DIXY GROUP DEMONSTRATES STRONG GROWTH AND SOLID PROFITABILITY IMPROVEMENT

DIXY GROUP DEMONSTRATES
STRONG GROWTH AND SOLID PROFITABILITY IMPROVEMENT
IN THE THIRD QUARTER OF 2014
Moscow, Russia, November 24, 2014
DIXY Group (MOEX: DIXY) – one of Russia’s leading retailers of foods and everyday products – today
announced unaudited IFRS results for the third quarter and first nine months of 2014.
Key highlights of the third quarter and the first nine months of 2014:
 In the first nine months of 2014, the Company opened 269 stores on net basis. As of September 30, 2014, the
Company operated 2,068 stores in Central, North-West and Urals Federal Districts of Russia.
 Selling Space increased by 23% year-on-year to 703,507 sq. m as of September 30, 2014.
 Revenue increased by 31.0% (18.8% in USD) year-on-year to RUB 57.9 bln (USD 1.6 bln) in the third quarter and
grew by 25.3% (12.0% in USD) year-on-year to RUB 164.9 bln (USD 4.7 bln) in the first nine months of 2014.
 Gross Profit grew by 29.2% (17.1% in USD) year-on-year to RUB 17.4 bln (USD 482.0 mln) in the third quarter
of 2014, and grew by 25.9% (12.5% in USD) year-on-year to RUB 49.9 bln (USD 1.4 bln) in the first nine months
of 2014.
 EBITDA grew by 56.3% (41.6% in USD) year-on-year to RUB 4.3 bln (USD 119.8 mln) in the third quarter of
2014, and grew by 45.0% (29.6% in USD) year-on-year to RUB 11.7 bln (USD 331.5 mln) in the first nine months
of 2014.
 EBITDA Margin improved by 120 basis points year-on-year to 7.5% in the third quarter, and by 100 basis points
year-on-year to 7.1% in the first nine months of 2014.
 Net Profit almost doubled year-on-year to RUB 1.2 bln (USD 33.0 mln) in the third quarter of 2014, and grew
2.4x times to RUB 3.2 bln (USD 89.3 mln) in the first nine months of 2014.
 Operating Cash Flow increased by 60.1% (43.0% in USD) year-on-year to RUB 5.8 bln (USD 164.2 mln) in the
first nine months of 2014.
1
In the first nine months of 2014, the Company opened 269 stores on net basis and increased selling space by 23%
year-on-year.
In the third quarter of 2014, the Company continued ticket and traffic driving promotional activity in DIXY chain.
The Company extended the range of its private label products, and continued to advertise, promote, and invest in “D”brand.
In the third quarter of 2014, the Company demonstrated 14.6% like-for-like sales growth on Group level, and record
17.7% like-for-like sales growth for DIXY banner.
The Company improved centralization level (deliveries through own distribution centers) for its neighborhood stores
to 89% in the third quarter of 2014. The logistic service level (success of deliveries ratio) stood at 91% in the third
quarter of 2014.
3Q and 9M 2014 Key Financial Highlights, year-on-year
in RUB million
Total Revenue
Retail Revenue
Gross Profit
Gross Margin, %
SG&A
SG&A, % of Sales
Operating Profit
Operating Margin, %
Net Profit
Net Profit Margin, %
EBITDA
EBITDA Margin, %
3Q 2014
57,895
57,422
17,442
30.1%
14,825
25.6%
2,617
4.5%
1,195
2.1%
4,335
7.5%
3Q 2013
44,180
43,778
13,504
30.6%
12,002
27.2%
1,502
3.4%
628
1.4%
2,774
6.3%
Change
31.0%
31.2%
29.2%
(50 bp)
23.5%
(160 bp)
74.3%
110 bp
90.4%
70 bp
56.3%
120 bp
9M 2014
9M 2013
164,858
163,494
49,919
30.3%
42,972
26.1%
6,947
4.2%
3,160
1.9%
11,732
7.1%
131,567
130,374
39,643
30.1%
35,209
26.8%
4,433
3.4%
1,331
1.0%
8,089
6.1%
Change
25.3%
25.4%
25.9%
20 bp
22.1%
(70 bp)
56.7%
80 bp
2,4х
90 bp
45.0%
100 bp
Revenues
Revenue increased by 31.0% (18.8% in USD) year-on-year to RUB 57.9 bln (USD 1.6 bln), driven by organic
expansion and supported by 14.6% like-for-like sales growth in the third quarter of 2014.
