1H 2013 Financial Results (Management Accounts)

Press-release Krasnodar July 23, 2013 OJSC "Magnit" Announces Unaudited 1H 2013 Results Krasnodar, July 23, 2013: OJSC "Magnit", Russia's largest retailer(the "Company"; MICEX and LSE: MGNT) announces its unaudited 1H 2013 resultsprepared in accordance with IFRS[1]. During 1H 2013 the Company added (net) 532 stores (506 conveniencestores, 12 hypermarkets, 6 "Magnit Family" stores and 8 cosmetics stores) andincreased its selling space by 29.66% in comparison to 1H 2012 from 2,119.53thousand sq. m. to 2,748.09 thousand sq. m. The total store base as of June30, 2013 reached 7,416 stores (6,552 convenience stores, 138 hypermarkets, 26"Magnit Family" stores and 700 cosmetics stores). Revenue in rubles increased by 31.42% YoY from 207,602.53 millionRUR in 1H 2012 to 272,838.04 million RUR in 1H 2013. The top line growth wasdue to an increase in selling space as well as to a 5.29% increase oflike-for-like sales (excl. VAT). Revenue growth in dollar terms amounted to29.82%: from US$ 6,775.76 million to US$ 8,796.43 million.[2] Gross margin grew from 25.61% in 1H 2012 to 27.26% in 1H 2013.Gross profit in rubles increased by 39.87% from 53,175.21 million RUR (US$1,735.54 million) to 74,374.73 million RUR (US$ 2,397.88 million). EBITDA increased by 34.25% from 20,547.29 million RUR (US$ 670.63million) in 1H 2012 to 27,583.96 million RUR (US$ 889.32 million) in 1H 2013.EBITDA margin in 1H 2013 amounted to 10.11%. 1H 2013 net income increased by 39.44% and amounted to 14,520.33million RUR (US$ 468.14 million) vs. 10,413.57 million RUR (US$ 339.88million) in 1H 2012. Sergey Galitskiy, the Company's CEO, provided the followingcomments on the published results: "Dear Shareholders: We continue to do quite well. I hope that ourresults did not dampen your summer mood." --------------------------------- [1] Based on management accounts [2] Based on the average exchange rate for 1H 2013 - 31.0169 RURper 1 US$, 1H 2012 - 30.6390 RUR per 1 US$ 2Q and 1H 2013 Key Operating and Financial Highlights: 2Q 2013 2Q 2012 Growth Rate 1H 2013 1H 2012 Growth RateNumber of opened stores, NET 341 256 n/a 532 413 n/a convenience stores 343 164 n/a 506 262 n/a hypermarkets 6 7 n/a 12 8 n/a magnit family 5 0 n/a 6 2 n/a cosmetics stores (13) 85 n/a 8 141 n/a Total number of stores 7,416 5,722 n/a 7,416 5,722 n/a convenience stores 6,552 5,268 n/a 6,552 5,268 n/a hypermarkets 138 98 n/a 138 98 n/a magnit family 26 5 n/a 26 5 n/a cosmetics stores 700 351 n/a 700 351 n/a Selling space growth, th. sq.m. 118.21 94.63 n/a 198.84 149.37 n/a convenience stores 99.18 56.03 n/a 151.92 91.69 n/a hypermarkets 15.62 21.02 n/a 35.47 24.67 n/a magnit family 5.38 0 n/a 6.83 2.40 n/a cosmetics stores (1.97) 17.58 n/a 4.61 30.61 n/a Selling space, eop, th. sq. m. 2,748.09 2,119.53 29.66% 2,748.09 2,119.53 29.66% convenience stores 2,129.38 1,729.52 23.12% 2,129.38 1,729.52 23.12% hypermarkets 423.09 303.12 39.58% 423.09 303.12 39.58% magnit family 31.19 6.20 n/a 31.19 6.20 n/a cosmetics stores 164.44 80.70 n/a 164.44 80.70 n/a Number of customers, million 619.62 503.03 23.18% 1,182.63 965.08 22.54% convenience stores 554.28 464.10 19.43% 1,059.74 891.92 18.82% hypermarkets 47.80 32.86 45.47% 89.93 62.25 44.46% magnit family 6.50 1.54 n/a 12.09 2.41 n/a cosmetics stores 11.03 4.54 n/a 20.88 8.50 n/a Net retail sales, million RUR 141,582.69 106,874.05 32.48% 272,800.56 207,467.47 31.49% convenience stores 111,116.10 87,809.30 26.54% 215,261.33 171,468.09 25.54% hypermarkets 25,687.12 17,520.89 46.61% 48,358.02 33,201.16 45.65% magnit family 2,267.66 496.07 n/a 4,203.45 797.63 n/a cosmetics stores 2,511.80 1,047.79 n/a 4,977.77 2,000.59 n/a Net retail sales, million US$[3] 4,478.62 3,446.00 29.97% 8,795.22 6,771.35 29.89% convenience stores 3,514.89 2,831.29 24.14% 6,940.13 5,596.40 24.01% hypermarkets 812.55 564.94 43.83% 1,559.09 1,083.62 43.88% magnit family 71.73 15.99 n/a 135.52 26.03 n/a cosmetics stores 79.45 33.78 n/a 160.49 65.30 n/a --------------------------------- [3] Based on the average exchange rate