2 March 2015. Russia, Moscow. Detsky Mir Group (Detsky Mir or the Group), the largest children's goods retailer in Russia and Kazakhstan, announces its audited financial results for the year ended 31 December 2014. 

KEY FINANCIAL RESULTS FOR THE FULL YEAR 2014

o   The Group's revenue increased by 26.2% to RUB 45.4bn vs RUB 36.0bn in 2013;

o   Detsky Mir's like-for-like sales gained 13.6% (with the number of checks growing by 8.1%, and the average check growing by 5.1%);

o   Detsky Mir's online store increased its sales by 95% up to RUB 443m;

o   Gross profit went up 24.1% reaching RUB 17.3bn compared to RUB 13.9bn in 2013; gross profit margin was slightly down to 38.0% against 38.6% a year earlier due to the effects of a weakening rouble and the need to maintain competitive prices at the stores;

o   The ratio of selling, general and administrative expenses to revenue dropped by 1.2 pp to 29.8% compared with 31.0% a year earlier;

o   OIBDA increased by 77% to RUB 4.9bn vs RUB 2.8bn in 2013: OIBDA margin gained 3.1 pp and reached 10.8% compared to 7.7% a year earlier;

o   Net profit rose by 77% up to RUB 2.0bn compared to RUB 1.2bn in 2013; net profit margin gained 1.3 pp from 3.2% in 2013 to 4.5%;

o   Debt was reduced compared to 2013:  Net Debt /OIBDA stood at 1.6x (in 2013 – 1.8x); net debt as of 31 December 2014 amounted to RUB 8.0bn. The entire debt of the company is denominated in roubles;

o   The company paid RUB 2.5bn in dividends to its shareholders in 2014 (compared to RUB 0.4bn in 2013). 

 2014 HIGHLIGHTS 

o   In 2014, the Group opened 72 new stores, including 56 Detsky Mir super- and hypermarkets and 16 ELC stores. All Detsky Mir stores launched in 2014 were based on the new concept presented in the MEGA Belaya Dacha shopping mall in December 2013. The Group's total number of stores increased to 322 with the total selling space of 390,000 sq m; 

o   In August 2014, Detsky Mir opened a 7,000 sq m flagship store at Vozdvizhenka St in the centre of Moscow. The hypermarket is now the biggest children's goods store in the CIS and in two months it has become a leader in Detsky Mir chain by customer traffic and goods turnover;

o   In December 2014, Detsky Mir and Sistema JSFC completed the sale of office buildings located at the following address: Moscow, 26 Bolshaya Yakimanka St, resulting in a relocation of the Yakimanka Children's Gallery store, which was reopened in December 2014 at the new address: Moscow, 3 Smolenskaya Square (the Smolensky Passazh shopping mall);

o   The Group's online store reached breakeven and reported positive OIBDA for 2014;

o   Detsky Mir's CEO became a minority shareholder of OJSC Detsky Mir as part of a long-term incentive programme for the top management. He now holds a 1.08% stake in the company (7,984,499 shares). 

Vladimir Chirakhov, CEO of Detsky Mir Group: 

«2014 was an important year for the Company's development and for the enhancement of its business efficiency. Despite the worsening macroeconomic environment, Detsky Mir Group continued implementing its development programme and opened a record number of new stores. The total number of the chain's super- and hypermarkets was increased by 70 and reached 322 in 2014 compared with 252 stores in 2013: we launched 56 Detsky Mir stores (2 stores were closed) and 16 ELC stores. I would like to point out that all the new Detsky Mir stores follow our new concept. Besides, ten of the chain's biggest stores were renovated and refurbished to fit the new concept. Another landmark event of this year was the opening of the 7,000 sq m Detsky Mir flagship store, the largest children's store in the CIS.

New initiatives and an interactive format enabled Detsky Mir to boost its like-for-like sales by increasing its customer traffic, while successfully containing the growth of prices amid considerable forex fluctuations. The implementation of a well-chosen strategy made it possible not only to make our customers happy about our pricing policy, but also enabled the Company to generate RUB 2.0bn in net profit and pay RUB 2.5bn in dividends. While increasing returns on equity Detsky Mir also continues maintaining its debt at comfortable levels – the Net Debt /OIBDA ratio fell from 1.8x in 2013 to 1.6x in 2014.

Despite the deterioration of the macroeconomic environment, Detsky Mir will proceed with its 2015 programme for increasing the efficiency and value of the business. We are going to open at least 40 new stores, complete the Company's migration to a uniform SAP platform and launch our own warehouse in the Moscow region».

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