2. Magnit at a Glance
Magnit at a Glance
As of 30.09.2014
Source: Company, Bloomberg, IFRS accounts for 1H2014 2
2 019Cities & Towns
№1
Russian Food Retail
Chain by Revenue
and Number of Stores
9 020Total Number
of Stores
3 327thous.sq.m.
Selling Space
25DCs
5 674Trucks
Multi-format Business Model
Comprising Convenience, Hypermarkets,
“Magnit Family” & Drogerie Stores
№2
Retailer in Europe
in Market
Capitalization $27bnMarket
Capitalization
>6%Share in Russian
Grocery Sector
Shareholder Structureas of 1H2014
54,6%
Free-float
38,7%
Sergey Galitskiy, CEO
3,3%
Other
3,4%
Lavreno Ltd. (Cyprus)0,1%
3. Magnit at a Glance
Key Metrics
3
*As of FY2013
Source: IFRS accounts for 1H2014, Company’s Estimates
Guidance for 2014
New Stores
349,0bn ($10,0bn)
Revenue
1H2014
5,61%
Net
Margin
10,47%
EBITDA
Margin
0,9
Net debt/
LTM EBITDA
1,31%
Dividend
Yield*
36%
Payout
Ratio*
1 100
Convenience
Stores
80
Hyper-
markets
300-350
Drogery
Stores
31-32%
RUR Sales
Growth
11,2-11,4%
EBITDA
Margin
$1,7-1,8bn
Capex
P=
4. Magnit at a Glance
Strategy
4
Growth
Value Efficiency
Multi-format Organic
Store Growth
Geographic
Scope
Density of Store
Coverage
Low
Prices
High
Quality
Assortment Cost
Management
Vertical
Integration
Centralization
6. Magnit at a Glance
Magnit vs Peers
6Source: As of 2013; Companies, Infoline, Bloomberg, Magnit’s Estimates
Number
of Stores
Selling Space
thous. sq.m.
Revenue
RUR bn
Market Cap
US$ bn
Market Share
%
8 093
4 544
1 799
94
87
79
72
Magnit
XS
Dixy
Okey
Lenta
Auchan
Metro
3 011
2 223
617
489
508
740
564
579,7
532,7
180,5
139,5
144,3
287,4
183,2
26,5
4,6
1,6
3,2
n/a
n/a
n/a
6
5
2
1
1
2
2
7. 886Drogerie Stores
7 891Convenience Stores
175Hypermarkets
68Magnit Family
25Distribution Centers
1 5 7 6 2 2 2
55 227 200 259 78 54
13
2 16 17 21 3 7 2
6 52 28 56 12 19
2
326
1 482 2 022 2 506 696 689
170
Operational Overview
Geographical Coverage
7Source: Company, as of September 30, 2014
2 019 Cities
& Towns
7 Federal
Districts
North
Caucasus
Southern Volga North
West
Urals SiberiaCentral
8. Operational Overview
Logistics System
8Source: Company, as of September 30, 2014
9 020Total Number
of Stores
799thous.sq.m.