DIXY neighborhood stores revenue increased by 37.2% (24.3% in USD) year-on-year to RUB 46.2 bln (USD 1.3 bln)
in the third quarter of 2014. Victoria division revenue grew by 14.9% (4.2% in USD) year-on-year to RUB 7.2 bln
(USD 199.1 mln), while MegaMart division revenue increased by 5.1% (decreased by 4.7% in USD) to RUB 4.1 bln
(USD 112.0 mln) in the third quarter of 2014.
Gross Profit
Gross Profit grew by 29.2% (17.1% in USD) year-on-year to RUB 17.4 bln (USD 482.0 mln) in the third quarter of
2014.
Gross Margin decreased by 50 basis points year-on-year to 30.1% in the third quarter of 2014, driven mainly by
increased shrinkage costs, and offset partially by better commercial terms from suppliers.
Cost of goods sold, as a percentage of sales, decreased by 20 basis points year-on-year to 66.5% of sales in the third
quarter of 2014, driven by better purchasing terms. Shrinkage costs, as a percentage of sales, increased by 70 basis
points year-on-year to 2.6% of sales in the third quarter of 2014, due mainly to growing share of fresh categories,
especially, fruits and vegetables, in DIXY stores revenue. Transportation costs, as a percentage of sales, remained
flat year-on-year at 0.8% as percentage of sales in the third quarter of 2014.
2
Operating Expenses
Selling, General & Administrative Expenses increased by 23.5% (12.0% in USD) year-on-year to RUB 14.8 bln
(USD 409.6 mln) in the third quarter of 2014.
SG&A expenses, as a percentage of sales, decreased by 160 basis points year-on-year to 25.6%. The decrease was
driven mainly by the reduction of staff expenses and utilities, repair and maintenance expenses, as a percentage of
sales, offset partially by increased operating lease, and depreciation and amortization expenses, as a percentage of
sales, in the third quarter of 2014.
Staff expenses increased by 20.8% (9.5% in USD) year-on-year to RUB 6.9 bln (USD 191.6 mln) in the third quarter
of 2014, due primarily to organic growth of the business and wage indexations. Staff expenses, as a percentage of
sales, decreased by 100 basis points to 12.0% in the third quarter of 2014, driven mainly by higher staff productivity
and strong like-for-like stores performance.
Operating lease expenses grew by 32.8% (20.4% in USD) year-on-year to RUB 3.5 bln (USD 96.4 mln). Operating
lease expenses, as a percentage of sales, increased by 10 basis points year-on-year to 6.0% in the third quarter of
2014, mainly, because of growing share of rented space and larger number of newly opened stores in the first nine
months of 2014 compared to the same period last year.
Utilities, repair and maintenance expenses increased by 11.5% (1.1% in USD) year-on-year to RUB 1.2 bln (USD
33.9 mln) in the third quarter of 2014, due mainly to utilities tariffs indexation. Utilities, repair and maintenance
expenses, as a percentage of sales, decreased by 40 basis points year-on-year to 2.1% in the third quarter of 2014,
due mainly to strong like-for-like stores performance.
EBITDA grew by 56.3% (41.6% in USD) year-on-year to RUB 4.3 bln (USD 119.8 mln) in the third quarter of 2014,
and grew by 45.0% (29.6% in USD) year-on-year to RUB 11.7 bln (USD 331.5 mln) in the first nine months of 2014.
EBITDA Margin increased by 120 basis points year-on-year to 7.5% in the third quarter of 2014, and by 100 basis
points year-on-year to 7.1% in the first nine months of 2014.
