REG-O'KEY Group S.A. O'KEY GROUP REPORTS 8.5% EBITDA MARGIN IN FY 2020
31/03/2021 07:55
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O'KEY Group S.A. (OKEY)
O'KEY GROUP REPORTS 8.5% EBITDA MARGIN IN FY 2020
31-March-2021 / 08:50 CET/CEST
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
EQS Group.
The issuer is solely responsible for the content of this announcement.
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Press Release
31 March 2021
O'KEY GROUP REPORTS 8.5% EBITDA MARGIN IN FY 2020
O'KEY Group S.A. (LSE, MOEX: OKEY, the "Group" or the "Company"), one of
Russia's leading food retailers, today announces its financial results for
the full year of 2020 based on audited consolidated financial statements.
All materials published by the Group are available on its website,
1 okeygroup.lu.
All results are presented under IFRS 16 unless stated otherwise.
FY 2020 Financial Highlights
• Total Group revenue increased by 5.6% YoY to RUB 174,341 mln
• O'KEY revenue rose by 0.8% YoY to RUB 148,341 mln, driven by 2.5% LFL
retail revenue growth
• DA! revenue soared by 45.2% YoY to RUB 26,000 mln, led by 27.8% LFL
revenue growth and selling space expansion
• Group gross profit increased by 5.4% to RUB 39,288 mln, and gross
margin amounted to 22.5% in FY 2020
• Group EBITDA grew by 5.5% YoY to RUB 14,832 mln, and EBITDA margin
stood at 8.5%
• DA! discounters EBITDA improved to positive RUB 784 mln in FY 2020
from negative RUB 215 mln in FY 2019, driven by strong revenue
performance and efficiency growth
• Group's operating profit grew by 2.8% YoY to RUB 5,039 mln in FY 2020
• Group's net debt position improved slightly YoY to a 3.6x
interest-bearing liabilities to EBITDA ratio, as of December 31, 2020
Armin Burger, O'KEY Group CEO, commented:
"In 2020, all sectors of the economy faced unprecedented instability and
challenges. And I am all the more pleased to report the solid financial
results delivered by O'KEY Group over the year. Our business model based
on clearly positioned and complementary formats - modern O'KEY
hypermarkets, DA! discounters, and a well-established e-commerce
platform - enables us to cover all customer segments, and leverage the
synergies. Our revenue grew by 5.6% YoY to RUB 174 billion, and Group
EBITDA reached RUB 14.8 billion with an EBITDA margin of 8.5%."
"O'KEY hypermarkets showed sustainable operational and financial results.
The revenue of O'KEY hypermarkets grew to RUB 148 billion, while EBITDA
stood at RUB 14.0 billion with an EBITDA margin of 9.5% in 2020. In 2020,
we introduced a new hypermarket concept, which is based on both O'KEY's
own innovations and best international practices aimed at strengthening
O'KEY's market positioning and improving the economics of selling space
utilisation. Within the next few years, we plan to expand our new
hypermarket concept across our key regions, starting with five to seven
stores in 2021."
"DA! discounters remained the main driver for the Group and once again
showed excellent results, with 45.2% revenue growth. As expected, DA!
broke even and delivered positive EBITDA in 2020. During the year, we
opened 18 discounters net of closures in Moscow and the Moscow Region,
which brought the total number of stores to 118 and increased selling
space by 16% YoY. Being focused on our strategic goals, we will continue
expansion of the discounter business, and expect to open 30 to 40 new DA!
stores in 2021, carefully selecting locations for every one of them. We
expect that the share of discounters in the Group revenue will keep
growing, thus supporting the Group's overall growth and increasing
operational profitability."
"Our strategic target is to deliver the best price-quality ratio in the
market in all our formats. We believe that the right strategy in action
will allow us to fully capitalise on the opportunities in a changing
market landscape."
Group Net Retail Revenue and LFL Revenue in 12M 2020
RUB mln 12M 2020 12M 2019 YoY, % LFL revenue,%
O'KEY Group 172,738 163,154 5.9% 5.4%
O'KEY hypermarkets 146,788 145,298 1.0% 2.5%
DA! discounters 25,950 17,856 45.3% 27.8%
For more details, please refer to the Group's 2 Q4 2020 Trading Update.
