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

Moscow, 08 October 2018 – The Board of Detsky Mir PJSC (“Detsky Mir” or “the Company”), updated the Long Term Incentive Plan (the LTIP) for the senior management of Detsky Mir with a view to further encouraging continuing focus on creation of sustainable value for the shareholders.

The duration of the LTIP has not changed and covers the three-year period to February 2020, the third anniversary of the Company’s IPO. The main change deals with an increase in the size of the bonus fund in value to up to 4.6% (hitherto – 2%) of the increase in the Company’s stock market value (including dividend payments) over the period.

In accordance with the terms of the LTIP, senior management in continuing employment by the Company upon the expiration of this period will be eligible for share grants or cash payments. The LTIP continues to include more than 20 key employees of the Company, including the CEO.

The LTIP also keeps providing for additional cash payments expected to total around RUB 500 million (plus any social taxes); of this amount, around RUB 250 million was paid in January 2018, while payment of the balance can be paid in 2019 subject to Board approval.

For additional information:

Detsky Mir Group (MOEX: DSKY) is Russia’s largest specialized children’s goods retailer. The company operates a network of 650 stores, including 599 Detsky Mir stores in Russia and Kazakhstan located in 225 cities, as well as 51 ELC (Early Learning Centre) and ABC stores in Russia. The total selling space as of 30 June 2018 was approximately 704,000 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.

(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.

Documents for EGSM meeting

On our website available  documents for the extraordinary general meeting of shareholders scheduled for September 20, 2018.

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

Detsky Mir Group Net Income Increased 2.7x To Rub 1.9BN In 1H 2018

Moscow, 21 August 2018 – 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 second quarter and the first half ended 30 June 2018.

Q2 2018 FINANCIAL HIGHLIGHTS[1]

• Group unaudited revenue increased by 14.6% year-on-year to RUB 24.1 bn.
  • Online revenue[2] increased by 93.1% year-on-year to RUB 1.6 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 6.1%, with the number of tickets growing by 8.9% and the average ticket price declining by 2.6%.
• Detsky Mir opened 20 new branded stores in Q2 2018. Total Group stores[4] amounted to 650 as of 30 June 2018.

• Gross profit increased by 15.3% year-on-year to RUB 8.4 bn, with a gross margin of 35.0%;
• Selling, general and administrative expenses as a percentage of revenue[5] decreased by 150 bps year-on-year, driven by increased operational efficiency;
• Adjusted EBITDA[6] increased by 34.4% year-on-year to RUB 3.0 bn; the adjusted EBITDA margin grew by 180 bps year-on-year to 12.4%, while EBITDA[7] amounted to RUB 2.8 bn (+31.2% year-on-year);
• Adjusted profit[8] doubled year-on-year to RUB 1.7 bn, while profit amounted to RUB 1.6 bn (+98.2% year-on-year);

• The net debt /adjusted EBITDA LTM ratio decreased to 1.6x as of 30 June 2018 from 1.7x as of 30 June 2017.

H1 2018 FINANCIAL HIGHLIGHTS1

• Group unaudited revenue increased by 14.3% to RUB 48.1 bn vs. RUB 42.1 bn in H1 2017.
  • Online revenue² increased by 78.4% year-on-year to RUB 3.1 bn.
• Like-for-like sales³ at Detsky Mir stores in Russia grew by 5.6%, with the number of tickets growing by 8.9% and the average ticket price declining by 3.0%.
• Detsky Mir opened 25 new branded stores[9] in H1 2018.

• Gross profit increased by 12.8% year-on-year to RUB 15.5 bn, with a gross margin of 32.3%;
• Selling, general and administrative expenses as a percentage of revenue decreased by 170 bps year-on-year, driven by increased operational efficiency;
• Adjusted EBITDA increased by 32.9% year-on-year to RUB 4.4; the adjusted EBITDA margin grew by 130 bps year-on-year to 9.2%, while EBITDA amounted to RUB 4.1 bn (+38.2% year-on-year);
• Adjusted profit more than doubled year-on-year to RUB 2.1 bn, while profit amounted to RUB 1.9 bn (+170.7% year-on-year);

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

“In H1 2018, Detsky Mir remained the undisputed leader in the Russian children’s goods market. Despite a challenging macroeconomic and demographic environment, the Company demonstrated strong results in all business segments.

