OREANDA-NEWS. DIXY Group (MOEX: DIXY) - one of Russia's leading retailers of foods and everyday products - today announced unaudited IFRS results for the third quarter and first nine months of 2014.

Key highlights of the third quarter and the first nine months of 2014:

In the first nine months of 2014, the Company opened 269 stores on net basis. As of September 30, 2014, the

Company operated 2,068 stores in Central, North-West and Urals Federal Districts of Russia.

Selling Space increased by 23% year-on-year to 703,507 sq. m as of September 30, 2014.

Revenue increased by 31.0% (18.8% in USD) year-on-year to RUB 57.9 bln (USD 1.6 bln) in the third quarter and grew by 25.3% (12.0% in USD) year-on-year to RUB 164.9 bln (USD 4.7 bln) in the first nine months of 2014.

Gross Profit grew by 29.2% (17.1% in USD) year-on-year to RUB 17.4 bln (USD 482.0 mln) in the third quarter of 2014, and grew by 25.9% (12.5% in USD) year-on-year to RUB 49.9 bln (USD 1.4 bln) in the first nine months of2014.

EBITDA grew by 56.3% (41.6% in USD) year-on-year to RUB 4.3 bln (USD 119.8 mln) in the third quarter of 2014, and grew by 45.0% (29.6% in USD) year-on-year to RUB 11.7 bln (USD 331.5 mln) in the first nine months of2014.

EBITDA Margin improved by 120 basis points year-on-year to 7.5% in the third quarter, and by 100 basis points year-on-year to 7.1% in the first nine months of 2014.

Net Profit almost doubled year-on-year to RUB 1.2 bln (USD 33.0 mln) in the third quarter of 2014, and grew 2.4x times to RUB 3.2 bln (USD 89.3 mln) in the first nine months of 2014.

Operating Cash Flow increased by 60.1% (43.0% in USD) year-on-year to RUB 5.8 bln (USD 164.2 mln) in the first nine months of 2014.

In the first nine months of 2014, the Company opened 269 stores on net basis and increased selling space by 23% year-on-year.

In the third quarter of 2014, the Company continued ticket and traffic driving promotional activity in DIXY chain.

The Company extended the range of its private label products, and continued to advertise, promote, and invest in "D"-brand.

In the third quarter of 2014, the Company demonstrated 14.6% like-for-like sales growth on Group level, and record 17.7% like-for-like sales growth for DIXY banner.

The Company improved centralization level (deliveries through own distribution centers) for its neighborhood stores to 89% in the third quarter of 2014. The logistic service level (success of deliveries ratio) stood at 91% in the third quarter of 2014.

Revenues

Revenue increased by 31.0% (18.8% in USD) year-on-year to RUB 57.9 bln (USD 1.6 bln), driven by organic expansion and supported by 14.6% like-for-like sales growth in the third quarter of 2014.

DIXY neighborhood stores revenue increased by 37.2% (24.3% in USD) year-on-year to RUB 46.2 bln (USD 1.3 bln) in the third quarter of 2014. Victoria division revenue grew by 14.9% (4.2% in USD) year-on-year to RUB 7.2 bln (USD 199.1 mln), while MegaMart division revenue increased by 5.1% (decreased by 4.7% in USD) to RUB 4.1 bln (USD 112.0 mln) in the third quarter of 2014.

Gross Profit

Gross Profit grew by 29.2% (17.1% in USD) year-on-year to RUB 17.4 bln (USD 482.0 mln) in the third quarter of

2014.

Gross Margin decreased by 50 basis points year-on-year to 30.1% in the third quarter of 2014, driven mainly by increased shrinkage costs, and offset partially by better commercial terms from suppliers.

Cost of goods sold, as a percentage of sales, decreased by 20 basis points year-on-year to 66.5% of sales in the third quarter of 2014, driven by better purchasing terms. Shrinkage costs, as a percentage of sales, increased by 70 basis points year-on-year to 2.6% of sales in the third quarter of 2014, due mainly to growing share of fresh categories, especially, fruits and vegetables, in DIXY stores revenue. Transportation costs, as a percentage of sales, remained flat year-on-year at 0.8% as percentage of sales in the third quarter of 2014.

