Entain PLC — Earnings Release 2019

Feb 26, 2020

Lenta Ltd. (LNTA;LNTR) 25-Feb-2020 / 07:59 CET/CEST 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.

LENTA PUBLISHES AUDITED IFRS FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

St. Petersburg, Russia; 25 February 2020 - Lenta PLC ("Lenta" or the "Company"), one of the largest retail chains in Russia, today announces its audited consolidated IFRS results for the year ending 31 December 2019.

2019 Financial Highlights:

• Total sales grew 1.0% to Rub 417.5bn (2018: Rub 413.6bn), including retail sales growth of 4.0% to Rub 408.0bn (2018: Rub 392.2bn) and wholesales decline of 55.5%;
• The gross margin of 22.0% (+0.5 p.p. vs. 2018) increased on the back of a slightly higher retail margin and a posi5ve impact from a declining share of lowmargin wholesale business in total sales;
• SG&A increased to 18.3% of sales (1.6 p.p. higher vs. 2018) mostly due to higher personnel expenses, higher deprecia5on linked to a reassessment of the economic useful life of land improvements and an increase in rental costs linked to the indexa5on of rental fees;
• EBITDA of Rub 34.0bn, down 6.2% (2018: Rub 36.2bn) with a margin of 8.1% (2018: 8.8%).
• Non-cash expenses of approx. Rub 14.1bn, including impairment of assets of approx. Rub 11.8bn and deprecia5on from a change in useful life of land improvements of approx. Rub 2.3bn;
• Net interest expenses of Rub 9.3bn, an increase of 1.9% compared to 2018 (Rub 9.1bn) as an increase in gross debt offset a decline in the average cost of debt;
• Net Loss [1] of Rub 2.1bn due to non-cash expenses, with a nega5ve Net Profit margin of 0.5% compared to Net Profit of Rub 11.7bn in 2018 with Net Profit margin of 2.9%;
• Net cash generated from opera5ng ac5vi5es, before net interest and income taxes paid, of Rub 42.8bn compared to Rub 32.4bn in 2018 with an increase of 32.1% due to movements in working capital;
• Capital expenditures of Rub 14.1bn, a decrease of 36.1% compared to 2018 (Rub 22.1bn) mainly due to the slower rate of expansion compared to the prior year, 5ght control over expenses and changes in the phasing of payments for some planned non-expansion projects;
• The Company generated a posi5ve free cash flow of Rub 17.0bn in 2019;
• Net Debt of Rub 77.1bn as of 31 December 2019 vs. Rub 93.3bn as at the end of 2018 and Rub 99.3 as at 30 June 2019;
• Net Debt/EBITDA of 2.3x compared to 2.6x as at 31 December 2018 and 2.7x as at 30 June 2019.

2019 Opera-onal Highlights:

• Eight new hypermarkets and three supermarkets were opened in 12M 2019, while three hypermarkets and seven supermarkets were closed during the same period;
• Total number of stores was 380 as at 31 December 2019, comprising 249 hypermarkets and 131 supermarkets with a selling space of 1,489,497 sq.m (+1.5% vs. 31 December 2018);
• Lenta has changed its approach to recognizing wholesale and retail sales and revised sales figures from these two channels for 4Q/FY 2018 and 4Q/FY 2019.The revision did not affect total sales growth of the Company.
• Like-for-like ("LFL") [2] retail sales growth of 0.1% excluding VAT.This is the equivalent of LFL retail sales growth of 0.9% including VAT, due to the increase in VAT from 1 January 2019;
• LFLaverage 5cket growth of 0.1% and flat LFL retail traffic in 2019;
• The number of ac5ve loyalty cardholders [3] increased by 10.1% y-o-y to a total of 15.8m as of 31 December 2019;
• Lenta opened a new distribu5on center in Moscow with total space of 70,990 sq.m and extended its warehouse in Novosibirsk, bringing its total space to 71,837 sq.m. Both facili5es contain new features, which will op5mize the Company's procurement and logis5cs in addi5on to support centraliza5on and further development of Lenta's "hero categories".

