Magnit

Earnings Release • Oct 24, 2014

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PJSC MAGNIT - Magnit Unaudited 9M 2014 Financial Results

PR Newswire

London, October 24

Press-releaseKrasnodarOctober 24, 2014PJSC "Magnit" Announces Unaudited 9M 2014 ResultsKrasnodar, October 24, 2014: PJSC "Magnit", Russia's largestretailer (the "Company"; MICEX and LSE: MGNT) announces its unaudited 9M 2014results prepared in accordance with IFRS[1].During 9M 2014 the Company added (net) 927 stores (691 conveniencestores, 14 hypermarkets, 22 "Magnit Family" stores and 200 cosmetics stores)and increased its selling space by 17.09% in comparison to 9M 2013 from2,841.39 thousand sq. m. to 3,327.00 thousand sq. m. The total store base asof September 30, 2014 reached 9,020 stores (7,891 convenience stores, 175hypermarkets, 68 "Magnit Family" stores and 886 cosmetics stores).Revenue increased by 30.08% YoY from 417,179.66 million RUR in 9M2013 to 542,675.00 million RUR in 9M 2014. The top line growth was due to anincrease in selling space as well as to a 13.12% increase of like-for-likesales.Gross margin grew from 27.96% in 9M 2013 to 28.65% in 9M 2014.Gross profit increased by 33.27% from 116,660.06 million RUR to 155,476.42million RUR.EBITDA increased by 36.49% from 44,405.68 million RUR in 9M 2013 to60,607.56 million RUR in 9M 2014. EBITDA margin in 9M 2014 amounted to 11.17%,which is 53 b.p. higher than 9M 2013 (10.64%). EBITDA margin in the 3Q of 2014was 12.42%.9M 2014 net income increased by 42.23% and amounted to 33,892.65million RUR vs. 23,829.90 million RUR in 9M 2013. Net income margin for 9M2014 was 6.25%.Sergey Galitskiy, the Company's CEO, provided the followingcomments on the published results:"The 3rd quarter was a challenging time for the business units ofthe company responsible for Logistics and Purchasing. A lot of effort wasfocused on achieving a high "service level" for food deliveries to our stores.We have a strong team and as a result, we managed to adapt to the changingconditions, in as short a time as possible, which resulted in a strongperformance in the 3rd quarter. I would like to thank my management team fordoing a great job in the rapidly changing market conditions".3Q and 9M 2014 Key Operating Highlights: 3Q 2014 3Q 2013 Growth Rate 9М 2014 9М 2013 Growth RateNumber of opened stores, NET 402 230 n/a 927 762 n/a convenience stores 277 231 n/a 691 737 n/a hypermarkets 6 10 n/a 14 22 n/a magnit family 11 4 n/a 22 10 n/a drogeries 108 (15) n/a 200 (7) n/aTotal number of stores 9,020 7,646 n/a 9,020 7,646 n/a convenience stores 7,891 6,783 n/a 7,891 6,783 n/a hypermarkets 175 148 n/a 175 148 n/a magnit family 68 30 n/a 68 30 n/a drogeries 886 685 n/a 886 685 n/aSelling space growth, th. sq.m. 137.79 93.30 n/a 315.62 292.14 n/a convenience stores 86.05 66.36 n/a 207.51 218.28 n/a hypermarkets 17.44 25.36 n/a 39.10 60.83 n/a magnit family 11.80 4.25 n/a 25.57 11.08 n/a drogeries 22.49 (2.67) n/a 43.44 1.95 n/aSelling space, eop, th. sq. m. 3,327.00 2,841.39 17.09% 3,327.00 2,841.39 17.09% convenience stores 2,519.71 2,195.74 14.75% 2,519.71 2,195.74 14.75% hypermarkets 521.98 448.45 16.40% 521.98 448.45 16.40% magnit family 78.83 35.44 122.47% 78.83 35.44 122.47% drogeries 206.48 161.77 27.63% 206.48 161.77 27.63%Number of customers, million 758.35 625.49 21.24% 2,158.82 1,808.12 19.40% convenience stores 661.02 554.95 19.11% 1,890.94 1,614.69 17.11% hypermarkets 60.13 49.68 21.05% 173.08 139.61 23.98% magnit family 15.85 7.95 99.45% 41.26 