INVESTOR PRESENTATION
9M 2015 OPERATIONAL RESULTS published on October 23, 2015
Magnit at a Glance
Magnit at a Glance
As of September 30, 2015
Source: Company, Thomson Reuters, * - as of FY2014 2
2 297 Cities & Towns
№1 Russian Food Retail
Chain by Revenue
and Number of Stores
11 388 Total Number
of Stores
4 155 thous.sq.m.
Selling Space
29 DCs
5 908 Trucks
Multi-format Business Model
Comprising Convenience, Hypermarkets,
“Magnit Family” & Drogerie Stores
№1 Retailer in Europe
in Market
Capitalization $23bn Market
Capitalization >6% Share in Russian
Grocery 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
3
Source: Company, as of September 30, 2015,
Company’s Estimates
* as of June 30, 2015
New Stores
690bn 27,2 % Revenue
9M 2015
6,26 %
Net
Margin
10,88%
EBITDA
Margin
0,9*
Net debt/
LTM EBITDA
1 350 Convenience
Stores 90 Hyper-
markets 950 Drogerie
Stores
26-28%
RUB Sales
Growth
10,5-11,3%
EBITDA
Margin
RUB 65bn
Capex
P = Revenue growth
Y-o-Y
Guidance for 2015
Magnit at a Glance
Strategy
4
Growth
Value Efficiency
Multi-format Organic
Store Growth
Geographic
Scope
Density of Store
Coverage
Low
Prices
High
Quality
Assortment Cost
Management
Vertical
Integration
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
$320bn Market
Size
FY 2014 % Modern
Retail
Penetration
Non-Modern Modern
Source: Sberbank CIB Estimates for FY2014
Magnit at a Glance
Magnit vs Peers
6
Source: As of FY 2014; Companies, Infoline, Bloomberg, Magnit’s Estimates
Number
of Stores
Selling Space
thous. sq.m.
Revenue
RUB bn
Market Cap
US$ 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
1 807 Drogerie Stores 75 388 440 511 183 156
54
9 246 Convenience Stores
208 Hypermarkets
127 Magnit Family
29 Distribution Centers
5 34 24 42 8 9 5
7 59 35 61 13 27
6
347
1 602 2 467 2 806 895 829
300
Operational Overview
Geographical Coverage
7 Source: Company, as of September 30, 2015
2 297 Cities
& Towns
7 Federal
Regions
North
Caucasus
Southern Volga North
West
Urals Siberia Central
1 6 9 7 2 2 2
Operational Overview
Logistics System
8 Source: Company, as of September 30, 2015
11 388 Total Number
of Stores
1 078 thous.sq.m.
Warehousing Space
29 DCs
5 908 Trucks
9
7
6
2
1
2
2
Central
Volga
Southern
Urals
North Caucasus
North West
Siberia
3667
2976
2229
1198
363
630
325
405,002
221,236
207,195
94,357
40,799
73,601
35,438
Centralization Ratio
%
Magnit
Outsourced
90
10
92
8
Convenience Stores
9M2015 Future Targets
Magnit
Outsourced
72
28
80
20
Hypermarkets
Operational Overview
Suppliers
9 Source: Company, as of December 31, 2014
5000 Domestic
Suppliers
4000 Local Suppliers
1000 Federal Suppliers
Assortment
55-60% 40-45%
Operational Overview
Direct Import
10
Source: Company,
Direct Import - as of FY2014,
Private Label – as of September 30, 2015
11 % Share
of Revenue 585 PL
SKUs M 84% Food
Items
Private Label
10 % International
Direct Import 860 Open
Contracts
Operational Overview
Employees
11
Source: Company,
as of September 30, 2015
*as of June 30, 2015
262 432 Employees
28 617 Average
Monthly
Salary* 4% Wage Rate
Increase* P =
189 361 In-store
Personnel
39 561 People Engaged
in Distribution
22 304 People in Regional
Branches
8 991 People Employed
by Head Office
1000 employees
Average Weighted Number of Employees – 231 373
2 215 Other
Operational Overview
Competitive Attributes
12
43-45 % of Family
Budget
Spent on Food
Location Quality
(of Products)
Assortment Reliability Atmosphere Prices
5 000 People —
Minimum
Population
(1 500–1 600 Families)
4 000-9 500 Monthly
Family Food
Budget 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
Operational Overview
Convenience Store
14 Source: Company, as of September 30, 2015
455 sq.m.
Total
324 sq.m.
Selling Space
89% Food
11% Non-food
26% Owned
74% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2015 –9M2014,%
241,8 P = $4,1
238 077 P = $6 196
10,06 Average
Ticket, RUB
-0,74 Traffic
9,24 Sales
2,7
3 years
If Leased
If Owned
Cost of New Store
per sq.m. of Total Space, thousand RUB
Time to Maturity
6 months
4-6 years
Owned 42-108
Leased 10-19
Hypermarket
Operational Overview
Hypermarket
16 Source: Company, as of September 30, 2015
80% Food
20% Non-food
78% Owned
22% Leased
Format Description Key Operational Statistics
Size of the Store Average Ticket
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2015 – 9M2014,%
608,7 P = $10,3
275 073 P = $7 159
1,2
6 684 sq.m.
Total
2 908 sq.m.
