1H2015 Financial Results

Magnit at a Glance

Magnit at a Glance

As of June 30, 2015Source: Company, Bloomberg, * - as of FY2014 2

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 Market

Capitalization >6% 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 Glance

Key Metrics

3Source: Company, as of June 30, 2015,Company’s Estimates

New Stores

455bn 30,3%Revenue1H 2015

5,56%

NetMargin

10,69%

EBITDAMargin

0,9

Net debt/LTM EBITDA

1 350 ConvenienceStores 90 Hyper-

markets 950 DrogerieStores

26-28%

RUB SalesGrowth

10,5-11,3%

EBITDAMargin

RUB 65bn

Capex

P=Revenue growthY-o-Y

Guidance for 2015

Magnit at a Glance

Strategy

4

Growth

Value Efficiency

Multi-format OrganicStore Growth

GeographicScope

Density of StoreCoverage

LowPrices

HighQuality

Assortment CostManagement

VerticalIntegration

Centralization

53

53%47%

Discounters

25%

Supermarkets

15%

Hypermarkets

13%

Traditional Stores

31%

Kiosks, Pavilions

6%

Open Markets

10%

Magnit at a Glance

Russian Food Retail Market

5

Market Composition by Format

$320bn MarketSizeFY 2014

% ModernRetailPenetration

Non-Modern Modern

Source: Sberbank CIB Estimates for FY2014

Magnit at a Glance

Magnit vs Peers

6Source: As of FY 2014; Companies, Infoline, Bloomberg, Magnit’s Estimates

Numberof Stores

Selling Spacethous. sq.m.

RevenueRUB bn

Market CapUS$ bn

Market Share%

9 711

5 483

2 195

108

132

85

80

Magnit

X5

Dixy

Okey

Lenta

Auchan

Metro

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

1 527Drogerie Stores 70 335 365 436 153 130

38

8 890Convenience Stores

201Hypermarkets

110Magnit Family

29Distribution Centers

4 29 20 38 6 9 4

7 57 34 59 12 27

5

337

1 573 2 336 2 734 843 797

270

Operational Overview

Geographical Coverage

7Source: Company, as of June 30, 2015

2 233 Cities& Towns

7 FederalRegions

North Caucasus

Southern Volga North West

Urals SiberiaCentral

1 6 9 7 2 2 2


Logistics System


10 728Total Numberof Stores

1 078thous.sq.m.Warehousing Space

29DCs

5 926Trucks

9

7

6

2

1

2

2

Central

Volga

Southern

Urals

North Caucasus

North West

Siberia

3375

2904

2104

1105

358

588

294

405,002

221,236

207,195

94,357

40,799

73,601

35,438

Centralization Ratio%

Magnit

Outsourced

90

10

92

8

Convenience Stores

1H2015 Future Targets

Magnit

Outsourced

73

27

80

20

Hypermarkets


Suppliers

9Source: Company, as of December 31, 2014

5000DomesticSuppliers

4000Local Suppliers

1000Federal Suppliers

Assortment

55-60% 40-45%


Direct Import

10Source: Company, Direct Import - as of FY2014,Private Label – as of June 30, 2015

11% Shareof Revenue587 PL

SKUsM 85% FoodItems

Private Label

10% InternationalDirect Import 860 Open

Contracts


Employees


259 766 Employees

28 617AverageMonthlySalary 4% Wage Rate

IncreaseP=

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


Competitive Attributes

12

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 500MonthlyFamily FoodBudget

P=Overlap “Good”Cannibalization

Magnit #1

Magnit #2

500m

Competitor #1 Competitor #2

Competitor #3

500m

Sales Catchment Area

Source: Company’s Estimates

Convenience Store


Convenience 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


Hypermarket


80% Food

20% Non-food

79% Owned

21% Leased

Format Description Key Operational StatisticsSize of the Store Average Ticket


Sales Mix



LFL 1H2015 – 1H2014,%

620,5P=$10,8

275 073P=$7 159

1,2

6 770 sq.m.Total

2 934 sq.m.Selling Space


-1,36 Traffic

8,66 Sales

OpeningPayback

6-9 years



8-15 months

Time to Maturity

S: up to 3 000M: 3 000-6 000L: over 6 000

Magnit Family


Magnit Family


2 230 sq.m.Total

1 116 sq.m.Selling Space

85% Food

15% Non-food

37% Owned

63% Leased



Sales Mix



LFL 1H2015 – 1H2014,%

448,7P=$7,8

371 659P=$9 673

2,2

6-9 years



8-15 months


-0,91 Traffic

8,82 Sales

Time to Maturity

Drogerie Store


Drogerie Store


300 sq.m.Total

229 sq.m.Selling Space

100% Non-food

17% Owned

83% Leased



Sales Mix



LFL 1H2015 – 1H2014,%

272,1P=$4,7

104 643P=$2 724


11,32 Traffic

24,92 Sales

1,1

3 years

If Leased

If Owned


Time to Maturity

6 months


4-6 years

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%


Format Summary

21Source: Company, as of June 30, 2015; * Excludes selling space designated for leases

