magnit 1 h2016_unaudited

INVESTOR PRESENTATION

1H 2016 OPERATIONAL RESULTS published on July 25, 2016

2

Magnit at a GlanceMagnit at a Glance

Source: Company, Thomson Reuters, IFRS accounts for FY2015

2 397Cities & Towns

№1Russian Food RetailChain by Revenueand Number of Stores

12 888Total Numberof Stores

4 677thous.sq.m.Selling Space

34DCs

5 836Trucks

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

№3Retailer in Europein MarketCapitalization $16bnMarket

Capitalization >7%Share in RussianGrocery Sector (As of 31.12.2016)

Shareholder Structure as of FY2015

57,70%Free-float

38,67%Sergey Galitskiy, CEO

2,98%Other

0,65%Lavreno Ltd. (Cyprus)

0,1%

As of June 30, 2016

As of June 30, 2016

Magnit at a GlanceKey Metrics

3

522bn 14,7 %5,01%

NetMargin

9,89%

EBITDAMargin

0,9*Net debt/LTM EBITDA

1000-1100 80 1200

P= Revenue growth Y-o-Y

Guidance for FY2016

Figures for 1H 2016

*as of FY2015

14-16%Sales Growth Rub

10-10,5%EBITDA Margin

67bnCapex Rub

New Convenience Stores

New Hypermarkets

New Drogerie Stores

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 FormatRUB 13 410bn Market

SizeFY 2015 % Modern

RetailPenetration

Non-Modern Modern

Source: INFOLine, as of December 31, 2015

65%

35%

Top-7 Retail Chains

22,5%

Modern Non-ChainStores

16,5%

Other chains26%

Traditional Trade28%

Open Markets7%

6

Magnit at a GlanceMagnit vs Peers

* As of FY 2014; Source: Companies, INFOLine, Thomson Reuters, Magnit’s Estimates

Numberof Stores, eop 2015

Selling Spacethous. sq.m., eop 2015

RevenueRUB bn, eop 2015

Market CapUS$ bn, eop 2015

Market Share%, eop 2015

7

6

2

2

1

3*

2*

Not public

Not public

950.6

808.8

272.3

252,8

162.5

314,8*

209,5*

Magnit

X5

Dixy

Lenta

Okey

Auchan

Metro

12098

7,020

2,708

172

146

96

87

4,414

3,333

908

882

593

836

661

19.0

5.1

0.5

3.3

0,5

7

2 588Drogerie Stores 92 511 658 745 237 238107

9 902Convenience Stores

228Hypermarkets

170Magnit Family

34Distribution Centers

6 44 33 52 12 11

8 63 38 64 15 3010

3581684 2667 2961 972 895

365

Operational OverviewGeographical Coverage

Source: Company, as of June 30, 2016

2 397Cities& Towns

7 FederalRegions

North Caucasu

sSouthern Volga North

WestUrals SiberiaCentral

8 10 8 3

8

Operational OverviewLogistics System


12 888Total Numberof Stores

1 351thous.sq.m.Warehousing Space

34DCs

5 836Trucks

Central

Volga

Southern

Urals

North Caucasus

North West

Siberia

10

8

8

3

1

2

2

3684

3957

2293

1179

462

826

487

283,871

310,387

142,533

Centralization Ratio%

90

10

92

8

Convenience Stores

1H2016

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, Direct Import – as of December 31, 2015; Private Label – as of June 30, 2016

