3 May 2017. Moscow, Russia. – Detsky Mir Group ("Detsky Mir", "the Group" or "the Company") (MOEX: DSKY), Russia’s largest specialized children's goods retailer, announces its unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the first quarter ended 31 March 2017.

KEY FINANCIAL RESULTS FOR 1Q 2017

• Group Revenue increased by 28.3% to RUB 21.1bn, vs. RUB 16.4bn in 1Q 2016;
• In accordance with the methodology of calculation of like-for-like comparisons, which would be closer to methodologies used in operating and financial reporting of publicly traded food retailers in Russia, like-for-like sales at Detsky Mir stores in Russia grew by 11.2%[1], with the number of tickets growing by 13.3% and a decline in the average ticket price by 1.9%;
• Gross profit increased by 17.9% year-on-year to RUB 6.5bn, with a gross margin of 30.7%;
• Selling, administrative and other operating expenses as a share of revenue[2]decreased year-on-year from 28.4% to 25.4% driven by increased operational efficiency;
• Adjusted EBITDA[3]increased by 37.6% to RUB 1.1bn for 1Q 2017 vs RUB 0.8bn for 1Q 2016; the EBITDA margin reached 5.3%. EBITDA[4]amounted to RUB 0.8bn;
• Adjusted profit for the period[5]increased by 34.4% year-on-year to RUB 137mln; Profit for the period amounted to RUB (89)mln;
• Net debt /Adjusted EBITDA LTM ratio amounted to 1.9x at the end of 1Q 2017.

Vladimir Chirakhov, PJSC Detsky Mir Chief Executive Officer, said:

“Despite the continued contraction of retail turnover, Detsky Mir Group successfully implements its strategy of attracting new customers and consolidating the market.

The variety of goods and affordable prices help maintain good growth rates. We reached a double-digit growth rate in the number of transactions (the number of checks) in like-for-like stores of Detsky Mir chain in Russia, which was amounted to 13.3%. The consolidated unaudited revenue grew by 28.3% to RUB 21.1bn. The implementation of the multichannel sales strategy is a priority and has a significant impact on the chain's business development. In the first quarter of 2017, the unaudited revenue of the online store almost doubled year-on-year: from RUB 491m to RUB 900m. One of the main components of the multichannel sales strategy is omni-pricing", which was implemented in 2016 through the reduction of prices in our brick-and-mortar stores to the level of the online store in order to offer the same prices to our customers.

In the first quarter of 2017, Detsky Mir Group successfully achieved all targets for reaching the double-digit adjusted EBITDA margin in the full-year 2017. Adjusted EBITDA grew by 37.6% year-on-year.

Improvements in operating efficiency continue to play the key role in increasing business profitability. The management's efforts to further improve labour productivity and optimise rental payments have reduced SG&A expenses as a percentage of revenue by 300 bps.  Adjusted income increased by 34.4% year-on-year.

Detsky Mir Group will continue rapid development in 2017 and will open at least 70 new stores.”

***

Conference call information

Detsky Mir’s management will host a conference call today at 4:00 pm (Moscow time) / 2:00 pm (London time) / 9:00 am (New York time) to present and discuss 1Q2017 results.

The dial-in numbers for the conference call are:

Russia

+7 495 221 6523

UK

+44 203 043 24 40

USA

+1 877 887 41 63

PIN: 44788326#

The conference title: “Detsky Mir Group – 1Q 2017 Unaudited IFRS Financial Results”.

For additional information:

([1]) PJSC Sistema is a publicly-traded diversified Russian holding company serving over 100 million customers in the sectors of telecommunications, high technology, pulp and paper, radio and space technology, banking, retail, mass media, tourism and healthcare services. Founded in 1993. Sistema’s global depositary receipts are listed under the symbol SSA on the London Stock Exchange. Sistema’s ordinary shares are listed under the ticker AFKS on Moscow Exchange.

([2]) RCIF is an equity fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), hold its stake in PJSC Detsky Mir through its funds: FLOETTE HOLDINGS LIMITED and EXARZO HOLDINGS LIMITED.

([1]) Alternative like-for-like average ticket growth, like-for-like number of tickets growth and like-for-like revenue growth based on the stores that have been in operations for at least 12 full calendar months.

([2]) Selling, general and administrative expenses exclude D&A expenses and adjusted for share-based compensation and cash bonuses under the LTI program

([3]) Adjusted EBITDA is calculated as profit for the period before income tax, FX loss, net finance expense, D&A; adjusted for share-based compensation and cash bonuses under the LTI program. See Attachment A.

([4]) See Attachment A for definitions and reconciliation of EBITDA to IFRS financial measures.

([5]) Adjusted for additional bonus accruals under the LTI program (together with related tax effects). See Attachment A.