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Annual Report 2021
President & CEO's Statement
Chairman's Statement

President and CEO’s statement

Magnit had another remarkable year in 2021. We are now bigger than ever and have consolidated our market position as one of Russia’s leading retailers and private companies. This has been achieved through a strategically important acquisition, organic expansion and an unwavering focus on delivering our strategic objectives.

We continued to enhance our value proposition founded on high quality at an affordable price, and addressing a wide range of consumer missions. Our customers are responding positively to the changes as evidenced by our growing loyalty programme, increased footfall and average spend.

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Chairman’s statement

Magnit has continued to consolidate its position as one of Russia’s largest retail and food production businesses. In 2021, we completed the acquisition of Dixy, and we continued to build our private label and multi-format offerings to meet consumer trends.

The ongoing global pandemic has demonstrated Magnit’s ability to respond to change quickly and meet the challenges presented by constant uncertainty. First and foremost, our priority is to ensure the health and safety of our staff and customers alike, so we have put in place all the necessary measures to stop the spread of the virus and help vulnerable people to cope during these difficult times. Some of our large-format stores have been used as vaccination centers, supporting the road out of the pandemic. We also arranged vaccination of our employees in our head office, which made the vaccination process for our colleagues easier and safer.

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Highlights of the year

Strategic priorities

Improvement of LFL sales growth
Proactive and opportunistic return-driven consolidation play
Margin regain
High returns leading to strong dividend payment
Accelerate smart organic expansion
E-grocery platform development
Improvements of the working capital cycle
1 ROIC = (EBIT - Income Tax) / (Average Net Debt + Average Equity)

2 Based on the first tranche of dividend payment – for 9M 2021 of RUB 30 bln vs 9M 2020 of RUB 25 bln.

Achievements in 2021 vs 2020

7.2%
improvement of EBITDA margin
in 2021 from 7.0% in 2020 on the back of gross margin gains and strict cost control
2,281
gross new stores
of core formats opened in 2021 vs. 1,292 in 2020
3
M&As
strategic acquisition of Dixy business and two bolt-on acquisitions of Edelweiss and Radezh
RUB 11.2 bln
full-year GMV
with more than 62,000 orders daily
7.0%
growth of LFL sales
2021 – second consecutive year of market-leading LFL sales growth
16.5%
growth of ROIC1
in 2021 vs 13.8% in 2020 vs 7.9% in 2019 and 20% YoY increase in dividend payment2
>7 days
optimisation of WC
with RUB 18 bln cash release and working capital turning negative

Strategy

Our strategic goal is to cement our current leading federal retail positions by growing our marketshare significantly and profitably.

Our strategic ambition is to become #1 for consumers, employees and investors.

Our strategy is driven by the desire to create value for our three major stakeholders – our consumers, our employees, and our investors.

Our goals are supported by four pillars:

Consumer first
Employer of choice
Most efficient and promising ways to market
Modern and efficient platform
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Consumers Growing LFL, best in NPS/CSI3 and more customer gains than losses
Employees Constant improvement of eNPS4/ engagement, employee turnover and staffing level
Investors Creating value for shareholders thanks to attractive returns
3 Net Promoter Score/ Consumer Satisfaction Index

4 Employee engagement and satisfaction survey

SustainableDevelopment

In 2020, focused on issues that matter most to its stakeholders, Magnit set its sustainability strategy goals for 2025. Now in its second year, the Company has made considerable progress across its five priorities, fine-tuning its work to drive even greater improvements across environmental and social goals.

Magnit changed gears in 2021, growing significantly through a major acquisition, launching numerous stores and new formats, and building the e-commerce business. This was achieved against a continued backdrop of uncertainty around the COVID-19 pandemic and supporting customers and employees to a ‘return to normal’.

At the heart of this is a strong commitment to grow the business sustainably and continue to reduce the Company’s impacts.

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Key highlights for 2021

72 %
employee satisfaction
8  thous.
volunteers/events5
16 %
increase in purchases from local suppliers
27 %
of private label sales falls on healthy lifestyle products
8 %
of the total volume of plastic generated in the distribution centres is sent for recycling
>99 %
of the total volume of plastic generated in the distribution centres is sent for recycling
19 %
reduction of specific GHG emissions (t CO2 eq/mln RUR) since 2019
RUB 641 mln
allocated for social and charity projects
5 The indicator is calculated ba sed on the number of volunteers divided by the number of events, since it is currently not possible to calculate the absolute number of volunteers

Environmental stewardship

To be a Leader in environmental impact reduction in the industry
  • CO₂ emissions
  • Packaging waste
  • Food waste
  • Energy and water use

Sustainable Sourcing

To strive towards a 100% responsible supply chain
  • Products and raw materials from responsible sources
  • Best local products
  • Food and non-food safety
  • Responsible own agriculture and production
  • Private labels
  • Green marketing

