33.7%

TOTAL REVENUE growth

4Q 2021 Key Operational and Financial Highlights

• Total revenue increased by 33.7% y-o-y to RUB 544.6 billion. Total revenue adjusted for the Dixy acquisition increased by 14.6%;
• Net retail sales reached RUB 530.7 billion increasing 34.3% y-o-y. Net retail sales growth adjusted for the Dixy acquisition was 15.6%;
• LFL[1] sales growth of 9.9% driven by 10.7% average ticket growth and 0.7% LFL traffic decline;

9.9%

lfl sales growth

• The Company opened 834 stores on a gross basis (565 Magnit and 9 Dixy convenience stores, 256 drogeries and 4 supermarkets). As part of the Company's ongoing efficiency driving campaign, 72 stores were closed resulting in a net addition of 762 stores. As of December 31, 2021 the total store base was 26,077;
• Selling space increase of 273 thousand sq. m., bringing total selling space to 8,997 thousand sq. m. (20.0% y-o-y growth);
• The Company redesigned 315 stores under Magnit brand (279 convenience stores, 28 supermarkets and 8 drogeries). As at December 31, 2021, 78% of convenience stores, 45% of supermarkets and 62% of drogeries are either new or refurbished;
• Gross Profit increased by 38.1% y-o-y to RUB 131.3 billion. Gross margin increased by 77 bps y-o-y to 24.1% as a result of improved commercial terms, lower  supply chain costs, smarter  promotions and a favorable format mix;

7.4%

EBITDA margin

• EBITDA was RUB 40.2 billion with a 7.4% margin - an improvement of 36 bps y-o-y and 21 bps q-o-q driven by strong gross margin dynamics;
• Net income increased by 36.4% y-o-y to RUB 15.2 billion with a margin of 2.8%.

19.5%

TOTAL REVENUE growth

FY 2021 Key Operational and Financial Highlights

• Total revenue increased by 19.5% y-o-y to RUB 1,856.1 billion. Total revenue adjusted for the Dixy acquisition increased by 10.8%;
• Net retail sales reached RUB 1,807.8 billion increasing 19.7% y-o-y. Net retail sales growth adjusted for the Dixy acquisition was 11.3%;
• LFL1 sales growth of 7.0% driven by 7.1% average ticket growth and 0.1% LFL traffic decline;

2,295

stores opened (gross)

• Materially exceeded full year organic store opening guidance. The Company opened 2,295 stores on gross basis (1,450 Magnit and 14 Dixy convenience stores, 825 drogeries and 6 supermarkets). As part of the Company's ongoing efficiency improvement campaign, 259 stores were closed resulting in a net store addition of 2,036. As of December 31, 2021 the total store base was 26,077;
• Selling space increase of 708 thousand sq. m. and addition of 793 thousand sq. m. as a result of the Dixy acquisition, bringing total selling space to 8,997 thousand sq. m. (20.0% y-o-y growth);
• Met full year guidance on the number of store redesigns. The Company redesigned 703 stores under Magnit brand (611 convenience stores, 74 supermarkets and 18 drogeries);
• Gross profit increased by 20.1% y-o-y to RUB 439.2 billion. Gross profit margin stood at 23.7%;

7.2%

EBITDA margin

• EBITDA was RUB 133.1 billion with a 7.2% margin - an improvement of 13 bps y-o-y as a result of stronger gross margin but partially offset by Dixy consolidation;
• Net income increased by 36.8% y-o-y to RUB 51.7 billion with a margin of 2.8% vs 2.4% a year ago.

«

Jan Dunning

Magnit's President

and CEO

»

"We are delighted with Magnit's performance in 2021, a year in which we delivered significant progress against our strategy. In July we completed the strategically important acquisition of Dixy, adding another 2,500 stores to our network and strengthening our overall market position. We accelerated our organic expansion and opened almost 2,300 stores - above our original guidance - alongside redesigning a further 700 stores.

We delivered market leading LFL sales growth in every quarter, resulting in continued sales density improvement in our mature stores. Total sales growth driven by same-store sales and then additional selling space reached 33.7%.

We have already made good progress with the integration of Dixy and have successfully extracted first portion of synergies and achieved further margin improvements for the combined business - 7.4% EBITDA margin in the quarter and 7.2% for the full year. This gives us confidence in our ability to achieve our ambitious long-term growth targets.

Our recently launched e-commerce sales channel has gained traction, achieving RUB 11 bn Gross Merchandise Value for the full year with more than 100,000 orders carried out daily at the end of December.

We continued to develop our 'My Price' discounter concept and today have over 200 stores in operation delivering encouraging results. In 2022 we plan to add hundreds of stores of this format and will continue developing our quality value-for-money offering.

