Magnit

Investor Presentation • Feb 18, 2021

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Magnit 2020 Highlights

Top Russian retailer

One of the largest retail chains with multi-format offering and vast by geographical coverage

Core offline formats

Selling space, ths. sq.m

21,564 Total number of stores

A convenient and affordable store for everyday shopping

A full-feature family supermarket for everyday and major shopping

Superstore for all the family with extended assortment covering all consumer missions

Store for women allowing to balance needs for taking care of herself, family and household

1

470

14,911

+

E-commerce covering express & stock-up missions

Serving consumers

in all highly populated Russian regions

Tickets per year

~85%

Households make purchases in Magnit stores²

43 mn

Registered loyalty cardholders

70%

Loyalty card penetration in sales

Unique capabilities

One of the largest private employers in Russia, with country wide supply chain and vertically integrated structure

316,000 employees

38

Distribution centers

17 Own production facilities and agricultural complexes

>2,500 Private label SKUs

Geographic Coverage

Operating Highlights

LFL sales growth, % LFL traffic growth, % LFL ticket growth, %

Financial Performance

Core achievements

Improvement of sales densities across all formats

Margin regain

Strict cost control

Significant working capital cycle improvement

Deleveraging and cash flow generation

Almost doubling ROIC

Concise Profit & Loss
	2018	2019	2020	YoY
Sales, bn Rub	1,237.0	1,368.7	1,553.8	+13.5%
Gross margin, %	23.9	22.8	23.5	+0.7pp
SG&A, %	20.5	21.3	20.5	(0.8pp)
EBITDA, bn Rub	89.6	83.1	109.4	+31.6%
EBITDA, %	7.2	6.1	7.0	+1.0pp
Net income, bn Rub	33.6	17.1	37.8	+121%
Net income, %	2.7	1.2	2.4	+1.2pp
Sales Density, ths. Rub / sq.m	202	193	206	+6.5%
Working Capital, bn Rub	44.9	58.9	25.8	(56.2%)
Net Debt, bn Rub	137.8	175.3	121.4	(30.8%)
Net Debt / EBITDA	1.5	2.1	1.1	(47.4%)
FCF, bn Rub	11.5	(1.3)	84.9	+86.2
ROIC, %	11.7%	7.9%	13.8%	5.9pp

Achievements to Date

Retail Operations	• Significant progress with CVP1 improvement and execution (incl. redesigns) • Completely new approach to Large Formats including redesigns • New promising ventures e.g. launch of Discounter, Magnit City, Kiosks
Processes Improvement	• Significant improvement of category management and operational processes OSA2 Pick-by-Voice, Time slot management, Piloting of Fresh flow and PBL3 • and Supply Chain efficiency increase e.g. • Revision of investment underwriting processes leading to significantly improved Return on Capital • Launch of Magnit Academy with tailored programs for every function
Organizational Design	• Transfer to balanced decentralization model with 8 regions • Strengthen format expertise with commercial & operations format heads separate procurement team including PL4, own production and direct import • Transformation of com. dep. — • New Digital Transformation Team to strengthen tech, data & analytics, e-com and marketing capabilities
Digital Transformation	• Full Loyalty Program roll-out • Relaunch of the App and e-com pilots covering express & stock-up missions • IT landscape upgrade incl. SAP-based ERP Transformation Program and introduction of Product approach • Launch of first big data cases, improving OSA and promo efficiency
ESG & Sustainability	• "Retail with Purpose" strategy with Commitments up to 2025 • Steering committee and 16 working groups to execute roadmaps • Joined the UN Global Compact, an UN driven worldwide initiative with 13,000+ companies working on ESG

What are the Major Global Trends?

Biggest global health related crisis for over a century

• Lockdown in major countries negatively affected economies and overall consumption behavior
• Work from home trends resulted in soaring delivery demand and lower in-store traffic

Coronavirus Good for Me and the World Technology vs Commodity

Consumers change attitude to consumption

• Transfer from demand on "fast & easy" to "don't make me think"
• Responsible consumption and social conscience raising expectations of "trusted" brands

Technology & data increasingly becoming a "new gold"

• Technologies accelerate pace of changes incl. the way people entertain themselves and consume
• Increasing expectations for experience within digital consumer journey

Challenges / Opportunities:

Deal with 1 income pressure

Rapidly adapt to consumer 2 behavior changes

Meet expectations in digital 3 with data / tech capabilities

Russian Environment

Macro-economic situation

• GDP¹ decline by (3.1%) in 2020 and 2021 forecast of +3.3%
• The threat of crisis driven by post-COVID economic deterioration
• Government actions re COVID consequences — to be seen

Consumer preferences

• Quality, fresh, local products, convenience, value pricing — all at once
• Migration to big cities strengthened after COVID
• Consumers become more digital and expect omni channel experience
• Safety and care new top priorities (influenced by COVID)
• Growing interest in sustainable development

Retail dynamics

• Negative real food retail sales growth of (2.6%) in 2020 YoY
• With growing number of stores, pressure on LFL and margin increase for all formats on the back of market share redistribution
• There is no clearly winning format, but there are successful players within each
• New niches / ways to market actively emerging

1979 ł

Technology development

• New communication channels
• New technologies penetration
• Advanced analytics, bionic and personalization to determine competitive abilities
• Actively emerging digital ecosystems erase the borders of traditional sectoral thinking

Russian Grocery Market Evolved Significantly but Still Offers Additional Room for Modern Retail

Market growth is slowing with expected moderate rates slightly above inflation

Russian market offers further growth potential

Grocery retail, tn Rub Modern retail share in grocery retail 2020, %

The market has potential for further consolidation

Share of top 5 players in grocery retail 2019, %

Our Strategic Goal

Cement current leading federal retail positions growing market share significantly & profitably

How we get there — at a glance

We will keep improving CVP as a key driver for material improvements of sales density and profitability supported by processes and ways of working enhancement

Continuous focus on extracting efficiency to get higher profitability and cash generation

We focus on smart expansion implying high profitability targets for new openings

Due to overall market evolution and high consolidation potential we expect more opportunities becoming available in the M&A field where we could selectively (based on strategic and value accretive approach) strengthen our overall positioning

We will extend consumer offering complimentary to our core business (incl. partnerships, E-com, new specialized formats in important adjacent consumer missions, etc.) to better satisfy consumer needs

12

Our Strategy at a Glance

• Consumer centric decision making with enhanced loyalty (as the key data source) / personalization
• Enhanced CVP and clustering to better serve consumer needs
• Improved brand positioning (incl. care, safety, ESG and value for money)
• E2E consumer offering going beyond traditional offline space – ecosystem

Employer of choice

• Intensified investment in people to ensure best competences and business continuity
• Agility and innovative thinking
• One team approach: effective cross functional cooperation
• Talent assessments and upward mobility
• Employees engagement

Consumer first Most efficient & promising ways to market

• Smart expansion in core formats to catch up market share, including M&A
• Actively and structurally consider new sales lines, new niches / markets
• OMNI incl. e-com
• Agile sourcing incl. partnerships with suppliers, crystalized offering in own production / PL to enhance proposition and secure positioning

Modern and efficient platform

• Defined & straightforward functional strategies
• Flexible org structure, clear responsibility split combined with entrepreneurial culture
• Smooth and efficient processes
• Flexible, reliable and scalable IT, operational and data platform

We are Already on the Right Track with Our Strategic Priorities

We Have a Clear Implementation Plan (1/2)

STRATEGIC
PILLAR

SHORT TERM within 1-2 years

Consumer first

• Updated CVP incl. new redesign concepts
• Store clustering
• Start emotional and personalized loyalty
• Advance Analytics efforts
• New brand positioning

MID & LONG TERM within 3-5 years

• Continuous evolution of CVP
• Advanced multi clustering
• Data driven decisions via DMP¹
• Deep personalization: promo & communication

Most efficient & promising ways to market

• Return driven expansion
• Extended pilots of the promising new formats
• Own production, PL and direct import
• E-com & extend partnerships

• Launch Super App

• E2E offering via full scale ecosystem

• Roll out new successful formats
• Strategic partnerships with suppliers
• Top e-com player beyond e-grocery

We Have a Clear Implementation Plan (2/2)

STRATEGIC PILLAR

SHORT TERM within 1-2 years

• Modern & efficient platform
• All functional strategies synchronized
• E2E process rethinking and optimization
• Tech reorg: architecture, processes, org, skills
• Migration to core industrial / operational platforms
• Stabilized org structure tailoring RACI¹ and KPIs