Operating and Net Profits
Depreciation and amortization expenses increased by 35.0% (22.4% in USD) year-on-year to RUB 1.7 bln (USD
47.5 mln) in the third quarter of 2014, driven mainly by organic growth of the store chain, as well as logistic
infrastructure development. D&A expenses, as a percentage of sales, increased by 10 basis points to 3.0% in the
third quarter of 2014.
Operating Profit grew by 74.3% (57.9% in USD) year-on-year to RUB 2.6 bln (USD 72.3 mln) in the third quarter of
2014. Operating Margin improved by 110 basis points year-on-year to 4.5% in the third quarter of 2014.
Income tax expense amounted to RUB 377.9 mln (USD 10.4 mln), while effective tax rate stood at 24.0% in the
third quarter of 2014.
Net Profit increased by 90.4% year-on-year to RUB 1.2 bln (USD 33.0 mln) in the third quarter of 2014, and grew
2.4x times year-on-year to RUB 3.2 bln (USD 89.3 mln) in the first nine months of 2014.
Net Profit Margin improved by 70 basis points year-on-year to 2.1% in the third quarter of 2014, and by 90 basis
points year-on-year to 1.9% in the first nine months of 2014.
Cash Flows and Debt
Net Cash from Operating Activities increased by 60.1% (43.0% in USD) to RUB 5.8 bln (USD 164.2 mln) in the
first nine months of 2014 from RUB 3.6 bln (USD 114.8 mln) in the first nine months of 2013. The increase was
attributable to the Company’s revenue and profitability growth.
As of September 30, 2014, Total Financial Debt to EBITDA ratio declined to 1.7, and Total Financial Debt
amounted to RUB 26.7 bln (USD 678.8 mln), while Net Debt amounted to RUB 23.8 bln (USD 605.0 mln) as of
September 30, 2014.
3
3Q and 9M 2014 Income Statement Highlights, year-on-year
in RUB million
3Q 2014
3Q 2013
Change
Total Revenue
Retail Revenue
DIXY division
Victoria division
Victoria supermarkets
Victoria neighborhood
CASH
Megamart division
Megamart
Minimart
Total COGS
Cost of Goods Sold
as % of Sales
Transportation Costs
as % of Sales
Shrinkage of Inventories
as % of Sales
Gross Profit
Gross Margin, %
Total SG&A
as % of Sales
Staff Expenses
as % of Sales
Operating Lease Expenses
as % of Sales
D&A Expenses
as % of Sales
Utilities, Repair and
Maintenance Expenses
as % of Sales
Advertising Expenses
as % of Sales
Other Expenses
as % of Sales
Operating Profit
Operating Margin, %
Finance Costs (Net)
Net FX Loss (Gain)
Profit before Tax
Income Tax Expense
Net Profit
Net Profit Margin, %
9M 2014
9M 2013
Change
57,895
57,422
46,163
7,205
5,767
1,191
247
4,054
3,213
841
40,452
38,496
66.5%
447
0.8%
1,509
2.6%
17,442
30.1%
14,825
25.6%
6,936
12.0%
3,489
6.0%
1,718
3.0%
1,227
44,180
43,778
33,652
6,269
4,947
1,122
200
3,856
3,048
808
30,677
29,475
66.7%
354
0.8%
847
1.9%
13,504
30.6%
12,002
27.2%
5,742
13.0%
2,627
5.9%
1,272
2.9%
1,101
31.0%
31.2%
37.2%
14.9%
16.6%
6.1%
23.6%
5.1%
5.4%
4.1%
31.9%
30.6%
(20 bp)
26.2%
78.2%
70 bp
29.2%
(50 bp)
23.5%
(160 bp)
20.8%
(100 bp)
32.8%
10 bp
