Magnit 1 h2015

INVESTOR PRESENTATION

1H 2015 OPERATIONAL RESULTS published on July 22, 2015

2

Magnit at a Glance

Magnit at a Glance

As of June 30, 2015Source: as ⃰�of FY2014, Company, Bloomberg, IFRS accounts for FY2014

2 233Cities & Towns

№1Russian Food RetailChain by Revenueand Number of Stores

10 728Total Numberof Stores

3 928thous.sq.m.Selling Space

29DCs

5 926Trucks

Multi-format Business ModelComprising Convenience, Hypermarkets,“Magnit Family” & Drogerie Stores

№2Retailer in Europein MarketCapitalization $26bn

MarketCapitalization >6%

Share in RussianGrocery Sector ⃰�

Shareholder Structure as of FY2014

54,6%Free-float

37,6%Sergey Galitskiy, CEO

3,3%Other

4,5%Lavreno Ltd. (Cyprus)0,1

%

Magnit at a GlanceKey Metrics

3

Source: Management accounts for 1H2015, Company’s Estimates,* as of FY2014

New Stores

455bn 30,3%Revenue1H 2015

5,55%

NetMargin

10,69%

EBITDAMargin

0,9*

Net debt/LTM EBITDA

1 350ConvenienceStores 90

Hyper-markets 950

Drogerie Stores

26-28%

RUB SalesGrowth

10,5-11,3%

EBITDAMargin

RUB 80bn

Capex

P=Revenue growth Y-o-Y

Guidance for 2015

4

Magnit at a GlanceStrategy

Growth

Value Efficiency

Multi-format OrganicStore Growth

GeographicScope

Density of StoreCoverage

LowPrices

HighQuality

Assortment CostManagement

VerticalIntegration

Centralization

5

53

53%

47%

Discounters

25%

Super-markets

15%

Hyper-markets

13%

Traditional Stores

31%

Kiosks, Pavil-ions

6%

Open Markets

10%

Magnit at a GlanceRussian Food Retail Market

Market Composition by Format

$320bnMarketSizeFY 2014 % Modern

RetailPenetration

Non-Modern Modern

Source: Sberbank CIB Estimates for FY2014

6

Magnit at a GlanceMagnit vs Peers

Source: As of FY 2014; Companies, Infoline, Bloomberg, Magnit’s Estimates

Numberof Stores

Selling Spacethous. sq.m.

RevenueRUB bn

Market CapUS$ bn

Market Share%

Magnit

X5

Dixy

Okey

Lenta

Auchan

Metro

9,711

5,483

2,195

108

132

85

80

3,591

2,572

747

552

701

789

619

763.5

633.9

229.0

152,0

194.0

338,0

210,0

21.5

3.3

0.8

1.2

2,9

6

5

2

1

2

3

2

Not public

Not public

Source: Company, as of June 30, 2015 7

1 527Drogerie Stores

8 890Convenience Stores

201Hypermarkets

110Magnit Family

29Distribution Centers

Operational OverviewGeographical Coverage

2 233Cities& Towns

7 FederalRegions

North Caucasu

s

Southern Volga North West

Urals SiberiaCentral

Source: Company, as of June 30, 2015 8

Operational OverviewLogistics System

10 728Total Numberof Stores

1 078thous.sq.m.Warehousing Space

29DCs

5 926Trucks

Central

Volga

Southern

Urals

North Caucasus

North West

Siberia

9

7

6

2

1

2

2

3375

2904

2104

1105

358

588

294

Centralization Ratio%

Magnit

Out-sourced

90

10

92

8

Convenience Stores

1H2015

Magnit

Out-sourced

73

27

80

20

Hypermarkets

Source: Company, as of December 31, 2014 9

Operational OverviewSuppliers

5000DomesticSuppliers

4000Local Suppliers

1000Federal Suppliers

Assortment

55-60% 40-45%

10

Operational OverviewDirect Import

Source: Company, Direct Import - as of FY2014,Private Label – as of June 30, 2015

