PJSC MAGNIT - Magnit Unaudited FY 2016 Financial Results

Press Release

Krasnodar

January 27, 2017

PJSC "Magnit" Announces Unaudited FY 2016 Results

Krasnodar, Russia (January 27, 2017): Magnit PJSC, one of Russia's leading retailers (MOEX and LSE: MGNT) announces its unaudited FY 2016 results prepared in accordance with IFRS[1].

During 2016 Magnit added 1,970 stores on a net basis (927 convenience stores, 18 hypermarkets, 39 Magnit Family stores, and 986 drogerie stores) and increased its selling space by 14.82% in comparison to 2015 from 4.41 million sq. m. to 5.07 million sq. m. The total store base as of December 31, 2016 reached 14,059 stores (10,521 convenience stores, 237 hypermarkets, 194 Magnit Family stores, and 3,107 drogerie stores).

Revenue increased by 13.07% YoY from 950.61 billion RUR in 2015 to 1.07 trillion RUR in 2016.

Gross Profit increased from 270.82 billion RUR in 2015 to 295.77 billion RUR in 2016. Gross Margin in 2016 was 27.52%.

EBITDA increased from 103.97 billion RUR in 2015 to 107.75 billion RUR in 2016. EBITDA Margin in 2016 was 10.02%. EBITDA Margin in the 4Q of 2016 was 9.66%.

Net Income was 54.36 billion RUR in 2016. Net Income Margin for 2016 was 5.06%.

According to Rosstat, general CPI in 12M 2016 was 5.4% compared to 12.9% in 12M 2015. In the month of December 2016 general CPI was 0.4% compared to 0.8% in December 2015.

Food inflation in 12M 2016 was 4.6% compared to 14.0% in 12M 2015. In the month of December 2016 food inflation was 0.6% compared to 1.2% in December 2015.

4Q and FY 2016 Key Operating Highlights:

	4Q 2016	4Q 2015	Growth Rate	FY 2016	FY 2015	Growth Rate
Number of opened stores, NET	695	701	n/a	1,970	2,378	n/a
convenience stores	383	348	n/a	927	1,250	n/a
hypermarkets	9	11	n/a	18	29	n/a
magnit family	15	28	n/a	39	58	n/a
drogerie stores	288	314	n/a	986	1,041	n/a
Total number of stores	14,059	12,089	n/a	14,059	12,089	n/a
convenience stores	10,521	9,594	n/a	10,521	9,594	n/a
hypermarkets	237	219	n/a	237	219	n/a
magnit family	194	155	n/a	194	155	n/a
drogerie stores	3,107	2,121	n/a	3,107	2,121	n/a
Selling space, eop. th. sq. m.	5,067.67	4,413.72	14.82%	5,067.67	4,413.72	14.82%
convenience stores	3,452.40	3,119.56	10.67%	3,452.40	3,119.56	10.67%
hypermarkets	683.67	639.14	6.97%	683.67	639.14	6.97%
magnit family	212.76	170.18	25.02%	212.76	170.18	25.02%
drogerie stores	718.84	484.84	48.26%	718.84	484.84	48.26%
Selling space growth, th. sq.m.	242.28	258.73	n/a	653.95	823.08	n/a
convenience stores	132.60	122.26	n/a	332.84	446.25	n/a
hypermarkets	24.30	34.18	n/a	44.53	80.05	n/a
magnit family	16.45	30.36	n/a	42.58	61.11	n/a
drogerie stores	68.93	71.92	n/a	234.00	235.67	n/a
Number of customers, million	966.69	895.82	7.91%	3,817.13	3,376.86	13.04%
convenience stores	809.30	754.72	7.23%	3,220.10	2,874.00	12.04%
hypermarkets	64.05	68.76	(6.86)%	262.10	263.05	(0.36)%
magnit family	32.60	29.08	12.10%	127.00	100.30	26.62%
drogerie stores	60.74	43.26	40.39%	207.93	139.51	49.04%

LFL Results

Formats	4Q 2016 - 4Q 2015[2]
	# of Stores	Average Ticket	Traffic	Sales
Convenience Stores	9,020	1.99%	(0.68)%	1.30%
Hypermarkets	214	1.00%	(12.23)%	(11.35)%
Magnit Family	133	0.06%	(9.79)%	(9.74)%
Drogeries	1,967	3.91%	0.37%	4.29%
Total	11,334	0.56%	(1.84)%	(1.30)%

Formats	12M 2016 - 12M 20152
	# of Stores	Average Ticket	Traffic	Sales
Convenience Stores	8,663	0.32%	2.05%	2.38%
Hypermarkets	211	(0.85)%	(9.32)%	(10.09)%
Magnit Family	133	(1.08)%	(6.04)%	(7.05)%
Cosmetics Stores	1,911	7.55%	(2.50)%	4.87%
Total	10,918	(0.90)%	0.65%	(0.26)%