Employees

To be the #1 employer in the industry
  • Fair, safe and rewarding workplace
  • Training and development

Communities

To make a Positive impact on the quality of life of all Russians
  • Corporate volunteering
  • Emergency help
  • Charity

Health & wellbeing

To Improve the quality of life for consumers and local communities
  • Promoting healthy lifestyle: nutrition and sports
  • Availability of health-related services and products

Download

Full Annual Report 2021PDF – 13.2 Mb
Strategic ReportPDF – 9.2 Mb
Corporate GovernancePDF – 1.4 Mb
Consolidated Financial StatementsPDF – 1.2 Mb
AppendicesPDF – 1.2 Mb
© 2022 PJSC Magnit

Contacts

Albert Avetikov
Chief Investor Relations Officer
‍+7 (861) 210 98 10 (ext. 46200)
‍ avetikov_am@magnit.ru
Dina Chistyak
Director for Investor Relations
‍+7 (861) 210 98 10 (ext. 15101)
‍ dina_chistyak@magnit.ru

About the Report

The Annual Report of Magnit PJSC for 2021 (hereinafter also referred to as Magnit or the Company) was prepared based on the information available to Magnit PJSC and its subsidiaries (hereinafter together referred to as the Group) as of 31 December 2021, unless otherwise implied by the meaning or content of the information provided.

This Annual Report is addressed to a wide range of stakeholders and reflects the key performance results of Magnit for 2021 in such matters as strategic and corporate governance as well as financial and operating results.

The Annual Report was prepared in accordance with the requirements of the applicable laws. The Annual Report should be read as a whole taking into account the content of all sections as well as the notes and the explanations herein, including the information set forth in the Disclaimer.

As at the date of publication, we are witnessing growing geopolitical and economic risks that may have an impact on the business of Magnit and its suppliers. The supply of food, hygiene products and home essentials for the needs of consumers has always been and will be our top priority. We will do everything in our power to keep our supply chain resilient and support our suppliers, including a significant number of local manufacturers. Our long track record in the market proves that we remain a reliable employer and business partner in the most challenging situations thanks to the existing infrastructure and resources, responsible business practices and robust corporate governance.

Disclaimer

The Annual Report should be read as a whole taking into account the content of all sections as well as the notes and the explanations herein, including the information set forth in this section.

The Annual Report was prepared based on the information available to Magnit and the Group as of 31 December 2021, unless otherwise implied by the meaning or content of the information provided. When using the information in this Annual Report, please note that the information on S&P and MSCI ratings assigned to Magnit is given as of 31 December 2021, whereas as of the date of actual publication of the Annual Report such ratings have been revised and/or withdrawn due to the general change/withdrawal of ratings of Russian issuers and entities.

Forward-looking statements are not based on actual circumstances and include all statements concerning the Company’s intentions, opinions, or current expectations regarding its performance, financial position, liquidity, growth prospects, strategy, and the industry in which Magnit operates. By their nature, such forward-looking statements are characterised by risks and uncertainties since they relate to events and depend on circumstances that may not occur in the future.

Such terms as “assume,” “believe”, “expect”, “predict”, “intend”, “plan”, “project”, “consider” and “could” along with other similar expressions as well as those used in the negative usually indicate the predictive nature of the statement. These assumptions contain risks and uncertainties that are foreseen or not foreseen by the Company. Thus, future performance may differ from current expectations, therefore the recipients of the information presented in the Annual Report should not base their assumptions solely on it.

Since February 2022 we are witnessing growing geopolitical tension and certain countries have announced and imposed and subsequently expanded various sanctions against the Russian Federation's sovereign debt, certain Russian banks, organizations and individuals. The Russian Federation has taken a number of retaliatory measures, including those drastically changing the regulation of Russian business compared to what it was as of 31 December 2021. These events, separately or jointly with other known and unknown circumstances, including those arising after 31 December 2021, may affect the Company's strategy and business plans.

In addition to official information on the activities of Magnit, this Annual Report contains information obtained from third parties and from sources which Magnit finds to be reliable. However, the Company does not guarantee the accuracy of this information, as it may be abridged or incomplete. Magnit offers no guarantees that the actual results, scope, or indicators of its performance or the industry in which the Company operates will correspond to the results, scope, or performance indicators clearly expressed or implied in any forward-looking statements contained in this Annual Report or elsewhere. Magnit is not liable for any losses that any person may incur due to the fact that the above person relied on forward-looking statements. Except as expressly envisaged by applicable law, the Company assumes no obligation to distribute or publish any updates or changes to forward-looking statements reflecting any changes in expectations or new information as well as subsequent events, conditions, or circumstances.