11

% Shareof Revenue587

PLSKUsM 85% Food

Items

Private Label

10 % International

Direct Import 860OpenContracts

11

Operational OverviewEmployees

Source: Company, as of June 30, 2015,*as of FY2014

259 766Employees

28 143AverageMonthlySalary ⃰� 9%

Wage RateIncrease ⃰�P=

187 273In-storePersonnel

41 115People Engagedin Distribution

20 706People in RegionalBranches

8 617People Employedby Head Office

1000 employees

Average Weighted Number of Employees – 230 928

2 055Other

12

Operational OverviewCompetitive Attributes

40 %

of FamilyBudgetSpent on Food

Location Quality(of Products)

Assortment Reliability AtmospherePrices

5 000People —MinimumPopulation

(1 500–1 600 Families)

4 000-9 500MonthlyFamily FoodBudgetP=

Overlap “Good”Cannibalization

Magnit #1

Magnit #2

500m

Competitor #1 Competitor #2

Competitor #3

500m

Sales Catchment Area

Source: Company’s Estimates

Convenience Store

Source: Company, as of June 30, 2015 14

Operational OverviewConvenience Store

454

sq.m.Total

322

sq.m.Selling Space

90% Food

10% Non-food

27% Owned

73% Leased

Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback

Store Ownership Structure

Sales Mix

Traffictickets/sq.m./day

Sales Densitysales/sq.m./year

LFL 1H2015 – 1H2014,%

244,0P=$4,3

238 077P=$6 196

12,06

AverageTicket, RUB

-0,15 Traffic

11,89

Sales

2,8

3 years

If Leased

If Owned

Cost of New Storeper sq.m. of Total Space, thousand RUB

Time to Maturity

6 months

4-6 years

Owned 42-108Leased 10-19

Hypermarket

Source: Company, as of June 30, 2015 16

Operational OverviewHypermarket

80% Food

20% Non-food

79% Owned

21% Leased

Format Description Key Operational StatisticsSize of the Store Average Ticket

Store Ownership Structure

Sales Mix

Traffictickets/sq.m./day

Sales Densitysales/sq.m./year

LFL 1H2015 – 1H2014,%

620,5P=$10,8

275 073P=$7 159

1,2

6 770

sq.m.Total

2 934

sq.m.Selling Space

10,16

AverageTicket, RUB

-1,36 Traffic

8,66 Sales

OpeningPayback

6-9 years

Cost of New Storeper sq.m. of Total Space, thousand RUB

Owned 65-111Leased 31-35

8-15 months

Time to Maturity

S: up to 3 000M:

3 000-6 000

L: over 6 000

Magnit Family

Source: Company, as of June 30, 2015 18

Operational OverviewMagnit Family

2 230

sq.m.Total

1 116

sq.m.Selling Space

85% Food

15% Non-food

37% Owned

63% Leased

Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback

Store Ownership Structure

Sales Mix

Traffictickets/sq.m./day

Sales Densitysales/sq.m./year

LFL 1H2015 – 1H2014,%

448,7P=$7,8

371 659P=$9 673

2,2

6-9 years

Cost of New Storeper sq.m. of Total Space, thousand RUB

Owned 81-108Leased 31-54

8-15 months

9,82 AverageTicket, RUB

-0,91 Traffic

8,82 Sales

Time to Maturity

Drogerie Store

Source: Company, as of June 30, 2015 20

Operational OverviewDrogerie Store

300

sq.m.Total

229

sq.m.Selling Space

100% Non-food

17% Owned

83% Leased

Format Description Key Operational Statistics OpeningSize of the Store Average Ticket Payback

Store Ownership Structure

Sales Mix

Traffictickets/sq.m./day

Sales Densitysales/sq.m./year

LFL 1H2015 – 1H2014,%

272,1P=$4,7

104 643P=$2 724

12,21

AverageTicket, RUB

11,32

Traffic

24,92

Sales

1,1

3 years

If Leased

If Owned

Cost of New Storeper sq.m. of Total Space, thousand RUB

Time to Maturity

6 months

Owned 31-96Leased 12-19

4-6 years

21

Sizeof the Store

sq.m.