Operating Expenses

Selling, General & Administrative Expenses increased by 23.5% (12.0% in USD) year-on-year to RUB 14.8 bln (USD 409.6 mln) in the third quarter of 2014.

SG&A expenses, as a percentage of sales, decreased by 160 basis points year-on-year to 25.6%. The decrease was driven mainly by the reduction of staff expenses and utilities, repair and maintenance expenses, as a percentage of sales, offset partially by increased operating lease, and depreciation and amortization expenses, as a percentage of sales, in the third quarter of 2014.

Staff expenses increased by 20.8% (9.5% in USD) year-on-year to RUB 6.9 bln (USD 191.6 mln) in the third quarter of 2014, due primarily to organic growth of the business and wage indexations. Staff expenses, as a percentage of sales, decreased by 100 basis points to 12.0% in the third quarter of 2014, driven mainly by higher staff productivity and strong like-for-like stores performance.

Operating lease expenses grew by 32.8% (20.4% in USD) year-on-year to RUB 3.5 bln (USD 96.4 mln). Operating lease expenses, as a percentage of sales, increased by 10 basis points year-on-year to 6.0% in the third quarter of 2014, mainly, because of growing share of rented space and larger number of newly opened stores in the first nine months of 2014 compared to the same period last year.

Utilities, repair and maintenance expenses increased by 11.5% (1.1% in USD) year-on-year to RUB 1.2 bln (USD 33.9 mln) in the third quarter of 2014, due mainly to utilities tariffs indexation. Utilities, repair and maintenance expenses, as a percentage of sales, decreased by 40 basis points year-on-year to 2.1% in the third quarter of 2014, due mainly to strong like-for-like stores performance.

EBITDA grew by 56.3% (41.6% in USD) year-on-year to RUB 4.3 bln (USD 119.8 mln) in the third quarter of 2014, and grew by 45.0% (29.6% in USD) year-on-year to RUB 11.7 bln (USD 331.5 mln) in the first nine months of 2014.

EBITDA Margin increased by 120 basis points year-on-year to 7.5% in the third quarter of 2014, and by 100 basis points year-on-year to 7.1% in the first nine months of 2014.

Operating and Net Profits

Depreciation and amortization expenses increased by 35.0% (22.4% in USD) year-on-year to RUB 1.7 bln (USD 47.5 mln) in the third quarter of 2014, driven mainly by organic growth of the store chain, as well as logistic infrastructure development. D&A expenses, as a percentage of sales, increased by 10 basis points to 3.0% in the third quarter of 2014.

Operating Profit grew by 74.3% (57.9% in USD) year-on-year to RUB 2.6 bln (USD 72.3 mln) in the third quarter of 2014. Operating Margin improved by 110 basis points year-on-year to 4.5% in the third quarter of 2014.

Income tax expense amounted to RUB 377.9 mln (USD 10.4 mln), while effective tax rate stood at 24.0% in the third quarter of 2014.

Net Profit increased by 90.4% year-on-year to RUB 1.2 bln (USD 33.0 mln) in the third quarter of 2014, and grew 2.4x times year-on-year to RUB 3.2 bln (USD 89.3 mln) in the first nine months of 2014.

Net Profit Margin improved by 70 basis points year-on-year to 2.1% in the third quarter of 2014, and by 90 basis points year-on-year to 1.9% in the first nine months of 2014.

Cash Flows and Debt

Net Cash from Operating Activities increased by 60.1% (43.0% in USD) to RUB 5.8 bln (USD 164.2 mln) in the first nine months of 2014 from RUB 3.6 bln (USD 114.8 mln) in the first nine months of 2013. The increase was attributable to the Company's revenue and profitability growth.

As of September 30, 2014, Total Financial Debt to EBITDA ratio declined to 1.7, and Total Financial Debt amounted to RUB 26.7 bln (USD 678.8 mln), while Net Debt amounted to RUB 23.8 bln (USD 605.0 mln) as of September 30, 2014.