Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan.
This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.
This communication does not constitute an offer of the securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities. This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the "Order"); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.
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DETSKY MIR ANNOUNCES PRICE RANGE FOR INITIAL PUBLIC OFFERING
Moscow, Russia - 26 January 2017. Public Joint Stock Company "Detsky mir" (the "Company" and, together with its subsidiaries, the "Group" or "Detsky Mir"), Russia's largest specialised children's goods retailer, today announces the price range for its initial public offering (the "Offering") of ordinary shares (the "Shares"). This follows the announcement of Detsky Mir's intention to float on Moscow Exchange released on 16 January 2017.
HIGHLIGHTS
- The price range for the Offering has been set at between RUB 85 and RUB 105 per Share.
- The selling shareholders are PJSFC Sistema ("Sistema"), the Russia-China Investment Fund ("RCIF") via its investment vehicles Floette Holdings Limited and Exarzo Holdings Limited, as well as certain individual shareholders, including members of the management teams of the Company and Sistema (collectively, the "Selling Shareholders").
- The Selling Shareholders are expected to sell a total of up to 247.9 million Shares, including the over-allotment option, which based on the announced price range would represent an Offering size of between RUB 21.1 billion and RUB 26.0 billion, valuing the Company at between RUB 62.8 billion and RUB 77.6 billion.
- In connection with the Offering, Sistema, Floette Holdings Limited and Exarzo Holdings Limited have granted to the Joint Bookrunners an over-allotment option to purchase Shares representing up to 15% of the Shares sold by them in the Offering.
- Following the Offering, the free float is expected to be approximately 33.55% (assuming full exercise of the over-allotment option).
- The Offering comprises an offering of the Shares (i) outside the United States in reliance on Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and (ii) within the United States to certain qualified institutional buyers as defined in, and in reliance on, Rule 144A under the Securities Act.
- Sistema intends to maintain majority ownership of the Company in the medium term, while all other Selling Shareholders will also retain a stake in the Company post-Offering.
- There will be a lock-up period of 365 days for the management of the Company and 180 days for the other Selling Shareholders and the Company.
- The Shares were admitted to trading and will be included in Level 1 of the List of Securities Admitted to Trading on Moscow Exchange following the Offering.[1]
- Credit Suisse, Goldman Sachs International and Morgan Stanley are acting as Joint Global Coordinators and Joint Bookrunners. Sberbank CIB and UBS Investment Bank are acting as Joint Bookrunners.
Vladimir Chirakhov, CEO of the Company, said:
"We are encouraged by the initial response we have received from potential investors since our Intention to Float announcement, and are excited to progress to the next phase of the Offering as we announce our price range.
"The IPO comes after a year in which the Company appears set to have delivered the strongest sales performance in its history. Preliminarily, we expect our full-year 2016 revenue to increase by around 30% year-on-year, and like-for-like sales at our stores in Russia by approximately 10.8%. We also opened 100 new stores during the year. At the same time, online sales, which represent a rapidly growing segment and important driver of future growth of the business, nearly doubled year-on-year.
"We are growing faster than other major retailers in our space with substantial headroom for further growth. We have consistently delivered superior returns on capital and believe that we will continue to do so. At the same time, we have adopted a dividend policy to pay at least 50% of our annual net profit in dividends. This is why we believe Detsky Mir represents a uniquely attractive investment proposition."
ABOUT DETSKY MIR
GROUP HIGHLIGHTS
- Undisputed market leader in Russia in a large, growing and resilient consumer market segment
- Category-defining brand, highly popular customer proposition and longstanding presence in the market
- Highly diversified product selection that attracts customer traffic and supports growth and resilience of sales and profitability
- Rapidly growing e-commerce and omni-channel proposition underpin the Company's growth
- Asset-light cash-generative business model providing strong returns on capital and enabling consistent dividend payments
- Scalable supply chain and infrastructure platform
- Strong management team with track record of delivering business growth
Detsky Mir is the largest specialised children's goods retailer in Russia, with a diversified product portfolio comprising toys, products for newborns, fashion (apparel and footwear), large items, and other products. It is the market leader both in terms of size of store network and in terms of revenue in the highly fragmented market for children's goods in Russia. According to Ipsos Comcon, in 2015, Detsky Mir had an estimated share of 32% (24% in 2014) of the specialised children's goods retail market in Russia and 13% (10% in 2014) of the total market for children's goods in Russia (including hyper- and supermarkets). This compares to 9% of the specialised children's goods retail market and 4% of the total market of children's goods for its largest competitor, also according to Ipsos Comcon.
The Group strongly benefits from the "Detsky mir" brand, which dates back to the opening of the first "Detsky mir" branded store in central Moscow in 1947. Thereafter, all large children's stores or department stores in the Soviet Union selling children's goods were named "Detsky Mir", and the brand has been closely associated with the entire national children's goods retail industry. This superior brand recognition persists and is confirmed by the findings of a recent consumer survey by Ipsos Comcon, where 97% of respondents mentioned the brand when prompted.
As at 31 December 2016, Detsky Mir operated a network of 525 stores, comprising 468 stores in Russia and 12 stores in Kazakhstan operating under the "Detsky mir" brand and 45 ELC stores in Russia. ELC stores offer various educational and learning games and other toys for newborns and children up to 14 years old. Total selling space as at 31 December 2016 was approximately 596 thousand square metres. Headquartered and originated in Moscow, Detsky Mir has gradually expanded its footprint outside Moscow since 2003, and at present the network outside Moscow accounts for approximately 70% of the Group's revenue. Detsky Mir primarily seeks to operate in cities with populations in excess of 50,000 people. In Russia, the Company has a nationwide presence with stores located in 171 of the approximately 300 cities with more than 50,000 inhabitants, based on Rosstat population data as at 31 December 2016. Detsky Mir has stores in all of Russia's 20 largest cities and in seven cities in Kazakhstan.
In addition to retail stores, Detsky Mir offers its products through its www.detmir.ru and www.elc-russia.ru websites. In 2011, the Company launched its online store, which has experienced significant growth since then. The Company's management believe that Detsky Mir's superior brand recognition and customer loyalty are particularly important in capturing market share in the fast developing online segment of the market. In 2015, Detsky Mir completed the roll-out of its "in-store pickup" service for goods ordered online throughout its retail network in Russia. The Group is continuously improving its online proposition by expanding the online product range and further integrating the online and offline platforms. In the nine months ended 30 September 2016, Detsky Mir recorded over 63 million visits to its online store, and the number of orders placed via the online store was over 1 million.
Detsky Mir has adopted a dividend policy to pay at least 50% of annual net profit (calculated based on its full year IFRS accounts) in dividends, subject to the Group's need for financial resources for capital expenditures and its ability to meet its obligations as they fall due. The decision to pay a dividend must be approved by the Group's General Shareholders' Meeting following a recommendation by the Board of Directors.
Investor contacts
Alexey Voskoboinik
Head of Investor Relations
Office: +7-495-781-0808, ext. 2582
Mobile: +7-915-129-9905
AVoskoboinik@detmir.ru
Media contacts
Detsky Mir
Nadezhda Kiseleva
Head of PR
Office: +7-495-781-0808, ext. 2041
Mobile: +7-903-969-0086
nkiseleva@detmir.ru
EM
Denis Denisov
+7-985-410-3544
denisov@em-comms.com
Tom Blackwell
+7-919-102-9064
blackwell@em-comms.com
Peter Morley
+44-7927-186645
morley@em-comms.com
Disclaimer
Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "wiII", "could," "may" or "might" the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.
[1] Subject to compliance with the applicable minimum free float requirement of 10%