Selling Space
8,04 Average
Ticket, RUB
-2,46 Traffic
5,38 Sales
Opening
Payback
6-9 years
Cost of New Store
per sq.m. of Total Space, thousand RUB
Owned 65-111
Leased 31-35
8-15 months
Time to Maturity
S: up to 3 000
M: 3 000-6 000
L: over 6 000
Magnit Family
Operational Overview
Magnit Family
18 Source: Company, as of September 30, 2015
2 193 sq.m.
Total
1 101 sq.m.
Selling Space
85% Food
15% Non-food
36% Owned
64% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2015 – 9M2014,%
439,7 P = $7,4
371 659 P = $9 673
2,1
6-9 years
Cost of New Store
per sq.m. of Total Space, thousand RUB
Owned 81-108
Leased 31-54
8-15 months
7,18 Average
Ticket, RUB
-2,24 Traffic
4,78 Sales
Time to Maturity
Drogerie Store
Operational Overview
Drogerie Store
20 Source: Company, as of September 30, 2015
299 sq.m.
Total
229 sq.m.
Selling Space
100% Non-food
14% Owned
86% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2015 – 9M2014,%
277,6 P = $4,7
104 643 P = $2 724
13,35 Average
Ticket, RUB
8,99 Traffic
23,54 Sales
1,1
3 years
If Leased
If Owned
Cost of New Store
per sq.m. of Total Space, thousand RUB
Time to Maturity
6 months
Owned 31-96
Leased 12-19
4-6 years
Size
of the Store sq.m.
Average
Ticket
Traffic
Tickets/ sq.m./day
Density
Sales/ sq.m./year
Sales
Mix
LFL 9M2015-
9M2014 %
Store Owner-
ship Structure
Payback Years
Cost of New
Store per sq.m.
of Total Space
Time
to Maturity Months
• Total
• Selling Space
• Food
• Non-food
• Av.ticket
• Traffic/ Sales
• Owned
• Leased
14%
86%
36%
64%
78%
22%
26%
74%
Operational Overview
Format Summary
21 Source: Company, as of September 30, 2015; * Excludes selling space designated for leases
Hypermarket
Drogerie
Store
Magnit
Family
455
6 684
299
2 193
324
2908*
229
1 101
Owned
RUB 42-108k
Leased
RUB 10-19k 2,7
1,2
1,1
2,1
P.241,8
$4,1
P.608,7
$10,3
P.277,6
$4,7
P.439,7
$7,4
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%
89%
11% Convenience
store
6
8-15
6
8-15
3 (if leased)
6-9
3 (if leased)
6-9
4-6 (if owned)
4-6 (if owned)
10,06
8,04
13,35
7,18
-0,74
-2,46
8,99
-2,24
9,24
5,38
23,54
4,78
Owned
RUB 65-111k
Leased
RUB 31-35k
Owned
RUB 31-96k
Leased
RUB 12-19k
Owned
RUB 81-108k
Leased
RUB 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: Company Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 22
RUB MN 1H2014 1H2015 1H2014 / 1H2015
Y-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%
20%
89 404 RUB mn
15
20
25
1H2013 1H2014 1H2015
273 349
455
1H2013 1H2014 1H2015
Financial Overview
Revenue & Costs
23 Source: 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 Dynamics RUB bn
Net Income Dynamics RUB bn
Margin Dynamics SG&A Expense Structure
Revenue — 455 RUB bn
Gross
Margin
EBITDA
Margin
Net
Margin
%
+27,9%
10,6% 11,5%
+30,3%
+33,8%
+29,0%
LFL LFL
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
27,26 27,83 27,94 -0,03 -0,42 -0,11 0,26
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
24 Source: Company
EBITDA Margin Bridge
% of Sales
% of Sales
+57 b.p. +11 b.p.
+35 b.p. +22 b.p.
10,12 10,47 10,69 -0,19 -0,24
-0,29 -0,22
0,57 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
36 952
32 904
12 593
-2 202
-3 057 -3 927
-20 337
-8 427
-6 368
2 936
26
Financial Overview
Free Cash Flow
25 Source: 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, Company Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 26
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
Financial Overview
Capex Analysis
27 ¹ CAPEX for 1H2015 amounts to RUB 24 434 mn
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 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
77 975 85 991
36 320
51 257
58 477
37 441
44 410 39 428
2013 2014 1H2015
Net Debt
Short-term Debt
Long-term Debt
%
Financial Overview
Debt Burden
28 Source: 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
1 0,9 0,9
0
0,5
1
1,5
2
2013 2014 1H2015
Debt Level Dynamics RUB mn
Credit Metrics Credit Profile
EBITDA / Finance Expenses
Net Debt / LTM EBITDA
The Company Has
an Impeccable Credit History
Collaboration with
the Largest Banks
Low Debt Burden:
Net Debt / LTM EBITDA Ratio of 0,9
No Currency Risk: 100%
of Debt is Rub Denominated
Matching Revenue Structure
No Interest Rate Risk:
Interest Payments are Made
at Fixed Rates
49,2% 53,6%
59,7%
40% of Debt is Long-term
Approximately 26%
of LT Debt is Rub Bonds
Contact Information
Contact Information
29
Timothy Post
Head of Investor Relations
+7 (961) 511-7678
http://ir.magnit.com
15/2 Solnechnaya Street
Krasnodar, 350072
Russian Federation