Magnit

Earnings Release • Apr 29, 2021

National Storage Mechanism | Additional information

MAGNIT PJSC (MGNT)

MAGNIT REPORTS 4.1% LFL SALES GROWTH AND 7.0% EBITDA MARGIN IN 1Q 2021

29-Apr-2021 / 09:59 MSK

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.

The issuer is solely responsible for the content of this announcement.

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Magnit Reports 4.1% LFL Sales Growth and 7.0% EBITDA margin in 1Q 2021

Krasnodar, Russia (April 29, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces its 1Q 2021 operating and unaudited financial results.

6.3% net retail sales growth	1Q 2021 Key Operating and Financial Highlights - Total revenue increased by 5.8% y-o-y (or by 7.1% adjusted for leap-year effect) to RUB 397.9 billion; - Net retail sales reached RUB 387.9 billion representing 6.3% y-o-y growth (or by 7.5% adjusted for leap-year effect); - LFL[1] sales growth stood at 4.1% driven by 14.9% average ticket growth and 9.4% traffic decline;
4.1% lfl sales growth	- The Company opened 407 stores on gross basis (241 convenience stores, one supermarket and 165 drogeries). As part of the Company's ongoing efficiency improvement campaign, 71 stores were closed resulting in a net store addition of 336 and the total store base as of March 31, 2021 of 21,900; - Addition of selling space amounted to 109 thousand sq. m. bringing total selling space to 7,606 thousand sq. m. (representing 4.5% y-o-y growth); - The Company redesigned 100 stores (88 convenience stores and 12 supermarkets). As at March 31, 2021, 73% of convenience stores, 32% of supermarkets and 57% of drogeries are either new or refurbished; - Gross profit margin stood at 23.4% - an increase of 74 bps y-o-y on improved commercial terms, lower shrinkage and favorable format mix partially offset by slightly higher supply chain costs as well as ongoing investments into loyalty program;
7.0% EBITDA margin	- EBITDA was RUB 27.7 billion with a 7.0% margin - 91 bps y-o-y margin expansion on strong gross margin dynamics and strict cost control; - Net income increased by 158.8% y-o-y and stood at RUB 10.9 billion. Net income margin increased by 162 bps to 2.7%.

« ### Jan Dunning Magnit's President and CEO »	"The first quarter results were in line with our internal expectations. In January, February and the first half of March, sales were exceptionally strong across all formats and channels despite trading against a prior year base that included a spike in sales driven by consumer stockpiling during the nationwide lockdown. LFL sales grew 4.1% in the first quarter of 2021, supported by further improvements in mature stores. We continue to grow market share and gain customers from competitors. Our confidence that these improvements are now baked in and permanent remains intact. We are on track to deliver on our published plans. Although the macro and consumer environment remain volatile, we continue to see a gradual improvement in profitability, delivering sustainable 7.0% EBITDA margin in 1Q 2021. We continue to be guided by our key priorities - improvements in our customer value proposition and operating efficiency, smart returns-driven expansion and store redesign to deliver further profitability gains. Development of the wider Magnit eco-system is progressing well with new services available now via Magnit Pay. We have also expanded our e-commerce pilots and are pleased with the first results. Magnit's financial position remained very stable with further optimization of the working capital cycle and low debt burden. Our strong capital discipline underpinned the recent Board decision to pay a second tranche of dividends for the full year of 2020 in the amount of about RUB 25 billion."
~25 RUB billion total amount of dividends recommended by the board to be paid for 2020 33 hard disounters in operation	### Key Events in 1Q 2021 and after the Reported Period - Magnit Board of Directors recommended the AGM to pay c. RUB 25 billion of dividends for the full year of 2020. Subject to shareholders' approval this tranche will be the second dividend payment for 2020 resulting in the total amount of dividends paid for 2020 of c. RUB 50 billion; - Magnit presented its Corporate Strategy 2021-2025; - Magnit redeemed its RUB 10 billion exchanged-traded bonds of BO-003P-02 series; - Magnit continued developing its hard discounter pilot and opened another 10 stores bringing the total number of My Price stores to 33; - Magnit started testing new format of small DIY stores - Magnit Master; - A cooperation agreement with the Government of the Republic of Dagestan was signed following Magnit's plans to open around 180 stores in the region in the next five years; - Magnit became the first Russian retailer to enable its customers to pay for mobile, Internet and TV services as well as to top up its transport cards via its app by adding new functions to its Magnit Pay service; - Magnit started implementing pay-with-a-glance technology in its stores; - Magnit opened first dark stores in Moscow; - Magnit opened new distribution center in Surgut; - Magnit announced its plans to open a representative office in Uzbekistan to drive the development of direct import from Middle East and Central Asia and to ramp up its export operations; - Magnit and eight largest FMCG producers are joining efforts to launch the 'United for a Healthier Future' Initiative; - Magnit published its second Sustainability Report.

