Sistema (LSE: SSA), the largest private sector consumer services company in
Russia and the CIS, announced today that it has expanded its retail chain from
13 stores in 2004 to 25 medium scale stores and 8 small scale outfits in 2005.
As part of the expansion programme, the retail business of Sistema, 'Detsky Mir'
Group ('Detsky Mir' or the 'Group') - has made the following acquisitions for a
total cash consideration of $3 million:
-- 4 small children's goods outlets with the brand name 'Virastai-ka'
-- a medium size children's goods retailer ZAO 'Chudo-Ostrov-Neva' based in St.
Petersburg, which consists of 6 large outlets
-- 'S-Toys', a children's toys wholesale company.
With the acquisition of 'Virastai-ka', Detsky Mir added a new, small-scale
outfit to its existing retail network. The small scale format is new to the
Group and is expected to enable further penetration of the children's goods
market across segments. Revenues of 'Virastai-ka' amounted to $1.3 million in
The acquisition of 'Chudo-Ostrov-Neva' gives the Group a leading position in St.
Petersburg, the second largest market in Russia after Moscow. Five
'Chudo-Ostrov-Neva' outlets will be re-branded 'Detsky Mir' and one will adopt
the smaller 'Virastai-ka' format. The consolidated revenues of
'Chudo-Ostrov-Neva' were $8.5 million in 2004.
'S-Toys' is a leading children's toys wholesale company in Russia with $5.2
million in revenues in 2004 and opportunities for market share growth through
further consolidation of the segment. The acquisition of 'S-Toys' is designed to
achieve greater synergy between 'Detsky Mir's' retail and wholesale operations
and to grow market share.
Through capitalizing on its market and technological expertise, Detsky Mir will
be able to immediately increase floor space utilization in the acquired outfits
by at least 20%, which should result in a significant increase of the overall
viability of the businesses.
The Group's rapid growth is achieved not only through exploiting acquisition
opportunities in this fragmented market, but also through pursuing organic
growth. The Group has launched 10 stores year to date, which brings the total
number to 33.
The Group is the largest retailer in the Russian children's goods market in
terms of revenues, and among the most recognized brands in Russia. Detsky Mir
Centre purchases goods from over 600 suppliers through contracts with local
importers, wholesalers and well-known international manufacturers of children's
goods. Approximately 80% of all goods purchased by Detsky Mir Centre are
Detsky Mir's flagship store in Moscow, located within walking distance of the
Kremlin, has a total area of 57,568 sq.m. The retail area in the store comprises
approximately 33,329 sq.m. in total of which 8,500 sq.m. are devoted to Destky
Mir, with the remainder leased out, making it one of the largest children's
department stores in Europe.
The Detsky Mir Group had revenues of $92 million for the year ended December 31,
For further information, please visit www.sistema.com or contact:
Sistema Investor Relations Shared Value Limited
Alexei Kurach Matthew Hooper
Tel: +7 095 2292741 Tel. +44 (0) 20 7321 5023
Sistema is the largest private sector consumer services company in Russia and
the CIS, with over 45 million customers. Sistema develops and manages
market-leading businesses in selected service-based industries, including
telecommunications, technology, insurance, banking, real estate, retail and
media. Founded in 1993, the company reported revenues of US$ 5.7 billion for the
full year 2004, and total assets of US$ 8.8 billion as at December 31, 2004.
Sistema's shares are listed under the symbol 'SSA' on the London Stock Exchange,
under the symbol 'AFKS' on the Russian Trading System (RTS), and under the
symbol 'CUCT' on the Moscow Stock Exchange (MSE).
Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Sistema. You can identify forward looking statements by terms
such as 'expect,' 'believe,' 'anticipate,' 'estimate,' 'intend,' 'will,'
'could,' 'may' or 'might' the negative of such terms or other similar
expressions. We wish to caution you that these statements are only predictions
and that actual events or results may differ materially. We do not intend to
update these statements to reflect events and circumstances occurring after the
date hereof or to reflect the occurrence of unanticipated events. Many factors
could cause the actual results to differ materially from those contained in our
projections or forward-looking statements, including, among others, general
economic conditions, our competitive environment, risks associated with
operating in Russia, rapid technological and market change in our industries, as
well as many other risks specifically related to Sistema and its operations.