Employer of choice

• Updated HR strategy & reconsidered EVP²
• Constant employee feedback collection
• Talents assessment and development
• Advanced education incl. e-learning in corporate university

MID & LONG TERM within 3-5 years

• Stable, reliable and efficient systems
• Product mindset as a core capability
• Industrial solutions IT landscape

• Automation of all business processes

• Preferable employer for tech talent³

• New corporate culture promoting entrepreneurship, care, teamwork, agility, openness to changes in place

MARKET DYNAMICS AND CONSUMER EVOLUTION

We expect unemployment rate above 2019 level but improving in the upcoming periods

Real disposable income is forecasted to get into positive territory in 2021

Unemployment rate, % Real and disposable income growth and real wages growth, YoY %

Inflation stabilizes after some fluctuations in the pandemic

CPI, YoY %

Russians are still to regain confidence

Consumer confidence index, %

Recovering Consumption Behavior Patterns

Consumers raise offline mobility after lockdown

Ivanovs' visits to grocery stores per week

Food spending already increases following wage recovery…

Ivanovs' daily spending, Rub

Food

Food spending, % of total

…to continue further

Price sensitive segments constantly growing with increasing importance of nonmonetary factors

2020 vs 2018

• +3pp for saving fans
• +3pp in goal-oriented

… and more demanding to assortment & convenience

Rank	Factor		Trend
1		Prices
2		Product quality
3		Assortment & One stop shopping
4		Location
5		Convenience of shopping

19

31

3

Channel Split is Relatively Stable. Key Growth in E-сom, Hard Discounters and Specialists

Share of FMCG sales channels in consumer spending (%)

Source: Retail monitor by GFK, latest available data – Aug'20 1. Magnit Convenient is represented within Discounters

E-grocery market size in Russia, bn Rub

% of food retail market

Key consumer reasons to choose online

(in addition to safety factors)

High growth rate

Foodtech and e-grocery market demonstrates double digit growth despite limited offering outside large cities

Most consumers will follow lockdown behavior 34% want to continue "work from home" regime 66% are likely to continue shopping online

Merge of foodtech and e-grocery

Borders have become blurred with large aggregators entering delivery from stores

Rise of express mission

Express mission is rapidly catching up with stock-up mission

Boost in big cities

Online sales was picking up to 8-10% of grocery retail sales in Moscow cities during pandemic

Audience growth

Up to 25% of Russian consumers use online grocery channels. Generation Z values online ordering option when choosing store and 48% ready to shop grocery online

FOCUS ON DELIVERING THE BEST PROPOSITION TO OUR CONSUMERS

Magnit Umbrella Brand – Consumer Missions and Formats

Being Closer to Consumers by Tailored Approach in Assortment Management (1/2)

Rationalization of assortment

to offer consumers what they want and simultaneously increase business efficiency

Structured Unit-of-Needs methodology in Category Management

Target categories update and revision by formats (сosmetics rezoning)

Сategory sizes to extend needs and decrease inefficient tail

Rebalanced price tiers to capture all consumer segments

Updated planogramming principles to ease on-shelf navigation

Reduction of Supply Chain complexity and "unfreezing" capacity

Commercial margin increase improvement LFL growth

Stock level decrease

Availability

Assortment harmonization

to reduce business complexity

"Matreshka" principle revision – key Unit-of-Needs / assortment structure by price tiers focusing on satisfying core consumer missions across all store sizes

Being Closer to Consumers by Tailored Approach in Assortment Management (2/2)

Smart store clustering

to balance tailoring efforts and management complexity

Key clusters based

on number and budget of habitants

Megapolis City Village

street retail, joint openings – Convenience and Drogerie

Tailored approach across clusters

Assortment & Promo offering Price tiers mix

In-store communication Look & Feel concept

Best in Local

to follow consumer demand for locally produced Fresh

Dedicated regional Category Management teams to improve local offering incl. tailored promo

Private Label, Own Production & Direct Import as Differentiation Pillars

Improve own brand portfolio to support a range of consumer missions

Consumer as the main priority – focus on Quality with degustation studios, feedback collection via App, 100% SKUs passing laboratory analyses