We have recorded another set of working capital optimization which turned negative for the first time in the history with RUB 18.5 billion cash release.

We ended 2021 in an extremely strong financial position. Leverage reduced to a comfortable level of 1.5x, a very good result given the acceleration of our store roll-out and acquisition of Dixy. Cash generation from operations increased, and, combined with further improvements in working capital, resulted in a healthy free cash flow position. As a result, we are pleased to be able to pay an increased dividend distribution to shareholders for the first nine months 2021, representing a 20% year-on-year growth".

~30

RUB billion

dividends distributed

for 9M 2021

Key events in 4Q 2021 and after the Reported Period

• Magnit distributed dividends for 9M 2021 in the total amount of c. RUB 30 billion or RUB 294.37 per one ordinary share;
• S&P Global Ratings upgraded Magnit's credit rating to "BB+" level;
• Magnit has reached an agreement for the long-term leasehold rights for the 56 stores operating under the Edelweiss brand in Kazan and 58 Radezh stores in Volgograd;
• Magnit and Wildberries rolled out express delivery of goods from convenience stores to new regions and launched a pickup service for alcohol;
• Magnit and Delivery Club have launched thirty-minute express grocery delivery;
• Magnit fulfilled over 100,000 online orders in one day in the lead-up to the New Year on December 30, 2021;
• Magnit has launched a pharmacy  dark store;
• The Company has started implementing AI-powered customer offering personalization;
• Magnit has begun construction of the greenhouses for growing strawberries and blueberries.

4Q 2021

4Q 2020

Change

Change, %

FY 2021

FY 2020

Change

Change, %

Total Net Retail Sales, million RUB

530,708

395,160

135,548

34.3%

1,807,752

1,510,071

297,681

19.7%

Magnit

456,792

395,160

61,632

15.6%

1,680,528

1,510,071

170,457

11.3%

Convenience Stores[2]

355,702

301,153

54,549

18.1%

1,309,682

1,161,295

148,387

12.8%

Supermarkets[3]

56,129

53,923

2,206

4.1%

208,316

203,541

4,776

2.3%

Drogerie Stores

42,317

36,997

5,320

14.4%

152,215

134,272

17,943

13.4%

Other Formats[4]

2,644

3,087

-444

-14.4%

10,314

10,963

-649

-5.9%

DIXY

73,916

n/a

n/a

n/a

127,224

n/a

n/a

n/a

Convenience Stores

70,057

n/a

n/a

n/a

120,552

n/a

n/a

n/a

Supermarkets[5]

3,858

n/a

n/a

n/a

6,672

n/a

n/a

n/a

Number of Tickets, mln

1,391

1,155

236

20.5%

5,147

4,641

506

10.9%

Magnit

1,203

1,155

48

4.2%

4,806

4,641

165

3.6%

Convenience Stores

1,010

962

48

5.0%

4,044

3,890

154

4.0%

Supermarkets

79

84

-5

-5.5%

328

338

-10

-2.9%

Drogerie Stores

107

100

7

7.0%

408

380

27

7.2%

Other Formats

6

9

-3

-28.9%

27

33

-6

-18.5%

DIXY

188

n/a

n/a

n/a

341

n/a

n/a

n/a

Convenience Stores

183

n/a

n/a

n/a

331

n/a

n/a

n/a

Supermarkets

5

n/a

n/a

n/a

10

n/a

n/a

n/a

Average Ticket[6], RUB

382

342

39

11.5%

351

325

26

7.9%

Magnit

380

342

38

11.0%

350

325

24

7.5%

Convenience Stores

352

313

39

12.4%

324

299

25

8.5%

Supermarkets

708

643

65

10.1%

636

603

33

5.4%

Drogerie Stores

396

371

26

6.9%

373

353

20

5.7%

Other Formats

399

332

67

20.1%

371

322

49

15.1%

DIXY

393

n/a

n/a

n/a

373

n/a

n/a

n/a

Convenience Stores

383

n/a

n/a

n/a

364

n/a

n/a

n/a

Supermarkets

722

n/a

n/a

n/a

676

n/a

n/a

n/a

4Q 2021

4Q 2020

Change

Change, %

FY 2021

FY 2020

Change

Change, %

Number of Stores (EOP)