Warehousing Space
25DCs
5 674Trucks
7
6
5
2
1
2
2
Central
Volga
Southern
Urals
North Caucasus
North West
Siberia
2761
2583
1855
823
334
476
188
273,346
147,883
153,007
92,782
34,503
71,860
26,064
Centralization Ratio
%
Magnit
Outsourced
90
10
92
8
Convenience Stores
9M2014 Future Targets
Magnit
Outsourced
71
29
80
20
Hypermarkets
9. Operational Overview
Suppliers
9Source: Company, as of December 31, 2013
5000
Domestic
Suppliers
4000Local Suppliers
1000Federal Suppliers
Assortment
55-60% 40-45%
200 Big International
Corporations
10. Operational Overview
Direct Import
10
Source: Company,
Direct Import – as of FY2013; Private Label - as of September 30, 2014
11%Share
of Revenue
624
PL
SKUs
M 86%Food
Items
Private Label
10%International
Direct Import
800
Open
Contracts
11. Operational Overview
Employees
11
Source: Company, as of September 30, 2014
⃰ as of 1H2014
241 848
Employees
0
Foreign
Workers
27 376
Average
Monthly
Salary ⃰
10%Wage Rate
Increase ⃰
P=
170 905In-store
Personnel
43 996
People Engaged
in Distribution
17 913People in Regional
Branches
9 043People Employed
by Head Office
1000 employees
Average Weighted Number of Employees – 201 910
12. Operational Overview
Competitive Attributes
12
35%of Family
Budget
Spent on Food
Location Quality
(of Products)
Assortment Reliability AtmospherePrices
5 000
People —
Minimum
Population
(1 500–1 600 Families)
4 000-9 500
Monthly
Family Food
Budget
P=
Overlap “Good”
Cannibalization
Magnit #1
Magnit #2
500m
Competitor #1 Competitor #2
Competitor #3
500m
Sales Catchment Area
Source: Company’s Estimates
14. Operational Overview
Convenience Store
14Source: Company, as of September 30, 2014
458
sq.m.
Total
319
sq.m.
Selling Space
89% Food
11% Non-food
28% Owned
72% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2014-9M2013,%
219,1P=
$6,2
214 746P=
$6 743
8,56
Average
Ticket, RUR
3,42
Traffic
12,27
Sales
2,9
3 years
If Leased
If Owned
Cost of New Store
per sq.m. of Total Space
Time to Maturity
6 months
Owned $1 100-2 800
Leased $250-500
4-6 years
16. Operational Overview
Hypermarket
16Source: Company, as of September 30, 2014
81% Food
19% Non-food
84% Owned
16% Leased
Format Description Key Operational Statistics
Size of the Store Average Ticket
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2014-9M2013,%
568,2P=
$16,1
248 649P=
$7 807
1,3
7 052
sq.m.
Total
2 983
sq.m.
Selling Space
6,78
Average
Ticket, RUR
5,80
Traffic
12,97
Sales
Opening
Payback
6-9 years
Cost of New Store
per sq.m. of Total Space
Owned $1 700-2900
Leased $700-900
8-15 months
Time to Maturity
S: up to 3 000
M: 3 000-6 000
L: over 6 000
18. Operational Overview
Magnit Family
18Source: Company, as of September 30, 2014
2 224
sq.m.
Total
1 159
sq.m.
Selling Space
86% Food
14% Non-food
35% Owned
65% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2014 -9M2013,%
400,2P=
$11,3
330 110P=
$10 365
2,3
6-9 years
Cost of New Store
per sq.m. of Total Space
Owned $2 000-2 600
Leased $800-1 400
8-15 months
8,14
Average
Ticket, RUR
9,94
Traffic
18,88
Sales
Time to Maturity
20. Operational Overview
Drogerie Store
20Source: Company, as of September 30, 2014
310
sq.m.
Total
233
sq.m.
Selling Space
100% Non-food
25% Owned
75% Leased
Format Description Key Operational Statistics Opening
Size of the Store Average Ticket Payback
Store Ownership Structure
Sales Mix
Traffic
tickets/sq.m./day
Sales Density
sales/sq.m./year
LFL 9M2014 – 9M2013,%
243,9P=
$6,9
74 532P=
$2 340
3,40
Average
Ticket, RUR
41,22
Traffic
46,03
Sales
1,1
3 years
If Leased
If Owned
Cost of New Store
per sq.m. of Total Space
Time to Maturity
6 months
Owned $800-2 500
Leased $200-450
4-6 years
21. Size
of the Store
sq.m.