AverageTicket

TrafficTickets/

sq.m./day

DensitySales/

sq.m./year

SalesMix

LFL 1H2015-1H2014

%

Store Owner-

ship Structure

PaybackYears

Cost of New Store

per sq.m.of Total Space

Timeto Maturity

Months

• Total• Selling Space

• Food• Non-food

• Av.ticket• Traffic/ Sales

• Owned• Leased

17%83%

37%

63%

79%21%

27%73%

Operational OverviewFormat Summary

Source: Company, as of June 30, 2015; * Excludes selling space designated for leases

Hypermarket

DrogerieStore

MagnitFamily

2934*

Owned RUB 42-

108kLeased

RUB 10-19kP.244,0

$4,3

P.620,5$10,8

P.272,1$4,7

P.448,7$7,8

P.238 077$6 196

P.275 073$7 159

P.104 643$2 724

P.371 659$9 673

80%20%

1

85%15%

90%10%

Conveniencestore

6

8-15

6

8-15

3 (if leased)

6-9

3 (if leased)

6-9

4-6 (if owned)

4-6 (if owned)

12.06

10.16

12.21

9.82

-0.15

-1.36

11.32

-0.91

11.89

8.66

24.92

8.82

OwnedRUB 65-111k

LeasedRUB 31-35k

OwnedRUB 31-96k

LeasedRUB 12-19k

OwnedRUB 81-108k

LeasedRUB 31-54k

22

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Summary P&L

SG&A is presented net of Depreciation & Amortization (except for Depreciation of production fixed assets which was included in the Cost of sales)Source: Audited IFRS accounts for 2013 – 2014Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals

RUB MM 2013 2014 2014 / 2013Y-o-Y Growth

Net sales 579,694.88 763,527.25 31.7%

Cost of sales (414,431.89) (543,006.69) 31.0%

Gross profit 165,262.99 220,520.56 33.4%

Gross margin, % 28.51% 28.88%

SG&A (101,729.77) (134,169.75) 31.9%

Other income/(expense) 1,178.76 (501.27) -142.5%

EBITDA 64,721.23 85,909.67 32.7%

EBITDA margin,% 11.16% 11.25%

Depreciation & Amortization (14,184.35) (17,609.67) 24.1%

EBIT 50,536.88 68,300.00 35.1%

Net finance costs (4,782.83) (6,273.47) 31.2%

Profit before tax 45,754.05 62,026.53 35.6%

Taxes (10,133.67) (14,340.69) 41.5%

Effective tax rate 22.15% 23.12%

Net income 35,620.38 47,685.84 33.9%

Net margin, % 6.14% 6.25%

Source: IFRS accounts for FY2012–2014 23

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Revenue & Costs

2012 2013 2014

0

5

10

15

20

25

30

35

26.5

28.5 28.9

10.6 11.2 11.3

5.6 6.1 6.3

Revenue DynamicsRUB bn

Net Income DynamicsRUB bn

Margin DynamicsSG&A Expense Structure

Revenue — 764 RUB bnGrossMargin

EBIDTAMargin

NetMargin

%

+29,2%

7,5% 14,5%

+31,7%+41,8%

+33,9%

LFLLFL

Sales Growth, RUB

Sales Growth, RUB

2012 2013 2014

449580

764

2012 2013 2014

2536

48

1,84 (0,37) ― Packaging & Raw Materials

2,23 (0,44) ― Repair & Maintenance

55,01 (10,93) ― Payroll & Related Taxes

1,93 (0,38) ― Taxes, Other than Income Tax

11,57 (2,30) ― Deprecation & Amortization

20,62 (4,10) ― Rent & Utilities

4,51 (0,90) ― Other

in SG&A,% in Revenue, %

2,29 (0,46) ― Advertising

20%

151 719 RUB mn

Source: IFRS accounts for FY2012 – 2014 24

GM2012

Trading Margin Transport Losses GM2013

Trading Margin Transport Losses GM2014

15

17

19

21

23

25

27

29

31

33

26.53

28.51 28.881.85 0.08 0.050.13 0.32 0.08

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Gross Margin Bridge

EBITDA Margin Bridge

% of Sales

% of Sales

+198 b.p.

+37 b.p.

+60 b.p. +9 b.p.

EBIDTA2012

GrossMargin

Salaries Rent & Utilites

Other EBIDTA2013

GrossMargin

Salaries Rent & Utilites

Advertising Other EBIDTA2014

0

2

4

6

8

10

12

14

10.5611.16

11.25

1.970.37 0.291.01

0.35 0.010.11 0.28 0.18

Source: IFRS accounts for FY2013–2014 25

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Free Cash Flow

Working Capital Analysis

The Average Days Payable to Suppliers is 38 Days.