26,077

21,564

4,513

20.9%

26,077

21,564

4,513

20.9%

Magnit

23,626

21,564

2,062

9.6%

23,626

21,564

2,062

9.6%

Convenience Stores

16,190

14,911

1,279

8.6%

16,190

14,911

1,279

8.6%

Supermarkets

470

470

0

0.0%

470

470

0

0.0%

Drogerie Stores

6,966

6,183

783

12.7%

6,966

6,183

783

12.7%

DIXY

2,451

n/a

n/a

n/a

2,451

n/a

n/a

n/a

Convenience Stores

2,412

n/a

n/a

n/a

2,412

n/a

n/a

n/a

Supermarkets

39

n/a

n/a

n/a

39

n/a

n/a

n/a

Store Openings (Net)

762

410

352

85.9%

2,036

839

1,197

142.7%

Magnit

788

410

378

92.2%

2,062

839

1,223

145.8%

Convenience Stores

533

212

321

151.4%

1,279

289

990

342.6%

Supermarkets

3

1

2

200.0%

0

-3

3

-100.0%

Drogerie Stores

252

197

55

27.9%

783

553

230

41.6%

DIXY

-26

n/a

n/a

n/a

-26

n/a

n/a

n/a

Convenience Stores

-26

n/a

n/a

n/a

-26

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

0

n/a

n/a

n/a

Total Selling Space (EOP), th. sq.m

8,997

7,497

1,500

20.0%

8,997

7,497

1,500

20.0%

Magnit

8,204

7,497

708

9.4%

8,204

7,497

708

9.4%

Convenience Stores

5,635

5,090

546

10.7%

5,635

5,090

546

10.7%

Supermarkets

937

941

-4

-0.4%

937

941

-4

-0.4%

Drogerie Stores

1,604

1,428

175

12.3%

1,604

1,428

175

12.3%

Other formats

28

37

-10

-25.6%

28

37

-10

-25.6%

DIXY

793

n/a

n/a

n/a

793

n/a

n/a

n/a

Convenience Stores

718

n/a

n/a

n/a

718

n/a

n/a

n/a

Supermarkets

75

n/a

n/a

n/a

75

n/a

n/a

n/a

Selling Space Addition (Net), th. sq.m

273

126

148

n/a

701

258

443

n/a

Magnit

280

126

154

n/a

708

258

449

n/a

Convenience Stores

226

85

141

n/a

546

138

408

n/a

Supermarkets

-4

1

-4

n/a

-4

-7

3

n/a

Drogerie Stores

58

45

14

n/a

175

126

49

n/a

Other formats

0

-4

4

n/a

-10

2

-11

n/a

DIXY

-7

n/a

n/a

n/a

-7

n/a

n/a

n/a

Convenience Stores

-7

n/a

n/a

n/a

-7

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

0

n/a

n/a

n/a

4Q 2021

12M 2021

Average Ticket

Traffic

Sales

Average Ticket

Traffic

Sales

Total (Magnit excl. Dixy)

10.7%

-0.7%

9.9%

7.1%

-0.1%

7.0%

Convenience Stores

11.9%

-0.1%

11.9%

8.0%

0.2%

8.2%

Supermarkets

10.0%

-6.2%

3.1%

5.2%

-3.1%

1.9%

Drogerie Stores

6.3%

-1.5%

4.7%

5.2%

-0.8%

4.4%

4.7%

LTM sales density[8] improvement y-o-y

20%

selling space

growth y-o-y

Trading Performance

Total sales in 4Q 2021 grew by 33.7% y-o-y to RUB 544.6 billion. Net retail sales grew by 34.3% y-o-y, driven by a combination of 20.0% selling space growth and 9.9% LFL sales growth. Net retail sales achieved by the stores under the Magnit brand accelerated to 15.6% from 13.8% in 3Q 2021 driven by LFL sales growth in the mature outlets and higher selling space growth.

Net retail sales growth continued to outpace selling space growth on further improvement of sales densities. Overall sales densities in 4Q 2021 (excluding stores under the Dixy brand) improved by 1.6% q-o-q and 4.7% y-o-y while across the Company's main convenience store format these improved by 1.9% q-o-q and 5.9% y-o-y.

Net retail sales growth of Magnit business was strong and exceeded 35% in October and November 2021. In December 2021 it slightly decelerated to 32.5% driven by weaker performance of the last 2.5 weeks due to the high base effect of 2020 (social payments in December 2020), slight deceleration of on-shelf inflation versus peak levels and various COVID-related restrictions in the regions.

Selling space growth increased further from 18.4% in the previous quarter to 20.0% in the reported quarter, driven by accelerated organic expansion and the Dixy acquisition (2,477 stores added in 3Q 2021 but consolidated from July 22nd, 2021, i.e. 4Q was the first full quarter with Dixy stores consolidated). Selling space growth adjusted for the Dixy acquisition accelerated to 9.4% compared to the previous quarter, reflecting a record high number of store openings per quarter (825 on gross basis) since 1Q 2019.