Group Profit and Losses Highlights in FY 2020 3 1
RUB mln FY 2020 FY 2019 ∆ YoY, %
Total Group revenue 174,341 165,086 5.6%
O'KEY 148,341 147,175 0.8%
DA! 26,000 17,911 45.2%
Gross profit 39,288 37,260 5.4%
Gross profit margin, %1 22.5% 22.6% (0.1 pp)
Selling, general and (32,792) (31,790) 3.2%
administrative expenses
SG&A, % of revenue 18.8% 19.3% (0.5 pp)
Other operating expenses, (1,457) (569) 2.6x
net
Operating profit 5,039 4,901 2.8%
Finance costs, net (4,884) (4,965) (1.6%)
Foreign exchange (loss)/gain (1,787) 938 n/a
Net (loss)/profit (1,444) 747 n/a
Group EBITDA 14,832 14,061 5.5%
Group EBITDA margin, % 8.5% 8.5% -
O'KEY EBITDA 14,048 14,277 (1.6%)
O'KEY EBITDA margin, % 9.5% 9.7% (0.2 pp)
DA! EBITDA 784 (215) n/a
DA! EBITDA margin, % 3.0% (1.2%) 4.2 pps
Group Revenue
RUB mln FY 2020 FY 2019 ∆ YoY, %
Total Group revenue 174,341 165,086 5.6%
Retail revenue 172,738 163,154 5.9%
Rental income 1,603 1,932 (17.0%)
Group retail revenue rose by 5.9% YoY to RUB 172,738 mln in FY 2020. This
growth was driven by strong LFL performance of DA! and their selling space
expansion, supported by O'KEY's positive LFL performance.
Rental income decreased by 17% (or by RUB 329 mln) YoY to RUB 1,603 mln in
FY 2020, mainly due to leaseholders' businesses shutting down during the
pandemic.
In FY 2020, total Group revenue increased by 5.6% YoY to RUB 174,341 mln.
Group gross profit
In FY 2020, the Group gross profit rose by 5.4% YoY to RUB 39,288 mln,
primarily driven by retail revenue growth.
Group gross margin decreased by 0.1 pp YoY to 22.5%, on the back of a
decline in rental income and higher shrinkage costs, as a percentage of
revenue. However, this was offset by more efficient procurement and lower
logistics costs, as a percentage of revenue.
Rental income, as a percentage of total revenue, declined by 0.2 pp YoY,
as explained above.
In FY 2020, shrinkage costs grew, as a percentage of revenue, by
0.2 pp YoY, primarily due to the cancellation of returns to suppliers of
products with a shelf-life of less than 30 days. As the new regulation was
enacted in June 2019, it resulted in a lower comparable base of 2019 vs
2020. Besides, the total share of 'fresh', 'ultra-fresh' products, and
fruit and vegetables, as the key categories of the company's customer
proposition, was up by 0.7 pp YoY to 46.4% of O'KEY's net retail revenue
in FY 2020.
Commercial margin improved by 0.2 pp YoY in FY 2020, driven by constant
assortment optimisation and customer proposition enhancement, as well as
operational and commercial synergies between the two formats.
Logistic costs, as a percentage of revenue decreased by 0.1 pp YoY, due to
the ongoing logistic processes optimisation.
Group Selling, General and Administrative Expenses
RUB mln FY 2020 % of FY 2019 % of ∆ YoY, pps
revenue revenue
Personnel costs 13,607 7.8% 13,006 7.9% (0.1 pp)
Depreciation and amortisation 8,204 4.7% 8,100 4.9% (0.2 pp)
Communication and utilities 3,720 2.1% 3,612 2.2% (0.1 pp)
Advertising and marketing 2,124 1.2% 2,267 1.4% (0.2 pp)
Repair and maintenance 1,345 0.8% 1,284 0.8% -
Insurance and bank commissions 1,026 0.6% 916 0.6% -
Operating taxes 735 0.42% 579 0.35% 0.07 pp
Security expenses 712 0.4% 705 0.4% -
Legal and professional expenses 685 0.4% 637 0.4% -
Materials and supplies 435 0.25% 312 0.19% 0.06 pp
Variable lease expenses and
expenses relating to short-term 161 0.1% 347 0.2% (0.1 pp)
and low-value leases
Other costs 38 0.0% 23 0.0% -
Total Group SG&A 32,792 18.8% 31,790 19.3% (0.5 pp)
Group SG&A expenses increased by 3.2% YoY to RUB 32,792 mln in FY 2020.
However, SG&A expenses as a percentage of revenue decreased by 0.5 pp YoY
to 18.8% in FY 2020.
Personnel costs, as a percentage of revenue, dropped by 0.1 pp YoY to 7.8%
in FY 2020, mainly due to the increased efficiency of store operations and
a ramp-up in the DA! business, partially offset by extra bonuses to store
staff during the pandemic.
Communication and utilities expenses increased by 3.0% YoY to
RUB 3,720 mln, but reduced as a percentage of revenue by 0.1 pp YoY in
FY 2020, resulting from the revenue growth.
