Magnit fy2015

INVESTOR PRESENTATION

FY 2015 RESULTS published on January 27, 2016

2

Magnit at a Glance

Magnit at a Glance

As of December 31, 2015Source: Company, Thomson Reuters, * - Magnit’s estimates

2 361Cities & Towns

№1Russian Food RetailChain by Revenueand Number of Stores

12 089Total Numberof Stores

4 414thous.sq.m.Selling Space

33DCs

5 882Trucks

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

№2Retailer in Europein MarketCapitalization $19bnMarket

Capitalization >7%Share in RussianGrocery Sector ⃰

Shareholder Structure as of 1H2015

55,8%Free-float

36,5%Sergey Galitskiy, CEO

3,2%Other

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

%

Magnit at a GlanceKey Metrics

3

Source: Company, as of December 31, 2015,Company’s Estimates* as of June 30, 2015

New Stores

951bn 24,5 %RevenueFY 2015

6,19 %

NetMargin

10,93%

EBITDAMargin

0,9*Net debt/LTM EBITDA

1 350ConvenienceStores 90Hyper-

markets 950Drogerie Stores

25,5-28%

RUB SalesGrowth

10,5-11,3%

EBITDAMargin

RUB 65bn

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

65

Magnit at a GlanceRussian Food Retail Market

Market Composition by Format$320bnMarket

SizeFY 2014 % Modern

RetailPenetration

Non-Modern Modern

Source: Infoline Estimates for FY2015

65%

35%

Top-7 Retail Chains

22,5%

Modern Non-ChainStores

16,5%

Other chains26%

Traditional Trade28%

Open Markets6%

6

Magnit at a GlanceMagnit vs Peers

Source: As of FY 2014; Companies, Infoline, Thomson Reuters, Magnit’s Estimates (2015 figures to be updated in March 2016)

Numberof Stores, eop 2014

Selling Spacethous. sq.m., eop 2014

RevenueRUB bn, eop 2014

Market CapUS$ bn, eop 2015

Market Share%, eop 2014

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

19.0

5.1

0.5

0.5

2,9

6

5

2

1

2

3

2

Not public

Not public

7

2 121Drogerie Stores 85 444 518 593 205 20076

9 594Convenience Stores

219Hypermarkets

155Magnit Family

33Distribution Centers

6 42 30 49 11 8

7 62 37 14 308

3531648 2578 2877 936 866

336

Operational OverviewGeographical Coverage

Source: Company, as of December 31, 2015

2 361Cities& Towns

7 FederalRegions

North Caucasu

s

Southern Volga North West

Urals SiberiaCentral

8 8 3

8

Operational OverviewLogistics System


12 089Total Numberof Stores

1 292thous.sq.m.Warehousing Space

33DCs

5 882Trucks

Central

Volga

Southern

Urals

North Caucasus

North West

Siberia

9

8

8

3

1

2

2

3763

3101

2396

1428

366

669

366

283,871

310,387

142,533

Centralization Ratio%

90

10

92

8

Convenience Stores

FY2015

73

27

80

20

HypermarketsDelivered from DC

Delivered from supplier

Delivered from DC

Delivered from supplier

9

Operational OverviewSuppliers


5 800DomesticSuppliers

4 600Local Suppliers

1 200Federal Suppliers

Assortment55% 45%

10

Operational OverviewDirect Import

Source: Company,as of December 31, 2015

11

% Shareof Revenue596PL

SKUsM 84% FoodItems

Private Label

9 % InternationalDirect Import 757Open

Contracts

11

Operational OverviewEmployees

Source: Company, as of December 31, 2015*as of June 30, 2015

265 989Employees

28 617AverageMonthlySalary* 4% Wage Rate

Increase*P=

194 723In-storePersonnel

40 369People Engagedin Distribution

19 108People in RegionalBranches

9 349People Employedby Head Office

1000 employees

2 440Other

12

Operational OverviewCompetitive Attributes

43-45 % of FamilyBudgetSpent on Food

Location Quality(of Products)

Assortment Reliability AtmospherePrices

5 000 People —MinimumPopulation

(1 500–1 600 Families)

4 000-9 500 MonthlyFamily FoodBudgetP=

Overlap “Good”Cannibalization

Magnit #1

Magnit #2500m

Competitor #1 Competitor #2

Competitor #3

500m

Sales Catchment Area

Source: Company’s Estimates

Convenience Store

14

Operational OverviewConvenience Store


455

sq.m.Total

325

sq.m.Selling Space

89% Food

11% Non-food

25% Owned

75% Leased

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

Store Ownership Structure

Sales MixTraffictickets/sq.m./day

Sales Densitysales/sq.m./year

LFL 12M2015 –12M2014,%

244,01P=$4,00

245 306P=$4 024

8,14 AverageTicket, RUB

-0,79 Traffic

7,29 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 35-105Leased 10-19

Hypermarket

16

Operational OverviewHypermarket


80% Food

20% Non-food

75% Owned

25% Leased

Format Description Key Operational StatisticsSize of the Store Average Ticket


Sales Mix

Traffictickets/sq.m./day


LFL 12M2015 – 12M2014,%

614,3P=$10,1

272 278P=$4 467

1,2

6 615

sq.m.Total

2 918

sq.m.Selling Space


-3,80 Traffic

1,51 Sales

OpeningPayback

6-9 years



8-15 months

Time to Maturity

S: up to 3 000M:

