RRaattiiffiieedd
bbyy tthhee rreessoolluuttiioonn ooff tthhee BBooaarrdd
ooff OOJJSSCC ““MMaaggnniitt”” ooff AApprriill 44,, 22001144,,
mmiinnuutteess №№ww//nn ooff AApprriill 44,, 22001144
RRaattiiffiieedd bbyy tthhee rreessoolluuttiioonn
ooff tthhee aannnnuuaall sshhaarreehhoollddeerrss mmeeeettiinngg
ooff OOJJSSCC ““MMaaggnniitt”” ooff MMaayy 2299,,22001144,,
mmiinnuutteess №№ww//nn ooff MMaayy 3300,, 22001144..
22001133 AANNNNUUAALL RREEPPOORRTT
OOPPEENN JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNYY
““MMAAGGNNIITT””
1155//55 SSoollnneecchhnnaayyaa ssttrreeeett,, KKrraassnnooddaarr,, RRuussssiiaann FFeeddeerraattiioonn
CChhiieeff EExxeeccuuttiivvee OOffffiicceerr
__________________________________________ SS.. GGaalliittsskkiiyy
CChhiieeff AAccccoouunnttaanntt
__________________________________________ AA.. BBuubblliikk
sseeaall
KKRRAASSNNOODDAARR 22001144
TTAABBLLEE OOFF CCOONNTTEENNTTSS
11.. PPEERRFFOORRMMAANNCCEE HHIIGGHHLLIIGGHHTTSS ......................................................................................... 4
22.. MMIISSSSIIOONN .................................................................................................................................. 7
33.. CCHHIIEEFF EEXXEECCUUTTIIVVEE OOFFFFIICCEERR’’SS SSTTAATTEEMMEENNTT ................................................................ 8
44.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPEERRSSOONN IINN TTHHEE PPOOSSIITTIIOONN OOFF AA SSOOLLEE EEXXEECCUUTTIIVVEE
BBOODDYY ............................................................................................................................................. 9
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE BBOODDYY MMEEMMBBEERRSS
((MMAANNAAGGEEMMEENNTT BBOOAARRDD)) aass ooff DDeecceemmbbeerr 3311,, 22001133 ........................................................ 10
66.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD MMEEMMBBEERRSS aass ooff DDeecceemmbbeerr 3311,, 22001133 ................ 14
77.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001133 OOPPEERRAATTIIOONNSS ..................... 20
88.. MMAAIINN 22001133 CCOORRPPOORRAATTEE EEVVEENNTTSS .................................................................................. 26
99.. PPOOSSIITTIIOONN OOFF TTHHEE CCOOMMPPAANNYY IINN IINNDDUUSSTTRRYY ........................................................... 28
1100.. PPRRIIOORRIITTYY AARREEAASS OOFF TTHHEE CCOOMMPPAANNYY’’SS OOPPEERRAATTIIOONNSS ....................................... 44
1111.. PPRRIIOORRIITTYY DDIIRREECCTTIIOONNSS OOFF TTHHEE CCOOMMPPAANNYY’’SS DDEEVVEELLOOPPMMEENNTT ....................... 46
1122.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS ............................................................ 49
1133.. SSEECCUURRIITTIIEESS ......................................................................................................................... 50
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001133 CCOONNSSIIDDEERREEDD MMAAJJOORR
TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW ““OONN JJOOIINNTT--SSTTOOCCKK
CCOOMMPPAANNIIEESS”” ............................................................................................................................ 67
1155.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001133 CCOONNSSIIDDEERREEDD
RREELLAATTEEDD--PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW OONN
““JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNIIEESS”” ............................................................................................ 68
1166.. MMAAIINN RRIISSKK FFAACCTTOORRSS IINNHHEERREENNTT IINN TTHHEE ССOOMMPPAANNYY OOPPEERRAATTIIOONN ............... 83
1177.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOMMPPLLIIAANNCCEE WWIITTHH TTHHEE CCOORRPPOORRAATTEE CCOODDEE OOFF
CCOONNDDUUCCTT OOFF FFFFMMSS OOFF TTHHEE RRUUSSSSIIAANN FFEEDDEERRAATTIIOONN ............................................ 113
1188.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY ............................................................................................................................... 128
1199.. IINNFFOORRMMAATTIIOONN OONN VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY RREESSOOUURRCCEESS
WWIITTHHIINN 22001133 ............................................................................................................................ 130
AANNNNEEXXEESS TTOO 22001133 AANNNNUUAALL RREEPPOORRTT OOFF OOJJSSCC ““MMAAGGNNIITT”” .................................... 131
ANNEX № 1: Consolidated financial statements of OJSC “Magnit” for the year
ended on December 31, 2013.