Advertising and marketing expenses declined as a percentage of revenue by
0.2 pp YoY, as the Group revised the advertising activities in response to
the consumer behaviour change. The mix was optimised from traditional
media towards a higher share of digital and personal communication,
reflecting the customers' consumption shifts during the pandemic.
Operating tax expenses increased by 26.9% YoY to RUB 735 mln, and by
0.07 pp YoY, mainly as a result of an increase in cadastral value of the
property owned, as well as the store expansion programme.
Materials and supplies expenses increased by 39.3% YoY to RUB 435 mln, and
by 0.06 pp YoY, mainly due to RUB 141 mln pandemic-related expenses for
sanitary measures and protective materials bought for our stores and
offices in FY 2020.
The Group brought variable lease expenses, as a percentage of revenue,
down by 0.1 pp YoY in FY 2020, thanks to the rent rate re-negotiations, as
well as temporary rental deductions received during the lockdown.
Depreciation and amortisation (D&A) expenses stood almost flat YoY, and
decreased, as a percentage of revenue, by 0.2 pp YoY in FY 2020.
Group EBITDA and EBITDA margin
Group EBITDA grew by 5.5% YoY to RUB 14,832 mln in FY 2020, led by revenue
growth and cost savings. Group EBITDA margin remained flat YoY at 8.5% in
FY 2020.
DA! EBITDA turned to positive RUB 784 mln in FY 2020, compared to negative
RUB 215 mln in FY 2019.
O'KEY EBITDA reduced by 1.6% YoY and amounted to RUB 14,048 mln in
FY 2020. The decline was driven mainly by the drop in rental income and
less non-cash gains from the lease agreement modification (according to
IFRS 16) recognised in FY 2020 as compared to FY 2019.
Other operating expenses and operating profit
Group other operating expenses amounted to RUB 1,457 mln in FY 2020,
compared to RUB 569 mln in FY 2019. The increase was attributable
primarily to the disposal of non-current assets related to the store and
land plots portfolio revision and optimisation in the reporting period.
This amounted to a net loss of RUB 485 mln in FY 2020, compared to a
RUB 47 mln gain in FY 2019.
Additionally, a one-off gain of RUB 377 mln from the lease agreement
modification was received in FY 2019. In FY 2020, the gain amounted to
only RUB 56 mln, as the main effect from the IFRS 16 standard
implementation was recognised in FY 2019. Both items have a non-cash
nature.
Group operating profit rose by 2.8% YoY to RUB 5,039 mln in FY 2020, on
the back of EBITDA growth partially offset by the increase in other
operating expenses.
Group finance costs, foreign exchange and net profit
A substantial part of interest costs was attributable to non-current lease
liabilities (accounted for under IFRS 16). Net finance costs decreased by
1.6% YoY to RUB 4,884 mln in FY 2020, led mainly by lower interest expense
on lease liabilities due to a decrease in the lease liabilities amount,
and by a decline in the weighted average interest rate in FY 2020.
In FY 2020, net foreign exchange loss amounted to RUB 1,787 mln, compared
to a RUB 938 mln gain in FY 2019. The loss mainly related to intragroup
USD-denominated loans, and to lease contracts nominated in foreign
currencies, while losses from import operations had a relatively small
impact on the Group results.
The Group recorded a net loss of RUB 1,444 mln in FY 2020, compared to a
RUB 747 mln net profit in FY 2019. The loss is mostly attributable to the
aforementioned foreign currency loss in FY 2020.
Group Cash Flow
RUB mln FY 2020 FY 2019
Net cash from operating activities 11,946 11,078
Net cash used in investing activities (3,755) (1,352)
Net cash used in financing activities (5,988) (12,922)
Net increase (decrease) in cash and 2,202 (3,196)
cash equivalents
Effect of exchange rate on cash and 4 (9)
cash equivalents
Net cash from operating activities amounted to RUB 11,946 mln in FY 2020,
compared to RUB 11,078 mln in FY 2019. The increase was largely a result
of the retail revenue growth and efficient working capital management.
Net cash used in investing activities amounted to RUB 3,755 mln in
FY 2020, in comparison with RUB 1,352 mln cash used in FY 2019. In 2020,
the Group invested over RUB 1,800 mln (excluding VAT) in the development
of its hypermarket business and over RUB 1,900 mln (excluding VAT) in the
expansion of its discounter operations. In 2019, the Group sold two land
plots and received cash proceeds totalling RUB 1,553 mln, partially
offsetting its capital expenditures in the respective period.
Net cash used in financing activities amounted to RUB 5,988 mln in
FY 2020, compared to RUB 12,922 mln in FY 2019. The decline was mainly
attributable to long-term loans advanced repayments in FY 2019.