1Q 2021 Operating Results

Retail Sales

	1Q 2021	1Q 2020	Change	Change, %
Total Net Retail Sales, million RUB	387,899	364,784	23,115	6.3%
Convenience Stores[2]	299,942	279,795	20,147	7.2%
Supermarkets[3]	50,115	50,963	-847	-1.7%
Drogerie Stores	35,011	31,406	3,605	11.5%
Other Formats[4]	2,831	2,621	210	8.0%
Number of Tickets, mln	1,103	1,195	-92	-7.7%
Convenience Stores	922	1,002	-80	-7.9%
Supermarkets	79	90	-11	-12.5%
Drogerie Stores	94	95	-1	-0.7%
Other Formats	8	8	-1	-8.0%
Average Ticket[5], RUB	352	305	46	15.2%
Convenience Stores	325	279	46	16.4%
Supermarkets	636	566	70	12.4%
Drogerie Stores	373	332	41	12.3%
Other Formats	357	305	52	17.2%

Stores and Selling Space

	1Q 2021	1Q 2020	Change	Change, %
Number of Stores (EOP)	21,900	20,860	1,040	5.0%
Convenience Stores	15,098	14,594	504	3.5%
Supermarkets	471	472	-1	-0.2%
Drogerie Stores	6,331	5,794	537	9.3%
Store Openings (Gross)	407	321	86	26.8%
Convenience Stores	241	145	96	66.2%
Supermarkets	1	0	1	n/a
Drogerie Stores	165	176	-11	-6.3%
Store Closures	71	186	-115	-61.8%
Convenience Stores	54	173	-119	-68.8%
Supermarkets	0	1	-1	-100.0%
Drogerie Stores	17	12	5	41.7%
Store Openings (Net)	336	135	201	148.9%
Convenience Stores	187	-28	215	-767.9%
Supermarkets	1	-1	2	-200.0%
Drogerie Stores	148	164	-16	-9.8%
Total Selling Space (EOP), th. sq.m	7,606	7,277	329	4.5%
Convenience Stores	5,169	4,951	218	4.4%
Supermarkets	943	947	-4	-0.4%
Drogerie Stores	1,460	1,339	121	9.0%
Other formats	33	39	-6	-14.5%
Selling Space Addition (Net), th. sq.m	109	38	71	n/a
Convenience Stores	80	0	80	n/a
Supermarkets	2	-1	3	n/a
Drogerie Stores	32	36	-5	n/a
Other formats	-4	3	-7	n/a

1Q 2021 LFL Results

LFL composition, %	Average Ticket	Traffic	Sales
Total	14.9%	-9.4%	4.1%
Convenience Stores	15.9%	-9.5%	4.9%
Supermarkets	12.1%	-11.4%	-0.7%
Drogerie Stores	12.0%	-6.9%	4.3%

High Base and Leap-Year Effect

	LFL Sales Growth	Net Retail Sales Growth
2.5 months 2021 (January 1st - March 14th, 2021)	7,3%	9.1%
0.5 months 2021 (March 15th - 31st, 2021)	-7.7%	-4.6%
1Q 2021	4.1%	6.3%
1Q 2021 adjusted for leap-year effect	-	7.5%
1Q 2021 adjusted for leap-year and stockpiling effect	7.5%	10.9%