20.03 105.95% drogeries 21.35 12.92 65.24% 53.54 33.80 58.42%LFL ResultsFormats 3Q 2014 - 3Q 2013[2] # of Stores Average Ticket Traffic SalesConvenience Stores 6,179 10.86% 5.74% 17.21%Hypermarkets 147 7.63% 6.38% 14.49%Magnit Family 29 9.12% 9.90% 19.93%Drogeries 591 3.44% 35.59% 40.25%Total 6,946 10.13% 6.43% 17.21%Formats 9M 2014 - 9M 20134 # of Stores Average Ticket Traffic SalesConvenience Stores 5,814 8.56% 3.42% 12.27%Hypermarkets 146 6.78% 5.80% 12.97%Magnit Family 29 8.14% 9.94% 18.88%Drogeries 529 3.40% 41.22% 46.03%Total 6,518 8.42% 4.33% 13.12%3Q and 9M 2014 Key Financial Results, million RUR 3Q 2014 3Q 2013 Growth Rate 9M 2014 9M 2013 Growth RateNet sales 193,627.89 144,341.62 34.15% 542,675.00 417,179.66 30.08% convenience stores 147,390.87 111,743.27 31.90% 414,372.92 327,004.60 26.72% hypermarkets 34,341.49 26,636.85 28.92% 98,349.79 74,994.86 31.14% magnit family 6,428.94 2,779.21 131.32% 16,510.65 6,982.67 136.45% cosmetics stores 5,223.24 3,101.58 68.41% 13,054.92 8,079.35 61.58% wholesale 243.35 80.71 201.51% 386.73 118.18 227.24%Gross profit 58,341.90 42,282.85 37.98% 155,476.42 116,660.06 33.27%Gross margin, % 30.13% 29.29% n/a 28.65% 27.96% n/aEBITDAR 29,412.22 20,668.81 42.30% 75,231.69 55,194.87 36.30%EBITDAR margin, % 15.19% 14.32% n/a 13.86% 13.23% n/aEBITDA 24,057.96 16,802.61 43.18% 60,607.56 44,405.68 36.49%EBITDA margin, % 12.42% 11.64% n/a 11.17% 10.64% n/aEBIT 19,624.76 13,198.79 48.69% 47,685.00 34,048.81 40.05%EBIT margin, % 10.14% 9.14% n/a 8.79% 8.16% n/aNet income 14,304.58 9,285.68 54.05% 33,892.65 23,829.90 42.23%Net income margin, % 7.39% 6.43% n/a 6.25% 5.71% n/a3Q and 9M 2014 Key Financial Results, US$ million[3] 3Q 2014 3Q 2013 Growth Rate 9M 2014 9M 2013 Growth RateNet sales 5,350.18 4,400.97 21.57% 15,335.09 13,194.79 16.22% convenience stores 4,072.59 3,407.05 19.53% 11,709.49 10,342.68 13.22% hypermarkets 948.90 812.16 16.84% 2,779.20 2,371.98 17.17% magnit family 177.64 84.74 109.63% 466.56 220.85 111.26% cosmetics stores 144.32 94.57 52.61% 368.91 255.54 44.36% wholesale 6.72 2.46 173.17% 10.93 3.74 192.25%Gross profit 1,612.06 1,289.20 25.04% 4,393.50 3,689.79 19.07%Gross margin, % 30.13% 29.29% n/a 28.65% 27.96% n/aEBITDAR 812.70 630.19 28.96% 2,125.92 1,745.73 21.78%EBITDAR margin, % 15.19% 14.32% n/a 13.86% 13.23% n/aEBITDA 664.75 512.31 29.76% 1,712.67 1,404.49 21.94%EBITDA margin, % 12.42% 11.64% n/a 11.17% 10.64% n/aEBIT 542.26 402.43 34.75% 1,347.50 1,076.91 25.13%EBIT margin, % 10.14% 9.14% n/a 8.79% 8.16% n/aNet income 395.25 283.12 39.61% 957.75 753.71 27.07%Net income margin, % 7.39% 6.43% n/a 6.25% 5.71% n/aNote: net revenue in US$ terms is calculated using the dailyexchange 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 ofSeptember 30, 2014, Magnit operated 25 distribution centers and over 9,020stores (7,891 convenience, 243 hypermarkets, and 886 drogeries) inapproximately 2,000 cities and towns throughout 7 federal regions of theRussian Federation.In accordance with the reviewed IFRS consolidated financialstatements for 1H 2014, Magnit had revenues of $9,979 million USD and anEBITDA of $1,045 million USD. Magnit's local shares are traded on the MoscowStock Exchange (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 bymarket capitalization, 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. bySeptember 1, 2013.[3] Based on the average exchange rate for 3Q 2014 - 36.1909 RUB per 1 USD, 3Q2013 - 32.7977 RUB per 1 USD, 9M 2014 - 35.3878 RUB per 1 USD, 9M 2013 -31.6170 RUB per 1 USD