“While growth of the children’s goods market has slowed, we were able to increase our consolidated unaudited revenue in H1 2018 by 14.3% to RUB 48.1bn thanks to implementation of our strategy of offering the best prices and a wide product mix. Importantly, like-for-like sale growth was achieved across all product categories. Total LFL sales in H1 2018 grew by 5.6%. The Company continued investing in consumer traffic, which in H1 2018 increased by 8.9%.

“Detsky Mir also bolstered its position in the online segment, with the online revenue surging by 78.4% in H1. Thanks to the expansive footprint of our retail chain, we are able to offer customers a convenient and cost-effective way to receive their online orders: in-person pick-up at any retail store within an hour.

“Strong operational efficiency remains Detsky Mir’s key competitive advantage over other market participants. Optimized operating expenses make it possible for the Company to offer customers the best prices while maintaining high profit margins. The Company’s strong market position and attractive store concept allow it to negotiate the most advantageous lease terms with landlords. Ongoing improvement of business processes supports increased labor productivity. In H1 2018, we reduced our SG&A expenses (net of management bonuses) as a share of revenue by 170 basis points year-on-year. As a result, EBITDA grew by 38.2%.

“The Company continues to generate strong cash flow thanks to low capital needs and efficient optimization of debt capital. Therefore, net income grew by more than 2.5 times in H1, while returns on invested capital totaled 64%.

“At the end of June 2018, Detsky Mir paid final dividends for 2017 in the amount of RUB 2.9bn, which corresponds to a dividend yield of 7.2%. Management plans to maintain high dividend payouts to shareholders.

“In H2 2018, Detsky Mir will continue implementation of its regional expansion program and will open its first stores in the Russian Far East as well as new cities in the Republic of Kazakhstan. We expect to open at least 100 new stores in 2018. As was previously announced, the Company has made a strategic decision to launch the first Detsky Mir store in Belarus in 2019.”

 KEY FINANCIAL & OPERATING HIGHLIGHTS

Key Operating Highlights

Key Financial Highlights[11]

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 16:00 (Moscow time) / 14:00 (London time) / 9:00 (New York time) to discuss the Company’s H1 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

22 20 27 94#

The conference call title: “Detsky Mir Group – H1 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 650 stores, including 599 Detsky Mir stores in Russia and Kazakhstan located in 225 cities, as well as 51 ELC (Early Learning Centre) and ABC stores in Russia. The total selling space as of 30 June 2018 was approximately 704,000 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[12] – 52.10%, Russia-China Investment Fund (RCIF) [13] – 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.

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 of the second quarter can be reconciled to our consolidated statements of profit and loss as follows:

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

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

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

([1]) The figures presented do not account for the new IFRS 16 “Lease” accounting standards.

([2]) Here and hereinafter, this segment includes all online orders via 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 the stores that have been in operations for at least 12 full calendar months.

([4]) The number of ELC and ABC stores amounted to 51.

([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 H1 2018, Detsky Mir closed four stores.

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

([11]) Although the Company has applied IFRS 16 “Lease” as of January 1, 2018, the comparison of key financial indicators of unaudited financial statements is provided without reference to the application of IFRS 16. In the transition to the new standard, the comparative figures were not reconciled for 2017.

(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.

Analyst and Investor Conference Call for H1 2018 Unaudited IFRS Financial Results

We would like to announce that H1 2018 Unaudited IFRS Financial Results will be published on August 21, 2018.

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

Please find the details of the conference call below.

Date: Tuesday, August 21, 2018

Time: 16:00 (Moscow) 14:00 (London) 9:00 (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

22 20 27 94#

Notice on the General shareholders meeting of PJSC Detsky mir

 DEAR SHAREHOLDERS!

 The Board of Directors of PJSC Detsky Mir hereby notifies you that on September 20, 2018 the Extraordinary General Meeting of the Company shareholders will be held.