5.3% LTM sales density[6] improvement y-o-y	### Trading Performance Total sales in 1Q 2021 grew by 5.8% y-o-y to RUB 397.9 billion. Net retail sales in 1Q 2021 grew by 6.3% y-o-y (or 7.5% y-o-y adjusted for the leap-year effect) driven by a combination of 4.5% selling space growth and 4.1% LFL sales growth. Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 1Q 2021 improved by 0.5% q-o-q and 5.3% y-o-y while in the Company's main convenience store format these improved by 7.0% y-o-y.
94% of selling space is already matured 14.9% lfl average ticket growth in 1Q 2021	High base effect due to the beginning of the pandemic in the middle of March 2020 had a significant impact on the dynamics within the reported quarter. March last year was the strongest month with the record high double-digit LFL sales growth due to stockpiling effect. As a result, net retail sales growth during first 2.5 months[7] reached 9.1% while starting from the 15th of March, sales growth started to decelerate and stood at -4.6% for the rest of the month bringing the 1Q average to 6.3%. All regions showed solid positive LFL sales growth with Siberian, Caucasian and Central regions delivering the strongest results. LFL sales growth continued accelerating during first 2.5 months of the reported quarter and reached 7.3% being almost in line with previous quarter average. High base effect of last year resulted in deterioration of LFL sales growth starting from the week of March 15th to -7.7% for the rest of the month. Mature stores continued to be the main driver of the Company's strong LFL performance with 288 stores entering LFL panel in 1Q (incl. 116 convenience stores and 172 drogeries). Only 5.9% of Magnit's selling space is currently in the ramp-up phase with 94.1% already matured. As in the previous quarters, average ticket was the main driver of LFL sales growth. This reflects continued trend of lower frequency of visits overcompensated by strong basket growth driven by increased spending per visit. LFL average ticket growth in 1Q 2021 was 14.9% predominantly due to growing number of articles per basket, continued 'trading up' purchases and on-shelf price inflation. 'Trading up' effect was driven by ongoing assortment improvements and inflow of more affluent customers from other chains. Shelf price inflation peaked in February and started decelerating since March. LFL traffic growth in 1Q 2021 declined to -9.4% driven by the high base of the previous year (4.0% in 1Q 2020). Already in January and February 2020 (pre-COVID months) LFL traffic demonstrated solid growth on positive response of customers to operational improvements and initiatives and then accelerated further driven by increased frequency of visits during stockpiling in March. 1Q results came without any acceleration of promo intensity. Promo share as a % of sales went down vs previous quarter and remained flat y-o-y on the back of more normal shopping patterns and different marketing tactics leading to a shift from "bulk" to personalized actions. Despite lower promo intensity q-o-q, sales growth continued accelerating during first 2.5 months of the reported quarter. Fresh fruits and vegetables remained the fastest growing category on continuous improvements of assortment and on-shelf availability.
46 mln of loyalty program active users	Magnit's cross-format loyalty program continued to gain popularity among customers during the period - the number of active loyalty card users exceeded 46 million. Company-wide, the share of tickets using the loyalty card was 54% with penetration in sales of 68%. The loyalty program continues to deliver positive cross-format gains with sustainable growth of customers visiting 2+ store formats (42% of Magnit customer base at the end of the reporting period).