LFL sales growth accelerated further from 8.6% in the previous quarter to 9.9% in 4Q 2021 predominantly driven by the strong performance of mature stores. 406 stores entered LFL comparison in 4Q (including 214 convenience stores and 192 drogeries). Only 7% of Magnit's selling space is currently in the 'ramp-up' phase with 93% already mature.

Performance of LFL stores was strong across all the regions with Caucasian and Siberian stores demonstrating the first-rate results in the double-digit zone.

LFL sales growth in the reported quarter was driven by strong LFL average ticket growth of 10.7% due to acceleration of inflation on top of the continued CVP improvements, store ramp-up effects, etc., while number of SKUs in the average customer basket and average price per article were under pressure, especially in December. LFL traffic was -0.7% driven by COVID uncertainty followed by the lockdown in November and the introduction of QR codes in shopping malls. The latter mostly affected traffic of larger formats located in the malls and a limited number of cosmetics stores in certain regions where they were not deemed 'essential' stores.

Acceleration of revenue and LFL sales growth versus previous quarter did not require any intensification of promo activity - it remained flat y-o-y with some acceleration q-o-q due to seasonal factors.

59 mln

of loyalty program cardholders

During the quarter the number of loyalty program cardholders reached 58.7 million. Company-wide, the proportion of tickets using the loyalty card was 56% with sales penetration of 69%. During peak days of the quarter it reached 59% and 73% correspondingly. The loyalty program continues to deliver positive cross-format gains - 43% of Magnit's customer base at the end of the reporting period (compared to 40% in the previous quarter) visit 2+ store formats. Average ticket of the active user is 1.8x higher vs transaction without loyalty card in a convenience store and 2.0x higher in large formats.

11.9%

LFL sales growth in Magnit convenience in 4Q 2021

Store Network Development and Performance by Format

The convenience segment within the Magnit brand generated 67.0% of total net retail sales in 4Q 2021. In the quarter Magnit accelerated its expansion program both q-o-q and y-o-y and opened (gross) 565 convenience stores (336 in 3Q 2021 and 243 in 4Q 2020). The Company continued its efficiency campaign and closed 32 convenience stores (flat y-o-y). Magnit added 533 convenience stores (net) during the quarter. The selling space growth of convenience stores picked up to 10.7% y-o-y, driving a 18.1% acceleration in sales in the format - the strongest performance across all Magnit's store formats - driven by LFL sales growth of 11.9% and selling space growth of 10.7%. LFL sales growth was driven by LFL average ticket growth of +11.9% while LFL traffic growth was -0.1%. Adjusted for the ramp-up effect following acceleration in redesign campaign, LFL traffic in convenience stores would be positive.

74

magnit supermarkets redesigned in 2021

Magnit supermarkets generated 10.6% of the Group's net retail sales in the reported quarter. During 4Q 2021 the Company opened four supermarkets and closed one store, focusing on refurbishment versus adding new space. The Company's redesign program is gaining traction with 74 supermarkets refurbished during 2021 including 28 in 4Q 2021. Selling space across this format remained almost flat y-o-y. The Company was able to deliver LFL sales growth of 3.1% - in line with the previous quarter - despite the introduction of QR codes for customers of shopping malls where a third of Magnit's supermarkets are located. This was driven by 10.0% average ticket growth and 6.2% traffic decline. Traffic reduction was partly due to higher share of stores in the ramp-up phase following acceleration in the redesign campaign (6% of large format store portfolio has been redesigned in the reported quarter). As a result, net retail sales growth of supermarkets improved to 4.1% in the quarter.

12.3%

y-o-y selling space increase in drogerie in 4Q 2021

13.9%

share of the Dixy stores in the total net retail sales in 4Q 2021

11.2

RUB billion

GMV in 2021

The sales contribution of Magnit's drogerie format represented 8.0% of total net retail sales. During 4Q 2021 Magnit opened (net) 252 cosmetics stores - a record high since 3Q 2019. Selling space increased by 12.3% y-o-y or by 58 thousand sq. m., the highest of all formats. Driven by this increase in selling space and LFL sales growth of 4.7%, sales grew 14.4%. LFL traffic declined by 1.5% due to the introduction of QR codes in certain regions where drogeries were not considered stores selling essential goods. This was well compensated by 6.3% LFL average ticket growth. LFL trends in the cosmetics format reflect lower inflation on the non-food assortment, different mix of products on promotion and high comparison base.

