22 February 2019

Lenta publishes audited IFRS financial results for the year ended 31 December 2018

St. Petersburg, Russia; 22 February 2019 – Lenta Ltd (“Lenta” or the “Company”), one of the largest retail chains in Russia, today announces its audited consolidated IFRS results for the year ending 31 December 2018.

View the full press release

2018 Financial Highlights:

  • Total sales grew 13.2% to Rub 413.6bn (2017: Rub 365.2bn), including retail sales growth of 13.6% to Rub 392.1bn (2017: Rub 345.0bn) and wholesales growth of 6.0%;
  • Adjusted EBITDA1 of Rub 36.2bn, up 2.0% (2017: Rub 35.5bn) with a margin of 8.8% (2017: 9.7%). FY2018 EBITDA growth was impacted by relatively weak results in the third quarter, with a return to positive EBITDA growth in the fourth quarter;
  • Gross margin of 21.5% (+0.1 p.p. vs. 2017) slightly increased as improved supplier conditions and LFL store productivity were almost fully offset by increased shrinkage and higher promo share and slightly higher supply-chain cost due to higher centralisation;
  • SG&A increased to 16.7% of sales (1.4 p.p. higher vs. 2017) due mostly to personnel expenses following salary indexation in 2H2017, higher depreciation linked to expansion and an increase in rental costs linked to the high volume of leased space opened in late 2017;
  • Capital expenditures of Rub 22.1bn, a decrease of 18.8% compared to 2017 (Rub 27.3bn) due mainly to the slower rate of expansion compared to the prior year and lower pre-investments in land and stores to be opened in future years;
  • Net cash generated from operating activities, before net interest and income taxes paid, of Rub 32.4bn compared to Rub 34.8bn in 2017 (a decrease of 6.9%) primarily driven by working capital movements;
  • Net interest expenses of Rub 9.1bn, a decrease of 13.4% compared to 2017 (Rub 10.5bn) due to a reduction of interest rates despite higher average borrowings;
  • Net Profit 2 of Rub 11.8bn, down 11.1% (2017: Rub 13.3bn) with a margin of 2.9%. The reduction in net profit was largely attributable to one-off tax benefits in 2017; and
  • Net Debt of Rub 93.3bn as of 31 December 2018 almost unchanged versus the end of 2017 (Net debt/Adjusted EBITDA of 2.6x).

2018 Operational Highlights:

  • 13 hypermarkets and 38 supermarkets were opened on net basis3 during 12M 2018 with 84.7 th. sq.m of net selling space addition;
  • Total number of stores was 379 as at 31 December 2018, comprising 244 hypermarkets and 135 supermarkets with selling space of 1,467,482 sq.m (+6.1% vs. 31 December 2017);
  • Like-for-like (“LFL”) 4 retail sales growth of 1.3% for 2018 with significant improvement in 4Q2018;
  • LFL average ticket increased by 0.8% in 2018;
  • LFL retail traffic increased by 0.5% in 2018;
  • The number of active loyalty cardholders5 increased by 17% y-o-y to a total of 14.4m as of 31 December 2018; and
  • New Lenta App was introduced late in 2018 with the number of installations exceeding 1.4 million as at the date of the Announcement.

View the full press release

For further information please visit www.lentainvestor.com, or contact:

Mariya Filippova
Head of PR and GR
Tel: +7 812 380-61-31 ext.: 1892
E-mail: maria.filippova@lenta.com

Russian Media:
NW Advisors
Anton Karpov & Victoria Afonina
Тel:+7 495 795 06 23
E-mail: lenta@nwadvisors.com

1 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
2 Net Profit equates to “Profit for the year” in the attached IFRS Financial Statements
3 One hypermarket in Saint-Petersburg with selling space of 7,219 sq.m was closed in November 2018 as a result of fire. It is expected that this hypermarket will be repaired and returned to operation during 2019. Three supermarkets were closed during the reported period: two supermarkets in Moscow with selling space of 963 sq.m and 721 sq.m and one store in Tula (Central region) with selling space of 702 sq.m
4 Lenta’s stores are included in the LFL store base starting 12 months after the end of the month they are opened
5 Cardholders who made at least 2 purchases at Lenta during the 12 months to 31 December 2018 are considered active