DETSKY MIR GROUP ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR 1st QUARTER 2016

Detsky Mir Group (“Detsky Mir” or “the Group”), Russia’s largest children’s goods retailer, announces its unaudited financial results under International Financial Reporting Standards (IFRS) for the first quarter of 2016, which ended on 31 March 2016.

KEY FINANCIAL RESULTS FOR 1st QUARTER 2016

• Group unaudited revenue increased by 35.1% to RUB 16.4bn, vs. RUB 12.2bn in Q1 2015;
• Like-for-like sales at Detsky Mir stores in Russia grew by 13.1%[1], with the number of checks growing by 0.9% and the average check increasing by 12.1%;
• Gross profit increased by 25.2% year-on-year to RUB 5.5bn vs. RUB 4.4bn in Q1 2015; the gross margin reached 33.4%;
• Selling, general and administrative expenses[2] as a share of revenue decreased by almost 2 p.p. to 28.5% compared with 30.3% in Q1 2015, driven by increased operational efficiency;
• OIBDA increased by 16.9% year-on-year to RUB 0.8bn vs RUB 0.7bn in Q1 2015; the OIBDA margin reached 4.9%;
• Net income more than quadrupled year-on-year to RUB 0.1bn;
• The net debt/adjusted OIBDA LTM ratio[3] as of March 2016 improved to 2.0x vs 2.3x in Q1 2015.

Vladimir Chirakhov, CEO of Detsky Mir Group, said:

“Detsky Mir Group continued to actively expand in the first quarter: unaudited consolidated revenue increased by 35.1% year-on-year to RUB 16.4bn. We maintained the double-digit pace of sales growth at comparable stores, with like-for-like sales growth of 13.1%.

Selling, general and administrative expenses as a share of revenue decreased by nearly 2 p.p. as we implemented projects to improve operational efficiency and automated business processes, thereby optimizing our back-office and sales headcount. OIBDA increased by 16.9% to RUB 806mln in Q1 2016.

Kazakhstan remains one of our priority areas of focus. In the first quarter, like-for-like sales growth (KZT) at Detsky Mir stores in Kazakhstan was 50.3%. Although our Kazakh stores account for a relatively small proportion of total sales, we see great business opportunities in this area, and plan to open at least five stores in 2016.”

FINANCIAL PERFORMANCE IN Q1 2016 VS. Q1 2015

FINANCIAL PERFORMANCE IN 12 MONTHS ENDING 31 MARCH 2016

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([1]) Here and elsewhere like-for-like (LFL) sales and average check are calculated in Russian roubles. Trends are presented for the comparative period (Q1 2016 to Q1 2015) and include only Detsky Mir stores in Russia.

([2]) Selling, general and administrative expenses, and other operating expenses are calculated without depreciation and amortisation

([3]) Adjusted OIBDA LTM excludes one-off effects related to the disposal of the Yakimanka building and payments under the long term incentive scheme;

([4]) Chain growth since the beginning of 2016 amounted to four stores excluding relocation

([5]) Excluding one-off effects related to payment of bonuses under the long term incentive scheme

([6]) Excluding one-off effects related to the disposal of the Yakimanka building and payment of bonuses under the long term incentive scheme

([7]) Excluding one-off effects related to the disposal of the Yakimanka building, payment of bonuses under the long term incentive scheme and other non-operating one-off costs