Magnit

Earnings Release • Jul 23, 2014

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OJSC MAGNIT - Unaudited 1H 2014 Financial Results

PR Newswire

London, July 23

Press-releaseKrasnodarJuly 23, 2014OJSC "Magnit" Announces Unaudited 1H 2014 ResultsKrasnodar, July 23, 2014: OJSC "Magnit", Russia's largest retailer(the "Company"; MICEX and LSE: MGNT) announces its unaudited 1H 2014 resultsprepared in accordance with IFRS[1].During 1H 2014 the Company added (net) 525 stores (414 conveniencestores, 8 hypermarkets, 11 "Magnit Family" stores and 92 cosmetics stores) andincreased its selling space by 16.05% in comparison to 1H 2013 from 2,748.09thousand sq. m. to 3,189.21 thousand sq. m. The total store base as of June30, 2014 reached 8,618 stores (7,614 convenience stores, 169 hypermarkets, 57"Magnit Family" stores and 778 cosmetics stores).Revenue increased by 27.93% YoY from 272,838.04 million RUR in 1H2013 to 349,047.11 million RUR in 1H 2014. The top line growth was due to anincrease in selling space as well as to a 10.63% increase of like-for-likesales.Gross margin grew from 27.26% in 1H 2013 to 27.83% in 1H 2014.Gross profit increased by 30.59% from 74,377.21 million RUR to 97,131.78million RUR.EBITDA increased by 32.39% from 27,603.07 million RUR in 1H 2013 to36,543.63 million RUR in 1H 2014. EBITDA margin in 1H 2014 amounted to 10.47%,which is 35 b.p. higher than 1H 2013 (10.12%). EBITDA margin in the 2Q of 2014was 11.71%.1H 2014 net income increased by 33.78% and amounted to 19,457.13million RUR vs. 14,544.22 million RUR in 1H 2013. Net income margin for 1H2014 was 5.57%.CEO quote:"Enjoy" - Sergey Galitskiy2Q and 1H 2014 Key Operating Highlights: 2Q 2014 2Q 2013 Growth Rate 1H 2014 1H 2013 Growth RateNumber of opened stores, NET 362 341 n/a 525 532 n/a convenience stores 273 343 n/a 414 506 n/a hypermarkets 4 6 n/a 8 12 n/a magnit family 7 5 n/a 11 6 n/a cosmetics stores 78 (13) n/a 92 8 n/aTotal number of stores 8,618 7,416 n/a 8,618 7,416 n/a convenience stores 7,614 6,552 n/a 7,614 6,552 n/a hypermarkets 169 138 n/a 169 138 n/a magnit family 57 26 n/a 57 26 n/a cosmetics stores 778 700 n/a 778 700 n/aSelling space growth, th. sq.m. 120.60 118.21 n/a 177.83 198.84 n/a convenience stores 83.95 99.18 n/a 121.46 151.92 n/a hypermarkets 11.01 15.62 n/a 21.66 35.47 n/a magnit family 8.95 5.38 n/a 13.77 6.83 n/a cosmetics stores 16.70 (1.97) n/a 20.95 4.61 n/aSelling space, eop, th. sq. m. 3,189.21 2,748.09 16.05% 3,189.21 2,748.09 16.05% convenience stores 2,433.66 2,129.38 14.29% 2,433.66 2,129.38 14.29% hypermarkets 504.54 423.09 19.25% 504.54 423.09 19.25% magnit family 67.03 31.19 114.94% 67.03 31.19 114.94% cosmetics stores 183.99 164.44 11.89% 183.99 164.44 11.89%Number of customers, million 737.81 619.62 19.08% 1,400.48 1,182.63 18.42% convenience stores 647.16 554.28 16.76% 1,229.92 1,059.74 16.06% hypermarkets 59.88 47.80 25.27% 112.96 89.93 25.60% magnit family 13.87 6.50 113.29% 25.41 12.09 110.22% cosmetics stores 16.90 11.03 53.26% 32.19 20.88 54.19%LFL ResultsFormats 2Q 2014 - 2Q 2013[2] # of Stores Average Ticket Traffic SalesConvenience Stores 5,990 9.00% 2.93% 12.20%Hypermarkets 135 8.13% 6.37% 15.02%Magnit Family 23 9.47% 9.99% 20.40%Cosmetics Stores 590 3.61% 40.58% 45.65%Total 6,738 9.16% 3.91% 