Goal to reach 100% core PL SKUs availability in all Magnit stores

Min. 2 faces for most PL Brands¹

Private Label Direct import Own production

to provide exclusive goods with better quality and price

Further selective investments to ensure differentiation and high returns

beetroot, carrots

4 Agricultural complexes

13 industrial production

Grains, cereal products, pasta

sunflower seeds, nuts

Cucumbers, tomatoes, lettuce

Confectionery and sweets

Instant food Spices,

Potatoes, onion,

Vinegar, syrups

Frozen fish

Mushrooms

Frozen food

differentiating offering

• Dedicated team with 60+ members
• New office openings: Central and Eastern Asia

Strategic partnerships with suppliers

Not only exclusive brands / SKUs, but

• Strategic projects in Supply Chain
• Merchandising cost optimization
• Data exchange
• Marketing and promo

Own Production — from Field / Site to Shelf

Magnit Convenience CVP

Positioning Missions

Everything you need for better today

Store with all the goods that you need here and now for people who search for shopping experience which will fit their daily needs

• Food for tonight
• Regular shopping
• Ready-to-eat

Locations & Size

Residential and business areas, shopping malls

~340 avg. selling space, sq.m

Clustering to be closer Enhanced operations

• Megapolis
• Wine & spirits

More leisure goods:

• Confectionary
• Snacks & drinks

City

Balanced offering Focus on Fresh everywhere

Village More goods for home:

• Non-food
• Detergency
• Grocery & Preserves

Target Categories

Cubes: bakery for all stores

Coffee corners with ready-to-eat and on-the-go offering for traffic locations in Megapolis & City

efficiency

Avg. monthly staff turnover level decrease YoY (1.9pp)

Losses decrease YoY (0.6pp)

"Quality officer" role

• Monitoring of product quality: availability, layout and shelf-life
• Price tag management
• F&V conditions

Actual mystery shopper score (vs target 95%)

New decorations – loft type ceiling, accent lighting, nice floor, stylish attention focusing signs

Café zone – with seating places, equipped with professional coffee machine, own bakery and Wi-Fi

New Look & Feel Concept for Megapolis (2/3)

Specially designed additional sales equipment with LED displays showing relevant content

New equipment for F&V and Fresh creating a pleasant atmosphere and increasing display capacity

New Look & Feel Concept for Megapolis (3/3)

Digital prices tags increasing quality and speed of information update and giving additional opportunities for communication with consumers

Unique flipping cash-desks with monitors for both cashier and consumer for self-service

Magnit Supermarket CVP

Food Experience Matters in a fullfeature supermarket with an extended assortment, improved experience and reasonable prices

• Regular shopping

• Food for tonight
• Ready-to-eat
• Minor stock-up

Residential and business areas, shopping malls

~1,360 avg. selling space, sq.m

New positioning

Magnit Family as a separate Supermarket format

Our consumers enjoy life regardless of what is happening outside

Dedicated Points of Differentiation

Widest assortment of goods in the neighborhood with emphasis on Fresh

Completely redefined Culinary assortment with new standards of quality

Dedicated cross-category zones for healthy lifestyle

Approachable and friendly staff focused on best in class service

New Redesign concept

Assortment Tailoring

Confectionary

Cubes: Farm dairy, Children goods,
Seasonal promo, Healthy lifestyle,
Alcohol

Magnit Superstore CVP

Shopping as valuable in-store

experience for all the family with extended assortment for all consumer missions with articular focus on value for money

• Major stock-up
• Regular shopping
• Food for tonight
• Ready-to-eat
• Seasonal purchases

Residential areas and highways

~3,560 avg. selling space, sq.m

Magnit Extra as a separate Superstore format

We want our consumers to spend time the most valuable way while offering them a unique shopping experience

New positioning Points of Differentiation

Redesign program turning every store into unique world with its own individual theme

New themed areas in partnership with FMCG companies creating meaningful experience

Extended promo offering incl. defined promo alleys and thematic festivals, with special emphasis on local goods

High-end technologies for better experience incl. LED screens, displays on cash desks

Closer than Hypermarkets – tailored approach to choosing locations combining convenience and drive through

Assortment Tailoring

in addition to supermarket ones in addition to supermarket ones

Extended offering in dedicated zones (cubes):

• "Wine house" with cross-category offering
• Beauty shop with everything for care
• Children zone with joy atmosphere
• Tandyr for fresh bakery
• Large Café zone

Non-food and seasonal offering tailored for key consumer missions – transit from "a bit of everything' to well considered offering

Easy Self-Service – convenient self-service cash desks, saving time in queues, hand scanners and MobyScan App