35.0%
10 bp
11.5%
164,858
163,494
129,763
21,557
17,310
3,551
696
12,175
9,693
2,482
114,939
109,721
66.6%
1,229
0.7%
3,989
2.4%
49,919
30.3%
42,972
26.1%
20,745
12.6%
9,691
5.9%
4,785
2.9%
3,868
131,567
130,374
100,106
18,777
14,648
3,519
610
11,491
9,017
2,473
91,924
88,341
67.1%
1,140
0.9%
2,444
1.9%
39,643
30.1%
35,209
26.8%
17,631
13.4%
7,392
5.6%
3,656
2.8%
3,097
25.3%
25.4%
29.6%
14.8%
18.2%
0.9%
14.1%
6.0%
7.5%
0.3%
25.0%
24.2%
(50 bp)
7.8%
(20 bp)
63.2%
50 bp
25.9%
20 bp
22.1%
(70 bp)
17.7%
(80 bp)
31.1%
30 bp
30.9%
10 bp
24.9%
2.1%
273
0.5%
1,182
2.0%
2,617
4.5%
931
113
1,573
378
1,195
2.1%
2.5%
204
0.5%
1,056
2.4%
1,502
3.4%
872
(27)
657
29
628
1.4%
(40 bp)
33.7%
12.0%
(40 bp)
74.3%
110 bp
6.8%
N/A
2.4x
13.1x
90,4%
70 bp
2.3%
688
0.4%
3,195
1.9%
6,947
4.2%
2,648
152
4,146
986
3 160
1.9%
2.4%
589
0.4%
2,844
2.2%
4,433
3.4%
2,529
47
1,858
526
1 331
1.0%
(10 bp)
16.7%
12.3%
(30 bp)
56.7%
80 bp
4.7%
3.2x
2.2x
87.4%
2.4x
90 bp
Operating profit to EBITDA Reconciliation for 3Q and 9M 2014, year-on-year
in RUB million
3Q 2014
3Q 2013
Change
9M 2014
9M 2013
Change
Operating profit
Depreciation & Amortization
EBITDA
2,617
1,718
4,335
1,502
1,272
2,774
74.3%
35.0%
56.3%
6,947
4,785
11,732
4,433
3,656
8,089
56.7%
30.9%
45.0%
4
9M 2014 Cash Flow Statement Highlights, year-on-year
in RUB million
Net Cash Generated from Operating Activities
Net Cash from Operating Activities before Changes in WC
Change in WC
Net Interest and Income Tax Paid
Net Cash Used in Investing Activities
Net Cash Used in Financing Activities
Net Increase/(Decrease) in Cash & Cash Equivalents
Cash and Cash Equivalents, EOP
Total Financial Debt as of September 30, 2014
in RUB million
Total Financial Debt
Short-term Debt
Long-term Debt
Net Debt
9M 2014
5,812
11,901
(1,775)
(4,315)
(5,266)
(2,037)
(1,492)
2,905
∆
60.1%
43.9%
N/A
N/A
N/A
N/A
N/A
54.0%
9M 2013
3,631
8,270
(1,380)
(3,259)
(4,881)
(509)
(1,759)
1,887
As of 30.09.2014
26,735
4,755
21,980
23,830
% of total
100%
18%
82%
-
9M 2014 Stores Operational Statistics, year-on-year
As of
30.09.2014
2,068
269
1,478,895
24%
703,507
20%
Number of Stores
New Store Openings (net)
Total Space, sq. m
Total Space Owned, %
Selling Space, sq. m
Selling Space Owned, %
3Q and 9M 2014 Average Ticket by Format, year-on-year
Rubles, incl. VAT
3Q 2014 3Q 2013
DIXY neighborhood stores
Kvartal neighborhood stores
Victoria Supermarket
Cash&Carry CASH
Compact hypermarket MegaMart
Compact hypermarket MiniMart
295.6
255.6
476.9
2,121.2
634.9
455.0
264.9
243.1
485.5
2 099.8
593.9
428.2
∆%
12%
5%
(2%)
1%
7%
6%
As of
30.09.2013
1,667
168
1,250,574
26%
574,180
23%
∆
401
101
18%
(200 bp)
23%
(300 bp)
9M 2014 9M 2013
300.1
260.7
501.7
2,155.8
642.2
456.4
267.4
247.7
498.4
2,127.5
604.2
439.6
∆%
12%
5%
1%
1%
6%
4%
Significant Disclosure Annotations:





Financial statements for the third quarter and first nine months of 2014 disclosed in the press release are unaudited.
