Magnit Unaudited 9M 2013 Financial Results

Press-release Krasnodar October 28, 2013 OJSC "Magnit" Announces Unaudited 9M 2013 Results Krasnodar, October 28, 2013: OJSC "Magnit", Russia's largestretailer (the "Company"; MICEX and LSE: MGNT) announces its unaudited 9M 2013results prepared in accordance with IFRS[1]. During 9M 2013 the Company added (net) 762 stores (737 conveniencestores, 22 hypermarkets and 10 "Magnit Family" stores) and increased itsselling space by 25.68% in comparison to 9M 2012 from 2,260.88 thousand sq. m.to 2,841.39 thousand sq. m. The total store base as of September 30, 2013reached 7,646 stores (6,783 convenience stores, 148 hypermarkets, 30 "MagnitFamily" stores and 685 cosmetics stores). Revenue in rubles increased by 30.58% YoY from 319,485.04 millionRUR in 9M 2012 to 417,179.66 million RUR in 9M 2013. The top line growth wasdue to an increase in selling space as well as to a 4.64% increase oflike-for-like sales (excl. VAT). Revenue growth in dollar terms amounted to28.44%: from US$ 10,273.36 million to US$ 13,194.79 million.[2] Gross margin grew from 26.07% in 9M 2012 to 27.96% in 9M 2013.Gross profit in rubles increased by 40.05% from 83,299.50 million RUR (US$2,678.58 million) to 116,660.06 million RUR (US$ 3,689.79 million). EBITDA increased by 35.62% from 32,743.51 million RUR (US$ 1,052.90million) in 9M 2012 to 44,405.68 million RUR (US$ 1,404.49 million) in 9M2013. EBITDA margin in 9M 2013 amounted to 10.64%. 9M 2013 net income increased by 41.92% and amounted to 23,829.90million RUR (US$ 753.71 million) vs. 16,791.15 million RUR (US$ 539.94million) in 9M 2012. Sergey Galitskiy, the Company's CEO, provided the followingcomments on the published results: "We have achieved record profitability results, as we previouslymentioned. I would also like to note the slowdown in the rate of inflationcompared to the previous year. Thus, we believe that the highest possiblesales growth rate for the full-year 2013 will be 28-29%". 3Q and 9М 2013 Key Operating Results: 3Q 2013 3Q 2012 Growth Rate 9М 2013 9М 2012 Growth RateNumber of opened stores, NET 230 397 n/a 762 810 n/a convenience stores 231 255 n/a 737 517 n/a hypermarkets 10 7 n/a 22 15 n/a magnit family 4 6 n/a 10 8 n/a cosmetics stores (15) 129 n/a (7) 270 n/a Total number of stores 7,646 6,119 n/a 7,646 6,119 n/a convenience stores 6,783 5,523 n/a 6,783 5,523 n/a hypermarkets 148 105 n/a 148 105 n/a magnit family 30 11 n/a 30 11 n/a cosmetics stores 685 480 n/a 685 480 n/a Selling space growth, th. sq.m. 93.30 141.41 n/a 292.14 290.77 n/a convenience stores 66.36 83.97 n/a 218.28 175.65 n/a hypermarkets 25.36 21.57 n/a 60.83 46.24 n/a magnit family 4.25 7.43 n/a 11.08 9.83 n/a cosmetics stores (2.67) 28.44 n/a 1.95 59.05 n/a Selling space, eop, th. sq. m. 2,841.39 2,260.88 25.68% 2,841.39 2,260.88 25.68% convenience stores 2,195.74 1,813.42 21.08% 2,195.74 1,813.42 21.08% hypermarkets 448.45 324.68 38.12% 448.45 324.68 38.12% magnit family 35.44 13.63 n/a 35.44 13.63 n/a cosmetics stores 161.77 109.14 n/a 161.77 109.14 n/a Number of customers, million 625.49 518.91 20.54% 1,808.12 1,483.99 21.84% convenience stores 554.95 474.63 16.92% 1,614.69 1,366.55 18.16% hypermarkets 49.68 35.97 38.11% 139.61 98.22 42.13% magnit family 7.95 2.12 n/a 20.03 4.53 n/a cosmetics stores 12.92 6.19 n/a 33.80 14.69 n/aLFL Results LFL growth 3Q 2013 - 3Q 2012[3] Convenience stores Hypermarkets Magnit Family Cosmetics stores TotalAverage ticket (excl. VAT), RUR 6.31% 1.12% 3.97% (1.53)% 5.84%Traffic (1.83)% 2.33% 2.79% 15.98% (1.44)%Revenue, RUR 4.36% 3.48% 6.87% 14.20% 4.32%LFL growth 9М 2013 - 9М 2012[4] Convenience stores Hypermarkets Magnit Family Cosmetics stores TotalAverage ticket (excl. VAT), RUR 5.82% 2.40% 5.27% 2.06% 5.73%Traffic (1.33)% 3.25% 9.02% 6.35% (1.03)%Revenue, RUR 4.41% 5.72% 14.76% 8.54% 4.64%Please note that food inflation in 9M 2013 was 4.5% compared to 5.4% in 9M2012, and in 3Q 2013 it was -0.7% vs. +0.7% in 3Q 2012. 