Café zones – additional break-out areas for customers to enjoy delicious coffee and Magnit's culinary during shopping trips

Digital wine sommelier offering ratings and tips to help consumers in choosing their perfect wine

Themed areas in partnerships with major FMCG companies creating meaningful experience

Irrigation equipment for fresh

greens helps to extend shelf life and fresh look coupled with reduction of plastic packaging supporting ESG commitments

Wooden crates and racks for F&V

both creating feeling of modern market and extending offering through local producers

LED digital displays creating new in-store communication channel with consumers

Magnit Cosmetic CVP

To care means to love

Store for women allowing to keep care about both herself and beloved ones so they appreciate it

Regular shopping of personal care and household goods

Residential and business areas

~230 avg. selling space, sq.m

Clustering to be closer

Megapolis

• Wider range of goods "For Her": cosmetics, perfumery and skin care

Balanced offering

Village

City

• • More goods for "Her Home" & "Her Family": hygiene, childhood and household

Assortment tailoring

New zoning with "Worlds" to satisfy consumer mission in dedicated section

Solution centers – new principle for assortment selection to address similar Unit-of-Needs

New rezoning & redesign concepts to be executed in 2021

Expertise in beauty

Broad but tailored assortment, supported by

Private Labels

Differentiation in beauty through exclusive brands in all price tiers

Beauty Experts

Ready to answer questions and give an expert advice

Digital Promotion

Active cooperation with bloggers and influencers for emotional SMM² campaigns

Magnit Pharmacy CVP

Federal omni-channel pharmacy chain with optimal assortment at affordable prices

Occasional purchases of drugs and relevant goods

Areas inside all formats base stores (no street retail)

~32 avg. selling space, sq.m

Positioning Missions Locations & Size Sales mix, %

Clustering to be closer

• Residential area
• More KVIs³ and parapharmaceuticals
• Lux and Express sub-formats

Close to Hospitals

Focus on prescription drugs and medical devices

High traffic location

Focus on basic pharma and medium price

Village

Focus on vital and entry price SKUs

Assortment tailoring

Intensified focus on para pharmaceuticals and private labels as a differentiation core:

E-Pharmacy to extend offering up to 15,000 SKUs available for pick-up in Magnit pharmacies and courier delivery

Improved in-store service

• Rebalanced org. structure based on clear methodology

• Upgraded motivation system focusing on performance

• New learning programs for pharmacist to develop professional consulting skills

• Focus on up-sell and cross-sell mechanics

New Promising Ventures

Magnit My Price Magnit City Magnit GO

Positioning

A low price no frills store for rational consumers offering assortment satisfying main needs

150-350 Avg. store size, sq.m 1,750 avg. # of SKUs

June 2020 – launch date 23 – current # of stores 30 – extended pilots 2021¹

KVIs & entry price SKUs

cartons and show boxes Attractive pricing via EDLP²

Layout in

Positioning

A small store with a café for large cities offering ready-to-eat and on-the-go products

120-180 Avg. store size, sq.m 3,200 avg. # of SKUs

July 2019 – launch date 9 – current # of stores 25 – extended pilots 2021

On-the-Go concept

Café area with all utilities Wi-Fi and electrical sockets

Positioning

A kiosk offering ready-to-eat and on-the-go in the most high traffic locations

6-60 Avg. store size, sq.m ~300 avg. # of SKUs³

January 2021 – launch date 1 – current # of stores 50 – extended pilots 2021

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Vending Kiosk Mini

(6-15 sq.m)

Kiosk (15-60 sq.m)

1

• Pre-shopping
• Loyalty, general promo and CVM¹ offers
• Interest clubs
• Partners privileges
• Checking availability in nearest stores

In-store experience • Informed navigation

2

• Selection of goods with mobile scanner / app

• Easier and faster check-out with mobile payment

• Express grocery

• Stock-up grocery
• E-drogerie
• E-pharma

Payment 4

• Digital loyalty card
• Magnit payment solution

Post-shopping 5

• Feedback
• Receipt
• Digital content

1. Consumer Value Management

We aim to build an ecosystem of complimentary services around Magnit brand and strong omni-channel core

Magnit brand at the center with multi-format & omni-channel offering…

…and united Loyalty, Sign-on, Purchase history, etc.