77.3% of total net retail sales generated by convenience segment	### Store Network Development and Performance by Format The convenience segment generated 77.3% of total net retail sales in the reported quarter. In 1Q 2021 Magnit accelerated its expansion program y-o-y and opened (gross) 241 convenience stores (145 in 1Q 2020). The Company continued its efficiency campaign and closed 54 convenience stores vs 173 store closures in 1Q 2020. As a result, Magnit added 187 stores (net) during the reported quarter, bringing the total number of convenience stores to 15,098. The selling space growth of convenience stores was 4.4% y-o-y resulting in the total selling space of this format of 5,169 thousand sq. m. as of March 31, 2021. Sales in the convenience format grew by 7.2% driven by LFL sales growth of 4.9%. LFL traffic growth decelerated to -9.5% on high base effect. LFL average ticket growth remained strong and stood at 15.9% overcompensating negative LFL traffic growth.
12.9% of total net retail sales generated by supermarkets	The share of supermarkets was 12.9% of the Group's net retail sales in the reported quarter. During 1Q 2021 the Company opened one supermarket resulting in the total number of supermarkets of 471. Selling space across this format decreased by 0.4% y-o-y as 6 supermarkets were closed during last four quarters and stood at 943 thousand sq. m. This resulted in net sales growth of -1.7%. During first 2.5 months of the reported quarter, supermarkets delivered strong trading in a positive zone with acceleration vs previous quarter. However, the last two weeks of March distorted the quarter performance as supermarkets had the highest base effect due to stockpiling last year which, to a great extent, happened in the large formats. LFL traffic was flat q-o-q and stood at -11.4% while LFL average ticket growth decelerated to 12.1% which was not enough to compensate negative LFL traffic. As a result, LFL sales growth in supermarkets stood at -0.7%.
9.0% of total net retail sales generated by drogerie 4.1 RUB billion annual GMV runrate	The share of drogerie format as a proportion of the total net retail sales increased to 9.0% in the reported quarter vs 8.6% a year ago. During 1Q 2021 Magnit opened (net) 148 cosmetics stores and added 32 thousand sq. m. of selling space delivering a 9.0% y-o-y increase in selling space, the highest across all formats. Driven by this increase in selling space and LFL sales growth of 4.3%, sales grew 11.5% representing again the strongest performance among all Magnit's store formats. LFL traffic growth was negative of -6.9% well compensated by strong 12.0% LFL average ticket growth. During 1Q 2021 Magnit continued its renovation program and redesigned 88 convenience stores and 12 supermarkets resulting in the combined share of refurbished and new stores at: 73% for convenience stores, 32% for supermarkets and 57% for the drogerie format. ### E-commerce Magnit began testing e-commerce services in the second half of 2020. In total, Magnit currently runs seven online delivery projects, both independently and in cooperation with partners. Magnit fulfils around 9,500 orders a day. The run rate for Magnit's online channel stands at RUB 4.1 billion based on the last week of March. Among all these pilots, convenience store-based express delivery has the highest sales and shows the best growth dynamics. Average ticket for Magnit's own delivery service is c. RUB 1,400 which is approx. 3.8 times higher than in the convenience stores (RUB 372 in 1Q 2021). This is mostly due to a larger number of items per basket. Magnit's e-commerce services today cover over 1,300 stores in 58 regions and 94 cities, with around 60% of the current revenue generated outside Moscow and Saint-Petersburg. During 2021, the Company plans to expand online delivery adding at least 1,500 convenience, drogerie and large-format stores in more than 50 regions across Russia.

1Q 2021 Monthly Operating Results

	January	Change	February	Change	March	Change
Total net retail sales, RUB million	124,429	10.7%	124,693	7.4%	138,777	1.8%
Convenience Stores	96,819	11.1%	95,892	8.6%	107,231	2.8%
Supermarkets	15,957	3.7%	16,364	-1.4%	17,795	-6.2%
Drogerie Stores	10,700	17.3%	11,526	11.1%	12,785	7.3%
Other formats	953	33.1%	912	10.8%	966	-10.7%
Number of tickets, million	357	-7.3%	345	-10.4%	401	-5.6%
Convenience Stores	300	-7.8%	287	-10.6%	335	-5.6%
Supermarkets	25	-12.8%	25	-15.2%	29	-9.7%
Drogerie Stores	30	2.3%	30	-3.1%	35	-1.1%
Other formats	2.6	8.3%	2.5	-8.1%	2.6	-20.1%
Average ticket[8], RUB	348	19.5%	362	19.8%	346	7.9%
Convenience Stores	323	20.5%	334	21.5%	320	8.9%
Supermarkets	626	18.9%	661	16.2%	623	3.8%
Drogerie Stores	362	14.7%	386	14.7%	370	8.5%
Other formats	354	23.2%	358	19.9%	360	11.3%
Number of Stores (EOP)	21,660	n/a	21,729	n/a	21,900	n/a
Convenience Stores	14,969	n/a	14,997	n/a	15,098	n/a
Supermarkets	470	n/a	471	n/a	471	n/a
Drogerie Stores	6,221	n/a	6,261	n/a	6,331	n/a
Store Openings (Gross)	106	n/a	90	n/a	211	n/a
Convenience Stores	66	n/a	45	n/a	130	n/a
Supermarkets	0	n/a	1	n/a	0	n/a
Drogerie Stores	40	n/a	44	n/a	81	n/a
Store Closures	10	n/a	21	n/a	40	n/a
Convenience Stores	8	n/a	17	n/a	29	n/a
Supermarkets	0	n/a	0	n/a	0	n/a
Drogerie Stores	2	n/a	4	n/a	11	n/a
Store Openings (Net)	96	n/a	69	n/a	171	n/a
Convenience Stores	58	n/a	28	n/a	101	n/a
Supermarkets	0	n/a	1	n/a	0	n/a
Drogerie Stores	38	n/a	40	n/a	70	n/a
Total Selling Space (EOP), th. sq. m.	7,528	3.8%	7,550	4.0%	7,606	4.5%
Convenience Stores	5,115	3.2%	5,127	3.5%	5,169	4.4%
Supermarkets	941	-0.6%	943	-0.4%	943	-0.4%
Drogerie Stores	1,437	9.6%	1,445	9.5%	1,460	9.0%
Other formats	36	-2.8%	35	-7.7%	33	-14.5%
Selling Space Added (Net), th. sq. m.	31.7	n/a	21.7	n/a	55.8	n/a
Convenience Stores	25.4	n/a	12.2	n/a	41.9	n/a
Supermarkets	0.0	n/a	2.0	n/a	0.0	n/a
Drogerie Stores	8.1	n/a	8.0	n/a	15.5	n/a
Other formats	-1.8	n/a	-0.4	n/a	-1.6	n/a