4Q and FY 2016 Key Financial Results, million RUR

	4Q 2016	4Q 2015	Growth Rate	FY 2016	FY 2015	Growth Rate
Net sales	284,674.68	260,170.78	9.42%	1,074,811.55	950,613.34	13.07%
convenience stores	207,440.08	188,929.35	9.80%	790,157.07	701,274.95	12.67%
hypermarkets	40,394.25	43,310.51	(6.73)%	157,688.53	161,578.67	(2.41)%
magnit family	15,161.85	13,509.11	12.23%	56,910.82	44,825.31	26.96%
drogerie stores	19,468.53	13,403.80	45.25%	64,449.43	40,122.06	60.63%
wholesale	2,209.97	1,018.01	117.09%	5,605.71	2,812.35	99.32%
Gross profit	78,338.85	75,444.88	3.84%	295,770.00	270,820.81	9.21%
Gross margin,%	27.52%	29.00%	n/a	27.52%	28.49%	n/a
EBITDAR	37,784.53	37,416.36	0.98%	146,225.97	134,149.92	9.00%
EBITDAR margin, %	13.27%	14.38%	n/a	13.60%	14.11%	n/a
EBITDA	27,495.26	28,860.14	(4.73)%	107,749.11	103,972.93	3.63%
EBITDA margin, %	9.66%	11.09%	n/a	10.02%	10.94%	n/a
EBIT	20,561.44	23,253.59	(11.58)%	81,889.96	82,856.21	(1.17)%
EBIT margin, %	7.22%	8.94%	n/a	7.62%	8.72%	n/a
Net income	13,439.11	15,807.15	(14.98)%	54,362.72	59,061.20	(7.96)%
Net income margin, %	4.72%	6.08%	n/a	5.06%	6.21%	n/a

4Q and FY 2016 Key Financial Results, US$ million[3]

	4Q 2016	4Q 2015	Growth Rate	FY 2016	FY 2015	Growth Rate
Net sales	4,513.73	3,945.36	14.41%	16,033.61	15,594.59	2.82%
convenience stores	3,289.12	2,865.02	14.80%	11,787.25	11,504.25	2.46%
hypermarkets	640.48	656.78	(2.48)%	2,352.34	2,650.66	(11.25)%
magnit family	240.40	204.86	17.35%	848.97	735.35	15.45%
drogerie stores	308.69	203.26	51.87%	961.43	658.19	46.07%
wholesale	35.04	15.44	126.94%	83.62	46.14	81.23%
Gross profit	1,242.12	1,144.09	8.57%	4,412.18	4,442.75	(0.69)%
Gross margin,%	27.52%	29.00%	n/a	27.52%	28.49%	n/a
EBITDAR	599.10	567.40	5.59%	2,181.34	2,200.70	(0.88)%
EBITDAR margin, %	13.27%	14.38%	n/a	13.60%	14.11%	n/a
EBITDA	435.96	437.65	(0.39)%	1,607.36	1,705.65	(5.76)%
EBITDA margin, %	9.66%	11.09%	n/a	10.02%	10.94%	n/a
EBIT	326.02	352.63	(7.55)%	1,221.60	1,359.24	(10.13)%
EBIT margin, %	7.22%	8.94%	n/a	7.62%	8.72%	n/a
Net income	213.09	239.71	(11.11)%	810.96	968.89	(16.30)%
Net income margin, %	4.72%	6.08%	n/a	5.06%	6.21%	n/a

Notes:

1. Net revenue in US$ terms is calculated using the average exchange rate for the period.

2. This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.

For further information. please contact:

Timothy Post	Head of Investor Relations Email: [e-mail] Office: [phone] x 17600
Investor Relations Office	[e-mail] Direct Line: [phone] Website: ir.magnit.com/
Media Inquiries	Media Relations Department [e-mail]

Company description:

Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of December 31, 2016, Magnit operated 35 distribution centers and 14,059 stores (10,521 convenience, 431 hypermarkets and 3,107 drogerie stores) in 2,494 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the unaudited IFRS management accounts for 2016, Magnit had revenues of RUB 1,075 billion and an EBITDA of RUB 108 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: 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 market capitalization, Magnit is one of the largest retailers in Europe.

[1] Based on management accounts

[2] LFL calculation base includes stores (all formats), which have been opened 12 months prior to the last month of the reporting period. i.e. by December 1, 2015.

^[3] Based on the average exchange rate for 4Q 2016 - 63.0685 RUB per 1 USD, 4Q 2015 - 65.9434 RUB per 1 USD, 12M 2016 - 67.0349 RUB per 1 USD, 12M 2015 - 60.9579 RUB per 1 USD