Enter Svyaznoy

Enter is the federal retail nonfood network having one beneficiary as Svyaznoy Group company, the only independent cellular retailer in Russia numbering more than 2400 mobile communications centers in 670 cities of Russia.

The Enter company is the format of retail chain stores combining trade Internet platforms and traditional shops. The first shop of Enter network was open in October of the current year. "Pilot" system implementation of digital television in 10 shops of network which opening is going to be performed until the end of 2011 became the initial stage on the way to project implementation to Enter.

Performance Indicators

2014

On April 21, 2015 Svyaznoy Group published the key financial and operational indicators for 2014: revenue reached 111 billion rubles. LfL revenue (sales of goods of one group - Like-For-Like) increased by 11%^[1].

Total revenue at the end of 2014 exceeded a similar indicator of 2013 for 3%.

Growth of revenue was not interfered by closing in the middle of 2014 about 200 least profitable shops (about 8% of network), it considerably reduced costs. The share of online sales, record for mobile retail, – 23% of a goods turnover, allows Svyaznoy to optimize physical presence without loss of a territory scope, saving contact with all clients.

The indicator of EBITDA was 4.42 billion rubles, having decreased by 4% relatively 2013.

"We managed to save an indicator of EBITDA at the level of previous year, despite losses of income owing to objective circumstances. For example, withdrawal of NPF and autoinsurance products from retail because of changes in the legislation "cost" us 1.6 billion rubles at the level of EBITDA, - Michael Tach, the president of the company noted. - At the same time, as a result of revenue growth and cost reduction, profit on key categories grew by 47% and brought additional 1.4 billion rubles in EBITDA that allowed to achieve a total indicator in 4.42 billion rubles at the end of year".

In total the company implemented 5.5 million smartphones for the amount of 56 billion rubles. The share of the company in revenue from sales of smartphones in Russia remained at the level of 26%. The share in a segment of tablet computers grew, both in units, and in rubles - up to 16% and 14% respectively. Dynamics of sales of tablets in Svyaznoy in 2014 is twice better than the market – the retailer has 71% of growth against 33% in the market.

In 2014 Svyaznoy sold 10 million contracts of mobile operators, at the same time revenue from sales of such services on one outlet increased by 10%. The number of the bank cards issued through retail network grew by 130% and reached 607 thousand pieces. Restrictions in issue of products of "Svyaznoy of Bank" did not affect growth as its share in total portfolio of financial services of the retailer is insignificant.

The net debt of group of companies was reduced by 800 million rubles to an indicator of 8.9 billion rubles.

"A significant part of a debt are the money taken on the security of retail business for development of other projects of the founder of the company, - Michael Tach emphasized. - If to consider our business without these credit lines, the net debt will be negative".

The retailer considers key priorities for 2015 growth of an indicator of EBITDA and reduction of a debt. According to Michael Tach, in 2015 the company is going to increase EBITDA, and will help growth of profitability including development of multi-channel sales: the Internet channel share by the end of the year can reach 30% that will allow not to increase retail network and to save on lease and overheads.

2013

Turnover of the retailer "Enter Svyaznoy" grew in 2013 by 139% — to 7.3 billion rubles including VAT in comparison with 2012, reported in financial statements of the company. The share of regional sales in turnover, according to the company, increased by 12 percent points and made 51%.

The number of trade names in 2013 grew by 23% — up to 48 thousand articles in comparison with 2012. The number of orders for the same period increased by 170% — up to 3.7 million.

In 2013 the company opened 48 shops and points of issue, including in the Southern and Volga federal districts at which was not present earlier. By the end of 2013 of Enter contained 128 shops and points in 53 cities of Russia. The floor space offline - Enter objects by the end of 2013 made about 10 thousand square meters.

Notes