Average
Ticket
Traffic
Tickets/
sq.m./day
Density
Sales/
sq.m./year
Sales
Mix
LFL 9M2014-
9M2013
%
Store Owner-
ship Structure
Payback
Years
Cost of New
Store
per sq.m.
of Total Space
Time
to Maturity
Months
• Total
• Selling Space
• Food
• Non-food
• Av.ticket
• Traffic/ Sales
• Owned
• Leased
25%
75%
35%
65%
84%
16%
28%
72%
Operational Overview
Format Summary
21Source: Company, as of September 30, 2014; * Excludes selling space designated for leases
Hypermarket
Drogerie
Store
Magnit
Family
458
7 052
310
2 224
319
2983*
233
1 159
Owned
$1 100-2 800
Leased
$ 250-500
2,9
1,3
1,1
2,3
P.219,1
$6,2
P.568,2
$16,1
P.243,9
$6,9
P.400,2
$11,3
P.214 746
$6 743
P.248 649
$7 807
P.74 532
$2 340
P.330 110
$10 365
81%
19%
100%
86%
14%
89%
11%
Convenience
store
6
8-15
6
8-15
3 (if leased)
6-9
3 (if leased)
6-9
4-6 (if owned)
4-6 (if owned)
8,56
6,78
3,40
8,14
3,42
5,80
41,22
9,94
12,27
12,97
46,03
18,88
Owned
$1 700-2 900
Leased
$ 700-900
Owned
$800-2 500
Leased
$200-450
Owned
$2 000-2 600
Leased
$800-1 400
22. Financial Overview
Summary P&L
Source: Reviewed IFRS accounts for 1H2013 – 1H2014
Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 22
USD MMUSD MMUSD MMUSD MM 1H20131H20131H20131H2013 1H20141H20141H20141H2014
1H2013 / 1H20141H2013 / 1H20141H2013 / 1H20141H2013 / 1H2014
YYYY----oooo----Y GrowthY GrowthY GrowthY Growth
Net salesNet salesNet salesNet sales 8 796,438 796,438 796,438 796,43 9 978,599 978,599 978,599 978,59 13,4%
Cost of sales (6 398,47) (7 201,70) 12,6%
Gross profitGross profitGross profitGross profit 2 397,962 397,962 397,962 397,96 2 776,892 776,892 776,892 776,89 15,8%
Gross margin, % 27,26% 27,83%
SG&A (1 518,88) (1 760,15) 15,9%
Other income/(expense) 10,86 27,32 151,5%
EBITDAEBITDAEBITDAEBITDA 889,94889,94889,94889,94 1 044,881 044,881 044,881 044,88 17,4%
EBITDA margin,% 10,12% 10,47%
Depreciation & amortization (217,72) (242,70) 11,5%
EBITEBITEBITEBIT 672,22672,22672,22672,22 802,19802,19802,19802,19 19,3%
Net finance costs (72,15) (80,69) 11,8%
Profit before tax 600,07 721,50 20,2%
Taxes (131,15) (161,52) 23,2%
Effective tax rate 21,86% 22,39%
Net incomeNet incomeNet incomeNet income 468,91468,91468,91468,91 559,99559,99559,99559,99 19,4%
Net margin, % 5,33% 5,61%
25. Financial Overview
Free Cash Flow
25Source: IFRS accounts for 1H2013 – 1H2014
Working Capital Analysis
The Average Days Payable to
Suppliers is 36 Days.