Inventory Management Days is 46 Days

Working Capital: RUB 6 927 mn as of 31.12.2014

RUB mn

2013

2014

Adjusted for loss from disposal of PPE, provision for doubtful receivables, foreign exchange gain, finance costs, gain on disposal of subsidiary and investment income

Calculated as additions + transfers of PP&E during the respective period

Does not include cash flow from financing activities

Adjust

ed

EBIDTA

Change in

Work

ing c

apital

Net Inte

rest

Paid

Taxe

s

Paid OCF

Capex

Other C

ash F

low

from

Inve

stin

g

Activ

ities

FCF

Paym

ent of D

ivid

ents

Other C

ash F

low

from

Fin

ancing

Activ

ities

CF

88,999

60,711

5,617

11,760

-9,330-6,433

-12,525

-55 936

-15 82521 968

842

65,358

44,624

-7,608 -6,521

-8,163-4,550

-8,021

-52 488 256

-9 545

10 632

26

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Balance Sheet

Source: Audited IFRS accounts for FY2012 - 2014Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals

RUB MM 2012 2013 2014

ASSETS

Property plant and equipment 158,752.58 195,158.25 232,968.80

Other non-current assets 3,948.69 5,762.40 6,043.82

Cash and cash equivalents 12,452.61 5,931.13 17,691.54

Inventories 41,025.62 56,095.41 81,475.66

Trade and other receivables 584.02 631.53 813.26

Advances paid 2,677.20 3,171.05 4,849.30

Taxes receivable 28.94 27.99 69.38

Short-term financial assets 876.66 1,150.64 475.18

Prepaid expenses 181.94 252.15 242.53

Income tax recoverable – – 131.86

TOTAL ASSETS 220,528.26 268,180.55 344,761.33

EQUITY AND LIABILITIES

Equity 99,235.71 126,162.14 143,651.62

Long-term debt 38,246.72 37,441.50 44,410.14

Other long-term liabilities 6,159.09 8,462.32 10,617.70

Trade and other payables 42,920.57 48,170.71 66,794.61

Short-term debt 25,121.90 36,319.76 51,256.67

Dividends payable 0.54 0.03 14,372.03

Other current liabilities 8,843.73 11,624.09 13,658.56

TOTAL EQUITY AND LIABILITIES 220,528.26 268,180.55 344,761.33

27

Hypermarkets Distribution Centres

Convenience Stores

Acquisition & Construction of Conv.Stores

Buy-out of Leased Conv.Stores

Greenhouses Land for HyperMarkets

Store Renovation

Maintenance Drogerie Stores

90 5 1 200 800

32 000 11 000 10 000 6 000 3 000 4 000 6 000 2 000 1 000 5 000

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Capex Analysis

Source: Company, as of December 31, 2014; Company’s Estimates

Construction in Progress & Buildings

Machinery & Equipment

Other Assets Land

36 297 11 553 5 156 2 930

FY 2014

₽ 56 bn

FY 2015 (plan)

₽ 80 bn

RUB 500 mn

Source: IFRS accounts for FY 2012 - 2014 28

2012 2013 2014

63,369

73,761

95,667

50,916

67,83077,97538,247

37,441 44,410

Net Debt

Long-term Debt

%

Financial Overview (1H2015 reviewed financial results will be released in August 26-28, 2015)Debt Burden

2012 2013 2014

0

2

4

6

8

10

12

14

11.7

13.0 12.9

2012 2013 2014

0

0.5

1

1.5

2

1.11

0.9

Debt Level Dynamics RUB mn

Credit Metrics Credit Profile

EBIDTA / Finance Expenses

Net Debt / LTM EBITDA

The Company Hasan Impeccable Credit History

Collaboration with

the Largest Banks

Low Debt Burden:Net Debt / EBITDA Ratio of 0,9

No Currency Risk: 100%of Debt is Rub DenominatedMatching Revenue Structure

No Interest Rate Risk:Interest Payments are Madeat Fixed Rates

39,6%49,2%

53,6%

46% of Debt is Long-term

Approximately 35%of LT Debt is Rub Bonds

29

Contact InformationContact Information

Timothy PostHead of Investor Relations

+7 (961) [email protected]://ir.magnit.com

15/2 Solnechnaya StreetKrasnodar, 350072Russian Federation