E-com roll-out during 2021 for key missions across major regions

Adjacent services (Pay, Mobile) to engage with consumer already in testing,…

…all to be united in single Magnit Super App

Strategic Partnerships to further grow the ecosystem

Launch of E-commerce Across All Missions

86 cities in 53 regions served

available across all services

>50 % of e-com revenues outside of Moscow and St. Petersburg

Loyalty Program Covering ~70% of Revenue Already One Year after Roll-out Completion

Ultimate Goal — increase Magnit's share of consumer wallet

Status:

• Up to 32 mn consumers with the loyalty card make purchases every month
• 70% share of loyalty in sales¹
• CRM² system with basic tools for campaigns, promo support and automated consumer care center
• Launch of 65+ loyalty partners network

Short-term plans:

• Increase value of the loyalty card with emotions: clubs, charity, lottery
• Continuous development of mobile app (base of the future Super App)
• Scaling CRM tools: automated campaigns and mass promo support
• CVM development based on the consumers life-cycle
• Further suppliers involvement in marketing campaigns covering part of investments into the program

Magnit Pay with Promising Initial Traction to Support Our Ecosystem

Consumer benefits:

• One virtual debit card for loyalty and payments with ability to transfer in-app from / to any card
• Loyalty program bonuses for all purchases with NFC card and QR code
• Opportunity to pay for utilities, fines, taxes in one mobile app

Status:

• Roll out with NFC card integrated with mobile app in partnership with LifeStylePlatform
• 1,500,000+ electronic cards issued (can pay in e-com)¹
• ~55,000 with tokenized NFC card¹ (can pay off-line even outside Magnit)

Short-term plans:

• Integrate QR code solution
• Expand services (e.g. credit broker, life-style)
• 450,000+ active clients

All Magnit Future Ecosystem Services within a Single Super App

General Modern tech stack and architecture for future expansion of new features, upgraded UX/UI¹ of the App

Loyalty Enhanced digital loyalty and marketing mechanics – loyalty basics and multiple marketing campaigns in the App

Payment 3

1

2

Payment solution conveniently integrated with consumer journey

The first Magnit financial service, basis for future other financial services and partner offerings

To be further integrated

Delivery

All delivery missions and formats conveniently available in native app interface

Expected 40%-60% MAU² growth in December 2021 YoY

Already significant rating growth after relaunch³

Next Generation of Data Capabilities to Power Digital Transformation

The exponential growth of data… …requires a modern centralized data platform to enable data-driven decision making

Strong central data team with >200 FTE² , centralization and streamlining of data processes in the company

Flexible modules around an optimized Teradata core to improve flexibility, reduce TCO³ and reduce time to market on data products and use cases

Focusing on fewer tools and systems with consistent data to enable fast and data-driven decision making

Automated reporting as a base for analysis and predictive models to optimize business processes

Use cases: Promo demand and forecasting, OSA, COGS⁴, Assortment, Pricing, CVM and Personalization

We Already Started a Fundamental Re-Org of Core IT

Detailed 12-month tech reorg plan and KPIs have been developed, team is assembled and ready to go

Objective: faster Time-to-Market & reduced Total Cost of Ownership

Integration of Scalable Industrial Solutions

ERP / HCM Enterprise Resource Planning / Human Capital Management

Best integrated solution (ERP) for core retail, finance, noncommercial procurement and real estate

Best solution for HR processes (HCM): Payroll Processing, HR accounting, personnel administration, formation and maintenance of all regulatory reporting etc.

F&R Forecast & Replenishment

Leading solution in the market Cloud-native SaaS solution that fulfils most functional needs from the box

The fastest solution on the market based on advanced in-memory computation mode

WMS Warehouse Management

One of the best WMS systems in the market

Leader in Gartner magic quadrant for WMS for last 3 years

Advanced and flexible tech architecture based on microservices could handle out complexity and scale

TMS Transportation Management

Covers all sources of transportation and freight calculations

Allows to develop just-in-time delivery scheme

Well integrated with core ERP solution – combining accounting and optimization logic

EMPLOYEE FIRST

Magnit — One of the Largest Private Employers in Russia

	Key changes in org. design	Head Quarter • Strategy & Expertise	Regional
1	Right balance of centralization / decentralization	• Budget • Execution guidelines Operations & Commercial	Heads
2	Format heads in commercial & operations to strengthen format focus and expertise	Format Management
3	New digital / tech / OMNI team to strengthen tech, big data and e-com capabilities
4	Separate procurement team in commercial including PL, own production & direct import		Head Quarter
5	Rebalancing RACI between commercial & supply chain to ensure E2E ownership	• functions	Centralized support

