O`KEY GROUP REPORTS 35.4% EBITDA GROWTH FOR THE FIRST HALF OF 2024

O'KEY Group S.A.
O`KEY GROUP REPORTS 35.4% EBITDA GROWTH FOR THE FIRST HALF OF 2024
23-Aug-2024 / 08:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

Press release

23 August 2024

O`KEY GROUP REPORTS 35.4% EBITDA GROWTH FOR THE FIRST HALF OF 2024

O`KEY Group S.A. (AIX, MOEX: OKEY, the“Group”), one of Russia's leading food retailers, has announced its financial results for the first half (H1) of 2024 based on condensed consolidated interim financial statements.

All materials published by the Group are available on its website okeygroup.

All results are
according to
IFRS
16 unless stated otherwise.

H1 2024 financial highlights

• Total Group revenue increased by 6.2% YoY to RUB 105.7 bn driven mainly by retail revenue growth from both O'KEY hypermarkets and DA! discounters. The two formats demonstrated LFL revenue growth for the reporting period.
• Group gross profit rose by 6.7% YoY to RUB 24.2 bn, while gross margin grew by 0.1 pps to 22.9% mainly due to efficient procurement and shrinkage cost management.
• Group EBITDA increased by 35.4% YoY to RUB 9.6 bn, while EBITDA margin grew by 2.0 pps to 9.1% due to improved profitability in both business segments.
• O'KEY hypermarkets EBITDA grew by 18.6% YoY to RUB 6.5 bn, while EBITDA margin was up by 1.3 pps to 9.2% driven by revenue growth combined with optimised operating expenses.
• DA! discounters EBITDA nearly doubled YoY to RUB 3.2 bn, while EBITDA margin increased to 9.0% from 5.4% in the prior year. This was driven by both operating expenses optimisation and maturation of DA! stores opened in previous years.
• The Group posted a net profit of RUB 78 mln for H1 2024 compared to a net loss of about RUB 3.0 bn a year earlier.

Group profit and
losses highlights in H1
2024

Group revenue

In H1 2024, total Group revenue increased by 6.2% YoY to RUB 105,653 mln led mainly by retail revenue growth. Group retail revenue was up 6.2% YoY to RUB 104,568 mln in H1 2024 driven by performance of both O'KEY hypermarkets and DA! discounters.

Group net retail revenue and
LFL revenue

For more details, please refer to the Group's Q2 2024 Trading Update .

Group gross profit increased by 6.7% YoY to RUB 24,176 mln in H1 2024. Group gross margin grew by 0.1 pps YoY to 22.9% due to consistent work on enhancing the efficiency of procurement, as well as shrinkage costs optimisation.

Group selling, general and administrative expenses

In H1 2024, the Group's selling, general and administrative (SG&A) expenses were down by 4.2% YoY to RUB 20,843 mln, while SG&A as a percentage of revenue decreased by 2.0 pps YoY to 19.8% mainly due to lower personnel, communication and utilities, and depreciation and amortisation costs.

Personnel costs decreased by 7.4% YoY to RUB 8,727 mln, and by 1.2 pps to 8.3% as a percentage of revenue. The decrease was largely due to cost optimisation on the Group level and a higher number of mature discounters hitting their turnover targets.

Communication and utilities costs decreased by 0.5% YoY to RUB 2,687 mln, and by 0.2 pps to 2.5% as a percentage of revenue, on the back of the Group's revenue growth rate outpacing utility tariffs inflation, as well as measures taken to boost the efficiency of utility usage.

Marketing costs remained almost unchanged YoY at RUB 958 mln, having decreased slightly as a percentage of revenue to 0.9%, thanks to effective management of various communication channels mix.

Group EBITDA grew by
35.4%
YoY to
RUB
9,616
mln, while EBITDA margin increased by
2.0
pps
YoY to
9.1%, with a positive momentum in both business segments. O'KEY hypermarkets EBITDA increased by 18.6% YoY to RUB 6,459 mln, while EBITDA margin grew by 1.3 pps YoY to 9.2%. DA! discounters EBITDA nearly doubled YoY to RUB 3,157 mln compared to RUB 1,656 mln in H1 2023. EBITDA margin increased by 3.6 pps YoY to 9.0% from 5.4% in the prior year.