Events a0er the reported period:

O n the 21st of February Lenta received a cer5ficate of temporary registra5on in Cyprus following its applica5on to the Department of Registrar of Companies and Official Receiver. As a result of the Redomicilia5on becoming effec5ve, the Company is now named Lenta PLC, has adopted a new memorandum and ar5cles of associa5on, and entered into a new deposit agreement with Deutsche Bank Trust Company Americas. All the relevant announcements can be viewed on the Company's website at www.lentainvestor.com

Lenta's Chief Execu-ve Officer, Herman Tinga said:

"2019 presented a challenging economic and operang environment, but we took measures to increase our resilience to adapt to changing market condions. The year was also a turning point for us at Lenta, both in terms of changes in our shareholder structure and an evoluon of our strategy. We connued to slow our previously rapid expansion with a clear focus on store performance and returns. As a result, our overall selling space grew by just 1.5%, and we also closed a few unprofitable hypermarkets. This, along with the subdued macroeconomic environment, aggressive compeon, higher promo-acvity, and some misses in our non-food performance hit our EBITDA margin in 2019, which declined to 8.1% from 8.8% in the previous year.

In the current environment, our hypermarkets faced the greatest challenges. This was especially visible in the third and the fourth quarter with declining LFL sales - a result of fewer visits by consumers along with a lower number of items purchased per basket. Nonetheless, we retained our strong posion in the market and as evidence we see a further inflow of new customers who cho se Lenta for grocery shopping. Our priority for this year is to offer customers a be5er shopping experience, improved assortment and enhanced customer communicaon to achieve posive trends in the performance of our core business.

Finally, I am sasfied with the work of our supermarkets over the past year. This format had been a significant challenge for us in 2018 . However, we appointed a dedicated team and implemented a number of iniaves to be5er o u r customer value proposion. As a result we saw material improvements i n EBITDA which remained posive throughout 2019. I am confident in the prospects of this format, although it sll represents a relavely small part of our business."

Lenta's Chief Financial Officer, Rud Pedersen commented:

"In 2019 we worked on iniaves to achieve operaonal efficiency and improve our cash flow. Our efforts started to pay off as we saw some improvements in the dynamics of our SG&A in the second half of the year due to opmizing the headcount, our markeng costs and other operang expenses. Our team also achieved good results in managing working capital, which, along with ght control over capital expenditures, resulted in a strong free cash flow of around Rub 17bn. Considering the new stage of the Company's development and our own efforts, we maintain our target to remain free -cash-flow posive and deliver value to our shareholders.

Improving our cash flow and performance across all formats remains our key priority for the current year, albeit we do not exclude potenal opportunies to further strengthen our posion in the market. This can include expansion in exisng and new formats and furtherexploraon of the online market."

Opera-ng performance

		Quarterly	Year to Date
	As at 31 December 4Q 2019	As at 31 December 4Q 2018		Net change Change (%)	As at 31 December FY 2019	As at 31 December FY 2018	Net change	Change (%)
Total sales(Rub, million)	117,893	119,586	(1 693)	(1.4%)	417,500	413,562	3,938	1.0%
Retail sales (Rub, million)	115,285	115,449	(164)	(0.1%)	407,986	392,199	15,787	4.0%
Hypermarkets	105,524	106,390	(866)	(0.8%)	373,012	364,758	8,253	2.3%
Supermarkets	9,761	9,059	702	7.7%	34,974	27,441	7,534	27.5%
Wholesales (Rub, million)	2,608	4,136	(1,528)	(37.0%)	9,514	21,363	(11,850)	(55.5%)

Lenta updated opera5onal figures provided in January for FY 2018 and FY 2019 with the effect on the previous quarterly results.These changes reflect the elimina5on of differences between opera5ng and financial accoun5ng.

YoY growth		1H 2019 2H 2019 2019
Total sales	3.1%	-0.9%	1.0%
Retail sales	7.2%	1.2%	4.0%
LFL retail sales	2.9%	-2.2%	0.1%
LFL retail traffic	2.2%	-1.9%	0.0%
LFL retail cket	0.7%	-0.3%	0.1%

Lenta's total sales in 2019 increased 1.0% compared to 2018 on the back of an increase in retail sales by 4.0% and a decline in wholesales by 55.5%. This included retai l sales growth from new stores that opened in 2019, new stores that opened in 2018 that are not yet part of the LFL panel and a like-for-like retai l sales increase of 0.1%. Lenta recorded a 1.5% increase in net selling space as of 31 December 2019 compared to 31 December 2018.