The meeting will be held at: 129090, Moscow, Bolshoy Balkansky pereulok 20/1

The meeting starts at 11 am.

The registration starts at 10.30 am.

Representatives of the shareholders should have a power of attorney certified at the workplace or by a notary.

The list of persons entitled to participate in the Extraordinary General Meeting of Shareholders is drawn up according to the registry as of July 27, 2018.

1.         On the establishment of procedure of holding the Extraordinary General Meeting of Shareholders of PJSC Detsky Mir.

2.         Early termination of powers of the Company’s Board of Directors.

3.         Determination of the quantitative composition of the Company’s Board of Directors.

4.         Electrion of the Company’s Board of Directors.

The shareholders have the opportunity to read the draft documents and materials concerning the agenda of the Extraordinary General Meeting of Shareholders, in the Company’s corporate secretariat, at the following address: 127238, Moscow, Tretiy Nizhnelikhoborsky proezd 3/6, beginning from August 31, 2018 through September 20, 2018.

See all materials to be provided to shareholders in preparation for the Extraordinary General Meeting of Shareholders of PJSC Detsky Mir on the web-page of PJSC Detsky Mir (http://corp.detmir.ru and www.e-disclosure.ru/portal/company.aspx?id=6788).

Please note that in preparation for the Extraordinary General Meeting of Shareholders of PJSC Detsky Mir, shareholders are given the opportunity to ask questions to the members of the executive bodies and the Board of Directors of PJSC Detsky Mir on the agenda of the General Meeting of Shareholders, as well as express their opinion on the agenda items by sending relevant messages to the e-mail address shareholder@detmir.ru.

The shareholders have the right to send completed and signed ballots to the Tabulation Commission at the following address: 129090, Moscow, Bolshoy Balkansky pereulok 20/1

Persons exercising their rights in securities the rights in which are accounted for by a nominal holder, foreign nominal holder, a foreign organization entitled in accordance with its personal law to register and assign rights to securities, may participate in the shareholders’ meeting and exercise the right to vote under the procedure established by Art. 8.9 of the Federal Law “On the Securities Market,” using electronic means through the depository accounting system.

Persons entitled to participate in the Extraordinary General Meeting of Shareholders of PJSC Detsky Mir can register for participation in the General Meeting of Shareholders, fill out the electronic form of the ballots and vote using these ballots on the website in the information and telecommunication network the Internet at www.aoreestr.ru (address of the webpage – http://www.aoreestr.ru/shareholders/e-voting).

Bulletins received not later than in 2 days before the Meeting will be considered at the establishment of the quorum and vote counting at the Extraordinary General Meeting of Shareholders.

Chairman of the Board of Directors of PJSC Detsky Mir

Christopher Baxter

Detsky Mir Group announces operating results for 2nd quarter and 1st half 2018

16 July 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 second quarter and the first half ended 30 June 2018.

Q2 2018 OPERATING HIGHLIGHTS[1]

• Group unaudited revenue increased by 14.6% year-on-year to RUB 24.1 bn.
  • Online revenue[2] increased by 93.1% year-on-year to RUB 1.6 bn.
• Like-for-like sales[3] at Detsky Mir stores in Russia grew by 6.1%, with the number of tickets growing by 8.9% and decline in the average ticket price by 2.6%.
• Detsky Mir opened 20 new branded stores in Q2 2018. Total stores of the Group[4] amounted to 650 as of 30 June 2018.
• Total selling space increased by 16.2% to c. 704,000 sq. m.   
• The number of issued Detsky Mir loyalty cards increased by 18% year-on-year to 19.3 mln with c.75% of total sales made using the loyalty card.

 H1 2018 OPERATING HIGHLIGHTS  

• Group unaudited revenue increased by 14.3% to RUB 48.1 bn vs. RUB 42.1 bn in H1 2017.
  • Online revenue² increased by 78.4% year-on-year to RUB 3.1 bn.
• Like-for-like sales³ at Detsky Mir stores in Russia grew by 5.6%, with the number of tickets growing by 8.9% and decline in the average ticket price by 3.0%.
• Detsky Mir opened 25 new branded stores[5] in H1 2018.

