O'KEY GROUP REPORTS FINANCIAL RESULTS FOR H1 2023

O'KEY Group S.A. (OKEY) O'KEY GROUP REPORTS FINANCIAL RESULTS FOR H1 2023 18-Sep-2023 / 08:45 CET/CEST Press release 18 September 2023 O`KEY GROUP REPORTS FINANCIAL RESULTS FOR H1 2023 O`KEY Group S.A. (AIX, LSE, MOEX: OKEY, the “Group”), one of Russia’s leading food retailers, has announced its financial results for the first six months of 2023 based on condensed consolidated interim financial statements. All materials published by the Group are available on its website okeygroup.lu. All results are according to IFRS 16, unless stated otherwise. H1 2023 financial highlights Total Group revenue increased by 1.7% YoY to RUB 99.5 bn driven by both retail revenue and rental income. Group gross profit rose by 1.6% to RUB 22.7 bn, with gross margin remaining flat YoY at 22.8% thanks to efficient procurement, assortment management and logistics. Group EBITDA decreased by 5.4% YoY to RUB 7.1 bn, while EBITDA margin declined by 0.6 pps YoY to 7.1%, mainly on the back of temporary SG&A pressure from new store openings in the discounter segment. The Group expects EBITDA margin to normalise by the year-end, as recently opened discounters ramp up. The Group reported net loss of RUB 3.0 bn in H1 2023 compared to a RUB 0.6 bn net profit in H1 2022, mainly due to a non-cash foreign exchange loss and an increase in finance costs. In July 2023, the National Credit Rating (NCR) agency assigned an A.ru credit rating (Stable outlook) to O`KEY LLC, the main operating subsidiary of O`KEY Group S.A. For more details, please refer to the full press release at https://www.okeygroup.lu/press-center/press-releases/2023/1859/. Group profit and losses highlights in H1 2023 RUB mln H1 2023 H1 2022 ∆ YoY, % Total Group revenue  99,478 97,803 1.7% O`KEY  69,042 72,264 (4.5%) DA! 30,436 25,539 19.2% Gross profit  22,652 22,302 1.6% Gross profit margin, % 22.8% 22.8% - Selling, general and administrative expenses (21,762) (19,794) 9.9% SG&A, % of revenue 21.9% 20.2%  (1.6pp) Other operating expenses, net (389) (551) (29.4%) Finance costs, net (3,249) (2,685) 21.0% Foreign exchange (loss)/gain (881) 1,533 n/a Net (loss)/profit (2,977) 576 n/a Group EBITDA  7,102 7,511 (5.4%) Group EBITDA margin, % 7.1% 7.7% (0.6pp) O`KEY EBITDA  5,447 5,765 (5.5%) O`KEY EBITDA margin, % 7.9% 8.0% (0.1pp) DA! EBITDA  1,656 1,745 (5.1%) DA! EBITDA margin, % 5.4% 6.8% (1.4pp) Group revenue RUB mln H1 2023 H1 2022 ∆ YoY, % Total Group revenue       99,478   97,803   1.7% Retail revenue        98,463   96,814   1.7% Rental income  1,015   989   2.6% Total Group revenue increased by 1.7% YoY to RUB 99,478 mln driven by both retail revenue and rental income. The Group’s retail revenue went up 1.7% YoY to RUB 98,463 mln driven by DA! discounters and online revenue growth in H1 2023. The Group’s rental income increased by 2.6% YoY to RUB 1,015 mln in H1 2023. Group net retail revenue and LFL revenue in H1 2023 RUB mln H1 2023 H1 2022 YoY, % LFL H1 2023/ H1 2022, % O`KEY Group 98,463 96,814 1.7%  (3.2%) O`KEY hypermarkets 68,054 71,300 (4.6%)  (5.4%) DA! discounters 30,409 25,514 19.2% 3.1% For more details, please refer to the Group’s Q2 2023 Trading Update. Group gross profit In H1 2023, Group gross profit improved by 1.6% YoY to RUB 22,652 mln, while gross margin stood flat YoY at 22.8%. The Group sustained its gross margin thanks to efficient procurement and logistics optimisation along with effective assortment and shrinkage management. Group selling, general and administrative expenses RUB mln H1 2023 % of revenue H1 2022 % of revenue ∆ YoY, pps Personnel costs  9,427 9.5%  8,494 8.7%  0.8 Depreciation and amortisation  5,717 5.7%  5,115 5.2%  0.5 Communication and utilities  2,702 2.7%  2,184 2.2%  0.5 Advertising and marketing  956 1.0%  1,029 1.1% (0.1) Repairs and maintenance  820 0.8%  766 0.8%  - Insurance and bank commissions  646 0.6%  606 0.6%  - Operating taxes  388 0.4%  421 0.4% - Security expenses  380 0.4%  375 0.4% - Legal and professional expenses  292 0.3%  330 0.3% - Materials and supplies  218 0.2%  206 0.2%  - Operating leases  187 0.2%  246 0.3% (0.1) Other costs  28 0.0%  23 0.0%  - Total SG&A expenses  21,762 21.9%  19,794 20.2%  1.6 Group total SG&A expenses increased by 9.9% YoY to RUB 21,762 mln in H1 2023. SG&A expenses as a percentage of revenue rose by 1.6 pps YoY to 21.9% in H1 2023, mainly due to the growth of personnel costs, depreciation and amortisation (D&A), and communication and utilities expenses. In H1 2023, personnel costs increased by 11.0% YoY to RUB 9,427 mln and, as a percentage of revenue, by 0.8 pps YoY to 9.5%. The growth was mainly associated with new discounter openings, as well as wages indexation. In H1 2023, D&A rose by 11.8% YoY to RUB 5,717 mln, and by 0.5 pps YoY to 5.7% of revenue, driven primarily by discounter chain growth. Communication and utilities expenses grew by 23.7% YoY to RUB 2,702 