10.7% sales growth in january 2021

Strong sales momentum continued since the start of 2021 with January delivering solid LFL sales growth in line with 4Q 2020 average. Sales growth also remained double-digit (10.7%). In February strong trend continued with further acceleration of LFL sales above January and above 4Q 2020 average. Net retail sales growth in February was 7.4%. Adjusted for the leap-year effect, net retail sales growth in February would be 11.3%. January and February 2021 came on a much stronger base with mid-single digit LFL sales growth in the same months last year. During first two weeks of March, LFL sales growth demonstrated further acceleration vs previous months. Starting from March 15th, sales dynamics was hit by the high base effect. As a result, net retail sales growth in March decelerated to 1.8% driven by negative LFL sales growth offset by 4.5% selling space growth.

Financial Results for 1Q 2021

	IAS 17			IFRS 16
RUB mln	1Q 2021	1Q 2020	Change	1Q 2021	1Q 2020	Change
Total Revenue	397,889	376,038	5.8%	397,889	376,038	5.8%
Retail	387,899	364,784	6.3%	387,899	364,784	6.3%
Wholesale	9,990	11,254	-11.2%	9,990	11,254	-11.2%
Gross Profit	93,070	85,185	9.3%	93,073	85,185	9.3%
Gross Margin, %	23.4%	22.7%	74 bps	23.4%	22.7%	74 bps
SG&A, % of Sales	-20.5%	-20.6%	10 bps	-19.0%	-19.2%	15 bps
EBITDA pre LTI[9]	28,003	23,088	21.3%	45,452	40,056	13.5%
EBITDA Margin pre LTI, %	7.0%	6.1%	90 bps	11.4%	10.7%	77 bps
EBITDA	27,678	22,744	21.7%	45,127	39,712	13.6%
EBITDA Margin, %	7.0%	6.0%	91 bps	11.3%	10.6%	78 bps
EBIT	16,956	11,461	48.0%	23,160	17,407	33.0%
EBIT Margin, %	4.3%	3.0%	121 bps	5.8%	4.6%	119 bps
Net Finance Costs	-2,581	-3,777	-31.7%	-10,164	-11,876	-14.4%
FX Gain/ (Loss)	-190	-1,830	-89.6%	-211	-2,017	-89.5%
Profit before Tax	14,186	5,854	142.3%	12,785	3,514	263.8%
Taxes	-3,311	-1,653	100.3%	-3,031	-1,185	155.9%
Net Income	10,875	4,201	158.8%	9,753	2,329	318.7%
Net Income Margin, %	2.7%	1.1%	162 bps	2.5%	0.6%	183 bps

23.4% Gross margin in 1Q 2021 61 bps y-o-y reduction of shrinkage 7.0% ebitda margin in 1Q 2021 2.7% Net income margin in 1Q 2021