Depreciation and amortisation costs decreased by 6.0% YoY to RUB 5,372 mln, and by 0.7 pps to 5.1% as a percentage of revenue, mainly as a result of ongoing asset portfolio optimisation and review of the assets' useful life.

Other operating income was RUB 714 mln compared to other operating expenses of RUB 389 mln in the prior year. The increase was mainly due to the Group's renegotiation of lease terms in the hypermarket segment in H1 2024.

Net finance costs increased by 23.7% YoY to RUB 4,018 mln, which was mainly attributable to an increase in the weighted average interest rate driven by a gradual refinancing of loans raised when interest rates were low. A large
part of
interest expenses was
attributable to
non-current lease liabilities (under IFRS
16).

Net foreign exchange gain was
RUB
73
mln compared to
a foreign exchange loss of RUB
881
mln in the prior year. The gain came from the rouble appreciation in H1 2024 and was largely attributable to intragroup US dollar-denominated loans.

Group net profit amounted to RUB 78 mln in H1 2024 compared to a loss of RUB 2,977 mln in H1 2023.

Group cash flow

Net cash from operating activities amounted to RUB 4,424 mln in H1 2024 compared to RUB 521 mln used in operating activities in H1 2023. The improvement was on the back of the Group's stronger turnover and profitability as well as due to working capital optimisation, including faster inventory turnover, in the reporting period.

Net cash used in investing activities totalled RUB 831 mln in H1 2024, down from RUB 2,249 mln in the prior year. In H1 2024, the Group invested RUB 484 mln (excluding VAT) in the hypermarket business and RUB 349 mln (excluding VAT) in the development of its discounter business.

Net cash used in financing activities increased to RUB 8,321 mln in H1 2024 from RUB 3,079 mln in the prior year. The growth was due to the scheduled repayment of the Group's loans in H1 2024.

As of 30 June 2024, the Group had RUB 17,560 mln of available credit lines in Russian roubles with fixed and floating interest rates. If necessary, proceeds from these facilities may be used to finance operating and investing activities.

Group net debt position

[1] Short-term debt does not include interest accrued on loans and borrowings.

As
of
30 June
2024, the
total interest-bearing liabilities (net of
cash) to
EBITDA ratio decreased to
3.24x from
4.08x as of
30 June 2023, driven mainly by a decrease in net debt by RUB 3,391 mln YoY, as well as a growth in EBITDA for the last twelve months.

Group interim IFRS report

The
Group's interim report, including the
full set of IFRS interim financial statements, can be
found at
.

For more information, please contact:

ABOUT O`KEY GROUP

O`KEY Group S.A. (AIX, MOEX: OKEY) is one of the leading grocery retailers in Russia, operating hypermarkets under the O`KEY brand and discounters under the DA! brand.

As of 30
June 2024, the Group had 296
stores across Russia (77
hypermarkets and 219
discounters) with a total selling space of 659,973
sq
m. O`KEY opened its first hypermarket in St
Petersburg in 2002 and has since demonstrated continuous growth. It was the first Russian food retailer to launch e-commerce operations offering a full range of hypermarket products for home delivery. The Group operates e-commerce pick-up and delivery points in 72 O'KEY hypermarkets across the country. In 2015, we launched the first discount chain in Russia under the DA! brand. The Group operates five distribution centres in Russia
– three in Moscow and two in St
Petersburg
– and employs 19,200
people.

In 2023, the Group's revenue amounted to RUB
207.9
bn, and EBITDA reached RUB
17.0
bn.

The O`KEY Group shareholder structure is as follows: NISEMAX
Co
Ltd
– 49.11%. GSU
Ltd
– 34.14%, free-float and other holders
– 16.75%.

DISCLAIMER

These materials contain statements about future events and expectations that are forward-looking statements. These statements typically include words such as 'expects' and 'anticipates' and words of similar import. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

None of the future projections, expectations, estimates or prospects in this announcement should be taken as forecasts or promises, nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in this announcement. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

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The issuer is solely responsible for the content of this announcement.