Employees' feedback

Basis for effective HR & corporate culture solutions

Engagement & Adherence survey matrix:

	Promoters	Skeptics	Critics
Engaged	28%	8%	1%	37%
Low Engaged	10%	22%	16%	47%
Not engaged	>1%	2%	13%	16%
	38%	31%	31%	100%

End of 2020 we launched first engagement & satisfaction survey showing exceptional results

Share of Engaged employees top result in the Russian food retail

73%

Satisfaction Index – well above average

69%

Share of Loyal employees – well above average

HR Strategy

Become employer of choice

• Change leader in mass labor market transformation
• Preferred employer in Brick & Mortar and Tech & Digital

1 2 3 Evolution to HR Zero Lead labor market change Acknowledge company talents

• Prioritize talent development and career planning

• Employees and Teams centric corporate culture

• Embody automation and improve processes

• Boost business ownership at all levels via leadership development

Ambition supported by tailored offering

Dimension / functional area

Become a Retailer with Purpose

Sustainability Strategic Framework

Ambitions

1.

Leader in environmental impact reduction

in the industry

Positive impact on the quality of life of all people in Russia

100% responsible supple chain

Best in class corporate governance

Strategic principles

Fair business & Partnership Diversity & Inclusion Environmental stewardship

Respect human rights "Green marketing"

2025 Sustainability Commitments

ENVIRONMENT 50% Private labels and own production packaging be recyclable, reusable or compostable 100% Recyclable plastics in own operations are recovered and recycled ▼ 50% Food waste reduction ▼ 30% SUSTAINABLE SOURCING 100% Responsible sourcing for socially important categories 100% Responsible own production and agriculture Increase of green packaging Responsible Sourcing for commercial EMPLOYEES 70% Rate of employee satisfactions ▼ 50% Lost time incidents rate reduction and zero fatalities 40% Max turnover rate COMMUNITIES 10% Employee volunteers Community Programs for all the regions of the Company's presence 1 2 3 4 5

HEALTH & WELLNESS

Healthy lifestyle Information about and nutrition is available to all of consumers

Health food Related products are available to all of consumers

Greenhouse gas emissions reduction

▼ 25% Water and energy consumption reduction

and non-commercial purchases

Partnership Programs for local suppliers & farmers

Strategic priorities	Achievements 2020 vs 2019
Improvement of LFL sales growth / sales densities	LFL sales growth of 7.4% in 2020 vs 0.4% in 2019
Margin regain	97 bps YoY EBITDA margin improvement on the back of gross margin gains and strict cost control
Improvements of the working capital cycle	30.5 bn Rub cash release from the working capital
Strong deleveraging and strengthening of financial position	Net Debt/EBITDA of 1.1х as of end-2020 vs 2.1x as of end 2019 with FCF of 85 bn Rub in 2020 vs (1.3) bn Rub in 2019

Almost doubling ROIC from 7.9% in 2019 to 13.8% in 2020

Key Strategic Guidance 2021-2025

CONSUMERS

Thought through strategic plan to execute to capture tremendous business improvement potential

Clear CVP initiatives to enhance consumer perception and experience big time

Clear potential to increase sales densities also by the way of speeding up value accretive redesigns

Accelerate smart organic expansion (p.a. on gross basis):

• Convenience: 1,000-1,500 stores
• Drogerie: 750-1,000 stores
• Supermarkets & Superstores: 5-15 stores

Proactive and opportunistic return driven consolidation play (M&A)

Build a leading e-grocery platform capable of handling 5%+ of Magnit turnover with seamless integration into an omni-channel consumer experience

Continue to proactively consider adjacent value accretive additional niches

Adherence to sustain high return requirements for new projects

Key Financial Guidance 2021-2025

Benefits from lucrative EBITDA margin steadily moving to the direction of 8% within 2021-2025 leading to very attractive cash generation

Comfortable leverage of ~1.5x of Net Debt/EBITDA with a self-imposed ceiling of 2.0x

Improvement of working capital with a focus

• on stock days optimization by:
• 3-5 days in grocery
• 10-15 days in drogerie

Focus on high returns and value accretion for shareholders leading to continuous strong dividend payment