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September 4, 2014

Lenta publishes reviewed IFRS financial results for 1H 2014

St. Petersburg, Russia; 4 September 2014 – Lenta Ltd (“Lenta” or the “Company”), one of the largest retail chains in Russia, today announces its reviewed consolidated IFRS results for the half year ending 30 June 20141.

1H 2014 Financial Highlights:

  • Total sales grew 38.3% to RUB 85.9bn (1H 2013: RUB 62.1bn);
  • Adjusted EBITDA2 of RUB 8.1bn, up 21.8% (1H 2013: RUB 6.7bn) with a margin of 9.5% (1H 2013: 10.7%);
  • Gross margin of 21.4% (+0.2 p.p. vs. 1H 2013) due to improved supplier conditions;
  • SG&A increased to 15.1% as a percentage of sales (+1.9 p.p. vs. 1H 2013) as the proportion of recently opened stores increased (14 hypermarkets out of 21 in 2013 were opened in the fourth quarter and additional five hypermarkets in 1H 2014) leading to higher pre-opening expense;
  • Capital investments of RUB 11.8bn, an increase of 42.0% compared to 1H 2013 (RUB 8.3bn) linked to a larger pipeline of new store openings in 2014, pre-investments in store opening programme for 2015-2016 and the construction of new distribution centres (“DCs”);
  • Net cash generated from operating activities, before net interest paid, of RUB 3.6bn compared to RUB 0.6bn in 1H 2013 driven by EBITDA growth and net working capital improvement;
  • Net interest expenses of RUB 2.9bn, an increase of 48.4% compared to 1H 2013 (RUB 2.0bn) due to additional borrowing in the reporting period and interest rates increase;
  • Net Profit3 of RUB 2.7bn, up 4.9% (1H 2013: RUB 2.6bn); and
  • Net Debt of RUB 51.0bn as of 30 June, 2014.

1H 2014 Operational Highlights:

  • Five hypermarkets and four supermarkets opened during first half 2014;
  • Total number of hypermarkets at 30 June, 2014 was 82. Including 14 supermarkets, selling space was c. 543,800 sq.m. as of 30 June 2014 (+37.2% vs. 30 June 2013);
  • 37% increase in the number of active loyalty card holders y-o-y to a total of 5.7mm as of 30 June, 2014;
  • Like-for-like (“LFL”)4 sales growth was 13.8% for 1H 2014;
  • LFL traffic increased by 6.1% in 1H 2014; and
  • LFL average ticket increased by 7.3% in 1H 2014.

1Certain amounts do not correspond to the IFRS financial statements for the six months ended 30 June 2013 and reflect adjustments made as detailed in Note 2 of the IFRS financial statements
2 Adjusted EBITDA is reported EBITDA as set out in Note 6 of the IFRS financial statements adjusted for non-recurring one-off items such as changes in accounting estimates and one-off non-operating costs and income
3 Net Profit equates to “Profit for the year” in the attached IFRS Financial Statements
4 Lenta’s stores are included in the LFL store base starting 12 months after the end of the month they are opened.

Lenta’s Chief Executive Officer, Jan Dunning said:

“We’re delighted that Lenta continues to drive rapid expansion and industry-leading like-for-like sales growth.

These results show that our pace of growth has accelerated further as we push on with our store opening plans and extend Lenta’s geographic and format reach in the under-served Russian market. We have added 37% to our total selling space in a year and are fully on track with the targets we set for new store growth at the time of the IPO.

With so many new and immature stores in our portfolio – more than half of our selling space is less than three years old – it is pleasing to report significant growth in cash generated from operations, despite having a large proportion of our stores in their ramp-up phase. Customers are responding well to our price investments and operating improvements, rewarding us with strong sales growth in both new and existing stores.”




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