TIDMLNTR TIDMLNTA
RNS Number : 2610X
Lenta Ltd
27 August 2015
LENTA PUBLISHES REVIEWED IFRS FINANCIAL RESULTS FOR THE HALF
YEAR ENDED 30 JUNE 2015
St. Petersburg, Russia; 27 August 2015 - Lenta Ltd ("Lenta" or
the "Company"), one of the largest retail chains in Russia, today
announces its reviewed consolidated IFRS results for the half year
ending 30 June 2015.
1H 2015 Financial Highlights:
-- Total sales grew 33.8% to RUB 114.9bn (1H 2014: RUB 85.9bn);
-- Adjusted EBITDA(1) of RUB 11.7bn, up 44.6% (1H 2014: RUB
8.1bn) with a margin of 10.2% (1H 2014: 9.5%);
-- Gross margin of 21.7% (+0.3p.p. vs. 1H 2014) rose due to
supply chain improvements while investing in prices;
-- Adjusted SG&A decreased to 11.2% of sales (-0.9p.p. vs.
1H 2014) primarily due to operational improvements and cost control
measures;
-- Total SG&A decreased 0.4p.p. despite an increase in the
share of leased selling space and associated rental expenses and a
higher depreciation expense as a result of our continuous
investments in growth.
-- Total SG&A as % of sales of the same store base(2) decreased by 1.4p.p. vs 1H 2014;
-- Capital expenditures of RUB 11.8bn, in line with investments
made in 1H 2014 (RUB 11.8bn) linked to a larger number of new
leased stores to be opened in 2015;
-- Net cash generated from operating activities, before net
interest and income taxes paid, of RUB 5.1bn compared to RUB 4.5bn
in 1H 2014 (an increase of 14.2%) driven by EBITDA growth;
-- Net interest expenses of RUB 5.1bn, an increase of 76.0%
compared to 1H 2014 (RUB 2.9bn) due to higher interest rates and
additional borrowing in the reporting period;
-- Net Profit(3) of RUB 3.0bn, up 10.7% (1H 2014: RUB 2.7bn)
with a margin of 2.6% mainly affected by increased interest
expenses; and
-- Net Debt of RUB 59.5bn as of 30 June 2015 (Net debt/Adjusted
EBITDA of 2.4x) reflecting prudent financial policy and the
successful primary capital increase in March 2015.
1H 2015 Operational Highlights:
-- Eight hypermarkets and three supermarkets opened during 1H 2015;
-- Total number of hypermarkets at 30 June 2015 was 116, with 27
supermarkets in operation; selling space was c. 751,447 sq.m. as of
30 June 2015 (+38.6% vs. 30 June 2014);
-- Like-for-like ("LFL")(4) sales growth of 11.5% vs 1H 2014;
-- LFL traffic growth of 4.7% combined with a 6.5% increase in LFL ticket; and
-- 33% increase in the number of active loyalty cardholders
y-o-y to a total of 7.6mm as of 30 June 2015.
Material events in 1H 2015 and after the reported period:
-- In March Lenta completed a primary capital increase of 35.2
million new GDRs via an accelerated bookbuilding, raising gross
proceeds of US$225.3 million;
-- Lenta has signed a Rub 15bn three-year revolving loan facility with VTB Bank;
-- Lenta has signed a Rub 37.3bn unsecured loan agreement with
VTB Bank with a seven-year term replacing a secured loan which was
due to 2018;
-- Lenta has signed an amendment to Rub 4.6bn loan agreement
with the European Bank for Reconstruction and Development
(EBRD);
-- Fitch Ratings has assigned Lenta with long-term foreign and
local currency Issuer Default Ratings of 'BB-' and a National
Long-term rating of 'A+(rus)', both with a positive outlook;
-- S&P Ratings Services upgraded the long-term credit rating
of Lenta Ltd. and its main operating company Lenta LLC to BB- with
a stable outlook; and
-- Lenta has issued Rub 5bn bonds on MoEx with a 10 years
maturity and a 2.5 year put option. The semi-annual coupon was set
at 12.4%.
(1) Adjusted EBITDA is reported EBITDA as set out in Note 6 of
the IFRS financial statements adjusted for non-recurring one-odd
items such as changes in accounting estimates and one-off
non-operating costs and income
(2) Stores opened up to 31st December 2013
(3) Net Profit equates to "Profit for the year" in the attached
IFRS Financial Statements
(4) Lenta stores are included in the LFL store base starting 12
months after the end of the month they are opened
Lenta's Chief Executive Officer, Jan Dunning said:
"Lenta continues to deliver industry-leading growth in sales and
selling space despite a challenging consumer and macro
environment.
We achieved significantly higher profitability during the first
half of 2015 compared to the same period of the previous year, with
Adjusted EBITDA growth of around 45% and an EBITDA margin
improvement of around 80 basis points. These improvements are
testament to Lenta's operational excellence, as they were driven
primarily by efficient cost control and supply chain improvements
which we consider sustainable in the future. This will enable us to
continue actively investing in prices in the second half of the
year wherever necessary to provide best offers to our customers and
remain very price competitive across all key regions.
