1Q 2015 Results

Magnit at a Glance

Magnit at a Glance

As of March 31, 2015 Source: Company, Bloomberg, IFRS accounts for FY2014 2

2 180Cities & Towns

№1Russian Food RetailChain by Revenueand Number of Stores

10 120Total Numberof Stores

3 733thous.sq.m.Selling Space

28DCs

5 934Trucks

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

№3Retailer in Europein MarketCapitalization $24bn Market

Capitalization >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 Glance

Key Metrics

3Source: IFRS accounts for FY2014, Company’s Estimates

Guidance for 2015New Stores

764bn ($20bn)RevenueFY2014

6,25%

NetMargin

11,25%

EBITDAMargin

0,9

Net debt/LTM EBITDA

1 200 ConvenienceStores 90 Hyper-

markets 800 DrogerieStores

28-32%

RUB SalesGrowth

9,5-11,0%

EBITDAMargin

RUB 80bn

Capex

P=

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

6*As of FY 2013Source: Companies, Infoline, Bloomberg, Magnit’s Estimates

Numberof Stores, eop 2014

Selling Spacethous. sq.m., eop 2014

RevenueRUB bn, eop 2014

Market CapUS$ bn, eop 2014

Market Share%, eop 2014

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

287,4

183,2

21,5

3,3

0,8

1,2

2,9

6

5

2

1

2

2

2

Not public

Not public

*

*

*

*

1 239Drogerie Stores

8 581Convenience Stores

196Hypermarkets

104Magnit Family

28Distribution Centers 1 6 9 6 2 2 2

60 293 285 364 115 94

28

4 29 19 35 5 9 3

7 56 34 59 12 24

4

332

1 548 2 234 2 675 798 755

239

Operational Overview

Geographical Coverage

7Source: Company, as of March 31, 2015

2 180 Cities& Towns

7 FederalRegions

North Caucasus

Southern Volga North West

Urals SiberiaCentral


Logistics System


10 120Total Numberof Stores

1 029thous.sq.m.Warehousing Space

28DCs

5 934Trucks

9

6

6

2

1

2

2

Central

Volga

Southern

Urals

North Caucasus

North West

Siberia

3157

2758

2039

1008

350

551

257

404,860

173,191

207,195

94,357

40,799

73,601

35,438

Centralization Ratio%

Magnit

Outsourced

89

11

92

8

Convenience Stores

1Q2015 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

10

Source: Company, Direct Import - as of FY2014; Private Label – as of March 31, 2015

12% Shareof Revenue579

PLSKUsM 86% Food

Items

Private Label

10% InternationalDirect Import 860

OpenContracts


Employees


*as of FY2014

258 629 Employees

28 143AverageMonthlySalary ⃰ 9% Wage Rate

Increase ⃰P=

186 089In-storePersonnel

42 717People Engagedin Distribution

19 720People in RegionalBranches

8 265People Employedby Head Office

1000 employees

Average Weighted Number of Employees – 230 627

1 838Other


Competitive Attributes

12

40% 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


452 sq.m.Total

321 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 1Q2015 – 1Q2014,%

247,1P=$4,0

238 077P=$6 196

13,87 AverageTicket, RUB

0,17 Traffic

14,06 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 42-108Leased 10-19

Hypermarket


Hypermarket


79% Food

21% Non-food

80% Owned

20% Leased

Format Description Key Operational StatisticsSize of the Store Average Ticket


Sales Mix



LFL 1Q2015 – 1Q2014,%

634,9P=$10,2

275 073P=$7 159

1,2

6 813 sq.m.Total

2 944 sq.m.Selling Space


0,47 Traffic

14,91 Sales

OpeningPayback

6-9 years



8-15 months

Time to Maturity

S: up to 3 000

M: 3 000-6 000

L: over 6 000

Magnit Family


Magnit Family


2 243 sq.m.Total

1 117 sq.m.Selling Space

84% Food

16% Non-food

38% Owned

62% Leased



Sales Mix



LFL 1Q2015 - 1Q2014,%

459,6P=$7,4

371 659P=$9 673

2,1

6-9 years



8-15 months


1,79 Traffic

17,29 Sales

Time to Maturity

Drogerie Store


Drogerie Store


304 sq.m.Total

230 sq.m.Selling Space

100% Non-food

20% Owned

80% Leased



Sales Mix



LFL 1Q2015 – 1Q2014,%

277,2P=$4,5

104 643P=$2 724


12,63 Traffic

23,86 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 1Q2015-1Q2014

%

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

20%

80%

38%62%

80%

20%

27%

73%


Format Summary

21Source: Company, as of March 31, 2015; * Excludes selling space designated for leases