During 4Q 2021 Magnit continued its renovation program and redesigned 279 convenience stores, 28 supermarkets and 8 drogeries. This resulted in the combined share of refurbished and new stores at: 78% for convenience stores, 45% for supermarkets and 62% for the drogerie format.

The share of Dixy stores in the Group's total net retail sales reached 13.9% in the fourth quarter including 13.2% of Dixy convenience stores. In the reported period nine convenience stores were opened, while 35 outlets have been closed, resulting in 2,451 stores and 793 thousand sq. m. of selling space as at December 31, 2021 compared to 2,477 stores at the end of the previous quarter. On pro-forma basis, Dixy' store estate demonstrated mid-single digit LFL sales growth, driven by mature stores, despite high comparison base and strong sales density overall.

E-commerce

Magnit has been piloting e-commerce services since the third quarter of 2020. The Company currently runs a number of online delivery projects, including own delivery and partnerships (express delivery, regular delivery, e-pharma, cosmetics and partnerships).

Total e-commerce GMV (incl. VAT) in the reported period was RUB 6.0 billion, contributing more than half to the full year e-commerce GMV of RUB 11.2 billion.

During 4Q 2021, the average number of orders per day almost doubled and reached 62,274. On December 30th Magnit fulfilled over 100,000 orders.

The average ticket across all online services was c. RUB 1,074 including VAT. This average ticket is approximately 2.7x higher than in the convenience stores (RUB 403 in 4Q 2021). This is mostly due to a larger number of items per basket. The average ticket within Magnit own delivery service was RUB 1,235.

Magnit's e-commerce services today cover over 4,490 offline stores and 20 dark stores in 64 regions and 301 cities, with 69% of the current revenue generated outside Moscow and St. Petersburg. The largest and fastest growing segment is express delivery, where orders are expected to be fulfilled within 60 minutes.

4Q 2021

4Q 2020

Change

Change, times/%

12M 2021

12M 2020

Change

Change, times/%

GMV, billion RUB

6.0

0.3

5.7

18.5x

11.2

0.4

10.9

32x

Number of orders per day (average)

62,274

3,959

58,315

15.7x

29,481

2,496

26,985

11.8x

Average ticket incl. VAT, RUB

1,074

912

162

17.8%

1,045

925

120

13.0%

Number of stores covered, EOP

4,490

1,290

3,200

3.5x

4,490

1,290

3,200 

3.5x

190

My Price discounters as at December 31, 2021

Discounters

Magnit started piloting discounters in July 2020 as a response to the fast changing economic environment. The concept is aimed at price-sensitive consumers who frequently make minor purchases of traditional goods or stock up on products.

As at December 31, 2021 the Company had 190 operating 'My Price' discounters compared to 15 stores a year ago.  During 2021 Magnit opened 175 stores including 78 in the reported quarter. Out of 190 operating discounters 71 are new store openings and 119 have been reformatted from convenience stores.

Average ticket at My price discounters increased by 8% y-o-y and stood at RUB 324. Outlets reformatted from convenience stores delivered LFL sales growth of above 30%.

RUB mln

4Q 2021

4Q 2020

Change

FY 2021

FY 2020

Change

Total Revenue

544,552

407,227

33.7%

1,856,079

1,553,777

19.5%

Retail

530,708

395,160

34.3%

1,807,752

1,510,071

19.7%

Wholesale

13,844

12,067

14.7%

48,327

43,707

10.6%

Gross Profit

131,255

95,027

38.1%

439,238

365,729

20.1%

Gross Margin, %

24.1%

23.3%

77 bps

23.7%

23.5%

13 bps

SG&A, % of Sales

-21.2%

-20.5%

-72 bps

-20.6%

-20.5%

-17 bps

EBITDA pre LTI[9]

40,452

28,803

40.4%

134,054

110,264

21.6%

EBITDA Margin pre LTI, %

7.4%

7.1%

36 bps

7.2%

7.1%

13 bps

EBITDA

40,167

28,592

40.5%

133,143

109,410

21.7%

EBITDA Margin, %

7.4%

7.0%

36 bps

7.2%

7.0%

13 bps

EBIT

23,745

16,516

43.8%

79,744

63,493

25.6%

EBIT Margin, %

4.4%

4.1%

30 bps

4.3%

4.1%

21 bps

Net Finance Costs

-3,835

-2,856

34.3%

-12,966

-13,497

-3.9%

FX Gain/ (Loss)

-150

419

-135.7%

302

-1,310

-123.1%

Profit before Tax

19,760

14,080

40.3%

67,081

48,686

37.8%

Taxes

-4,590

-2,962

55.0%

-15,387

-10,905

41.1%

Net Income

15,170

11,117

36.4%

51,694

37,781

36.8%

Net Income Margin, %

2.8%

2.7%

6 bps

2.8%

2.4%

35 bps

For 4Q and FY 2021 financial results in accordance with IFRS 16 - see Appendix

24.1%

Gross margin

in 4Q 2021

7.4%

ebitda margin in 4Q 2021

2.8%

Net income margin

in 4Q 2021

Total revenue in 4Q 2021 increased by 33.7%. This growth was underpinned by net retail sales growth of 34.3% and wholesale revenue growth of 14.7%. Wholesale operations accounted for 2.5% of total sales.