AOer the robust performance in the first half, sales came under pressure in the second half of the year due to declining infla5on, higher promo5onal ac5vity and a decline in LFL sales, which was especially pronounced in the fourth quarter.Total LFL retail sales increased 0.1% during the reported year driven by a n increase in LFL 5cket by 0.1%, while LFL traffic was flat versus 2018.

In 2019 the Company recorded a significant decline in LFL non-food sales by 7.4% (excl. VAT).The results were weak amid a high base of 2018, where LFL non-food sales were posi5ve throughout the year due to revised assortment and successful promo-campaigns.The demand for the similar assortment fell significantly last year mainly due to a deteriorated macroeconomic environment.The company will keep working on its offering in this category to meet consumer demand and deliver posi5ve trends in non-food sales performance.

At the same 5me, our LFL food sales grew 1.2% (excl. VAT) as a result of posi5ve changes in the assortment, procurement and marke5ng communica5on during the year. In 2019 the Company launched new ini5a5ves and focused on the development of "hero categories" - the part of food products that is intended to aPract customers to the stores. As a result of the efforts, "hero categories" delivered LFL sales growth of 3.5% (excl. VAT).

The Company maintained a focus on digital marke5ng ac5vi5es as a mean to reach customers. Lenta's mobi le App has been installed by 4.8 million customers since its launch in the fourth quarter of 2018. Direct communica5on with consumers via the app with personalized offers delivered promising upliOs in sales. The Company will con5nue improving its App with a series of upgrades steadily increasing func5onality. Lenta's goal is to switch to low-cost digital customer communica5on leveraging insights from individual customer loyalty-card data to deliver a bePer customer experience leading to increased loyalty, higher sales and lower costs.

Store Network Development, Supply Chain and Performance Review

Lenta opened eight hypermarkets and three supermarkets during 2019, while three hypermarkets and seven supermarkets were closed, taking the total number of hypermarkets to 249 and supermarkets to 131. The Company did not enter any new ci5es during the period and remained present in 88 ci5es [4] across the country. Total selling space as at 31 December 2019 increased to 1,489,497 sq.m., up 1.5% year-on-year.

In 2019 the Company made a decision to run a boPom-up store performance review to iden5fy stores which have low poten5al to reach expected returns. As a result of this review the Company closed seven supermarkets and three hypermarkets during the year. An addi5onal three hypermarkets may be closed, subject to rent nego5a5ons.The Company will con5nue opera5ng these stores if there is a posi5ve outcome of lease nego5a5ons.

In the second half of the year the Company added 21 stores to the performance-review base, which resulted in addi5onal impairment charges of around Rub 2.8bn. Lenta is not considering closing any of these stores.

The Company con5nued inves5ng in the op5miza5on of its logis5cs. In 2019, Lenta opened a new distribu5on center in Moscow with a total space of around 70,990 sq.m. and extended the total space of its exis5ng warehouse in Novosibirsk from 39,137to 71,837 sq.m.The larger space of the distribu5on center mainly reflects the Company's decision to upgrade its supply-chain standards by adding different temperature zones for fresh and frozen food categories, as well as separate units for hero categories to support their centraliza5on and further development.