Hypermarket

DrogerieStore

MagnitFamily

452

6 813

304

2 243

321

2944*

230

1 117

Owned RUB 42-108k

Leased RUB 10-19k

2,7

1,2

1,1

2,1

P.247,1$4,0

P.634,9$10,2

P.277,2$4,5

P.459,6$7,4

P.238 077$6 196

P.275 073$7 159

P.104 643$2 724

P.371 659$9 673

79%

21%

100%

84%16%

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)

13,87

14,38

9,97

15,23

0,17

0,47

12,63

1,79

14,06

14,91

23,86

17,29

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: 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 22

RUB MMRUB MMRUB MMRUB MM 2013201320132013 20142014201420142014 / 20132014 / 20132014 / 20132014 / 2013

YYYY----oooo----Y GrowthY GrowthY GrowthY Growth

Net salesNet salesNet salesNet sales 579,694.88579,694.88579,694.88579,694.88 763,527.25763,527.25763,527.25763,527.25 31.7%

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

Gross profitGross profitGross profitGross profit 165,262.99165,262.99165,262.99165,262.99 220,520.56220,520.56220,520.56220,520.56 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%

EBITDAEBITDAEBITDAEBITDA 64,721.2364,721.2364,721.2364,721.23 85,909.6785,909.6785,909.6785,909.67 32.7%

EBITDA margin,% 11.16% 11.25%

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

EBITEBITEBITEBIT 50,536.8850,536.8850,536.8850,536.88 68,300.0068,300.0068,300.0068,300.00 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 incomeNet incomeNet incomeNet income 35,620.3835,620.3835,620.3835,620.38 47,685.8447,685.8447,685.8447,685.84 33.9%

Net margin, % 6.14% 6.25%

Financial Overview

Revenue & Costs

23Source: IFRS accounts for FY2012–2014

26,5

28,5 28,9

10,6 11,2 11,3

5,6 6,1 6,3

0

5

10

15

20

25

30

35

2012 2013 2014

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

449580

764

2012 2013 2014

25

36

48

2012 2013 2014

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

26,53

28,51 28,88-0,081,85 0,08 0,05 0,13 0,32

15

17

19

21

23

25

27

29

31

33

GM2012

Trading Margin Transport Losses GM2013

Trading Margin Transport Losses GM2014

Financial Overview

Gross Margin Bridge

24Source: IFRS accounts for FY2012 – 2014

EBITDA Margin Bridge

% of Sales

% of Sales

+198 b.p.+37 b.p.

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

10,5611,16 11,25

-1,01-0,35 -0,01

-0,11 -0,28 -0,181,97

0,37 0,29

0

2

4

6

8

10

12

14

EBIDTA2012

GrossMargin

Salaries Rent & Utilites Other EBIDTA2013

GrossMargin

Salaries Rent & Utilites Advertising Other EBIDTA2014

Financial Overview

Free Cash Flow

25Source: IFRS accounts for FY2013–2014

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

88 999

60 711

5 617

11 760

-9 330-6 433

-12 525

-55 936

-15 82521 968

842

AdjustedEBIDTA

Change inWorking capital

Net InterestPaid

TaxesPaid

OCF Capex Other CashFlow

from InvestingActivities

FCF Payment ofDividents

Other CashFlow

from FinancingActivities

CF

65 358

44 624

-7 608 -6 521

-8 163-4 550

-8 021

-52 488 256-9 545 10 632

Financial Overview

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 26

RUB MMRUB MMRUB MMRUB MM 2012201220122012 2013201320132013 2014201420142014

ASSETS ASSETS ASSETS 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 TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS 220220220220,,,,528.26528.26528.26528.26 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33

EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES 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 LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIES 220220220220,,,,528.26528.26528.26528.26 268268268268,,,,180.55180.55180.55180.55 344,761.33344,761.33344,761.33344,761.33

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

Capex Analysis

27Source: 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

63 369

73 761

95 667

50 916

67 830

77 975

25 122

36 320

51 257

38 247

37 441

44 410

2012 2013 2014

Net DebtShort-term DebtLong-term Debt%

Financial Overview

Debt Burden

28Source: IFRS accounts for FY 2012 - 2014

11,7

13,0 12,9

0

2

4

6

8

10

12

14

2012 2013 2014

1,11

0,9

0

0,5

1

1,5

2

2012 2013 2014

Debt Level DynamicsRUB 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: 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

39,6%49,2%

53,6%

46% 46% 46% 46% of Debt is Long-term

Approximately 35%35%35%35%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