Gross Profit in 4Q 2021 increased by 38.1% y-o-y to RUB 131.3 billion. Gross margin increased by 77 bps y-o-y to 24.1% as a result of lower supply chain costs, improved commercial terms, smarter promotions and a favorable format mix. Promotional intensity was flat y-o-y with some acceleration q-o-q due to seasonal factors. On a q-o-q basis gross margin improved by 52 bps from 23.6% in 3Q 2021.

Despite further increases to on-shelf availability, supply chain costs decreased by 12 bps y-o-y. This was due to higher DC productivity and utilization, which offset the negative impact of the increased container shipping tariffs.

Shrinkage as a proportion of sales increased by 5 bps y-o-y driven by consolidation of the Dixy business. Shrinkage as a percentage of sales at Magnit's standalone business remained flat y-o-y despite the growing share of fresh products and overall improvement of on-shelf availability.

SG&A costs increased by 72 bps y-o-y to 21.2% as a percent of sales due to the different calendarisation of personnel costs versus the previous year as well as the accelerated expansion and redesign with higher a share of stores in the ramp-up phase.

Personnel costs as a percentage of sales increased by 62 bps which was predominantly driven by the different calendarisation of the annual bonus accrual (44 bps) versus previous year. Total amount of expenses related to STIP[10] remained flat y-o-y. Other influencing factors include higher share of outsource staff and much bigger number of new stores in the ramp-up phase. This was partially offset by continued productivity improvements and ongoing automation of business processes.

Advertising expenses decreased by 21 bps y-o-y on more efficient marketing activities and calendarisation of loyalty campaigns.

Rental costs as a percentage of sales increased by 12 bps y-o-y driven by consolidation of Dixy stores predominantly located in the Moscow and Saint-Petersburg regions with higher rent rates, acceleration in store openings and, subsequently, larger number of stores in the ramp-up period as well as higher share of leased selling space. The share of leased selling space increased to 80.2% in 4Q 2021 vs 78.0% a year ago. Despite the above-mentioned factors, rent expense of Magnit's standalone business decreased as a percentage of sales thanks to higher sales density, improved lease terms with landlords and the closure of inefficient stores.

Utilities costs as a percentage of sales increased by 8 bps y-o-y on accelerated store openings and their ramp-up period as well as y-o-y increase in cleaning expenses due to higher frequency of cleaning and sanitary treatment.

Depreciation, repair and maintenance, packaging and raw materials, bank, tax and other expenses as a percentage of sales remained broadly flat y-o-y.

As a result, EBITDA was RUB 40.2 billion with a 7.4% margin - an improvement of 36 bps y-o-y and 21 bps q-o-q. This was driven by strong gross margin dynamics but partially offset by higher SG&A costs as well as the consolidation of Dixy business with lower profitability. EBITDA margin for the FY 2021 was 7.2% with a y-o-y improvement of 13 bps.

Net finance costs in 4Q 2021 increased by 34.3% y-o-y to RUB 3.8 billion (but were flat in absolute terms q-o-q) due to the higher total amount of borrowings. The Company increased its total debt by RUB 104.3 billion during the last twelve months, by obtaining long-term bank loans and bond issuance. These supported the Company's accelerated expansion and the acquisition of Dixy.

As a result, average cost of debt increased y-o-y to 6.4% (33 bps y-o-y) but remained flat q-o-q. 99.8% of the Company's debt profile is represented by long-term borrowings and bonds with an average maturity of 18 months.

In 4Q 2021 the Company reported FX loss of RUB 0.2 billion related to direct import operations.

Income tax in 4Q 2021 was RUB 4.6 billion. The effective tax rate stood at 23.2%.

As a result, net income in 4Q 2021 increased by 36.4% y-o-y and stood at RUB 15.2 billion. Net income margin increased by 6 bps y-o-y to 2.8%. Net income for FY 2021 grew by 36.8% with a margin improvement of 35 bps to 2.8%.