FY2019 Financial Performance

	IAS 17
RUB (mi l l ions)			1H 2018 1H 2019 2H 2018 2H 2019		2018	2019	% Change 2019 - 2018
Total sales	193,220	199,211	220,342	218,289	413,562	417,500	1.0%
Gross profit	42,319	44,855	46,475	46,803	88,794	91,659	3.2%
Gross margin	21.9%	22.5%	21.1%	21.4%	21.5%	22.0%	0.5p.p
SG&A, % of sales	17.1%	19.1%	16.4%	17.6%	16.7%	18.3%	1.6p.p
[5] Adjusted SG&A , % of sales	12.5%	13.9%	12.2%	12.8%	12.3%	13.3%	1.0p.p
[6] EBITDAR	20,030	19,235	22,228	21,067	42,258	40,302	(4.6%)
EBITDAR margin	10.4%	9.7%	10.1%	9.7%	10.2%	9.7%	(0.5p.p)
Rental expenses, % of sales	1.5%	1.6%	1.4%	1.5%	1.5%	1.5%	-
EBITDA	17,112	16,144	19,082	17,816	36,194	33,959	(6.2%)
EBITDA margin	8.9%	8.1%	8.7%	8.2%	8.8%	8.1%	(0.7p.p)
Opera-ng profit before impairment	11,226	8,756	12,990	10,495	24,217	19,251	(20.5%)
Impairment	(200)	(9,005)	68	(2,845)	(132)	(11,850)	89.7x
Opera-ng profit/(loss)	11,027	(250)	13,058	7,651	24,084	7,401	(69.3%)
Profit before income tax	6,354	(4,829)	8,464	3,089	14,817	(1,740)	(111.7%)
Net Profit	5,161	(4,453)	6,634	2,349	11,794	(2,104)	(117.8%)

Gross profit margin improved to 22.0% from 21.5% in 2018. The Company mainly benefited from a significant decline in a share of a low-margin wholesales business in the total sales throughout the year.An addi5onal posi5ve effect came from a higher retail margin as an increase in promo share as % of sales by 4.p.p. y-o-y was fully compensated by a combined effect of higher promo margin and bePer coverage of promo ac5vi5es by suppliers.

The expansion of the Company's own produc5on and increased volumes led to a rise in related costs by 43 bps.The share of shrinkage increased by 13 bps as a result of ongoing changes in procurement, including increased direct import and direct contracts with suppliers. At the same 5me, Lenta recorded a declining shrinkage in its fresh-food category as a result of the Company's focused efforts.

Supply-chain cost as % of sales rose by 17 bps to 1.3% in 2019 vs 1.2% in 2018. The increas e was mainly driven by higher fuel prices and higher personnel expenses following an expansion of own truck fleet and the launch of new distribu5on centers. Nonetheless, higher transport costs were largely offset b y an increase in the share of deliveries by own truck fleet, the increase in supply-chain income versus the previous year and ongoing improvements in transporta5on efficiency.The Company's average centraliza5on ra5o increased to 60.5% from 56.9% in 2018.

Personnel costs as % of sales grew by 56 bps y-o-y due to one-off expenses related to management compensa5on, including an amount of Rub 116.5m related to a change the shareholder structure, and further stores expansion. Professional fees were higher as % of sales by 12 bps mainly due to rapid growth of the share of customer payments by debit and credit cards, in addi5on to one-off expense of around Rub 332m related to MTO [7] and the re-domicilia5on process. A countrywide increase in tariffs resulted in higher u5li5es, and cleaning and communal costs which increased by 27bps.

As a result, adjusted SG&A as % of sales increased by 1.0 p.p to 13.3% in 2019 compared to 2018. Rental expenses increased marginally by 5 bps to 1.5% of sales as a result of the indexa5on of rental fees in 2019 linked to the CPI.

Following the factors men5oned above,EBITDA in 2019 reached Rub 34.0bn and the EBITDA margin stood at 8.1%.

Deprecia5on as % of sales increased by 63 bps y-o-y, which was mainly due to the Company reviewing the economic useful life of land improvements from 30 years to 7 years (as prac5ce has proven that the factual useful life of land improvements does not exceed 7 years). Consequently, the Company recognized a n addi5onal non-cash expense of around Rub 2.3bn in 2019.

Total SG&A as % of sales increased to 18.3% in the reported period, up from 16.7% in 2018.

In the first half of the year, the Company's management decided to reassess its impairment of assets. Lenta performed an impairment test of assets at the lowest level of aggrega5on of assets that is able to generate independent cash Inflows, which is generally at the individual store level. In 2019 an impairment charge was made on 100 objects (55 hypermarkets and 40 supermarkets), including closed stores, stores that may be closed, and several projects i n progress; and also cover land, land improvements, buildings and equipment.The Company recognised one-off non-cash impairment loss of approximately Rub 11.8bn for 2019.