Hypermarket

DrogerieStore

MagnitFamily

454

6 770

300

2 230

322

2934*

229

1 116

Owned RUB 42-108k

Leased RUB 10-19k

2,8

1,2

1,1

2,2

P.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%

100%

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

Financial Overview

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: CompanyPlease note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 22

RUB MNRUB MNRUB MNRUB MN 1H20141H20141H20141H2014 1H20151H20151H20151H2015 1H2014 / 1H20151H2014 / 1H20151H2014 / 1H20151H2014 / 1H2015YYYY----oooo----Y GrowthY GrowthY GrowthY Growth

Net salesNet salesNet salesNet sales 349349349349,,,,047047047047....11 11 11 11 454454454454,,,,808808808808....63 63 63 63 30.3%

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

Gross profitGross profitGross profitGross profit 97979797,,,,134134134134.5.5.5.52 2 2 2 127127127127,,,,060060060060....41 41 41 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%

EBITDAEBITDAEBITDAEBITDA 36363636,,,,549549549549....60 60 60 60 48484848,,,,627627627627....66 66 66 66 33.0%

EBITDA margin,% 10.47% 10.69%

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

EBITEBITEBITEBIT 28282828,,,,060060060060....22224444 38383838,,,,594594594594....03 03 03 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 incomeNet incomeNet incomeNet income 19191919,,,,588588588588....07 07 07 07 25252525,,,,265265265265....66 66 66 66 29.0%

Net margin, % 5.61% 5.56%

20%

89 404 RUB mn

1520

25

1H2013 1H2014 1H2015

273349

455

1H2013 1H2014 1H2015

Financial Overview

Revenue & Costs

23Source: Company

27,3 27,8 27,9

10,1 10,5 10,7

5,3 5,6 5,6

0

5

10

15

20

25

30

1H2013 1H2014 1H2015

Revenue DynamicsRUB bn

Net Income DynamicsRUB bn

Margin DynamicsSG&A Expense Structure

Revenue — 455 RUB bnGrossMargin

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 Taxes

1,65 (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

27,2627,83 27,94-0,03 -0,42 -0,110,26

0,34 0,64

15

17

19

21

23

25

27

29

31

33

GM1H2013

Trading Margin Transport Losses GM1H2014

Trading Margin Transport Losses GM1H2015

Financial Overview

Gross Margin Bridge

24Source: Company

EBITDA Margin Bridge

% of Sales

% of Sales

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

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

10,1210,47 10,69-0,19 -0,24

-0,29-0,220,57

0,21 0,11 0,59 0,03

0

2

4

6

8

10

12

EBITDA1H2013

GrossMargin

Rent & Utilites Advertising Other EBITDA1H2014

GrossMargin

Payroll & Taxes Rent & Utilites Advertising Other EBITDA1H2015

36 95232 904

12 593

-2 202

-3 057-3 927

-20 337

-8 427

-6 368

2 936

26

Financial Overview

Free Cash Flow

25Source: Company

Working Capital Analysis

The 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 mn

1H 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

49 065

36 337

11 552

-5 776

-2 238-5 735

-4 755-24 434

-351 -19 300

1 972

AdjustedEBITDA

Change inWorking capital

Net InterestPaid

TaxesPaid

OCF Capex Other CashFlow

from InvestingActivities

FCF Payment ofDividents

Other CashFlow

from FinancingActivities

CF

Financial Overview

Balance 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 26

RUB MNRUB MNRUB MNRUB MN 2013201320132013 2014201420142014 1H20151H20151H20151H2015

ASSETS ASSETS ASSETS 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 TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33 357357357357,,,,329329329329....32 32 32 32

EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES 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 LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIES 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33 357357357357,,,,329329329329....32 32 32 32

Financial Overview

Capex Analysis

27¹ 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 2 930

FY 2014¹

RUB 56 bn

FY 2015 (plan)

RUB 65 bn

RUB 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

73 761

95 667 97 905

67 830

77 97585 991

36 320

51 25758 477

37 441

44 410 39 428

2013 2014 1H2015

Net DebtShort-term DebtLong-term Debt%

Financial Overview

Debt Burden

28Source: IFRS accounts for FY2013, FY2014, Company

13,0 12,9

8,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

2013 2014 1H2015

10,9 0,9

0

0,5

1

1,5

2

2013 2014 1H2015

Debt Level DynamicsRUB mn

Credit Metrics Credit Profile

EBITDA / Finance Expenses

Net Debt / LTM EBITDA

The Company Hasan Impeccable Credit History

Collaboration with

the Largest Banks

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

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

No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:Interest Payments are Madeat Fixed Rates

49,2%53,6%

59,7%

40% 40% 40% 40% of Debt is Long-term

Approximately 26%26%26%26%of LT Debt is Rub Bonds

Contact Information

Contact Information

29

Timothy PostHead of Investor Relations

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

15/2 Solnechnaya StreetKrasnodar, 350072Russian Federation