1H 2010 IFRS Results

Press-release

Krasnodar

August 24, 2010

OJSC "Magnit" announces unaudited 1H 2010 operating and financial results

Krasnodar, August 24, 2010: OJSC "Magnit" (the "Company"; RTS, MICEX and LSE: MGNT) is pleased to release its 1H 2010 financial results prepared in accordance with IFRS.

During 1H 2010 the Company added 264 stores (260 convenience stores and 4 hypermarkets) and increased its selling space by 27.72% in comparison to 1H 2009 from 905.22 thousand sq. m. to 1,156.12 thousand sq. m. The total store base as of June 30, 2010 reached 3,492 stores (3,464 convenience stores and 28 hypermarkets).

Revenue in rubles increased by 31.84% YoY from 78,629.27 million RUR in 1H 2009 to 103,664.61 million RUR in 1H 2010. The top line growth was due to an increase in selling space as well as to a 4.93% increase of like-for-like sales (excl. VAT). Revenue growth in dollar terms amounted to 45.00%: from US$ 2,377.81 million to US$ 3,447.72 million.[1]

Gross margin reduced from 23.30% in 1H 2009 to 21.48% in 1H 2010 due to continued large-scale price investments. Gross profit in rubles increased by 21.54% from 18,318.79 million RUR (US$ 553.97 million) to 22,265.37 million RUR (US$ 740.51 million).

EBITDA increased by 2.09% from 7,414.81 million RUR (US$ 224.23 million) in 1H 2009 to 7,569.95 million RUR (US$ 251.76 million) in 1H 2010. EBITDA margin in 1H 2010 amounted to 7.30% which is 2.13% below the figure of 1H 2009 (9.43%). Net debt/EBITDA ratio (in ruble terms) for 1H 2010 amounted to 0.54.

1H 2010 net income increased by 1.17% and amounted to 3,945.25 million RUR (US$ 131.21 million) vs. 3,899.47 million RUR (US$ 117.92 million) in 1H 2009.

Sergey Galitsky, the Company's CEO, provided the following comments on the published 1H 2010 results:

"Results are in line with our expectations and reflect continued aggressive pricing policy in the second quarter of 2010. Positive LFL traffic and average ticket trends instill optimism and confidence in the targeted sales growth of 35% in ruble terms at the year end. At that expectations of EBITDA margin for 2010 lay within the range of 8.0 - 8.5%. Plans of 30 hypermarket openings and upgrade of guidance for new convenience stores to 650 allows us to speak of this year CAPEX to stand at 1.1 - 1.3 billion US dollars (excl. VAT)".

1H 2010 Key Operating Results

1H 2010 to 1H 2009 LFL results[2]

1H 2010 Key Financial Results

Note: net revenue in US$ terms is calculated using the daily exchange rate.

Please follow the link below to view 1H 2010 financial report in full:

http://www.magnit-info.ru/lib_files/1366_c48aa.pdf 

For further information, please contact:

Company description:

Based in Krasnodar, in the Southern region of Russia, Open Joint Stock Company "Magnit" is the holding company for a group of entities that operate in the retail trade under the "Magnit" brand. The chain of "Magnit" stores is one of the leading food retail networks in Russia. As of June 30, 2010 the chain consisted of 3,464 convenience stores and 28 hypermarkets in 1,109 locations in the Russian Federation.

Approximately two-thirds of the Company's stores are located in cities with a population of less than 500,000 inhabitants. Most of its stores are located in the Southern, North-Caucasian, Central and Volga regions. The Company also operates stores in the North-Western and Urals regions.

As of June 30, 2010 the Company operated an in-house logistics system consisting of 10 distribution centers, employing automated stock replenishment systems and a fleet of 1,723 vehicles.

In accordance with the unaudited IFRS consolidated financial statements for 1H 2010, the Company recorded consolidated revenue of approximately US$3,448 million and consolidated EBITDA of around US$252 million