Net interest expenses increased 1.9% to Rub 9.3bn as the increase in gross debt outpaced the reduc5on of the cost of debt. Overall, the weighted-average effec5ve interest cost decreased 4 0 bps from 8.6% for 2018 to 8.2% for 2019, declining to 7.8% in the fourth quarter of the year.The Company achieved it through the combined effects of improvements in the terms and condi5ons of major long-term loan facili5es, debt repayments and refinancing.

In 2019 Lenta recorded a tax benefit as a result of losses before tax, which was offset by addi5onal one-off income tax expenses. As a result the Company recognized a tax expense in the amount of Rub 363m.

In the reported period the Company recognized a Net Loss of Rub 2.1bn compared to a Net Profit of Rub 11.8bn in 2018.This was mainly due to the nega5ve impact from the above men5oned non-cash items in the total amount of Rub 14.1bn.

			IFRS 16
RUB (mi l l ions)			IFRS 16 impact 1H 2019 IFRS 16 impact		2H 2019 IFRS 16 impact	2019
Total sales	-	199,211	-	218,289	-	417,500
Gross profit	187	45,043	171	46,975	358	92,017
Gross margin	0.1p.p	22.6%	0.1p.p	21.5%	-	22.0%
SG&A, % of sales	(0.3p.p)	18.8%	(0.4p.p)	17.2%	(0.3p.p)	18.0%
[8] Adjusted SG&A , % of sales	-	13.9%	-	12.8%	-	13.3%
[9] EBITDAR	187	19,422	176	21,243	363	40,665
EBITDAR margin	-	9.7%	-	9.7%	-	9.7%
Rental expenses, % of sales	(1.3p.p)	0.3%	(1.2p.p)	0.3%	(1.2p.p)	0.3%
EBITDA	2,680	18,824	2,866	20,682	5,547	39,506
EBITDA margin	1.3p.p	9.4%	1.3p.p	9.5%	1.4p.p	9.5%
Opera-ng profit before impairment	833	9,589	982	11,477	1,815	21,066
Impairment	-	(9,005)	-	(2,845)	-	(11,850)
Opera-ng profit/(loss)	833	583	982	8,633	1,815	9,216
Profit before income tax	(470)	(5,299)	(393)	2,696	(863)	(2,603)
Net Profit	(376)	(4,829)	(314)	2,035	(690)	(2,794)
Net profit margin	(0.2p.p)	(2.4%)	(0.2p.p)	0.9%	(0.2p.p)	(0.7%)

Cash Flow and Balance Sheet

		IAS 17	IFRS 16
RUB (mi l l ions)	FY 2018		FY 2019 Change, % 2019 -2018 IFRS 16 impact		FY 2019
Cash flow from opera-ng ac-vi-es	32,416	42,835	32.1%	5,599	48,434
Movements in working capital	(4,400)	7,422	2.7x	57	7,479
Net interest and income taxes paid	(10,789)	(11,767)	9.1%	(2,795)	(14,562)
Net cash flow from opera-ng ac-vi-es	21,627	31,068	43.7%	2,804	33,872
Net cash flow from inves-ng ac-vi-es	(22,144)	(14,008)	(36.7%)	44	(13,964)
Net cash flow from financing ac-vi-es	20,020	22,540	12.6%	(2,848)	19,692
Net increase/(decrease) in cash and cash equivalents	19,503	39,600	2.0x	-	39,600

Net cash generated from opera5ng ac5vi5es before net interest and income taxes paid increased by 32.1% and reached Rub 42.8bn as opposed to Rub 32.4bn in 2018. The Company improved its inventory levels, which resulted in bePer working capital in the reported year. Another posi5ve impact came from higher trade

payables compared to 2018 due to bePer supplier condi5ons.

Capital expenditures in 2019 were 36.1% lower than in 2018 and amounted to Rub 14.1bn. The reduc5on mainly reflected the effect of slower organic expansion, 5ght control over expenses and changes in phasing of payments for some planned non-expansion projects. A t 31 December 2019, the Group ha d contractual capital expenditure commitments in respect to property, plant and equipment, and intangible assets totalling Rub 6.2bn net of VAT (30 December 2018: Rub 11.5bn net of VAT).