Total financial debt includes borrowings and financial lease liabilities.
Net debt is calculated as Total financial debt minus Cash and cash equivalents as of the end of the period.
Based on the audited appraisal of DIXY Group financial statements for FY2013, Group’s financials reported for the
second quarter of 2013 were restated. As a result, Group’s financials reported for the first nine months of 2013 were also
restated after reporting date.
The following official exchange rates of the Central Bank of Russian Federation were used to convert Russian Rubles to
US dollars:
Average (third quarter), RUB/USD
Average (nine months), RUB/USD
As of September, 30, RUB/USD
2013
32.7977
31.6170
-
2014
36.1909
35.3878
39.3866
5
OJSC DIXY Group (MOEX: DIXY) is one of Russia’s leading retailers of foods and everyday products.
The first DIXY store was opened in Moscow in 1999, and after that the Company had been experiencing the period of
the intensive organic development, followed by the major acquisition of Victoria Group in June 2011.
As of October 31, 2014, the Company operated 2,093 stores, including 1,966 DIXY neighborhood stores, 92 Victoria
stores, 1 CASH store, and 34 compact hypermarkets MegaMart and MiniMart.
The Company operates in Central, Northwest and Urals federal districts of Russia, and in Kaliningrad region.
As of October 31, 2014, the Company had a total of 714,026 square meters of selling space.
The Company is the third largest national food retailer by revenue, selling area, and number of stores. The Company
employs over 40,000 people.
In May 2007, the Company raised USD 360 mln in its IPO on the RTS and MICEX. A controlling stake of 54.4% in
OJSC DIXY Group is owned by Mercury Group, a diversified holding company.
In 2013, the Company’s total revenue amounted to RUB 180 bln (USD 5.7 bln).
The Russian business magazine Expert rates DIXY Group as one of the Top-100 largest Russian companies.
For further enquiries, please, contact:
Natalya Belyavskaya
Head of Investor Relations
DIXY Group of Companies
Tel.: + 7 495 223-3338
Fax: + 7 495 933-0259
E-mail: [email protected]
[email protected]
http://www.dixy.ru/
Anastasia Orlova
PR Director
DIXY Group of Companies
Tel.: +7 495 933 1450 ext. 2132
Fax: +7 495 933 0259
Mob.: +7 916 953 20 56
E-mail: [email protected]
[email protected]
http://www.dixy.ru/
6
OJSC DIXY Group
Interim consolidated statement of financial position
At 30 September 2014
(in thousands of Russian roubles, unless otherwise indicated)
Assets
Non-current assets
Property, plant and equipment
Capital advances
Goodwill
Other intangible assets
Operating lease deposits
Initial lease costs
Loans
Deferred tax asset
Available-for-sale investments
Current assets
Inventories
Trade and other receivables
Taxes recoverable and prepayments
Income tax prepayments
Loans
Initial lease costs
Cash and cash equivalents
Total assets
Equity and liabilities
Equity attributable to equity holders of the Parent
Share capital
Additional paid-in capital
Treasury shares
Retained earnings
Non-controlling interest
Total equity
Non-current liabilities
Borrowings
Finance leases
Unfavourable operating lease agreements
Deferred tax liability
Current liabilities
Trade and other payables
Borrowings
Finance leases
Advances from customers
Tax liability, other than income taxes
Income taxes payable
Unfavourable operating lease agreements
Provisions for liabilities and charges
Total equity and liabilities
30 September 2014
(unaudited)
31 December 2013
(audited)
35,174,836
489,772
17,665,526
2,782,170
1,152,855
79,808
211,052
386,794
37,530
57,980,343
34,061,088
987,283
17,665,526
2,877,612
941,906
108,565
139,314