3 000-6 000

L: over 6 000

Magnit Family

18

Operational OverviewMagnit Family


2 161

sq.m.Total

1 098

sq.m.Selling Space

85% Food

15% Non-food

36% Owned

64% Leased





LFL 12M2015 – 12M2014,%

446,9P=$7,3

349 703P=$5 737

2,0

6-9 years



8-15 months


-3,55 Traffic

0,62 Sales

Time to Maturity

Drogerie Store

20

Operational OverviewDrogerie Store


298

sq.m.Total

229

sq.m.Selling Space

100% Non-food

13% Owned

87% Leased





LFL 12M2015 – 12M2014,%

287,6P=$4,7

114 924P=$1 885

13,24

AverageTicket, RUB

5,62 Traffic

19,61

Sales

1,0

3 years

If Leased

If Owned


Time to Maturity

6 months


4-6 years

21

80%20%

Sizeof the Store

sq.m.

AverageTicket

TrafficTickets/

sq.m./day

DensitySales/

sq.m./year

SalesMix

LFL 12M2015-12M2014

%

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

13%

87%

36%

64%

75%25%

25%75%

Operational OverviewFormat Summary

Source: Company, as of December 31, 2015; * Excludes selling space designated for leases

Hypermarket

DrogerieStore

MagnitFamily

325

2918*6 615

298

Owned RUB 35-

105kLeased

RUB 10-19k2,8

1,0

2,0

P.244,01$4,0

P.614,25$10,1

P.287,6$4,7

P.446,9$7,3

P.245 306$4 024

P.272 278$4 467

P. 114 924$1 885

P.349 703$5 737

89%11%

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)

8,14

5,53

13,24

4,33

-0,79

-3,80

5,62

-3,55

7,29

1,51

19,61

0,62

OwnedRUB 56-98k

LeasedRUB 31-41k

OwnedRUB 71-112k

LeasedRUB 31-54k

OwnedRUB 20-70k

LeasedRUB 9-16k8

5%15%

1

22

Financial OverviewSummary 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: CompanyPlease note: there may be small variations in calculation of totals , subtotals, and/ or percentage change due to rounding of decimals

RUB MN 1H2014 1H2015 1H2014 / 1H2015Y-o-Y Growth

Net sales 349,047.11 454,808.63 30.3%

Cost of sales (251,912.59) (327,748.22) 30.1%

Gross profit 97,134.52 127,060.41 30.8%

Gross margin, % 27.83% 27.94%

SG&A (61,569.24) (79,406.25) 29.0%

Other income, net 955.52 937.45 -1.9%

EBITDA 36,549.60 48,627.66 33.0%

EBITDA margin,% 10.47% 10.69%

Depreciation & Amortization (8,489.36) (10,033.63) 18.2%

EBIT 28,060.24 38,594.03 37.5%

Net finance costs (2,822.41) (5,865.82) 107.8%

Profit before tax 25,237.83 32,728.21 29.7%

Taxes (5,649.76) (7,462.55) 32.1%

Effective tax rate 22.39% 22.80%

Net income 19,588.07 25,265.66 29.0%

Net margin, % 5.61% 5.56%

23

20%

89 404 RUB mn

1H2013 1H2014 1H2015

1520

25

1H2013 1H2014 1H2015

273349

455

Financial OverviewRevenue & Costs

Source: Company1H2013 1H2014 1H2015

0

5

10

15

20

25

3027.3 27.8 27.9

10.1 10.5 10.7

5.3 5.6 5.6

Revenue DynamicsRUB bn

Net Income DynamicsRUB bn

Margin DynamicsSG&A Expense StructureRevenue — 455 RUB bn

GrossMargin

EBITDAMargin

NetMargin

%

+27,9%

10,6% 11,5%

+30,3%+33,8%

+29,0%

LFLLFL

Sales Growth, RUB

Sales Growth, RUB

1,90 (0,37) ― Packaging & Raw Materials

1,69 (0,33) ― Repair & Maintenance

53,31 (10,48) ― Payroll & Related Taxes1,65 (0,33) ― Taxes, Other than Income Tax

11,18 (2,20) ― Deprecation & Amortization

22,55 (4,44) ― Rent & Utilities

4,70 (0,92) ― Other

in SG&A,% in Revenue, %

3,02 (0,59) ― Advertising

Source: Company 24

GM1H2013

Trading Margin Transport Losses GM1H2014

Trading Margin Transport Losses GM1H2015

15171921232527293133

27.26 27.83 27.940.26 0.34 0.640.03 0.42 0.11

Financial OverviewGross Margin Bridge

EBITDA Margin Bridge

% of Sales

% of Sales

+57 b.p. +11 b.p.

