DETSKY MIR GROUP ADJ. EBITDA INCREASES BY 30.1% TO RUB 1.9BN IN Q1 2019
Moscow, Russia, 29 April 2019 – 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 first quarter ended 31 March 2019.
Q1 2019 FINANCIAL HIGHLIGHTS[1]
- Group unaudited revenue increased by 16.1% year-on-year to RUB 27.9 bn.
- Online revenue[2] increased by 74.1% year-on-year to RUB 2.6 bn.
- Revenue in Kazakhstan rose by 60.4% year-on-year to RUB 743 m.
- Like-for-like sales[3] at Detsky Mir stores in Russia and Kazakhstan grew by 7.2%. The number of tickets grew by 8.2% while the average ticket price decreased by 0.9%.
- Like-for-like sales at Detsky Mir stores in Russia grew by 6.6%. The number of tickets grew by 7.5% while the average ticket price decreased by 0.9%.
- Like-for-like sales[4] at Detsky Mir stores in Kazakhstan increased by 36.4%.
- Detsky Mir opened six new branded stores[5] in Q1 2019. The Group had 748 stores as of 31 March 2019.[6]
- Total selling space increased by 12.1% year-on-year to approximately 769,000 sq. m.
- Gross profit increased by 13.7% year-on-year to RUB 8.1 bn, with a gross margin of 29.0%.
- SG&A as a percentage of revenue[7] decreased by 1.3 p.p year-on-year, driven by increased operational efficiency.
- Adjusted EBITDA[8] increased by 30.1% year-on-year to RUB 1.9 bn; the adjusted EBITDA margin was 6.7%. EBITDA[9] totalled RUB 1.6 bn (+27.2% year-on-year).
- Adjusted net profit[10] increased by 4.5% year-on-year to RUB 474 m. Net profit totalled RUB 291 m (-13.4% year-on-year).
- The net debt /adjusted EBITDA ratio stood at 1.8x as of 31 March 2019.
EVENTS AFTER THE REPORTING PERIOD
- In April 2019, the Board of Directors recommended that the AGM (convened on 16 May 2019) approve a final dividend for the 2018 financial year of RUB 3.3 bn representing a payment of RUB 4.45 per ordinary share. The BoD also recommended that the AGM set the record date establishing eligibility to receive the dividend as 27 May 2019.
- In April 2019, Detsky Mir successfully issued its series BО-07 exchange-traded bond with a nominal value of RUB 5 bn and a coupon rate set at 8.90% p.a. The put option is in 3 years. Investor demand was more than twice the bond issue size, allowing the issuer to revise the marketing range from the initial level. Proceeds from the placement were used to refinance existing debt with the aim of further diversifying the credit portfolio and reducing costs.
Vladimir Chirakhov, PJSC Detsky Mir Chief Executive Officer, said:
“We were able to increase business growth rate in the first quarter of 2019 amid continued stagnation of consumer demand in Russia. Consolidated unaudited revenue rose by 16.1% YoY to RUB 27.9bn.
“In addition to ramp-up of stores opened in 2017-2018, one of the key drivers behind revenue growth was like-for-like sales growth rate of 7.2% resulting from 8.2% increase in the number of transactions.
“E-commerce is still the fastest-growing segment of Detsky Mir’s business. The online store’s revenue increased by 74.1% YoY in Q1 2019. This channel’s share in the Company’s total revenue rose to 9.3%.
“Our team’s top priority remains improving operating efficiency, primarily to offer our customers an affordable and wide range of products. Despite continued investment in prices in the reporting period, we managed to improve our EBITDA margin by 0.7 p.p. to 6.7%, thanks to a significant reduction in selling, general and administrative expenses as a percentage of revenue – by 1.3 p.p.
“Adjusted net income grew 4.5% in the first quarter of 2019. This line was impacted by an increase in interest expenses and a foreign exchange loss. Detsky Mir will continue to combine high business growth rates and high level of dividend payments.”
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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 Q1 2019 unaudited IFRS Financial Results.
The dial-in numbers for the conference call are:
Russia
+7 499 609 12 00
UK
+44 203 769 68 19
USA
+1 646 787 01 57
PIN
51 57 19
For additional information:
|
Nadezhda Kiseleva Head of Public Relations Office: +7-495-781-08-08, ext. 2041 Cell: +7-985-992-78-57 nkiseleva@detmir.ru |
Sergey Levitskiy Head of Investor Relations Office: +7-495-781-08-08 ext. 2315 slevitskiy@detmir.ru |
Detsky Mir Group (MOEX: DSKY) is a multi-format retailer and Russia’s largest specialized children’s goods retailer. The Group comprises the Detsky Mir retail chain, ELC (Early Learning Centre in Russia) and the ABC retail chains, as well as the Zoozavr pet supplies retail chain. The company operates a network of 674 Detsky Mir stores located in 254 cities in Russia, Kazakhstan and Belarus, as well as 56 ELC and 12 ABC stores as of 31 March 2019. The Zoozavr retail chain comprises six stores. Total selling space was approximately 769,000 square meters.
In accordance with the audited Financial Statements under IFRS, Group revenue amounted to RUB 110.9 bn for FY 2018, adjusted EBITDA totalled RUB 12.7 bn and adjusted profit amounted to RUB 7.2 bn.
Detsky Mir Group’s shareholder structure as of the date of this announcement is as follows: PJSC Sistema[11] – 52.10%, Russia-China Investment Fund (RCIF) [12] – 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]) Excluding the effect of the new IFRS 16 (“Lease”) accounting standards.
([2]) 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]) Calculated in the national currency of Kazakhstan (tenge).
([5]) In Q1 2019, Detsky Mir closed five stores.
([6]) Including 68 ELC and ABC stores, as well as six Zoozavr stores.
([7]) Hereinafter, selling, general and administrative expenses exclude D&A expenses and adjusted for share-based compensation and cash bonuses under the LTI program
([8]) 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.
([9]) Hereinafter, see Attachment A for definitions and reconciliation of EBITDA to IFRS financial measures.
([10]) Hereinafter, adjusted for additional bonus accruals under the LTI program (together with related tax effects). See Attachment A.
([11]) 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.
([12]) 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.