3Q and 9М 2013 Key Financial Results 3Q 2013 3Q 2012 Growth Rate 9М 2013 9М 2012 Growth RateNet sales, mn RUR 144,341.62 111,882.51 29.01% 417,179.66 319,485.04 30.58% convenience stores 111,743.27 90,287.18 23.76% 327,004.60 261,755.27 24.93% hypermarkets 26,636.85 19,336.32 37.76% 74,994.86 52,537.48 42.75% magnit family 2,779.21 717.09 n/a 6,982.67 1,514.72 n/a cosmetics stores 3,101.58 1,524.29 n/a 8,079.35 3,524.88 n/a wholesale 80.71 17.63 n/a 118.18 152.69 n/aNet sales, mn US$ 4,400.97 3,495.54 25.90% 13,194.79 10,273.36 28.44% convenience stores 3,407.05 2,820.84 20.78% 10,342,68 8,417.00 22.88% hypermarkets 812.16 604.12 34.44% 2,371.98 1,689.39 40.40% magnit family 84.74 22.40 n/a 220.85 48.71 n/a cosmetics stores 94.57 47.62 n/a 255.54 113.35 n/a wholesale 2.46 0.55 n/a 3.74 4.91 n/aGross profit, mn RUR 42,282.85 30,124.29 40.36% 116,660.06 83,299.50 40.05%Gross profit, mn US$ 1,289.20 941.17 36.98% 3,689.79 2,678.58 37.75%Gross margin, % 29.29% 26.92% n/a 27.96% 26.07% n/aEBITDAR, mn RUR 20,668.81 14,867.85 39.02% 55,194.87 40,076.39 37.72%EBITDAR, mn US$ 630.19 464.52 35.67% 1,745.73 1,288.70 35.47%EBITDAR margin, % 14.32% 13.29% n/a 13.23% 12.54% n/aEBITDA, mn RUR 16,802.61 12,196.23 37.77% 44,405.68 32,743.51 35.62%EBITDA, mn US$ 512.31 381.05 34.45% 1,404.49 1,052.90 33.39%EBITDA margin, % 11.64% 10.90% n/a 10.64% 10.25% n/aEBIT, mn RUR 13,198.79 9,320.29 41.61% 34,048.81 24,602.36 38.40%EBIT, mn US$ 402.43 291.19 38.20% 1,076.91 791.11 36.13%EBIT margin, % 9.14% 8.33% n/a 8.16% 7.70% n/aNet profit, mn RUR 9,285.68 6,377.58 45.60% 23,829.90 16,791.15 41.92%Net profit, mn US$ 283.12 199.25 42.09% 753.71 539.94 39.59%Net profit margin, % 6.43% 5.70% n/a 5.71% 5.26% 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: +7-861-277-4562Dina 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, the companyis headquartered in the southern Russian city of Krasnodar. As of September30, 2013, Magnit operated 19 distribution centers and over 7,600 stores (6,783convenience, 178 hypermarkets, and 685 cosmetics) in more than 1,760 citiesand towns throughout 7 federal regions of the Russian Federation. In accordance with its reviewed IFRS consolidated financialstatements, Magnit had 1H 2013 revenues of $8.7 billion USD and an EBITDA of$890 million USD. Magnit's local shares are traded on the Moscow StockExchange (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 by marketcapitalization, Magnit is now Europe's 2nd largest food retailer. --------------------------------- [1] Based on management accounts [2] Based on the average exchange rate for 3Q 2013 - 32.7977 RUBper 1 USD, 3Q 2012 - 32.0072 RUB per 1 USD, 9M 2013 - 31.6170 RUB per 1 USD,9M 2012 - 31.0984 RUB per 1 USD [3] Based on 4,573 convenience stores and 170 cosmetics storeswhich were opened by January 1, 2012, and 72 hypermarkets and 3 Magnit Familywhich were opened by October 1, 2011, i.e. based on the result of theconvenience stores that had been operating for not less than six months andhypermarkets that had been operating for not less than eight months and haveachieved a mature level of sales. [4] Based on 3,646 convenience stores and 19 cosmetics stores whichwere opened by July 1, 2011, and 60 hypermarkets and 1 Magnit Family whichwere opened by May 1, 2011, i.e. based on the result of the convenience storesthat had been operating for not less than six months and hypermarkets that hadbeen operating for not less than eight months and have achieved a mature levelof sales