O'KEY GROUP S.A. 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 cash equivalents 2,202 (3,196) Effect of exchange rate on cash and cash equivalents 4 (9)
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 (net of ?ash & ?ash equivalents) 53,152 51,335
Total interest-bearing liabilities (net of ?ash & ?ash equivalents) / EBITDA 3.6x 3.7x [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 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:
Local access +7 495 213 1767
Russia:
Toll free 8 800 500 9283
Local access +44 (0) 330 336 9125
UK:
Toll free 0800 358 6377
Europe: Local access +49 (0) 69 2222 25574
Local access +1 646-828-8193
USA:
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
Natalya.Belyavskaya@okmarket.ru
www.okeygroup.lu
For media
Alla Golovatenko
Public Relations Manager
+7 926 169 9117
alla.golovatenko@okmarket.ru
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.
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