1. 1 Financial Results 1H 2014 2. Magnit at a Glance Magnit at a Glance As of 30.06.2014 Source: Company, Bloomberg, IFRS accounts for 1H2014 2 1 959Cities & Towns 1 Russian Food Retail Chain by Revenue and Number of Stores 8 618Total Number of Stores 3 189thous.sq.m. Selling Space 24DCs 5 697Trucks Multi-format Business Model Comprising Convenience, Hypermarkets, Magnit Family Stores & Drogeries 2 Retailer in Europe in Market Capitalization $28bnMarket Capitalization >6%Share in Russian Grocery Sector Shareholder Structureas of 1H2014 54,6% Free-oat 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, Companys 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 Drogeries 26-29% RUR Sales Growth 10,6-10,9% EBITDA Margin $1,7-1,8bn Capex P= 4. Magnit at a Glance Strategy 4 Growth Value Eciency Multi-format Organic Store Growth Geographic Scope Density of Store Coverage Low Prices High Quality Assortment Cost Management Vertical Integration Centralization 5. 47 47%53% Discounters 22% Supermarkets 14% Hypermarkets 11% Traditional Stores 34% Kiosks, Pavilions 8% Open Markets 10% Magnit at a Glance Russian Food Retail Market 5 Market Composition by Format 7,3%Food Ination $311bnMarket Size FY 2013 %Modern Retail Penetration Non-Modern Modern Source: Sberbank CIB Estimates for FY2013 6. Magnit at a Glance Magnit vs Peers 6Source: As of 2013; Companies, Infoline, Bloomberg, Magnits Estimates; Number of Stores Selling Space thous. sq.m. Revenue RUR bn Market Cap US$ 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. 778Drogeries 7 614Convenience Stores 169Hypermarkets 57Magnit Family 24Distribution Centers 1 5 7 6 1 2 2 51 211 170 221 68 45 12 2 15 12 19 2 5 2 6 51 27 54 10 19 2 322 1 452 1 931 2 446 658 658 147 Operational Overview Geographical Coverage 7Source: Company, as of June 30, 2014 1 959 Cities & Towns 7 Federal Districts North Caucasus Southern Volga North West Urals SiberiaCentral 8. Operational Overview Logistics System 8Source: Company, as of June 30, 2014 8 618Total Number of Stores 707thous.sq.m. Warehousing Space 24DCs 5 697Trucks 7 6 5 2 1 1 2 Central Volga Southern Urals North Caucasus North West Siberia 2589 2548 1779 759 329 450 164 273,346 147,883 111,832 92,782 34,503 21,060 26,064 Centralization Ratio % Magnit Outsourced 89 11 92 8 Convenience Stores 1H2014 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 June 30, 2014 12%Share of Revenue 627 PL SKUs M 86%Food Items Private Label 10%International Direct Import 800 Open Contracts 11. Operational Overview Employees 11Source: Company, as of June 30, 2014 229 272 Employees 0 Foreign Workers 27 376 Average Monthly Salary 10%Wage Rate Increase P= 161 438In-store Personnel 42 144 People Engaged in Distribution 17 034People in Regional Branches 8 656People Employed by Head Oce 1000 employees Average Weighted Number of Employees 197 251 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 5001 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: Companys Estimates 13. Convenience Store 14. Operational Overview Convenience Store 14Source: Company, as of June 30, 2014 458 sq.m. Total 320 sq.m. Selling Space 89% Food 11% Non-food 29% Owned 71% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Trac tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2014-1H2013,% 217,1P= $6,2 214 746P= $6 743 7,23 Average Ticket, RUR 1,90 Trac 9,26 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 15. Hypermarket 16. Operational Overview Hypermarket 16Source: Company, as of June 30, 2014 81% Food 19% Non-food 85% Owned 15% Leased Format Description Key Operational Statistics Size of the Store Average Ticket Store Ownership Structure Sales Mix Trac tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2014-1H2013,% 566,7P= $16,2 248 649P= $7 807 1,3 7 058 sq.m. Total 2 985 sq.m. Selling Space 6,37 Average Ticket, RUR 5,55 Trac 12,28 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 17. Magnit Family 18. Operational Overview Magnit Family 18Source: Company, as of June 30, 2014 2 297 sq.m. Total 1 176 