Magnit

Earnings Release • Oct 22, 2018

MAGNIT PJSC (MGNT)

22-Oct-2018 / 10:00 MSK Dissemination of a RegulatoryAnnouncement 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.

Press Release | Krasnodar| October 22, 2018

PJSC "Magnit" Announces Unaudited 3Q 2018 Results

Krasnodar, Russia(22 October, 2018): Magnit PJSC (MOEX and LSE: MGNT), one of Russia's leading retailers announces its unaudited 3Q 2018 results prepared in accordance with IFRS 1 .

Revenue increased by 8.4% from 286 billion RUB in 3Q 2017 to 310 billion RUR in 3Q 2018 on the back of significant LFL sales recovery to -2.0% compared to - 5.2% in the previous quarter.The change of the LFL sales trend dynamics across all formats is the result of the improved CVP achieved through the new developments of the category management and promo ac?vity.The best performance was demonstrated by "Magnit Cosme?c" stores - LFL sales reached 3.9% in 3Q 2018 on the back of 3.8% LFLaverage ?cket growth and 0.1% traffic growth.

During 3Q 2018 Magnit added (net) 482 stores.The total store base as of September 30, 2018 reached 17,442 stores (12,813 convenience stores, 457 supermarkets and 4,172 drogerie stores). Addi?on of selling space in 9M 2018 was 337 thousand sq. m. compared to 495 thousand sq. m.in 9M 2017.The quality of new store openings has improved which supported sales density growth of the new stores compared to the exis?ng store base. All new stores are being opened under the new format with the improved layout, design, naviga?on and equipment. We have redesigned 380 stores in 3Q 2018.

EBITDA in 3Q 2018 increased by 5.3% y-o-y compared to the nega?ve dynamics in 2Q this year.EBITDA margin in 3Q 2018 was 7.0%.There was a seasonal decrease compared to 2Q 2018. Nevertheless, this year tradi?onal seasonal decrease moderated.The 23.9% decrease of gross margin was largely offset by the cost op?miza?on ini?a?ves: payroll expenses due to the reduc?on in the number of the management personnel and the packaging and raw materials due to the introduc?on of the tender procedures and lower procurement prices.

Net Income increased by 10% from 6.9 billion RUB in 3Q 2017 to 7.6 billion RUB in 3Q 2018.The key factor which impacted the more pronounced posi?ve dynamics of net income compared to EBITDA in 3Q 2018 was the improvement of interest expense due to lower credit rates this year compared to the previous year. Net Income Margin in 3Q 2018 was 2.5%.

Olga Naumova, Magnit's Chief Execu+ve Officer, said:

"At the first stage of transformaon the key indicator of the posive dynamics for us is the like-for-like improvement. For the first me this year we see LFL trends changing. This improvement underlines that our customers respond posively to the implemented changes in assortment and approach to the promo acvity.

We are already seeing cost improvements and connue to opmise ourefficiency to maintain EBITDA margin .

Our transformaon strategy shows first signs of recovery of consumer interest in our stores. We are confident that this is the solid base for further success of Magnit team".

3Q 2018 Monthly Opera+ng Metrics:

	July	Y-o-Y, %	August		Y-o-Y, % September	Y-o-Y, %
New Store Openings(NET)	78	n/a	130	n/a	274	n/a
Convenience stores	43	n/a	86	n/a	181	n/a
2 Supermarkets	3	n/a	(2)	n/a	(1)	n/a
Drogerie Stores	32	n/a	46	n/a	94	n/a
Number ofStores(EOP)	17,038	n/a	17,168	n/a	17,442	n/a
Convenience stores	12,546	n/a	12,632	n/a	12,813	n/a
Supermarkets	460	n/a	458	n/a	457	n/a
Drogerie Stores	4,032	n/a	4,078	n/a	4,172	n/a
New SellingSpace, th. sq. m.	27	n/a	37	n/a	84	n/a
Convenience stores	15	n/a	31	n/a	66	n/a
Supermarkets	5	n/a	(4)	n/a	(3)	n/a
Drogerie Stores	7	n/a	10	n/a	21	n/a
Total SellingSpace (EOP), th. sq. m.	5,971	11.0%	6,009	10.0%	6,092	9.5%
Convenience stores	4,108	11.0%	4,139	10.0%	4,205	9.5%
Supermarkets	938	4.9%	934	3.9%	931	3.2%

Drogerie Stores	926	18.4%	936	16.8%	956	16.8%
Number of Customers, million	389	10.8%	388	8.6%	360	7.0%
Convenience stores	330	11.2%	327	8.5%	304	6.8%
Supermarkets	35	5.5%	35	6.4%	32	4.9%
Drogerie Stores	25	13.7%	25	13.3%	24	12.5%
3 Retail Sales , million RUR	104,856		7.3% 104,506	9.2%	95,888	7.4%
Convenience stores	79,317	8.2%	78,399	9.4%	71,966	7.5%
Supermarkets	17,858	0.5%	17,962	5.0%	16,322	3.1%

Drogerie Stores 7,680 16.4% 8,145 18.1% 7,600 16.9%

3Q and 9M 2018 Key Opera+ng Metrics:

	3Q2018	3Q2017	Y-o-Y, %	9M 2018	9M 2017	Y-o-Y, %
New Store Openings(NET)	482	853	n/a	1,092	1,638	n/a
Convenience stores	310	629	n/a	688	1,222	n/a
Supermarkets	0	2	n/a	6	1	n/a
Drogerie Stores	172	222	n/a	398	415	n/a
Number ofStores(EOP)	17,442	15,697	n/a	17,442	15,697	n/a
Convenience stores	12,813	11,743	n/a	12,813	11,743	n/a
Supermarkets	457	432	n/a	457	432	n/a
Drogerie Stores	4,172	3,522	n/a	4,172	3,522	n/a
New SellingSpace, th. sq. m.	148	243	n/a	337	495	n/a
Convenience stores	112	190	n/a	247	389	n/a
Supermarkets	(2)	2	n/a	1	6	n/a
Drogerie Stores	37	51	n/a	90	100	n/a
Total SellingSpace (EOP), th. sq. m.	6,092	5,562	9.5%	6,092	5,562	9.5%
Convenience stores	4,205	3,841	9.5%	4,205	3,841	9.5%
Supermarkets	931	902	3.2%	931	902	3.2%
Drogerie Stores	956	819	16.8%	956	819	16.8%
Number of Customers, million	1,137	1,044	8.8%	3,257	2,988	9.0%
Convenience stores	960	882	8.9%	2,755	2,518	9.4%
Supermarkets	102	97	5.6%	295	284	3.6%

Drogerie Stores 74 65 13.2% 208 186 11.6%

LFL Results:

3Q2018 - 3Q2017 4

Formats	# of Stores	Average Ticket	Traffic	Sales
Convenience stores 9,578		(0.5%)	(2.2%)	(2.7%)
Supermarkets	407	(1.9%)	0.2%	(1.6%)
Drogerie Stores	3,288	3.8%	0.1%	3.9%
Total	13,273	(0.2%)	(1.8%)	(2.0%)

9М 2018 - 9М 2017³

Formats	# of Stores	Average Ticket	Traffic	Sales
Convenience stores 8,259		(1.3%)	(2.6%)	(3.9%)
Supermarkets	404	(3.1%)	(1.1%)	(4.2%)
Drogerie Stores	3,157	3.7%	(1.9%)	1.8%
Total	11,820	(1.1%)	(2.4%)	(3.4%)

3Q and 9M 2018 Key Financial Results, million RUR

	3Q2018		3Q2017 Growth Rate	9M 2018		9M 2017 Growth Rate
Net sales		310,112 285,961		8.4% 905,374 840,985		7.7%
Convenience stores		229,682 211,977		8.4% 673,330 623,793		7.9%
Supermarkets	52,142	50,706		2.8% 151,209 151,170		0.0%
Drogerie Stores	23,425	19,996	17.1%	65,456	56,956	14.9%
Wholesale	4,863	3,283	48.1%	15,380	9,066	69.6%
Gross Profit	73,996	73,285		1.0% 221,168 221,850		(0.3%)
Gross Margin, %	23.9%	25.6%	n/a	24.4%	26.4%	n/a
EBITDAR	34,781	32,582		6.8% 104,895 103,044		1.8%
EBITDAR Margin, %	11.2%	11.4%	n/a	11.6%	12.3%	n/a

5 EBITDA	21,742	20,656	5.3%	66,608	69,391	(4.0%)
Adjusted EBITDA	21,742	20,656	5.3%	68,107	69,391	(1.9%)
EBITDA Margin, %	7.0%	7.2%	n/a	7.4%	8.3%	n/a
Adjusted EBITDA Margin, % 7.0%		7.2%	n/a	7.5%	8.3%	n/a
EBIT	12,127	12,208	(0.7%)	39,556	44,496	(11.1%)
EBITMargin, %	3.9%	4.3%	n/a	4.4%	5.3%	n/a
Net Income	7,618	6,923	10.0%	25,383	27,672	(8.3%)
Net Income Margin, %	2.5%	2.4%	n/a	2.8%	3.3%	n/a

Notes:

1. This announcement contains inside informa?on which is disclosed in accordancewith theMarket Abuse Regula?on which came into effect on 3 July 2016. 2. Please note that theremay be smallvaria?ons in calcula?on of totals, subtotals and/ or percentage change due to rounding of decimals.

For further informa+on, please contact:

Dina Svishcheva

Hea d of IR Emai l: Chistyak@magnit.ru Office: +7-861-277-4554 x 15101

Media Inquiries

Media Rela?ons Department Emai l: press@magnit.ru

Note to editors:

Publ ic Joint Stock Compa ny "Magnit" is one of Russia's lea ding retai lers. Founded in 1994, the compa ny is hea dquartered in the s outhern Russia n city of Kras nodar. As of September 30, 2018, Magnit operated 37 distribu?on centers a nd 17,442 stores (12,813 convenience, 457 s upermarkets a nd 4,172 drogerie stores) in 2,866 ci?es a nd towns throughout 7 federal regions of the Russia n Federa?on.

In accorda nce with the reviewed IFRS cons ol idated fina ncial statements for 1H 2018, Magnit ha d revenues of RUB 595 bi l l ion a nd a n EBITDA of RUB 44 bi l l ion. Magnit's local s hares are tra ded on the Moscow Excha nge (MOEX: MGNT) a nd its GDRs on the London Stock Excha nge (LSE: MGNT) a nd it has a credit ra?ng from Sta ndard & Poor's of BB.

ISIN: US55953Q2021 Category Code: MSCU TIDM: MGNT LEICode: 2534009KKPTVL99W2Y12 OAM Categories:2.2. Inside information Sequence No.: 6267 EQS News ID: 735887

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