RUB mln

31.12.2021

31.12.2020

Inventories

224,873

205,949

Trade and other receivables

11,902

8,564

Cash and cash equivalents

73,399

44,700

Long-term borrowings and loans

205,287

147,695

Trade and other payables

239,737

184,325

Short-term loans and borrowings

65,139

18,392

negative working capital with

18.5

billion

cash release

Inventories increased by RUB 18.9 billion (9.2%) compared with December 31, 2020 and stood at RUB 225 billion on the back of total sales growth of 33.7%. Adjusted for the Dixy acquisition, inventories of the Magnit's standalone business reduced substantially. This was driven by a number of ongoing projects, including the reduction of slow-moving items, assortment harmonization and IT solutions that are aimed at better on-shelf availability and promotion forecasting.

Trade and other payables grew by RUB 55.4 billion compared with December 31, 2020 and stood at RUB 239.7 billion, driven by higher sales and increased payment days. Accounts receivables increased by RUB 3.3 billion vs December 31, 2020 and stood at RUB 11.9 billion due to higher sales and improved commercial terms with suppliers.

As a result, working capital as of December 31, 2021 turned negative with the cash release of RUB 18.5 billion. Negative working capital was achieved for both the standalone Magnit and Dixy businesses.

December 31, 2021

June 30, 2021

December 31, 2020

IAS 17

Total Debt, RUB billion

270.4

265.5

166.1

Long-Term Debt

205.3

222.9

147.7

Short-Term Debt

65.1

42.6

18.4

Net Debt, RUB billion

197.0

136.1

121.4

Net Debt/EBITDA

1.5x

1.2x

1.1х

IFRS 16

Net Debt, RUB billion

653.3

498.9

479.0

Net Debt/EBITDA

3.0x

2.7x

2.7x

1.5x

net debt/ebitda
as of december 31, 2021

(IAS17)

As at December 31, 2021 Gross Debt increased by RUB 104.3 billion or 62.8% compared to December 31, 2020 and stood at RUB 270.4 billion. Total debt remained flat versus end of the previous quarter. The Company's cash position increased to RUB 73.4 billion as at December 31, 2021 from RUB 44.7 billion as at December 31, 2020. As a result, Net Debt increased by 62.3% y-o-y to RUB 197.0 billion as at December 31, 2021.

The Company's debt is fully RUB denominated, matching its revenue structure. The Net Debt to EBITDA ratio was 1.5x as at December 31, 2021 vs 1.1x as at December 31, 2020. During the reported quarter leverage reduced significantly from 1.9x as at September 30, 2021.

Capex in 4Q 2021 increased by 89.3% and stood at RUB 23.9 billion. This was driven by an almost twofold acceleration of the Group's expansion and a more than quadrupling of the store redesign program (834 store openings on gross basis and 315 redesigns in 4Q 2021 vs 445 and 72 respectively in 4Q 2020). Total capital expenditure for the full year almost doubled and stood at RUB 65.9 billion (matching guidance), compared with RUB 32.0 billion in FY 2020.

Number of store openings (all formats, gross)

>2,000

Number of redesigns (all formats)

~900

GMV on-line growth, RUB billion

>2.0x

CAPEX, RUB billion

80-85

>2,000

stores on gross basis to be opened by magnit organically in 2022

In 2022 Magnit plans to open more than 2,000 stores of different format on a gross basis as part of its organic expansion which is broadly in line with the previous year, adjusted for small organic-type acquisitions. The store opening program for the current year reflects a strict return requirement and continued focus on operating efficiency. The Company also plans to refurbish around 900 stores, more than in the previous year.

In 2022, the Company will continue developing its e-commerce services including Magnit's own delivery and partnerships and plans to at least double its e-commerce GMV.

In 2022 Capital expenditure is expected to be approximately RUB 80-85 billion, excluding M&A activity. An increase in the planned absolute investment compared to 2021 reflects the greater number of store redesigns, Dixy store network refurbishment and maintenance, launch of new own production facilities and higher spending on efficiency projects focused on both sales growth and productivity improvement, including supply-chain optimization and IT infrastructure. The Company expects that in 2022 capex of total sales will remain at similar levels to 2021.

For further information, please contact:

Dina Chistyak

Director for Investor Relations 
dina_chistyak@magnit.ru

Office: +7 (861) 210 9810 x 15101

Media Inquiries                    Twitter

press@magnit.ru                    @MagnitIR

Note to editors

"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, 2021, Magnit operated 45 distribution centers and 26,077 stores in 3,898 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the unaudited IFRS 16 management accounts results for FY 2021, Magnit had revenues of RUB 1,856 billion and an EBITDA of RUB 214 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+.

