

Moscow, 31 October 2018 – Detsky Mir PJSC (“Detsky Mir” or “the Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer and a Sistema Group company (LSE: SSA, MOEX: AFKS) announces that its Board of Directors at a meeting on 29 October 2018 approved a resolution to convene the General Shareholders’ Meeting (the GSM) on 05 December 2018. The record date for shareholders eligible to participate in the GSM is 09 November 2018.

The Board of Directors recommended that the GSM approve an interim dividend for the nine months 2018 financial year of RUB 3,244 million, representing a payment of RUB 4.39 per ordinary share. As a result, the total amount of the dividends paid out in 2018 is expected to be RUB 7.3 billion, which is equivalent to a dividend yield of 10.4% based on the average price of Company’s shares for the last 12 months.

The Board of Directors also recommended that the GSM set the record date establishing eligibility to receive the dividend as 16 December 2018.

The GSM materials will be available at the Company’s website (corp.detmir.ru), as well as at Interfax’s website (e-disclosure.ru) and by request at the Company’s corporate secretariat: 3/6 3rd Nizhnelikhoborsky proyezd, 127238 Moscow after 13 November 2018.

Shareholders may register to participate in the GSM, fill out the electronic form of ballots and vote via the electronic voting service (www.aoreestr.ru/shareholders/e-voting).

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 666 stores, including 610 Detsky Mir stores in Russia and Kazakhstan located in 228 cities, as well as 54 ELC (Early Learning Centre) and 2 ABC stores in Russia. The total selling space as of 30 September 2018 was approximately 714,000 square meters.

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

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%.

Learn more at www.detmir.ru, corp.detmir.ru, and 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) Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children’s goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality.

(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 Net Profit Increased By 74.5% To Rub 4.0bn In 9m 2018

Moscow, 29 October 2018 – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”, MOEX: DSKY), Russia’s largest specialized children’s goods retailer and a Sistema Group company (LSE: SSA, MOEX: AFKS) announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter and the nine months ended 30 September 2018.

Q3 2018 FINANCIAL HIGHLIGHTS[1]

• Group unaudited revenue increased by 15.9% year-on-year to RUB 28.4 bn.
  • Online revenue[2] more than doubled year-on-year to RUB 2.1 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 3.7%. The number of tickets grew by 5.2% while the average ticket decreased by 1.5%.
• Detsky Mir opened 12 new branded stores in Q3 2018. Total Group stores[4] stood at 666 as of 30 September 2018.

• Gross profit increased by 14.6% year-on-year to RUB 9.5 bn, with a gross margin of 33.4%;
• SG&A as a percentage of revenue[5] decreased by 70 bps year-on-year, driven by increased operational efficiency;
• Adjusted EBITDA[6] increased by 18.5% year-on-year to RUB 3.6 bn; the adjusted EBITDA margin grew by 30 bps year-on-year to 12.7%. EBITDA[7] amounted to RUB 3.5 bn (+29.8% year-on-year);
• Adjusted net profit[8] increased by 17.4% year-on-year to RUB 2.2 bn. Net profit amounted to RUB 2.1 bn (+32.3% year-on-year);

• The net debt /adjusted LTM EBITDA ratio decreased to 1.3x as of Q3 2018 from 1.4x as of 30 September 2017.

9M 2018 FINANCIAL HIGHLIGHTS1

• Group unaudited revenue increased by 14.9% year-on-year to RUB 76.6 bn
  • Online revenue² increased by 94.7% year-on-year to RUB 5.1 bn.
• Like-for-like sales³ at Detsky Mir stores in Russia grew by 4.9%. The number of tickets grew by 7.5% while the average ticket decreased by 2.4%.
• Detsky Mir opened 37 new branded stores[9] in 9M 2018.

• Gross profit increased by 13.5% year-on-year to RUB 25.0 bn, with a gross margin of 32.7%;
• SG&A as a percentage of revenue decreased by 130 bps year-on-year, driven by increased operational efficiency;
• Adjusted EBITDA increased by 26.0% year-on-year to RUB 8.0; the adjusted EBITDA margin grew by 90 bps year-on-year to 10.5%. EBITDA amounted to RUB 7.6 bn (+34.2% year-on-year);
• Adjusted net profit rose by half year-on-year to RUB 4.4 bn. Net profit amounted to RUB 4.0 bn (+74.5% year-on-year).

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

“Our results for 9M 2018 confirm Detsky Mir’s status as a leading player in the children’s goods market in Russia and Kazakhstan. The key achievement is high sales growth in all business segments despite deteriorating consumer sentiment in Russia.