+35 b.p. +22 b.p.

EBITDA1H2013

GrossMargin

Rent & Utilites

Advertising Other EBITDA1H2014

GrossMargin

Payroll & Taxes

Rent & Utilites

Advertising Other EBITDA1H2015

02468

1012

10.12 10.47

10.69

0.570.21 0.11 0.59 0.030.19 0.24

0.29 0.22

Source: Company 25

36,95232,904

12,593

-2,202

2,936

26

3057 3927 -20 337

8427-6 368

Financial OverviewFree Cash Flow

Working Capital AnalysisThe Average Days Payable to Suppliers is 36 Days.

Inventory Management Days is 47 Days

Working Capital: RUB 7 171 mn as of 30.06.2015

RUB mn1H 2014

1H 2015

Adjusted for loss from disposal of PPE, provision for doubtful receivables, foreign exchange loss, gain on disposal of subsidiary Calculated as

additions + transfers of PP&E during the respective period

Does not include cash flow from financing activities

Adjusted

EBITDA

Change in

Working ca

pital

Net Interest

Paid

Taxe

s

Paid OCF

Capex

Other Cash

Flow

from In

vesti

ng

Activit

iesFC

F

Paym

ent of D

ividents

Other Cash

Flow

from Fi

nancing

Activit

ies

CF

49,065

36,337

11,552

-5,776

-2,238-5,735 -4,755

-24 434

-351 -19 300

1 972

26

Financial OverviewBalance Sheet

Source: IFRS accounts for FY2013, FY2014, CompanyPlease note: there may be small variations in calculation of totals , subtotals, and/or percentage change due to rounding of decimals

RUB MN 2013 2014 1H2015 ASSETS Property plant and equipment 195,158.25 232,968.80 247,425.33 Other non-current assets 5,762.40 6,043.82 6,344.84 Cash and cash equivalents 5,931.13 17,691.54 11,915.01 Inventories 56,095.41 81,475.66 86,930.23 Trade and other receivables 631.53 813.26 731.37 Advances paid 3,171.05 4,849.30 3,175.85 Taxes receivable 27.99 69.38 162.03 Short-term financial assets 1,150.64 475.18 387.48 Prepaid expenses 252.15 242.53 257.18 Income tax receivable – 131.86 –TOTAL ASSETS 268,180.55 344,761.33 357,329.32 EQUITY AND LIABILITIES Equity 126,162.14 143,651.62 156,255.11 Long-term debt 37,441.50 44,410.14 39,428.44 Other long-term liabilities 8,462.32 10,617.70 11,641.24 Trade and other payables 48,170.71 66,794.61 64,503.32 Short-term debt 36,319.76 51,256.67 58,477.16 Dividends payable 0.03 14,372.03 7,600.33 Other current liabilities 11,624.09 13,658.56 19,423.72 TOTAL EQUITY AND LIABILITIES 268,180.55 344,761.33 357,329.32

27

Financial OverviewCapex Analysis

¹ CAPEX for 1H2015 amounts to RUB 24 434 mnSource: 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 930FY 2014¹

RUB 56 bnFY 2015 (plan)

RUB 65 bnRUB 500 mn

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 1 350 950

25 000 9 000 8 000 5 000 2 000 4 000 5 000 2 000 1 000 4 000

Source: IFRS accounts for FY2013, FY2014, Company 28

2013 2014 1H2015

73,761

95,667 97,905

67,830

77,97585,991

37,441 44,410 39,428

Net DebtLong-term Debt%

Financial OverviewDebt Burden

2013 2014 1H20150.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0 13.0 12.9

8.0

2013 2014 1H20150

0.5

1

1.5

2

1.0 0.9 0.9

Debt Level Dynamics RUB mn

Credit Metrics Credit ProfileEBITDA / Finance Expenses

Net Debt / LTM EBITDA

The Company Hasan Impeccable Credit HistoryCollaboration withthe Largest BanksLow Debt Burden:Net Debt / LTM EBITDA Ratio of 0,9

No Currency Risk: 100%of Debt is Rub DenominatedMatching Revenue StructureNo Interest Rate Risk:Interest Payments are Madeat Fixed Rates

49,2%53,6%

59,7%

40% of Debt is Long-termApproximately 26%of LT Debt is Rub Bonds

29

Contact InformationContact InformationTimothy PostHead of Investor Relations

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

15/2 Solnechnaya StreetKrasnodar, 350072Russian Federation