Q2 2018 KEY EVENTS

• In May 2018, Detsky Mir paid out the final dividends of RUB 2.9 bn on the result of Q4 2017. Dividend yield of Detsky Mir shares was 7.2%[6].
• Acting under the LTIP, Detsky Mir implemented buyback of 438,130 Detsky Mir ordinary shares for RUB 46 mln, which comprises 0.06% share capital of the Company.
• At the end of May 2018 the Company opened the first store of the new retail toy chain of ABC in Chelyabinsk. The company plans to continue to develop ABC in shopping centers and shopping facilities of street retail in those regions where ELC is not yet represented. ABC stores offer an expanded range of products at affordable prices for children of not only preschool, as in ELC, but also of school age. The average area of stores will be up to 150 sq. m.

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

“In H1 2018, Detsky Mir Group demonstrated excellent results in all business segments. We delivered high business growth and achieved a significant reduction in operating costs, which allows us to expect the EBITDA increase by at least 38% YoY in the first half.

The Company’s consolidated unaudited revenue grew by 14.6% to RUB 24.1bn in the second quarter of 2018. The Company successfully launched the sales of its summer collection, considerably increasing its turnover in the clothing and footwear categories. The highest growth was once again seen in the online segment, where revenue went up 93.1% due to the improvement of customer service.

Influx of new customers is the key growth driver of the Company’s sales: positive trends have been observed at both new stores and the stores which have been operating for more than one year. Detsky Mir’s like-for-like sales growth amounted to 6.1%, while the like-for-like number of tickets growth gained 8.9%.

Rapid growth of the business and stable financial situation, in combination with the plight of many players on the market, allowed adjusting the plan for development of the retail chain: in 2018, Detsky Mir is going to open at least 100 supermarkets instead of the initially planned 70 stores. We also increased the mid-term forecast figures and intend to open at least 300 stores on a 4-year horizon.

As part of its geographical expansion strategy, Detsky Mir decided to enter the market of Belarus. The Company’s goal is to open the first store in Belarus in the next year and become a key player in the mid-term. Positive experience in Kazakhstan demonstrates the Company’s ability to successfully develop its business outside of Russia.”

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

***

Conference Call Information

Detsky Mir’s management team will host a brief conference call today at 16:00pm (Moscow time) / 14:00pm (London time) / 9:00am (New York time) to discuss Q2 2018 Trading Update.

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: 88 71 42 31#

The conference title: “Detsky Mir Group – Q2 2018 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 650 stores, including 599 Detsky Mir stores in Russia and Kazakhstan located in 225 cities, as well as 51 ELC (Early Learning Centre) and ABC stores in Russia. The total selling space as of 30 June 2018 was approximately 704,000 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 without taking into account the new accounting standards IFRS 16 “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 the stores that have been in operations for at least 12 full calendar months.

([4]) The number of ELC and ABC stores amounted to 51.

([5]) In H1 2018, Detsky Mir closed four stores.

([6]) Dividend yield is calculated as the ratio of dividends per share paid in the amount of RUB 5.1 bn for FY2017, and the average market price of the share for the last 12 calendar months

([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 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 2Q & 1H 2018 Trading Update

We would like to announce that 2Q & 1H 2018 Trading Update will be published on July 16, 2018.

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

Please find the details of the conference call below.

Date: Monday, July 16, 2018

Time: 16:00 (Moscow) 14:00 (London) 9:00 (New York)

Speakers:

•   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

88 71 42 31#

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

THE RESULTS OF ANNUAL GENERAL MEETING OF SHAREHOLDERS OF PJSC “DETSKY MIR”

23 May 2018. Moscow, Russia. – Detsky Mir PJSC (“Detsky Mir” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces the results of its Annual General Meeting of Shareholders (AGM) that took place on May, 18, 2018.

The General Meeting of Shareholders passed the following resolutions:

1. Distribution of RUB 2.9bn in dividends for FY 2017 (RUB 3.88 per one ordinary share). The list of persons entitled to dividends will be made on May, 29, 2018.