Lenta's balance sheet has also been strengthened with a
significant fall in leverage, a reduction in interest rates and an
increase in the amount of undrawn debt available to fund expansion.
Our healthy financial position, higher profitability and greater
cash generation enables us to maintain our store opening guidance
for 2015 to open at least 25 hypermarkets and provides us with even
more confidence in our plans to successfully drive the further
expansion of Lenta".
***
For further information, please visit www.lentainvestor.com, or
contact:
Lenta
Anna Meleshina, Director of Public Relations and Government
Affairs
+7 812 363 28 53
Anna.Meleshina@lenta.com
Albert Avetikov, Director of Investor Relations
+7 812 363 28 44
Albert.Avetikov@lenta.com
Instinctif Partners
International Media Russian Media
Mark Walter & Tony Friend Leonid Fink
+44 20 7457 2020 +44 20 7457 2020
Mark.Walter@instinctif.com Leonid.Fink@instinctif.com
Store Developments and Supply Chain
Lenta opened eight hypermarkets and three supermarkets during 1H
2015, taking the total number of hypermarkets to 116 and
supermarkets to 27. Total selling space as at 30 June 2015
increased to 751,447 sq.m., up 38.6% compared to the end of 1H
2014. Since the beginning of 2015 the Company has opened six owned
standard hypermarkets in Veliky Novgorod, Chelyabinsk, Orel,
St.Petersburg, Murmansk and Zheleznodorozhny (Moscow region), one
leased standard hypermarket in Nizhniy Tagil, one owned compact
hypermarket in Kemerovo and three leased compact hypermarkets in
Engels, Tyumen and Magnitogorsk. These latest openings increase the
total store count to 146, including 119 hypermarkets in 63 cities
and 27 supermarkets in Moscow and the Moscow region. Total selling
space as at 27 August, 2015 reached 770,164 sq.m.
Lenta continues to invest significantly in its supply chain,
with two new DCs in Rostov and Togliatti opened in the second part
of 2014. In 1H 2015 Lenta has also started construction of a
further new DC in Yekaterinburg which will complete its national
network covering all regions of operation. The Company also plans
to open a dedicated supermarket DC in Moscow in 2016 to improve
supply-chain efficiency for the format. The average centralization
ratio increased to 43% in 1H 2015 from 38% in 1H 2014.
Operating performance
Lenta's total sales growth in 1H 2015 reached 33.8% following an
increase in sales from new stores opened in 2014, which are not yet
part of the like-for-like panel and an increase in like-for-like
sales. Consumer income continues to be under pressure and
decelerating inflation and a high base for comparison led to a
slowdown in year-on-year sales growth rates in the second quarter,
compared to the performance in the first quarter. While LFL food
sales growth in 1H 2015 was still strong at 13.4%, it was partially
offset by LFL non-food sales decline of -2.2%, leading to the total
LFL sales growth of 11.5% for the first six months of the year.
YoY growth 1Q 2015 2Q 2015 1H 2015
Total sales 37.7% 30.4% 33.8%
LFL sales 15.0% 8.6% 11.5%
LFL traffic 7.8% 2.0% 4.7%
LFL ticket 6.7% 6.4% 6.5%
Financial Performance
Lenta demonstrated a strong overall performance during the first
half of the year, with industry-leading sales growth and a marked
increase in Adjusted EBITDA margin of 77bps. The increase in
profitability was achieved thanks to effective cost management and
supply chain improvements and despite of Lenta's absorption of some
inflationary impacts away from our customers. While the net profit
margin was primarily affected by the elevated growth in interest
expense, it was supported by a reduction in the effective tax rate
to a normalised level of 22%.
Income Statement Highlights
% Change
1H 2015 -
RUB (millions) 1H 2014 1H 2015 1H 2014
Sales 85,899 114,897 33.8%
Gross profit 18,384 24,976 35.9%
Gross margin 21.4% 21.7% 0.3 p.p
SG&A, % of sales 15.1% 14.7% -0.4 p.p
Adjusted SG&A(5) , %
of sales 12.1% 11.2% -0.9 p.p
Adjusted EBITDAR(6) 8,707 13,030 49.7%
Adjusted EBITDAR margin 10.1% 11.3% 1.2 p.p
Rental expenses, % of
sales 0.7% 1.1% 0.4 p.p
Adjusted EBITDA 8,122 11,747 44.6%
Adjusted EBITDA margin 9.5% 10.2% 0.8 p.p
Operating profit 6,590 9,015 36.8%
Profit before income
tax 3,643 3,789 4.0%
Net Profit 2,679 2,966 10.7%
Net profit margin 3.1% 2.6% -0.5 p.p
(5) Adjusted SG&A is SG&A before rent paid on land,
equipment and premises leases, depreciation and one-off
non-operating costs
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