Total revenue in 1Q 2021 increased by 5.8% to RUB 397.9 billion. Net retail sales in 1Q 2021 grew by 6.3% y-o-y to RUB 387.9 billion. Wholesale revenue in 1Q 2021 decreased by 11.2% y-o-y to RUB 10.0 billion with 2.5% proportion of total sales. Gross Profit in 1Q 2021 increased by 9.3% to RUB 93.1 billion with a margin increase of 74 bps y-o-y to 23.4% as a result of improved commercial terms, lower shrinkage and favorable format mix. This was partially offset by slightly higher supply chain costs as well as ongoing investments into Magnit's loyalty program with higher penetration. Format mix had a positive impact on gross margin, with the share of high-margin drogerie business growing from 8.6% in 1Q 2020 to 9.0% in 1Q 2021 and the share of lower margin wholesale segment decreasing as a percent of sales y-o-y. Promo intensity was flat y-o-y with some seasonal reduction compared to the previous quarter. Supply chain costs increased y-o-y due to continuous increase of on-shelf availability and higher transportation costs. Growth of transportation tariffs in China impacted domestic transportation tariffs. Alongside with the growing share of fresh products and overall improvement of on-shelf availability shrinkage as a proportion of sales decreased further by 61 bps y-o-y driven by ongoing optimization of supply chain processes, renegotiation of quality standards with suppliers and other initiatives. SG&A costs improved by 10 bps to 20.5% as a percent of sales. This was achieved as a result of lower depreciation and rent costs as well as positive operating leverage effect partially offset by negative effect coming from stores in the ramp up phase, higher packaging, raw materials and marketing costs. Personnel costs as a percent of sales increased by 3 bps y-o-y on the back of acceleration in store openings started in 4Q and their ramp-up period offset by growing productivity and retention rate. Staff turnover continued to improve during the period driven by on-going automation of business processes. Rental costs as a percent of sales decreased by 6 bps y-o-y driven by higher sales density, improved lease terms with landlords and closing of inefficient stores. This was achieved despite the increased share of leased selling space to 78.3% in 1Q 2021 vs 77.3% a year ago. Depreciation as a percent of sales reduced by 31 bps y-o-y as most of the newly opened stores were leased while the number of store refurbishments in the reported quarter decreased by more than twice (288 store were refurbished in 1Q 2020 vs 100 in 1Q 2021). Advertising expenses increased by 9 bps y-o-y on higher marketing activities including loyalty campaigns and digital marketing. Packaging and raw materials expenses increased by 12 bps y-o-y reflecting the ongoing provision of means of sanitary protection to customers and employees during the COVID-19 pandemic. Other costs including utilities, repair and maintenance, bank and tax expenses remained broadly flat as a percent of sales y-o-y. Total costs incurred as a result of the Company's response to COVID-19 in 1Q 2021 amounted to approximately RUB 0.3 billion and consisted mainly of personal protection means and safety procedures (reflected in other operating expenses). As a result, EBITDA was RUB 27.7 billion with a 7.0% margin - 91 bps y-o-y expansion - due to strong gross margin dynamics and strict cost control. LTI expenses in the reported period stood at 0.08% of sales - as a result EBITDA margin pre-LTI was in line with the reported EBITDA margin of 7.0%. Net finance costs in 1Q 2021 decreased by 31.7% y-o-y (or 36 bps) to RUB 2.6 billion due to the lower cost of debt and total amount of borrowings. As a result of continued focus on financial efficiencies, the cost of debt further reduced to the historical low level of 5.9% (89 bps y-o-y or 18 bps q-o-q). This has also led to further improvement of the debt profile with increased share of long-term borrowings to 98% and debt maturity of 21 months. In 1Q 2021 the Company reported FX loss in the amount of RUB 0.2 billion related to direct import operations. Income tax in 1Q 2021 was RUB 3.3 billion. Effective tax rate has normalized to 23.3%. As a result, net income in 1Q 2021 increased by 158.8% y-o-y and stood at RUB 10.9 billion. Net income margin increased by 162 bps y-o-y to 2.7%.

Financial Position Highlights (IFRS 16)

RUB mln	31.03.2021	31.12.2020	31.03.2020
Inventories	211,241	205,949	223,434
Trade and other receivables	12,171	8,564	12,533
Cash and cash equivalents	6,575	44,700	26,645
Long-term borrowings	144,022	147,695	87,493
Trade and other payables	138,260	161,072	143,353
Short-term borrowings and short-term portion of long-term borrowings	24,205	18,392	131,397

7.6 DAYS y-o-y optimisation of inventories[10]

Despite ongoing improvement to on-shelf availability, the increased share of drogerie format by 42 bps as a percent of net retail sales, supplier inflation and total sales growth of 5.8%, inventories decreased by RUB 12.2 billion vs March 31, 2020 and stood at 211.2 billion. This was driven by a number of projects launched in 2020 including reduction of slow-moving items, assortment harmonization and IT solutions aimed at better on-shelf availability and promo forecasting. Trade and other payables reduced by RUB 5.1 billion vs March 31, 2020 and stood at RUB 138.3 billion due to inventory reduction vs previous year, while payment days increased. This was partially offset by slight improvement of accounts receivables by 2.9% to RUB 12.2 billion as a result of ongoing optimization initiatives including weekly tracking of overdue debts and clearing activities as well as launch of electronic document flow with suppliers.