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

1. Christopher Baxter;

2. Vitaly Vavilov;

3. Alexey Katkov;

4. Tony Meyer; 

5. Alexander Shulgin;

6. James McArtur;

7. Alexander Shevchuk;

8. Olga Ryzhkova;

9. Gevork Sarkisyan;

10. Vladimir Chirakhov.

3. Approval of the Annual Report and Financial Statements for FY 2017 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 2018

5. Election of the Audit Review Commission as follows:

1. Marina Zhuravleva;

2. Nadezhda Voskresenskaya;

3. Alexander Patyukov.

***

For additional information:

DETSKY MIR GROUP ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR 1st QUARTER 2018

27 April 2018. Moscow, Russia. – Detsky Mir Group (“Detsky Mir”, “the Group” or “the Company”) – Russia’s largest specialized children’s goods retailer, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the first quarter ended 31 March 2018.

Q1 2018 FINANCIAL HIGHLIGHTS[1]

• Group unaudited revenue increased by 14.0% year-on-year to RUB 24.0 bn.
  • Online revenue[2] 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%[3], with the number of tickets growing by 8.8% and decline in the average ticket price by 3.4%.

• Gross profit increased by 10.0% year-on-year to RUB 7.1 bn, with a gross margin of 29.6%;
• Selling, general and administrative expenses as a percentage of revenue[4] decreased by 190 bps year-on-year driven by increased operational efficiency;
• Adjusted EBITDA[5] increased by 30.0% to RUB 1.4 bn for Q1 2018 from RUB 1.1 bn for Q1 2017; adjusted EBITDA margin reached 6.0%, while EBITDA[6] amounted to RUB 1.3 bn (+57% year-on-year);
• Adjusted profit for the period[7] more than tripled year-on-year to RUB 0.5 bn, while profit for the period amounted to RUB 0.3 bn;

• Net debt /Adjusted EBITDA LTM ratio decreased to 1.5x as of 31 March 2018 from 1.9x as of 31 March 2017.

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

“In the first quarter of 2018, Detsky Mir Group strengthened its position as the leader of the Russian children’s goods market. Its consolidated revenue grew by 14.0% to RUB 24.0bn.

The management’s priority is still the reduction of operating costs, which allows it to maintain high operating efficiency of the business and increase its profit margins. In the first quarter, rent as a percentage of revenue decreased by 1.3 p.p. year-on-year. The Company’s management continues to implement best practices in IT and HR management, optimising the staffing structure of the retail chain.

As a result, SG&A expenses as a percentage of revenue decreased by 1.9 p.p. year-on-year, increasing adjusted EBITDA by 30% year-on-year.

The company continues focusing on optimising the debt burden, ensuring the continuity of financing for operating activities on the best market terms with a high level of diversification of the loan portfolio. The weighted average cost of debt capital decreased to 9.5% as of the end of the reporting period, which contributed to a threefold increase in adjusted net profit year-on-year.”

KEY FINANCIAL & OPERATING HIGHLIGHTS

Key Operating Highlights

Key Financial Highlights[8]

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) / 15:00 (London time) / 10:00 (New York time) to discuss Q1 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

85 05 36 64 #

The conference title: “Detsky Mir Group – Q1 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 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[9]  – 52.10%, Russia-China Investment Fund (RCIF) [10] – 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]) The figures are presented without taking into account the new accounting standards IFRS 16 “Lease”.

([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 the stores that have been in operations for at least 12 full calendar months.

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

([5]) 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.

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

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

([8]) Although the Company has applied IFRS 16 “Lease” as of January 1, 2018, the comparison of key financial indicators of unaudited financial statements is provided without reference to the application of IFRS 16. In the transition to the new standard, the comparative figures were not reconsilated for 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.

Analyst and investor conference call for q1 2018 unaudited ifrs financial results

We would like to announce that Q1 2018 unaudited IFRS Financial Results will be published on April 27, 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: Friday, April 27, 2018

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

Speakers:

•   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

85 05 36 64#