428,532
–
57,209,826
11,231,057
7,234,455
1,379,285
638,901
5,579
22,385
2,905,108
23,416,770
81,397,113
10,102,566
6,039,855
1,814,778
452,284
3,156
27,242
4,397,044
22,836,925
80,046,751
1,248
20,443,341
(554)
10,243,909
30,687,944
353
30,688,297
1,248
20,443,341
(554)
7,083,876
27,527,911
357
27,528,268
21,980,473
50,173
642,172
22,672,818
28,560,115
2,535
76,451
851,691
29,490,792
21,891,648
4,741,122
13,598
228,471
1,077,144
41,461
36,791
5,763
28,035,998
50,708,816
81,397,113
21,468,165
327,808
47,012
307,023
793,827
34,808
43,285
5,763
23,027,691
52,518,483
80,046,751
7
OJSC DIXY Group
Interim consolidated statement of comprehensive income
For the nine months ended 30 September 2014
(in thousands of Russian roubles, unless otherwise indicated)
For the nine months
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Finance income
Finance costs
Foreign exchange loss, net
Profit before income tax
Income tax expense
ended 30 September
2014
2013
(unaudited)
164,857,687
131,566,729
(114,938,865)
(91,924,034)
49,918,822
39,642,695
(42,972,275)
(35,209,332)
6,946,547
4,433,363
127,687
10,964
(2,775,732)
(2,539,758)
(152,432)
(46,890)
4,146,070
1,857,679
(986,037)
(526,290)
Profit for the period
3,160,033
1,331,389
Total comprehensive income for the year
3,160,033
1,331,389
3,160,037
(4)
3,160,033
1,331,260
129
1,331,389
Attributable to:
Equity holders of the Parent
Non-controlling interest
8
OJSC DIXY Group
Interim consolidated statement of cash flows
For the nine months ended 30 September 2014
(in thousands of Russian roubles, unless otherwise indicated)
For the nine months
ended 30 September
2014
2013
(unaudited)
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of initial lease costs
Amortisation of unfavourable lease commitments
Loss on disposals of property, plant and equipment and intangible assets
Increase/(decrease) in provision for impairment of taxes recoverable and prepayments
Increase in provision for impairment of trade and other receivables
Write down/(reversal of write down) of inventory to net realizable value
Finance costs
Finance income
Unrealised foreign exchange losses
Operating cash flows before working capital changes
Increase in trade and other receivables
(Increase)/decrease in inventories
Increase in operating lease deposits
Decrease in taxes recoverable and prepayments
Increase/(decrease) in trade and other payables
Increase in tax liability, other than income tax
Decrease in advances from customers
Cash generated from operations
Income tax paid
Interest paid
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangible assets
Initial lease costs paid
Disbursement of loans
Loans repaid
Interest received
Purchases of intangible assets
Purchase of available-for-sale investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Purchase of non-contolling interest in subsidiary
Finance lease payments
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
4,146,070
1,857,679
4,551,505
238,032
28,713
(32,772)
15,050
42,257
51,760
59,928
2,775,732
(127,687)
152,432
11,901,020
(1,222,110)
(1,188,418)
(210,950)
477,103
164,903
283,317
(78,552)
10,126,313
(1,333,783)
(2,981,025)
5,811,505
3,469,308
200,971
26,293
(40,841)
216,092
(1,327)
1,350
(35,081)
2,539,758
(10,964)
46,890
8,270,128
(2,126,028)
1,054,533
(286,999)
1,703,989
(1,870,661)
244,789
(99,386)
6,890,365
(961,611)
(2,297,864)
3,630,890
(5,284,624)
92,809
7,716
(2,000)
120,413
(163,100)
(37,530)
(5,266,316)
(5,060,486)
338,979
(29,334)
857
4,244
(135,025)
(4,880,765)
(2,001,176)
(35,949)
(2,037,125)
(1,491,936)
4,397,044
2,905,108
7,895,506
(8,377,180)
(505)
(27,093)
(509,272)
(1,759,147)
3,646,067
1,886,920
9
`