Net increase in cash amounted to RUB 2,202 mln in FY 2020, versus a
RUB 3,196 mln cash decrease in FY 2019.
As of December 31, 2020, the Group had RUB 12,400 mln of undrawn,
committed borrowing facilities available in Russian roubles on a fixed and
floating rate basis until March 2021 - November 2024, in respect of which
all conditions have been met. Proceeds from these facilities may be used
to finance operating and investing activities if necessary.
Group Net Debt Position
As of 31 As of 31
RUB mln December, 2020 December,
2019
EBITDA 14,832 14,061
Total debt 36,227 31,719
Short-term debt1 4,419 1,629
Long-term debt 31,808 30,090
Cash & cash equivalents 7,714 5,507
Net debt 28,513 26,212
Total lease liabilities 24,639 25,123
Short-term lease liabilities 4,472 3,950
Long-term lease liabilities 20,167 21,173
Total interest-bearing liabilities 53,152 51,335
(net of сash & сash equivalents)
Total interest-bearing liabilities
(net of сash & сash equivalents) / 3.6x 3.7x
EBITDA
1 Short-term debt does not include interest accrued on loans and
borrowings.
Group financial position remained stable during the reporting period. As
of December 31, 2020, the total interest-bearing liabilities (net of cash)
to EBITDA ratio reduced to 3.6x from 3.7x as of December 31, 2019.
As of December 31, 2020 and during the twelve-month period then ended, the
Group complied with all of its loan covenants.
Group audited IFRS report
Group audited report, including the full set of audited IFRS financial
statements, can be found at
4 https://okeygroup.lu/investors/result-center/ifrs-statements/.
O'KEY Group S.A. (LSE, MOEX: OKEY) is pleased to invite the investment
community to join the Group's management conference call to discuss FY
2020 IFRS audited financial results.
Date: April 08, 2021
Time:
• 5.00 p.m. (Moscow)
• 3.00 p.m. (London)
• 10.00 a.m. (New York)
Participants:
• Armin Burger, CEO
• Konstantin Arabidis, CFO
• Natalya Belyavskaya, Head of IR
The conference call details are provided below. Please dial in 5-10
minutes prior to the start time using the number / Confirmation Code
below:
Russia: Local access +7 495 213 1767
Toll free 8 800 500 9283
UK: Local access +44 (0) 330 336 9125
Toll free 0800 358 6377
Europe: Local access +49 (0) 69 2222 25574
USA: Local access +1 646-828-8193
Toll free 888-220-8451
Conference ID: 6898568
For further information please contact:
For investors
Natalya Belyavskaya
Head of Investor Relations
+7 495 663 6677 ext. 266
5 Natalya.Belyavskaya@okmarket.ru
6 www.okeygroup.lu
For media
Alla Golovatenko
Public Relations Manager
+7 926 169 9117
7 alla.golovatenko@okmarket.ru
8 www.okeygroup.lu
ABOUT O'KEY GROUP
O'KEY Group S.A. (LSE, MOEX: OKEY, RAEX - 'ruA-') is one of the leading
grocery retailers in Russia, operating hypermarkets under the O'KEY brand
and discounters under the DA! brand.
As of December 31, 2020, the Group operated 195 stores across Russia (77
hypermarkets and 118 discounters) with total selling space of 599,536
square meters. The company opened its first hypermarket in St. Petersburg
in 2002 and has since demonstrated continuous growth. O'KEY was the first
Russian food retailer to launch e-commerce operations in St. Petersburg
and Moscow, offering a full range of hypermarket products for home
delivery. The Group has six e-commerce pick-up points in Moscow and six
e-commerce pick-up points in St. Petersburg. In 2015, the Group 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. The Group employs more than 20,000 people.
In 2020, Group's revenue amounted to RUB 174.3 billion, while EBITDA
reached RUB 14.8 billion.
The O'KEY shareholder structure is as follows: NISEMAX Co Ltd - 44.84%,
GSU Ltd - 29.53%, free float - 25.63%.
DISCLAIMER
These materials contain statements about future events and expectations
that are forward-looking statements. These statements typically contain
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 which 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.
══════════════════════════════════════════════════════════════════════════
9 1 In the reporting period, the Group has reclassified certain
expenses relating to in-store deli from selling, general and
administrative expenses to cost of goods sold. For comparison purposes,
the respective changes in the presentation have been applied to the
FY 2019 profit and loss statement. The changes do not have any effect on
EBITDA or net income.
══════════════════════════════════════════════════════════════════════════
ISIN: US6708662019
Category Code: ACS
TIDM: OKEY
LEI Code: 213800133YYU23T4L791
Sequence No.: 96647
EQS News ID: 1179914
End of Announcement EQS News Service
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