Forward-looking statements

This document contains or may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and/or store openings are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Magnit as of the date of the statement. All written or oral forward-looking statements attributable to Magnit are qualified by this caution. Magnit does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.

October

Change

November

Change

December

Change

Total net retail sales, RUB million

168,086

35.6%

162,423

35.2%

200,199

32.5%

Magnit

144,308

16.5%

139,281

15.9%

173,203

14.6%

Convenience Stores

113,449

18.7%

110,603

18.9%

131,650

17.0%

Supermarkets

16,950

8.5%

15,815

1.8%

23,365

2.7%

Drogerie Stores

12,985

12.3%

12,050

14.5%

17,282

15.9%

Other formats

925

-17.3%

813

-22.6%

906

-1.3%

DIXY

23,778

n/a

23,141

n/a

26,996

n/a

Convenience Stores

22,523

n/a

22,051

n/a

25,483

n/a

Supermarkets

1,255

n/a

1,091

n/a

1,513

n/a

4Q 2021

4Q 2020

Change

Change, %

FY 2021

FY 2020

Change

Change, %

Store Openings (Gross)

834

445

389

87.4%

2,295

1,292

1,003

77.6%

Magnit

825

445

380

85.4%

2,281

1,292

989

76.5%

Convenience Stores

565

243

322

132.5%

1,450

669

781

116.7%

Supermarkets

4

2

2

100.0%

6

4

2

50.0%

Drogerie Stores

256

200

56

28.0%

825

619

206

33.3%

DIXY

9

n/a

n/a

n/a

14

n/a

n/a

n/a

Convenience Stores

9

n/a

n/a

n/a

14

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

0

n/a

n/a

n/a

Store Closures

72

35

37

105.7%

259

453

-194

-42.8%

Magnit

37

35

2

5.7%

219

453

-234

-51.7%

Convenience Stores

32

31

1

3.2%

171

380

-209

-55.0%

Supermarkets

1

1

0

0.0%

6

7

-1

-14.3%

Drogerie Stores

4

3

1

33.3%

42

66

-24

-36.4%

DIXY

35

n/a

n/a

n/a

40

n/a

n/a

n/a

Convenience Stores

35

n/a

n/a

n/a

40

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

0

n/a

n/a

n/a

Store Openings (Net)

762

410

352

85.9%

2,036

839

1,197

142.7%

Magnit

788

410

378

92.2%

2,062

839

1,223

145.8%

Convenience Stores

533

212

321

151.4%

1,279

289

990

342.6%

Supermarkets

3

1

2

200.0%

0

-3

3

-100.0%

Drogerie Stores

252

197

55

27.9%

783

553

230

41.6%

DIXY

-26

n/a

n/a

n/a

-26

n/a

n/a

n/a

Convenience Stores

-26

n/a

n/a

n/a

-26

n/a

n/a

n/a

Supermarkets

0

n/a

n/a

n/a

0

n/a

n/a

n/a

RUB mln

4Q 2021

4Q 2020

Change

FY 2021

FY 2020

Change

Total Revenue

544,552

407,227

33.7%

1,856,079

1,553,777

19.5%

Retail

530,708

395,160

34.3%

1,807,752

1,510,071

19.7%

Wholesale

13,844

12,067

14.7%

48,327

43,707

10.6%

Gross Profit

131,234

95,054

38.1%

439,264

365,756

20.1%

Gross Margin, %

24.1%

23.3%

76 bps

23.7%

23.5%

13 bps

SG&A, % of Sales

-19.9%

-19.2%

-71 bps

-19.2%

-19.1%

-15 bps

EBITDA pre LTI[11]

63,138

46,168

36.8%

215,132

179,043

20.2%

EBITDA Margin pre LTI, %

11.6%

11.3%

26 bps

11.6%

11.5%

7 bps

EBITDA

62,853

45,957

36.8%

214,220

178,189

20.2%

EBITDA Margin, %

11.5%

11.3%

26 bps

11.5%

11.5%

7 bps

EBIT

31,016

22,572

37.4%

108,897

88,424

23.2%

EBIT Margin, %

5.7%

5.5%

15 bps

5.9%

5.7%

18 bps

Net Finance Costs

-13,398

-10,509

27.5%

-46,578

-44,268

5.2%

FX Gain/ (Loss)

-183

485

-137.7%

281

-1,453

-119.3%

Profit before Tax

17,435

12,547

39.0%

62,600

42,703

46.6%

Taxes

-4,136

-2,657

55.7%

-14,494

-9,709

49.3%

Net Income

13,299

9,890

34.5%

48,106

32,993

45.8%

Net Income Margin, %

2.4%

2.4%

1 bps

2.6%

2.1%

47 bps