			As a result, the Company generated Rub 17.0bn of free cash flow during the reported period.
--	--	--	---------------------------------------------------------------------------------------------

RUB (mi l l ions)			31 December 2019 30 June 2019 31 December 2018
Gross debt	150,541	170,260	127,080
Long-term debt	82,110	87,064	106,341
Short-term debt	68,431	83,197	20,739
Cash and cash equivalents	73,405	70,969	33,805
Net Debt	77,136	99,291	93,275
Net Debt/EBITDA	2.3x	2.7x	2.6x

As of 31 December 2019, the Company had a gross debt of Rub 150.5bn and a cash balance of Rub 73.4bn, giving Net Debt of Rub 77.1bn. In addi5on, Lenta had Rub 89.1bn of undrawn short- and long-term facili5es.

New long-term loan facili5es with lower fixed rates were placed early in the first quarter of 2019 and shortly aOer the closure of the second quarter. These facili5es enabled the Company to secure a lower cost of debt with sufficient cash on hand to cover all of Lenta's refinancing needs in 2019 and part of 2020. All of Lenta's debt is denominated in Russian rubles and unsecured. A total of 69.6% of debt is long-term, of which 21.2% is due within one year.

As of 31 December 2019, Net Debt to EBITDA stood at 2.3x, Lease Adjusted Net Debt to EBITDAR [10] at 3.2x and EBITDA to Net Interest at 3.7x. As of 31 December 2018, Net Debt to EBITDA stood at 2.6x, Lease Adjusted Net Debt to EBITDAR at 3.4x and EBITDA to Net Interest was at 3.9x.

Impact of IFRS 16

In 2019 Lenta applied IFRS 16, which changes the accoun5ng principles for opera5ng leases, using the modified retrospec5ve approach under which the prior year figures in the financial statement were not restated.

Under IFRS 16, Lenta's gross profit increased by Rub 359m due to a reduced supply-chain cost by an amount related to an opera5ng lease of distribu5on centers. Gross profit margin stood flat at 22.0% vs. compared to figure under IAS 17.

SG&A expenses decreased by Rub 1.5bn mainly due to the exclusion of lease expenses of Rub 5.2b n under the new standard. At the same 5me, the Company recognized addi5onal deprecia5on of around Rub 3.7bn. Opera5ng profit before impairment amounted to Rub 21.1bn under IFRS 16 vs. Rub 19.3bn under IAS 17. Adjusted for impairment, the Company recorded opera5ng profit of Rub 9.2bn under the new standard vs. an opera5ng profit of Rub 7.4bn under IAS 17.

Interest expenses under IFRS 16 increased by Rub 2.8bn, related to interest expenses on lease liabili5es, while income-tax expense increased by Rub 173m due to addi5onal deprecia5on expenses. As a result, Net Loss under the new standard reached Rub 2.8bn vs. Rub 2.1bn under IAS 17.

The net changes in cash posi5on has not changed under IFRS 16 vs. IAS 17, while the relevant reclassifica5ons were made within the cash-flow statement.

Guidance

Lenta expects its selling space to increase by ~3% in 2020. This figure reflects the Company's decision to focus on improvements in store performance and opera5onal efficiency. Nonetheless, Lenta will con5nue looking for aPrac5ve growth opportuni5es and expansion in exis5ng and new formats, as well as further explora5on of on-line market.

In 2020 Lenta will con5nue working to op5mize SG&A expenses.The Company expects that the implementa5on of priori5es set for this year will result in the EBITDA margin in 2020 above that of 2019.

Lenta plans to invest ~4% of its sales in capital expenditures in 2020. The Company will have overall lower investments in organic expansion and supply-chain infrastructure when compared to 2019. Meanwhile Lenta will increase spending on IT, digital marke5ng and other projects aimed to upgrade and enhance the customer's experience in its stores as well as drive opera5onal efficiency.

The current plans for expansion and capital expenditures, as well as further efforts to op5mize opera5ng cash flow, will result in posi5ve free cash-flow genera5on by the Company in 2020.

