Magnit

Earnings Release • Apr 22, 2014

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OJSC MAGNIT - Magnit Unaudited 1Q 2014 Financial Results

PR Newswire

London, April 22

Press-releaseKrasnodarApril 22, 2014OJSC "Magnit" Announces Unaudited 1Q 2014 ResultsKrasnodar, April 22, 2014: OJSC "Magnit", Russia's largest food retailer (the"Company"; MICEX and LSE: MGNT) announces its unaudited 1Q 2014 financialresults prepared in accordance with IFRS.During 1Q 2014 the Company added (net) 163 stores (141 convenience stores, 4hypermarkets, 4 "Magnit Family" stores and 14 cosmetics stores) and increasedits selling space by 16.68% in comparison to 1Q 2013 from 2,629.88 thousand sq.m. to 3,068.61 thousand sq. m. The total store base as of March 31, 2013reached 8,256 stores (7,341 convenience stores, 165 hypermarkets, 50 "MagnitFamily" stores and 700 cosmetics stores).Revenue in rubles increased by 24.95% YoY from 131,239.91 million RUR in 1Q2013 to 163,990.13 million RUR in 1Q 2014. The top line growth was due to anincrease in selling space as well as to a 7.49% increase in like-for-like sales(incl. VAT). Revenue growth in dollar terms amounted to 8.71%: from US$4,315.09 million to US$ 4,690.91 million.Gross margin grew from 26.72% in 1Q 2013 to 27.24% in 1Q 2014. Gross profit inrubles increased by 27.36% from 35,070.35 million RUR (US$ 1,153.09 million) to44,665.95 million RUR (US$ 1,277.66 million).EBITDA increased by 21.82% from 12,214.09 million RUR (US$ 401.59 million) in1Q 2013 to 14,879.50 million RUR (US$ 425.63 million) in 1Q 2014. EBITDA marginin 1Q 2014 amounted to 9.07%.1Q 2014 net income increased by 13.52% and amounted to 6,988.23 million RUR(US$ 199.90 million) vs. 6,156.16 million RUR (US$ 202.41 million) in 1Q 2013.Net income margin for 1Q 2014 was 4.26%.Sergey Galitskiy, the Company's CEO, provided the following comments on thepublished results:"In the middle of 1Q 2014 the Company started active price investments in thenew regions of our geographical coverage: Moscow, Saint-Petersburg, Urals andWestern Siberia. The Company's EBITDA margin in the first quarter is in linewith our FY 2014 guidance".1Q 2014 Key Operational Results: 1Q 2014 1Q 2013 Growth RateNumber of opened stores, NET 163 191 n/a convenience stores 141 163 n/a hypermarkets 4 6 n/a magnit family 4 1 n/a cosmetics stores 14 21 n/aTotal number of stores 8,256 7,075 n/a convenience stores 7,341 6,209 n/a hypermarkets 165 132 n/a magnit family 50 21 n/a cosmetics stores 700 713 n/aSelling space, eop, th. sq. m. 3,068.61 2,629.88 16.68% convenience stores 2,349.71 2,030.20 15.74% hypermarkets 493.53 407.46 21.12% magnit family 58.08 25.81 125.06% cosmetics stores 167.29 166.41 0.53%Selling space growth, th. sq.m. 57.24 80.62 n/a convenience stores 37.51 52.74 n/a hypermarkets 10.66 19.85 n/a magnit family 4.82 1.45 n/a cosmetics stores 4.25 6.58 n/aNumber of customers, million 662.66 563.01 17.70% convenience stores 582.77 505.46 15.30% hypermarkets 53.07 42.13 25.98% magnit family 11.53 5.58 106.65% cosmetics stores 15.29 9.85 55.23%LFL ResultsFormats 1Q 2014 - 1Q 2013 # of Stores Average Ticket Traffic SalesConvenience Stores 5,851 5.32% 0.61% 5.96%Hypermarkets 128 4.34% 4.62% 9.17%Magnit Family 21 5.27% 9.93% 15.73%Cosmetics Stores 571 1.97% 50.54% 53.50%Total 6,571 5.60% 1.79% 7.49%1Q 2014 Key Financial Results 1Q 2014 1Q 2013 Growth RateNet sales, mn RUR 163,990.13 131,239.91 24.95% convenience stores 126,020.31 104,145.23 21.00% hypermarkets 29,589.83 22,670.89 30.52% magnit family 4,453.55 1,935.79 130.06% cosmetics stores 3,888.13 2,465.97 57.67% wholesale 38.30 22.04 73.77%Net sales, mn US$ 4,690.91 4,315.09 8.71% convenience stores 3,604.79 3,424.23 5.27% hypermarkets 846.41 745.40 13.55% magnit family 127.39 63.65 100.15% cosmetics stores 111.22 81.08 37.17% wholesale 1.10 0.72 51.18%Gross profit, mn RUR 44,665.95 35,070.35 27.36%Gross profit, mn US$ 1,277.66 1,153.09 10.80%Gross margin,% 27.24% 26.72% n/aEBITDAR, mn RUR 19,330.73 15,541.62 24.38%EBITDAR, mn US$ 552.95 511.00 8.21%EBITDAR margin, % 11.79% 11.84% n/aEBITDA, mn RUR 14,879.50 12,214.09 21.82%EBITDA, mn US$ 425.63 401.59 5.98%EBITDA margin, % 9.07% 9.31% n/aEBIT, mn RUR 10,726.22 8,969.84 19.58%EBIT, mn US$ 306.82 294.92 4.03%EBIT margin, % 6.54% 6.83% n/aNet income, mn RUR 6,988.23 6,156.16 13.52%Net income, mn US$ 199.90 202.41 (1.24%)Net income margin, % 4.26% 4.69% n/aNote: net revenue in US$ terms is calculated using the daily exchange rate.For further information, please contact:Timothy Post Director, Investor Relations Email: post@gw.tander.ru Office: +7-861-277-4554 x 17600 Mobile: +7-961-511-7678 Direct Line: +7-861-277-4562Dina Svishcheva Deputy Director, Investor Relations Email: Chistyak@gw.tander.ru Office: +7-861-277-45-54 x 15101 Mobile: +7-961-511-0202 Direct Line: +7-861-277-4562Company description:Magnit is Russia's largest food retailer. Founded in 1994, the company isheadquartered in the southern Russian city of Krasnodar. As of March 31, 2014,Magnit operated 23 distribution centers and over 8,200 stores (7,341convenience, 215 hypermarkets, and 700 cosmetics) in more than 1,905 cities andtowns throughout 7 federal regions of the Russian Federation.In accordance with the audited IFRS consolidated financial statements for 2013,Magnit had revenues of $18,202 million USD and an EBITDA of $2,032 million USD.Magnit's local shares are traded on the Moscow Stock Exchange (MICEX: MGNT) andits GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit ratingfrom Standard & Poor's of BB. Measured by market capitalization, Magnit is oneof the largest retailers in Europe.Based on management accountsBased on the average exchange rate for 1Q 2014 - 34.9591 RUR per 1 US$, for 1Q2013 - 30.4142 RUR per 1 US$.LFL calculation base includes stores (all formats), which have been opened 12months prior to the last month of the reporting period. i.e. by March 1, 2013.