“Consolidated revenue grew by 14.9% to RUB 76.6bn. The key driver was the high growth rate of like-for-like sales at Detsky Mir stores in Russia, at 4.9%, and an increase in the ramp-up of stores opened in 2017. Detsky Mir’s chain in Kazakhstan also made a significant contribution to Group revenue growth, doubling revenue and increasing like-for-like sales by 30%.

“The online store www.detmir.ru is one of the fastest growing e-commerce websites in Russia, with revenue growing by 94.7%. The main advantage of our online channel is its unique logistics system, which allows customers to receive their orders in retail stores in any city where the chain is present within an hour of placing the order. In-store pick-ups as a proportion of online sales reached 74%, while the entire online segment increased its share of total revenue to 6.7%. The customer-friendly pick-up service not only improves the customer experience, but also allows us to significantly reduce logistical costs and increase the profitability of the online business at the Group level.

“The company continues to improve operating efficiency, mainly due to increased labour productivity and lower rental costs. As a result, in 9M 2018 Detsky Mir reduced the share of SG&A (excluding long-term bonus payments to management) as a percentage of revenue by 130 p.p. YoY. This allowed us to further invest in prices, growing like-for-like customer traffic by 7.5%, and at the same time increase EBITDA by 34.2% YoY.

“In addition, strict investment discipline and efficient implementation of our growth programme with its lease-based business model made it possible to increase ROIC to 69% in the reporting period. The Group’s net profit increased by 74.5% YoY.  

“In 9M 2018, Detsky Mir’s net profit under RAS amounted to RUB 3.3bn, which enables management to recommend that all net profit be distributed as interim dividends. 

“Detsky Mir’s growth plan – to open at least 100 stores in 2018 – remains fully on track. Since the beginning of the year, 37 new stores have been opened, and the rest will be opened in the last quarter in the peak sales season. Detsky Mir also confirms its plans to entre the Belarusian market – the first store is expected to open in the first quarter of next year. The Company has also set the goal of entering the pet products market with an annual volume of more than RUB 200bn under the Zoozavr brand by opening its first retail stores and online store by the end of the year.”

View the full press release here, www.corp.detmir.ru

***

Conference Call Information

Detsky Mir’s management will host a conference call today at 16:00 (Moscow time) / 13:00 (London time) / 9:00 (New York time) to discuss the Company’s 9M 2018 Unaudited 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

65 201 791#

The conference call title: “Detsky Mir Group – 9M 2018 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 666 stores, including 610 Detsky Mir stores in Russia and Kazakhstan located in 228 cities, as well as 56 ELC (Early Learning Centre) and ABC stores in Russia. The total selling space as of 30 September 2018 was approximately 714,000 square meters.

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

Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSC Sistema[10] – 52.10%, Russia-China Investment Fund (RCIF) [11] – 14.03%, other shareholders owning less than 5% of the shares – 33.87%.

Learn more at www.detmir.ru, corp.detmir.ru and 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]) The figures presented do not account for the new IFRS 16 “Lease” accounting standards.

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

([3]) Hereinafter like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on stores in operation for at least 12 full calendar months.

([4]) The number of ELC and ABC stores amounted to 56.

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

([6]) Hereinafter, 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.

([7]) Hereinafter, see Attachment A for definitions and reconciliation of EBITDA to IFRS financial measures.

([8]) Hereinafter, adjusted for additional bonus accruals under the LTI program (together with related tax effects). See Attachment A.

([9]) In 9M 2018, Detsky Mir closed five stores.

(8) Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children’s goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality.

(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 Operating Results For 3Q and 9M 2018

17 October 2018. Moscow, Russia. – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”), Russia’s largest specialized children’s goods retailer and a PJSFC Sistema company, announces its operating results for the third quarter and the nine months ended 30 September 2018.

Q3 2018 OPERATING HIGHLIGHTS[1]

• Group unaudited revenue increased by 15.9% year-on-year to RUB 28.4 bn.
  • Online revenue[2] more than doubled year-on-year to RUB 2.1 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 3.7%. The number of tickets grew by 5.2% while the average ticket price decreased by 1.5%.
• Detsky Mir opened 12 new branded stores in Q3 2018. The Group had 666 stores as of 30 September 2018.[4]
• Total selling space increased by 13.2% to c. 714,000 sq. m.   
• The number of issued Detsky Mir loyalty cards increased by 17% year-on-year to 19.9 mln, while the number of active loyalty cardholders[5] was 9.9 mln. Transactions using the loyalty card accounted for 73% of total sales.