The full set of accounts for Lenta PLC. for financial years of 2011-2019 are available at www.lentainvestor.com

About Lenta

Lenta is the largest hypermarket chain in Russia and the country's fourth-largest retail chain. The Company was founded in 1993 in St. Petersburg. Lenta operates 249 hypermarkets in 88 cies across Russia and 131 supermarkets in Moscow, St. Petersburg, and the Siberia, Ural and Central regions, with a total of approximately 1,489,497 sq.m. of selling space. The average Lenta hypermarket has selling space of approximately 5,500 sq.m. The average Lenta supermarket has selling space of approximately 840 sq.m. The Company operates 12 distribuon centers.

The Company's price-led hypermarket formats are differenated in terms of their promoon and pricing strategies , as well as their local product assortment. The Company employed approximately 48,391 people as of 3 1 December 2019 [11] .

The Company's management team combines a mix of local knowledge and internaonal experse coupled with extensive operaonal experience in Russia. Lenta's largest shareholders include Severgroup, which is commi5ed to maintaining high standards of corporate governance.

Lenta is listed on the London Stock Exchange and on the Moscow Exchange and trades under the cker: 'LNTA'

A brief video summary on Lenta's business and its Big Data iniave can be seen here.

For further informa-on, please visit www.lentainvestor.com, or contact:

Lenta Mariya Fi l ippova PR&GR Director	Russia n Media: NW Advisors Victoria Afonina
Tel: +7 812 380-61-31 ext.: 1892 E-mai l: maria.fil ippova@lenta.com	Тel:+7 495 795 06 23 E-mai l: lenta@nwa dvis ors.com

Forward-looking statements:

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be idenfied by the fact that they do not only relate to historical or current events. Forward-looking statements oMen use words such as "ancipate", "target", "expect", "esmate", "intend", "expected", "plan", "goal", "believe", and other words of similar meaning.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond Lenta's control. As a result, actual future results may differ materially from the plans, goals and expectaons set out in these forward-looking statements.

Any forward-looking statements made by or on behalf of Lenta speak only as at the date of this announcement. As required by any applicable laws or regulaons, Lenta undertakes no obligaon publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectaons or to reflect events or circumstances aMer the date of this document.

• [1] Net Lossequatesto "(Loss)/Profit for the period"in the a5ached IFRSFinancial Statements
• [2]Lenta'sstores areincluded in theLFL store basestarng 12 months aMer theend of themonth they are opened
• [3] Cardholders who made at least 2 purchases at Lenta during the 12 monthsto 31 December 2019 areconsidered acve

[4] According to Lenta's methodology for calculang the number ofcies of presence, since 1 May 2015 all cies located in Moscow citylimits and the Moscow region areshown as Moscow, and all cieslocated in theLeningrad region and St. Petersburg areshown asSt. Petersburg.

[5] Adjusted SG&A isSG&A beforerent paid on land,equipment and premisesleases, depreciaon

[6]EBITDAR isEBITDA beforerent paid on land,equipment and premisesleases

[8] Adjusted SG&A isSG&A beforerent paid on land,equipment and premisesleases, and depreciaon

[9]EBITDAR isEBITDA beforerent paid on land, and equipment and premisesleases

[10]Lease adjusted Net Debt calculated as Net Debt plus operang leasesmulplied bycapitalizaon rate of 8.0x in accordance with the approach of credit rang agencies.

[11] FTE(full-meequivalent). AverageFTEfor FY 2019 was 51,908 employees

ISIN: US52634T2006, US52634T1016 Category Code: ACS TIDM: LNTA;LNTR LEICode: 213800OMCE8QATH73N15 OAM Categories:1.1.Annual financial and audit reports Sequence No.: 48660 EQS News ID: 982787

End ofAnnouncementEQS News Service

^[7] In 2019 Severgroup LLC acquired 34.45% and 7.47% of Lenta's issued and outstanding vong shares from TPG and EBRD respecvely. As a result, Severgroup launched a cash offer on 30 April 2019 to acquire all of theissued shares and GDR's ofLenta (MandatoryTender Offer);