sq.m. Selling Space 85% Food 15% Non-food 40% Owned 60% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Trac tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2014 -1H2013,% 396,8P= $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 7,51 Average Ticket, RUR 9,96 Trac 18,22 Sales Time to Maturity 19. Drogerie 20. Operational Overview Drogerie 20Source: Company, as of June 30, 2014 314 sq.m. Total 236 sq.m. Selling Space 100% Non-food 28% Owned 72% Leased Format Description Key Operational Statistics Opening Size of the Store Average Ticket Payback Store Ownership Structure Sales Mix Trac tickets/sq.m./day Sales Density sales/sq.m./year LFL 1H2014 1H2013,% 243,3P= $7,0 74 532P= $2 340 3,05 Average Ticket, RUR 45,11 Trac 49,54 Sales 1,0 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 Trac Tickets/ sq.m./day Density Sales/ sq.m./year Sales Mix LFL 1H2014- 1H2013 % 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 Trac/ Sales Owned Leased 28% 72% 40% 60% 85% 15% 29% 71% Operational Overview Format Summary 21Source: Company, as of June 30, 2014; * Excludes selling space designated for leases Hypermarket Drogerie Magnit Family 458 7 058 314 2 297 320 2985* 236 1 176 Owned $1 100-2 800 Leased $ 250-500 2,9 1,3 1,0 2,3 P.217,1 $6,2 P.566,7 $16,2 P.243,3 $7,0 P.396,8 $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% 85% 15% 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) 7,23 6,37 3,05 7,51 1,90 5,55 45,11 9,96 9,26 12,28 49,54 18,22 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 protGross protGross protGross prot 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 nance costs (72,15) (80,69) 11,8% Prot before tax 600,07 721,50 20,2% Taxes (131,15) (161,52) 23,2% Eective 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% 23. Financial Overview Revenue & Costs 23Source: IFRS accounts for 1H2012 1H2014 25,6 27,3 27,8 9,9 10,1 10,5 5,0 5,3 5,6 0 5 10 15 20 25 30 1H2012 1H2013 1H2014 Revenue Dynamics USD mn Net Income Dynamics USD mn Margin DynamicsSG&A Expense Structure Revenue 9 979 USD mn Gross Margin EBIDTA Margin Net Margin % +29,8% 8,8% 10,6% +13,4% +38,0% +19,4% LFLLFL Sales Growth, USD Sales Growth, USD 6 776 8 796 9 979 1H2012 1H2013 1H2014 340 469 560 1H2012 1H2013 1H2014 20% 2 002 USD mn 1,88 (0,38) Packaging & Raw Materials 1,77 (0,36) Repair & Maintenance 55,18 (11,07) Payroll & Related Taxes 2,09 (0,42) Taxes, Other than Income Tax 12,08 (2,42) Deprecation & Amortization 20,67 (4,15) Rent & Utilities 6,33 (1,26) Other in SG&A,% in Revenue, % 24. 25,61 27,26 27,83 -0,11 -0,01 -0,031,77 0,26 0,34 15 17 19 21 23 25 27 29 31 33 GM 1H2012 Trading Margin Transport Losses GM 1H2013 Trading Margin Transport Losses GM 1H2014 Financial Overview Gross Margin Bridge 24Source: IFRS accounts for 1H2012 1H2014 EBITDA Margin Bridge % of Sales % of Sales +165 b.p. +57 b.p. +22 b.p. +35 b.p. 9,90 10,12 10,47-1,00 -0,35 -0,05 -0,03 -0,19 -0,24 1,65 0,57 0,21 0 2 4 6 8 10 12 14 EBIDTA 1H2012 Gross Margin Salaries Rent & Utilites Repair & Maintenance Other EBIDTA 1H2013 Gross Margin Rent & Utilites Advertising Other EBIDTA 1H2014 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, nance costs, gain on disposal of subsidiary and investment income Calculated as additions + transfers of PP&E during the respective period Does not include cash ow from nancing 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 nancial 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 CAPEX for 1H2014 amounts to $581 mn Source: Company, as of December 31, 2013; Companys Estimates Construction in Progress & Buildings Machinery & Equipment Other Assets Land Acquisition of Subsidiaries 906 362 258 68 53 FY2013 $1,647 bn FY2014 (plan) $1,775 bn Hyper Markets Trucks Distribution Centres Convenience Stores Acquisition & Construction of Conv.Stores Buy-out of Leased Conv.Stores Greenhouses Land for HyperMarkets Store Renovation Maintenance Drogeries 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 Prole 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