11

% Shareof Revenue611PL

SKUsM 84% FoodItems

Private Label

9 % InternationalDirect Import 757Open

Contracts

11

Operational OverviewEmployees

Source: Company, * as of June 30, 2016* * as of December 31, 2015

259 389Employees *

29 636AverageMonthlySalary * * 5% Wage Rate

Increase * *P=

190 420In-storePersonnel

36 592People Engagedin Distribution

19 923People in RegionalBranches

10 031People Employedby Head Office

1000 employees

2 423Other

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


457

sq.m.Total

327

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 1H2016 –1H2015,%

243,80P=$3,47

245 306P=$4 024

-0,36 AverageTicket, RUB

2,21 Traffic

1,85 Sales

2,7

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

73% Owned

27% Leased

Format Description Key Operational StatisticsSize of the Store Average Ticket


Sales Mix

Traffictickets/sq.m./day


LFL 1H2016 – 1H2015,%

596,91P=$8,5

272 278P=$4 467

1,1

6 503

sq.m.Total

2 897

sq.m.Selling Space

-2,48 AverageTicket, RUB

-7,86 Traffic

-10,15

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


2 148

sq.m.Total

1 100

sq.m.Selling Space

84% Food

16% Non-food

37% Owned

63% Leased





LFL 1H2016 – 1H2015,%

447,9P=$6,4

349 703P=$5 737

1,9

6-9 years



8-15 months

-2,31

AverageTicket, RUB

-4,03

Traffic

-6,25

Sales

Time to Maturity

Drogerie Store

20

Operational OverviewDrogerie Store


290

sq.m.Total

229

sq.m.Selling Space

100% Non-food

13% Owned

87% Leased





LFL 1H2016 – 1H2015,%

305,3P=$4,4

114 924P=$1 885

10,86

AverageTicket, RUB

-4,00 Traffic

6,42 Sales

0,9

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 1H2016-1H2015

%

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%

37%

63%

73%27%

25%75%

Operational OverviewFormat Summary

Source: Company, as of June 30, 2016; * Excludes selling space designated for leases

Hypermarket

DrogerieStore

MagnitFamily

327

2897*6 503

290

Owned RUB 35-

105kLeased

RUB 10-19k2,7

0,9

1,9

P.243,8$3,5

P.596,9$8,5

P.305,3$4,4

P.447,9$6,4

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)

OwnedRUB 56-98k

LeasedRUB 31-41k

OwnedRUB 20-70k

LeasedRUB 9-16k

OwnedRUB 71-112k

LeasedRUB 31-54k8

4%16%

1

-0.36

-2.48

10.86

-2.31

2.21

-7.86

-4.00

-4.03

1.85

-10.15

6.42

-6.25

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: Company’ s calculations based on IFRS accounts for 2014 - 2015Please note: there may be small variations in calculation of totals , subtotals, and/ or percentage change due to rounding of decimals

RUB MN 2014 2015 2014 / 2015Y-o-Y Growth

Net sales 763,527.25 950,613.34 24.5%

Cost of sales (543,006.69) (679,792.53) 25.2%

Gross profit 220,520.56 270,820.81 22.8%

Gross margin, % 28.88% 28.49%

SG&A (134,169.75) (167,420.12) 24.8%

Other income, net (501.27) 483.77 -196.5%

EBITDA 85,909.67 103,972.94 21.0%

EBITDA margin,% 11.25% 10.94%

Depreciation & Amortization (17,609.67) (21,116.73) 19.9%

EBIT 68,300.00 82,856.21 21.3%

Net finance costs (6,273.47) (11,660.29) 85.9%

Profit before tax 62,026.53 71,195.92 14.8%

Taxes (14,340.69) (12,134.72) -15.4%

Effective tax rate 23.12% 17.04%

Net income 47,685.84 59,061.20 23.9%

Net margin, % 6.25% 6.21%

23

20%

188 448 RUB mn

2013 2014 2015

3648

59

2013 2014 2015

580764

951

Financial OverviewRevenue & Costs

Source: Company’s calculations based on IFRS accounts for FY2013-20152013 2014 2015

0

5

10

15

20

25

30

35

28.5 28.9 28.5

11.2 11.3 10.9

6.1 6.3 6.2

Revenue DynamicsRUB bn

Net Income DynamicsRUB bn

Margin DynamicsSG&A Expense StructureRevenue — 951 RUB bn

GrossMargin

EBITDAMargin

NetMargin

%

+31,7%

14,5% 6,2%

+24,5%+33,9%

+23,9%

LFLLFL

Sales Growth, RUB

Sales Growth, RUB

1,97 (0,39) ― Packaging & Raw Materials

1,77 (0,35) ― Repair & Maintenance

52,40 (10,39) ― Payroll & Related Taxes1,62 (0,32) ― Taxes, Other than Income Tax