mln, and by 0.5 pps YoY as a percentage of revenue in H1 2023, mainly due to tariff inflation and discounter chain growth. As a result, Group EBITDA declined by 5.4% YoY to RUB 7,102 mln, while EBITDA margin decreased by 0.6 pps YoY to 7.1% in H1 2023. The Group sees the pressure on EBITDA margin from new discounter openings as temporary and expects the margin to normalise by the year-end, as recently opened discounters ramp up. Net finance costs increased by 21.0% YoY to RUB 3,249 mln, mainly due to a higher weighted average interest rate. A substantial part of interest costs was attributable to non-current lease liabilities (accounted for in accordance with IFRS 16). In H1 2023, net foreign exchange loss amounted to RUB 881 mln compared to a RUB 1,533 mln gain in H1 2022. The loss resulted from Russian rouble devaluation in H1 2023, and was largely attributable to intragroup US dollar-denominated loans, as well as lease contracts denominated in foreign currencies. Losses from import operations had a relatively small impact on the Group’s results. Net foreign exchange loss has a non-cash nature. Consequently, the Group reported a RUB 2,977 mln net loss in H1 2023 compared to the profit of RUB 576 mln in H1 2022. Group cash flow RUB mln H1 2023 H1 2022 Net cash (used in) from operating activities (521)  948 Net cash used in investing activities (2,249) (3,482) Net cash (used in) from financing activities (3,079)  1,405 Net decrease in cash and cash equivalents (5,850) (1,129) Effect of exchange rate on cash and cash equivalents (9) (373) Net cash used in operating activities amounted to RUB 521 mln in H1 2023, compared to RUB 948 mln cash from operating activities in H1 2022. That resulted from an increase in investments in the Group's working capital in H1 2023 on the back of a decrease in accounts payable. Net cash used in investing activities amounted to RUB 2,249 mln in H1 2023, showing a decrease in comparison with RUB 3,482 mln of cash used in H1 2022. In H1 2023, the Group invested approximately RUB 950 mln (excluding VAT) in hypermarket business development and store renovation, and over RUB 1,680 mln (excluding VAT) in the development of its discounter business. Net cash used in financing activities amounted to RUB 3,079 mln in H1 2023, compared with the RUB 1,405 mln of net cash received from financing activities in H1 2022. The dynamics resulted from the Group's regular credit portfolio refinancing in H1 2023. As of 30 June 2023, the Group had RUB 18,800 mln of available credit lines in Russian roubles with fixed and floating interest rates, in respect of which all conditions have been met. If necessary, proceeds from these facilities may be used to finance operating and investing activities. Group net debt position RUB mln As of 30 June 2023 As of 30 June 2022 EBITDA LTM 16,612 16,440 Total debt 48,442 44,396 Short-term debt1 6,198 10,122 Long-term debt 42,244 34,275 Cash & cash equivalents 5,921 7,946 Net debt 42,521 36,451 Total lease liabilities 25,215 23,967 Short-term lease liabilities 5,941 5,257 Long-term lease liabilities 19,274 18,711 Total interest-bearing liabilities (net of сash & сash equivalents) 67,735 60,418 Total interest-bearing liabilities (net of сash & сash equivalents) / EBITDA LTM 4.08 3.68 [1] Short-term debt does not include interest accrued on loans and borrowings. The Group’s financial position remained stable during the reporting period. As of 30 June 2023, the total interest-bearing liabilities (net of cash) to LTM EBITDA ratio grew to 4.08x from 3.68x as of 30 June 2022, mainly due to an increase in long-term debt and lease liabilities, as well as a decrease in cash balance. As of 30 June 2023 and during the twelve-month period then ended, the Group complied with all of its loan covenants. Group interim IFRS report The Group’s interim report, including the full set of interim IFRS financial statements, can be found at https://www.okeygroup.lu/investors/result-center/ifrs-statements/. For more information, please contact:  For investors Natalya Belyavskaya Head of Investor Relations [phone], ext. 266 [e-mail] www.okeygroup.lu ABOUT O`KEY GROUP O`KEY Group S.A. (AIX, LSE, 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 2023, we operated 282 stores across Russia (77 hypermarkets and 205 discounters) with a total selling space of 648,597 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 has e-commerce pick-up points in 31 O’KEY hypermarkets: nine in Moscow, seventeen in St Petersburg, one in Sochi, and four in Krasnodar. 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 21,900 people. In 2022, the Group’s revenue amounted to RUB 202.2 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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ISIN:	US6708662019
Category Code:	IR
TIDM:	OKEY
LEI Code:	213800133YYU23T4L791
Sequence No.:	271897
EQS News ID:	1727687

End of Announcement	EQS News Service