Detsky Mir Expansion Strategy

5 Asset-light cash-generative business model providing for strong returns on capital and consistent dividend payments Attractive new store economics and disciplined roll-out... ☐ Capex of c. RUB 13m per 1 standard DM store Strict investment criteria: IRR hurdle rate of 40% on 7-year cash flows (not accounting for terminal value) Total maturity period - 18-24 months Targeted EBITDA breakeven in 6 months after a store opening Payback period of 2.5-3.0 years Resulting in strong returns ... detsky mir supported by well-controlled rental costs Prime locations in high-traffic modern shopping malls Most rental agreements with right to lease for more than 5 years and fixed annual increases Unilateral termination rights for Detsky Mir (with reasonable notice periods) Limited currency risk for leased properties (denominated in respective local currencies in Russia, Kazakhstan and Belarus, or with fixed caps for USD and EUR exchange rates) ... and a leading ROIC(4) in global retail context FY 2019, median values for respective peer groups % 2014 2015 2016 2017 2018 2019 2020 Revenue growth 26% 33% 31% 22% 14% 16% 11% Selling space growth 22% 26% 21% 15% 12% 10% 6% Adj. EBITDA, RUB bn 4.5(2) 6.2 8.2 10.7 12.7 14.7 17.0 Capex, RUB bn (1.9) (5.3) (1.7) (2.5) (3.8) (3.5) (2.4) Dividends, RUB bn (1.9) (3.0) (4.4) (4.8) (6.1) (7.0) (7.8) Adj. net debt (3) / Adj. EBITDA LTM(1) 0.6x 1.7x 1.4x 1.0x 1.4x 1.2x 1.1x ROIC(4), (5) 71% 62% 71% 78% 70% 63% 76% 63% detsky mir 29% 21% 12% Children's goods retailers (6) High performance Russian food retailers specialty retailers (7) (8) Source: Companies' disclosure and reporting Note: The Group's consolidated financial statements for 2013 under US GAAP and 2014-2020 under IFRS (before IFRS16). For the line items and the years presented, there was no difference between the calculation of numbers or presentation under US GAAP and IFRS (1) Adj. EBITDA is calculated as profit for the year before income tax, FX gain/loss, gain on acquisition of controlling interest in associate, impairment of goodwill, net finance expense, D&A, adjusted for the one-off effect relating to disposal of the Yakimanka building in 2014, as well as share-based compensation and cash bonuses under the LTI program (2) Less RUB 1,164m net gain from disposal of Yakimanka store (3) Adj. Net Debt is calculated as total borrowings (long term borrowings and short-term borrowings and current portion of long-term borrowings) less cash and cash equivalents adjusted for amounts receivable under the loan issued to CJSC "DM-Finance" (RUB 5.2bn in 2014, RUB 5.8bn in 2015 and RUB 1.1bn in 2016) (4) Calculated as operating profit divided by average capital invested (simple average of capital invested as at the respective dates). Capital invested is calculated as net debt plus total equity/(equity deficit) (5) Adjusted for amounts receivable under the loan issued to CJSC "DM-Finance" in 2014, 2015 and 2016; as well as for net book value of the building occupied by the Bekasovo distribution center of RUB 3.1bn (for 2015 only, given it was completed in 2015, but was not operational for the most of 2015) (6) Five Below, Children's Place, Carters, Jumbo and Baby Bunting; (7) Clicks, Lojas Renner, LPP, CCC, Raia Drogasil, B&M, Liverpool and XXL; (8) X5, Magnit and Lenta 24

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