Dear shareholders and partners,
Over the past year, the spread of the novel coronavirus, COVID-19, has exposed the global community to unprecedented external challenges, which have changed the way we live. We have witnessed how not only individual companies or markets but also the economies of entire countries and world regions have had to adapt to new conditions rapidly, accelerate transformational processes and start acting to stay ahead of the curve. The retail sector has felt the effects of the pandemic acutely, though it has also received a powerful impetus to develop in an entirely new way.
Said Gutseriev
Chairman of the Board

In 2020, the Group’s overriding priorities were to ensure the safety and wellbeing of customers, partners and employees, as well as to meet the soaring demand for online shopping and delivery. M.Video–Eldorado successfully rose to these challenges. Over the past few years, we have progressively transformed into a company whose successful hybrid business model demonstrates great flexibility and efficiency even in the face of uncertainty.

We had much that we could rely on during this challenging period: we were already fairly well developed in terms of digitalization and an omnichannel model, and we had a universal business model and two leading Russian retail brands that everyone knows, a loyal customer base, an extensive network of stores nationwide, efficient logistics and, of course, a professional and tight-knit team.

During this time, the involvement of M.Video’s founders, Alexander Tynkovan and Pavel Breev, in operational work was crucial. During the most severe restrictions in the second quarter of 2020, their experience and knowledge played a major role in the Group being able to navigate the crisis successfully.

In this challenging environment, M.Video–Eldorado demonstrated robust growth in its business, once again confirming its leadership in innovation, and the ability to anticipate and respond to new market challenges quickly. M.Video–Eldorado was one of the few non-food retailers that retained staff and expanded its business despite all the restrictions imposed. Our team’s dedication throughout the year resulted in M.Video–Eldorado becoming one of Russia’s largest retailers in terms of online sales.

In 2020, one of the Group’s priority focuses was to improve its corporate governance system, and there were several key changes to the Board of Directors. Enrique Fernandez, who previously served as the Group’s CEO for many years, joined the Board. In August, the Group announced the creation of a Strategy and Digital Transformation Committee under the Board, and Alexander Tynkovan was elected its chairman. This move reaffirms our focus on the further digital transformation and development of M.Video–Eldorado’s online business. In 2021, we plan to continue developing the Group’s corporate governance systems in line with international best practices. Specifically, we intend to increase the proportion of independent directors on M.Video–Eldorado’s Board, which will allow us to strengthen the expertise that the Group will need in order to grow further.

The Group also bolstered its management team last year. In October, Alexander Izosimov became the new CEO of M.Video–Eldorado Group. His experience in developing rapidly growing businesses and his strategic vision are fully in line with our leadership ambitions, which is particularly important when the Group is starting a new page in its development with the adoption of its Strategy 2025. Today, we can confidently say that M.Video– Eldorado has one of the strongest teams in Russian retail.

Throughout the whole of 2020, the Group worked to identify new points of long-term growth and formulated key development priorities. All this work resulted in the approval in December of a new strategy. We have set the ambitious goal of doubling GMV to RUB 1 trillion by the end of 2025, while keeping the EBITDA margin at its historical high and debt comfortable.

Most importantly, the Group’s further development in accordance with the strategy will help to simultaneously work towards the goals of doubling the business and investing in further growth to deliver strong shareholder returns. To this end, in early 2021, the Group adopted a new dividend policy that reflects both its ability to generate significant free cash flow and its confidence in the prospects for growth and business sustainability. M.Video– Eldorado intends to make regular payments to shareholders of at least 100% of IFRS (IAS) 17 net profit. This will enhance the appeal and transparency of our investment track record for the entire market and enable the Group’s shareholders to benefit from further growth in the business.

The Company’s success is reflected today in the growing investor interest in its shares. In March 2021, Safmar Group successfully placed 13.5% of M.Video–Eldorado shares totaling RUB 17.6 billion via an SPO on the Moscow Exchange. Leading international and Russian funds participated in the offering, as did retail investors. The result of the placement was that we doubled the share of M.Video–Eldorado stock in free float to 24%, which will allow the shares’ liquidity to increase to the benefit of all shareholders.

As a strategic player in the market, we are fully aware of our responsibility to a wide range of stakeholders, so we carefully evaluate and consider the long-term positive effects of each strategic decision made by the Group. In this regard, sustainable development issues have become not only an integral part of our corporate culture and business model but also strategic in nature. In early 2021, we adopted a sustainable development strategy with specific goals to create value for partners and society as a whole as well as reduce the environmental impact of our business and the entire consumer electronics sector. Our social and environmental initiatives have already gained widespread recognition in society, and we intend to continue working on these issues and developing new products to achieve our strategic goals.

In conclusion, I am confident that the solid foundation built by our team will enable M.Video–Eldorado to achieve all the strategic goals it has set, while creating even greater value for our customers, employees, partners, shareholders and society as a whole.