11,16 (2,21) ― Deprecation & Amortization

23,35 (4,64) ― Rent & Utilities

4,66 (0,92) ― Other

in SG&A,% in Revenue, %

3,06 (0,61) ― Advertising

24

GM2013

Trading Margin Transport Losses GM2014

Trading Margin Transport Losses GM2015

15171921232527293133

28.51 28.88 28.490.13 0.32 0.430.08 0.68 0.14

Financial OverviewGross Margin Bridge

Source: Company’s calculations based on IFRS accounts for FY2013-2015

EBITDA Margin Bridge

% of Sales

% of Sales

+37 b.p. -39 b.p.

+9 b.p. -31 b.p.

02468

101214

11.16 11.25 10.940.37 0.29 0.54 0.09 0.06 0.070.11 0.28 0.18 0.39 0.53 0.15

25

88,999

60,711

5,617

11,760

-9,330-6,433

-12,525-55 936

-15 825 21 968842

Financial OverviewFree Cash Flow


Working Capital AnalysisThe Average Days Payable to Suppliers is 41 Days.

Inventory Management Days is 52 Days

Working Capital: RUB 18 233 mn as of 31.12.2015

RUB mn2014

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

107,237

72,782

18,004

-9,300

-14,848-10,743 -8,864

-54 276

-502 -35 253

7 949

26

Financial OverviewBalance Sheet

Source: Audited IFRS accounts for FY2013 – 2015Please note: there may be small variations in calculation of totals , subtotals, and/or percentage change due to rounding of decimals

RUB MN 2013 2014 2015 ASSETS Property plant and equipment 195,158.25 232,968.80 265,995.94Other non-current assets 5,762.40 6,043.82 6,380.79Cash and cash equivalents 5,931.13 17,691.54 8,390.90Inventories 56,095.41 81,475.66 116,471.59Trade and other receivables 631.53 813.26 993.67Advances paid 3,171.05 4,849.30 5,295.73Taxes receivable 27.99 69.38 96.67Short-term financial assets 1,150.64 475.18 246.78Prepaid expenses 252.15 242.53 320.91Income tax receivable – 131.86 -TOTAL ASSETS 268,180.55 344,761.33 404,192.98EQUITY AND LIABILITIES Equity 126,162.14 143,651.62 165,140.60Long-term debt 37,441.50 44,410.14 59,411.19Other long-term liabilities 8,462.32 10,617.70 12,998.59Trade and other payables 48,170.71 66,794.61 88,372.22Short-term debt 36,319.76 51,256.67 44,817.12Dividends payable 0.03 14,372.03 16,993.86Other current liabilities 11,624.09 13,658.56 16,459.40TOTAL EQUITY AND LIABILITIES 268,180.55 344,761.33 404,192.98

27

Financial OverviewCapex Analysis

1 Source: 2015 IFRS Audited Financials2 Source: Company’s Estimates

Buildings: Complete & under Construction

Machinery & Equipment Other Assets Land

36 231 15 750 541 1 753FY 2015 (Actual) 1

RUB 54 bn

FY 2016 (Estimates) 2

RUB 67 bn

RUB 500 mn

Buildings: Complete & under Construction

Machinery & Equipment Other Assets Land

41 000 23 000 1 000 2 000

RUB 500 mn

28

2013 2014 2015

73,761

95,667104,228

67,830

77,975

95,83737,441 44,410 59,411

Net DebtLong-term Debt%

Financial OverviewDebt Burden


2013 2014 20150.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0 13.0 12.9

8.7

2013 2014 20150

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 StructureInsignificant Interest Rate Risk:Interest Payments are Madeat Fixed Rates Primarily

49,2%53,6%

43,0%

57% of Debt is Long-termApproximately 51%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