13.43%Formats 1H 2014 - 1H 20134 # of Stores Average Ticket Traffic SalesConvenience Stores 5,881 7.23% 1.90% 9.26%Hypermarkets 135 6.37% 5.55% 12.28%Magnit Family 23 7.51% 9.96% 18.22%Cosmetics Stores 556 3.05% 45.11% 49.54%Total 6,595 7.46% 2.95% 10.63%2Q and 1H 2014 Key Financial Results 2Q 2014 2Q 2013 Growth Rate 1H 2014 1H 2013 Growth RateNet sales, mn RUR 185,056.98 141,598.12 30.69% 349,047.11 272,838.04 27.93% convenience stores 140,961.74 111,116.10 26.86% 266,982.05 215,261.33 24.03% hypermarkets 34,418.47 25,687.12 33.99% 64,008.30 48,358.02 32.36% magnit family 5,628.16 2,267.66 148.19% 10,081.71 4,203.45 139.84% cosmetics stores 3,943.55 2,511.80 57.00% 7,831.68 4,977.77 57.33% wholesale 105.08 15.43 n/a 143.38 37.47 n/aNet sales, mn US$[3] 5,287.36 4,479.11 18.04% 9,978.59 8,796.43 13.44% convenience stores 4,027.49 3,514.89 14.58% 7,632.51 6,940.13 9,98% hypermarkets 983.39 812.55 21.03% 1,829.88 1,559.09 17.37% magnit family 160.80 71.73 124.17% 288.22 135.52 112.68% cosmetics stores 112.67 79.45 41.81% 223.89 160.49 39.50% wholesale 3.00 0.49 n/a 4.10 1.21 n/aGross profit, mn RUR 52,465.83 39,306.86 33.48% 97,131.78 74,377.21 30.59%Gross profit, mn US$ 1,499.03 1,243.38 20.56% 2,776.81 2,397.96 15.80%Gross margin, % 28.35% 27.76% n/a 27.83% 27.26% n/aEBITDAR, mn RUR 26,482.31 18,984.44 39.49% 45,813.04 34,526.07 32.69%EBITDAR, mn US$ 756.64 600.53 26.00% 1,309.71 1,113.14 17.66%EBITDAR margin, % 14.31% 13.41% n/a 13.13% 12.65% n/aEBITDA, mn RUR 21,664.13 15,388.98 40.78% 36,543.63 27,603.07 32.39%EBITDA, mn US$ 618.98 486.79 27.16% 1,044.71 889.94 17.39%EBITDA margin, % 11.71% 10.87% n/a 10.47% 10.12% n/aEBIT, mn RUR 17,341.10 11,880.18 45.97% 28,067.32 20,850.02 34.62%EBIT, mn US$ 495.46 375.80 31.84% 802.39 672.21 19.37%EBIT margin, % 9.37% 8.39% n/a 8.04% 7.64% n/aNet income, mn RUR 12,468.90 8,388.07 48.65% 19,457.13 14,544.22 33.78%Net income, mn US$ 356.26 265.34 34.27% 556.24 468.91 18.62%Net income margin, % 6.74% 5.92% n/a 5.57% 5.33% 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@magnit.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@magnit.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, thecompany is headquartered in the southern Russian city of Krasnodar. As of June30, 2014, Magnit operated 24 distribution centers and over 8,600 stores (7,614convenience, 226 hypermarkets, and 778 cosmetics) in approximately 2,000cities and towns throughout 7 federal regions of the Russian Federation.In accordance with the audited IFRS consolidated financialstatements for 2013, Magnit had revenues of $18,202 million USD and an EBITDAof $2,032 million USD. Magnit's local shares are traded on the Moscow StockExchange (MICEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT)and it has a credit rating from Standard & Poor's of BB. Measured by marketcapitalization, Magnit is one of the largest retailers in Europe.---------------------------------[1] Based on management accounts[2] LFL calculation base includes stores (all formats), which havebeen opened 12 months prior to the last month of the reporting period. i.e. byJune 1, 2013.[3] Based on the average exchange rate for 2Q 2014 - 34.9999 RUB per 1 USD, 2Q2013 - 31.6130 RUB per 1 USD, 1H 2014 - 34.9796 RUB per 1 USD, 1H 2013 -31.0169 RUB per 1 USD