Inventory Management Days is 44
Days
Working Capital: -120 mn USD as of
30.06.2014
USD mn
1H2013
1H2014
Adjusted for loss from disposal of PPE, provision
for doubtful receivables, foreign exchange gain,
finance costs, gain on disposal of subsidiary and
investment income
Calculated as additions
+ transfers of PP&E
during the respective
period
Does not include cash flow from
financing activities
1 056
945
364
-64
-87
-111
-581
-245
-183
87
Adjusted
EBIDTA
Change in
Working capital
Net Interest
Expense
Taxes
Paid
OCF Capex Other Cash
Flow
from Investing
Activities
FCF Payment of
Dividents
Other Cash
Flow
from Financing
Activities
CF
901
755
103
-130
-63 -100
-666
-158
17
14
-75
26. Financial Overview
Balance Sheet
Source: Audited IFRS accounts for FY2012 – 1H2014
Please note: there may be small variations in calculation of totals, subtotals, and/or percentage change due to rounding of decimals 26
USD MMUSD MMUSD MMUSD MM 2012201220122012 2013201320132013 1H20141H20141H20141H2014
ASSETSASSETSASSETSASSETS
Property plant and equipment 5 226,8 5 962,8 6 144,5
Other non-current assets 130,0 176,1 169,5
Cash and cash equivalents 410,0 181,2 110,9
Inventories 1 350,7 1 713,9 1 769,4
Trade and other receivables 19,2 19,3 16,0
Advances paid 88,1 96,9 70,5
Taxes receivable 1,0 0,9 2,5
Short-term financial assets 28,9 35,1 41,9
Prepaid expenses 6,0 7,7 6,5
TOTAL ASSETSTOTAL ASSETSTOTAL ASSETSTOTAL ASSETS 7 260,77 260,77 260,77 260,7 8 193,98 193,98 193,98 193,9 8 331,78 331,78 331,78 331,7
EQUITY AND LIABILITIESEQUITY AND LIABILITIESEQUITY AND LIABILITIESEQUITY AND LIABILITIES
Equity 3 267,3 3 854,7 4 070,1
Long-term debt 1 259,2 1 144,0 1 618,4
Other long-term liabilities 202,8 258,6 270,5
Trade and other payables 1 413,1 1 471,8 1 489,9
Short-term debt 827,1 1 109,7 394,8
Dividends payable - - -
Other current liabilities 291,2 355,1 488,0
TOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIESTOTAL EQUITY AND LIABILITIES 7 260,77 260,77 260,77 260,7 8 193,98 193,98 193,98 193,9 8 331,78 331,78 331,78 331,7
27. Financial Overview
Capex Analysis
27
¹CAPEX for 1H2014 amounts to $581 mn
Source: Company, as of December 31, 2013; Company’s Estimates
Construction in Progress
& Buildings
Machinery &
Equipment
Other Assets Land Acquisition of
Subsidiaries
906 362 258 68 53
FY2013¹
$1,647 bn
FY2014 (plan)
$1,775 bn
Hypermarkets Trucks Distribution
Centres
Convenience
Stores
Acquisition &
Construction
of Conv.Stores
Buy-out of
Leased
Conv.Stores
Greenhouses Land for
HyperMarkets
Store
Renovation
Maintenance Drogerie
Stores
80 400 4 1 100 350
700 85 240 220 140 60 100 50 50 30 100
28. Financial Overview
Debt Burden
28Source: IFRS accounts for FY2012 – 1H2014
11,7
13,0
12,2
0
2
4
6
8
10
12
14
2012 2013 1H2014
1,1
1
0,9
0
0,5
1
1,5
2
2012 2013 1H2014
Debt Level Dynamics
USD mn
Credit Metrics Credit Profile
EBIDTA / Finance Expenses
Net Debt / LTM EBITDA
The Company Has
an Impeccable Credit History
Collaboration with
the Largest Banks
Low Debt Burden:
Net Debt / EBITDA Ratio of 0,9
No Currency Risk:No Currency Risk:No Currency Risk:No Currency Risk: 100%
of Debt is Rub Denominated
Matching Revenue Structure
No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:No Interest Rate Risk:
Interest Payments are Made
at Fixed Rates
2 086
2 254
2 013
1 676
2 073
1 902
827
1 110
395
1 259
1 144
1 618
2012 2013 1H2014
Net Debt
Short-term Debt
Long-term Debt
%
39,6%
49,2%
19,6%
80%80%80%80% of Debt is Long-term
Approximately 38%38%38%38%
of LT Debt is Rub Bonds