Debt Composition and Leverage

	March 31, 2021	December 31, 2020	March 31, 2020
IAS 17
Total Debt, RUB billion	168.2	166.1	218.9
Long-Term Debt	144.0	147.7	87.5
Short-Term Debt	24.2	18.4	131.4
Net Debt, RUB billion	161.7	121.4	192.2
Net Debt/EBITDA	1.4х	1.1х	2.2х
IFRS 16
Net Debt, RUB billion	522.8	479.0	549.8
Net Debt/EBITDA	2.8x	2.7x	3.6x

1.4x net debt/ebitda as of March 31, 2021 (IAS 17)

Gross Debt remained almost flat vs December 31, 2020. Following dividend payment for 9M 2020 in the reported quarter cash position stood at RUB 6.6 billion. As a result, Net Debt increased by 33.2% to RUB 161.7 billion. The Company's debt is fully RUB denominated matching revenue structure. 98% of debt portfolio was long-term with 21 months maturity. The Net Debt to EBITDA ratio was 1.4x as at March 31, 2021 vs 1.1x as at December 31, 2020. Capex in 1Q 2021 increased by 15.9% to RUB 8.3 billion. This was driven by acceleration of expansion program (407 store openings on gross basis in 1Q 2021 vs 321 in 1Q 2020). Capex is expected to pick up in the next periods in line with the calendarization of the store opening and redesign process.

FY 2021 Guidance

Magnit confirms its full year store opening, redesign and capex guidance published on February 4th, 2021.

In 2021 Magnit plans to open around 2,000 stores of different format on gross basis as part of its organic expansion and redesign about 700 stores. Capital expenditures are expected in the amount of RUB 60-65 billion.

Note:

1. This announcement contains inside information disclosed in accordance with the Market Abuse Regulation effective from July 3, 2016.

2. Please note that there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals.

	### For further information, please contact: Dmitry Kovalenko Director for Investor Relations  dmitry_kovalenko@magnit.ru Office: +7 (861) 210 4880 Dina Chistyak Director for Investor Relations  dina_chistyak@magnit.ru Office: +7 (861) 210 9810 x 15101 Media Inquiries                    Twitter press@magnit.ru                    @MagnitIR

### Note to editors Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of March 31, 2021, Magnit operated 39 distribution centers and 21,900 stores (15,098 convenience, 471 supermarkets and 6,331 drogerie stores) in 3,770 cities and towns throughout 7 federal regions of the Russian Federation. In accordance with the audited IFRS 16 results for FY 2020, Magnit had revenues of RUB 1,553.8 billion and an EBITDA of RUB 178.2 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB.

### Forward-looking statements This document contains or may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and/or store openings are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Magnit as of the date of the statement. All written or oral forward-looking statements attributable to Magnit are qualified by this caution. Magnit does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.

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[1] LFL calculation base includes stores, which have been operating for 12 months since its first day of sales. LFL sales growth and average ticket growth are calculated based on sales turnover including VAT.

[2] Convenience Stores include convenience stores and small pilots such as Magnit City and My Price

[3] Supermarkets include Magnit Family supermarkets and Magnit Extra superstores

[4] Other Formats include pharmacies and stores located at Russian Post offices

[5] Excluding VAT

[6] Net retail sales of the last four quarters divided by the average selling space at the end of the last five quarters

[7] Period of 1st January - 14th March 2021 compared to the same period of 2020

[8] Excluding VAT

[9] LTI - Long-Term Incentive Program

[10] Inventory turnover days = ((inventories as of 31.12.2020 + inventories as of 31.03.2021)/2/cost of goods sold for 1Q 2021) x 90

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ISIN:	US55953Q2021
Category Code:	MSCU
TIDM:	MGNT
LEI Code:	2534009KKPTVL99W2Y12
OAM Categories:	2.2. Inside information
Sequence No.:	101864
EQS News ID:	1190292

End of Announcement	EQS News Service

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