 9M 2018 OPERATING HIGHLIGHTS  

• Group unaudited revenue increased by 14.9% year-on-year to RUB 76.6 bn
  • Online revenue² increased by 93.9% year-on-year to RUB 5.1 bn.
• Like-for-like sales³ at Detsky Mir stores in Russia grew by 4.9%. The number of tickets grew by 7.5% while the average ticket price decreased by 2.4%.
• Detsky Mir opened 37 new branded stores[6] in 9M 2018.

Q3 2018 KEY EVENTS

• Detsky Mir Group and PNK Group signed an agreement for the construction of a distribution center (DC) at PNK Park Bekasovo, in the Naro-Fominsk district of Moscow region. Total investment is estimated at RUB 2.5bn, while the total area of the facility will be 62,000 sq m. Construction is scheduled for completion in late 2018.
• As part of its long-term incentive programme (LTIP), Detsky Mir repurchased 1,082,820 ordinary shares of Detsky Mir for RUB 100 mln, representing 0.15% of the share capital of the Company.
• Detsky Mir PJSC registered a subsidiary, Detmir BEL LLC, in Belarus. Detsky Mir PJSC owns 100% of the subsidiary. Strategic and financial management of Detsky Mir’s Belarusian retail chain will be executed by the Company’s head office in Moscow.

Vladimir Chirakhov, CEO of PJSC Detsky Mir, said:

“In Q3 2018, Detsky Mir Group continued its consolidation of the children’s goods market, with revenue growing significantly faster than the market. Despite the continued slump in purchasing power and a challenging demographic situation, Detsky Mir has been growing at an impressive rate. At the same time, we are focusing on improving operational efficiency, and expect EBITDA to increase by at least 32% year-on-year for the first nine months of 2018.

“The Company’s consolidated unaudited revenue grew by 15.9% to RUB 28.4bn in the third quarter of 2018. Like-for-like sales growth in Russia was 3.7%. The Company continues to attract new customers mostly as a result of the weaker positions of other market players, as underscored by a 5.2% increase in the number of tickets.  We made successful preparations for the 2018 back-to-school season, which significantly boosted the Company’s turnover. Moreover, toys traditionally remain one of the key categories demonstrating high growth in like-for-like sales.

“Detsky Mir Group is pursuing its organic growth strategy. We have opened 37 new stores since the start of the year, including 13 stores in the Moscow region and two stores in Kazakhstan. By the end of the year we expect to open at least 100 stores, most of which will traditionally be launched in the New Year season of high sales.

“In Q3, Detsky Mir’s online sales more than doubled year-on-year, while revenue amounted to RUB 5.1bn in the first nine months of 2018. We remain focused on developing an omni-channel business model by making the most of our logistical and IT infrastructure to achieve strong results in the online segment and offer our customers a convenient and affordable service. In August, we launched a pilot project for delivering online orders from retail stores, which is expected to significantly reduce the time from order placement to delivery.

“Searching for new value growth opportunities and entry into new markets is one of the key elements of the Company’s strategy. In September, management took a strategic decision to enter the pet products market. This is a promising market in terms of volumes, expected growth rates and high level of fragmentation, as well as the opportunities it offers for management to leverage their experience in the children’s goods market.”

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 666 stores, including 610 Detsky Mir stores in Russia and Kazakhstan located in 228 cities, as well as 56 ELC (Early Learning Centre) and ABC stores in Russia. The total selling space as of 30 September 2018 was approximately 714,000 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[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) Hereinafter the figures are presented excluding the effect of the new IFRS 16 accounting standards (“Lease”)

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

(3) Like-for-like average growth, like-for-like number of tickets growth and like-for-like revenue growth based on stores in operation for at least 12 full calendar months.

(4) Including 56 ELC and ABC stores.

(5) Cardholders who made at least one purchases at Detsky Mir during the last 12 months to 30 September 2018 are considered active.

(6) In 9M 2018, Detsky Mir closed five stores.

(7) 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) Sistema PJSFC is a publicly-traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, children’s goods retail, paper and packaging, healthcare services, agriculture, high technology, banking, real estate, pharmaceuticals and hospitality.

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

Analyst and Investor Conference Call for 9M 2018 Unaudited IFRS Financial Results

We would like to announce that Q3 2018 Trading update will be published on October 17, 2018.

9M Unaudited IFRS Financial Results will be announced on October 29, 2018.

Detsky Mir Group will host a brief conference call for investors and analysts on IFRS results.

Please find the details of the conference call below.

Date: Monday, October 29, 2018

Time: 16:00 (Moscow) 13:00 (London) 09:00 (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

0 800 376 61 83 (toll-free) 

USA

+1 646 722 49 16

844 286 06 43 (toll-free)

PIN

65 201 791#