for 2Q 2013 - 31.6130 RUBper 1 USD, 2Q 2012 - 31.0139 RUB per 1 USD LFL Results LFL growth 2Q 2013 - 2Q 2012[4] Convenience stores Hypermarkets TotalAverage ticket (excluding VAT), RUR 6.16% 2.80% 6.07%Traffic (0.07)% 4.55% 0.22%Revenue, RUR 6.09% 7.48% 6.30%LFL growth 6M 2013 to 6M 2012[5] Convenience stores Hypermarkets TotalAverage ticket (excluding VAT), RUR 5.67% 3.00% 5.70%Traffic (0.67)% 3.97% (0.39)%Revenue, RUR 4.96% 7.09% 5.29% --------------------------------- [4] Based on 4,236 convenience stores which were opened by October1, 2011, and 65 hypermarkets which were opened by August 1, 2011, i.e. basedon the result of the convenience stores that had been operating for not lessthan six months and hypermarkets that had been operating for not less thaneight months and have achieved a mature level of sales [5] Based on 3,903 convenience stores which were opened by July 1,2011, and 60 hypermarkets which were opened by May 1, 2011, i.e. based on theresult of the convenience stores that had been operating for not less than sixmonths and hypermarkets that had been operating for not less than eight monthsand have achieved a mature level of sales 2Q and 1H 2013 Key Financial Results 2Q 2013 2Q 2012 Growth Rate 1H 2013 1H 2012 Growth RateNet sales, mn RUR 141,598.12 106,984.57 32.35% 272,838.04 207,602.53 31.42% convenience stores 111,116.10 87,809.30 26.54% 215,261.33 171,468.09 25.54% hypermarkets 25,687.12 17,520.89 46.61% 48,358.02 33,201.16 45.65% magnit family 2,267.66 496.07 n/a 4,203.45 797.63 n/a cosmetics stores 2,511.80 1,047.79 n/a 4,977.77 2,000.59 n/a wholesale 15.43 110.52 n/a 37.47 135.05 n/aNet sales, mn US$ 4,479.11 3,449.57 29.85% 8,796.43 6,775.76 29.82% convenience stores 3,514.89 2,831.29 24.14% 6,940,13 5,596.40 24.01% hypermarkets 812.55 564.94 43.83% 1,559.09 1,083.62 43.88% magnit family 71.73 15.99 n/a 135.52 26.03 n/a cosmetics stores 79.45 33.78 n/a 160.49 65.30 n/a wholesale 0.49 3.56 n/a 1.21 4.41 n/aGross profit, mn RUR 39,304.38 27,737.00 41.70% 74,374.73 53,175.21 39.87%Gross profit, mn US$ 1,243.30 894.34 39.02% 2,397.88 1,735.54 38.16%Gross margin, % 27.76% 25.93% n/a 27.26% 25.61% n/aEBITDAR, mn RUR 18,965.34 13,271.20 42.91% 34,506.96 25,208.54 36.89%EBITDAR, mn US$ 599.92 427.91 40.20% 1,112.52 822.76 35.22%EBITDAR margin, % 13.39% 12.40% n/a 12.65% 12.14% n/aEBITDA, mn RUR 15,369.87 10,836.81 41.83% 27,583.96 20,547.29 34.25%EBITDA, mn US$ 486.19 349.42 39.14% 889.32 670.63 32.61%EBITDA margin, % 10.85% 10.13% n/a 10.11% 9.90% n/aEBIT, mn RUR 11,879.35 8,148.05 45.79% 20,849.19 15,282.07 36.43%EBIT, mn US$ 375.77 262.72 43.03% 672.19 498.78 34.77%EBIT margin, % 8.39% 7.62% n/a 7.64% 7.36% n/aNet profit, mn RUR 8,364.17 5,641.13 48.27% 14,520.33 10,413.57 39.44%Net profit, mn US$ 264.58 181.89 45.46% 468.14 339.88 37.74%Net profit margin, % 5.91% 5.27% n/a 5.32% 5.02% n/a Note: net revenue in US$ terms is calculated using the dailyexchange rate. For further information, please contact: Timothy Post Director, Investor Relations Email: [email protected] Office: +7-861-277-4554 x7600 Mobile: +7-961-511-7678 Direct Line: +7-861-277-4562 Dina Svishcheva Deputy Director, Investor Relations Email: [email protected] Office: +7-861-277-45-54 x5101 Mobile: +7-961-511-0202 Direct Line: +7-861-277-4562 Company description: Magnit is Russia's largest retailer. Founded in 1994 by SergeyGalitskiy, the company is headquartered in the southern Russian city ofKrasnodar. As of June 30, 2013, Magnit operates 18 distribution centers andover 7,000 stores (6,552 convenience, 164 hypermarkets, and 700 cosmetics) inmore than 1,700 cities and towns throughout 7 federal regions of the RussianFederation. In accordance with the unaudited IFRS management accounts for 1H2013, Magnit had revenues of $8,796 million USD and an EBITDA of $889 millionUSD. Magnit's local shares are traded on the Moscow Stock Exchange (MICEX:MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has acredit rating from Standard & Poor's of BB. Measured by market capitalization,Magnit is now Europe's 2nd largest retailer.