ANNEX № 2: Consolidated financial statements of OJSC "Magnit" for the year 2013
prepared in accordance with the Federal law N 208-FZ "On consolidated financial
statements".
ANNEX № 3: Accounting report of JSC “Tander” for the year 2013 prepared in
accordance with RAS.
ANNEX № 4: Accounting report of OJSC “Magnit” for the year 2013 prepared in
accordance with RAS.
1,209
1,154
35
26
-6
8,093
7,200
161
46
686
3,011.38
2,312.20
482.88
53.26
163.04
2,465.05
2,193.87
193.06
29.60
48.52
11.. PPEERRFFOORRMMAANNCCEE HHIIGGHHLLIIGGHHTTSS
2013 Key Operational Results1:
Number of opened stores, NET
convenience stores
hypermarkets
Magnit Family
cosmetics stores
Total number of stores,
convenience stores
hypermarkets
Magnit Family
cosmetics stores
Selling space, thousand sq. m.
convenience stores
hypermarkets
Magnit Family
cosmetics stores
Number of customers, million
convenience stores
hypermarkets
Magnit Family
cosmetics stores
1 "Magnit" group of companies
LFL Results:
Formats
Convenience Stores
Hypermarkets
Magnit Family
Cosmetics Stores
Total
FY 2013 - FY 20122
Average ticket
5.35%
2.04%
5.01%
3.72%
5.22%
Traffic
(1.57)%
2.52%
7.41%
10.54%
(1.28)%
Sales
3.70%
4.61%
12.80%
14.65%
3.88%
2 Based on 3,487 convenience stores and 18 cosmetics stores which were opened by July 1, 2011, and 60
hypermarkets and 1 Magnit Family which were opened by May 1, 2011, i.e. based on the result of the
convenience stores that had been operating for not less than six months and hypermarkets that had been
operating for not less than eight months and have achieved a mature level of sales.
2013 Key Financial Results3:
Net sales, mn RUR
convenience stores4
hypermarkets3
Magnit Family3
cosmetics stores3
wholesale3
Net sales, mn US$5
convenience stores3
hypermarkets3
Magnit Family3
cosmetics stores3
wholesale3
Gross profit, mn RUR
Gross profit, mn US$
Gross margin, %
EBITDAR3, mn RUR.
EBITDAR3, mn US$
EBITDAR3 margin, %
EBITDA, mn RUR
EBITDA, mn US$
EBITDA margin, %
EBIT, mn RUR
EBIT, mn US$
EBIT margin, %
Net profit, mn RUR
Net profit, mn US$2
Net profit margin, %
Market capitalization, mn RUR6
Market capitalization, mn USD7
3 Audited financial statements prepared in accordance with IFRS
4 Management accounts
5 Based on the average exchange rate for 2013 of 31,8480 RUR per USD 1
6 CJSC «MICEX Stock Exchange» as of December 30, 2013
7 Based on the exchange rate for December 30, 2013 of 32,6282 RUR per USD 1
579 694,88
450 801,48
106 175,58
10 678,07
11 873,35
166,40
18 201,92
14 154,78
3 333,82
335,28
372,81
5,22
165 262,99
5 189,12
28,51%
79 678,33
2 501,83
13,74%
64 721,23
2 032,19
11,16%
50 536,88
1 586,81
8,72%
35 620,38
1 118,45
6,14%
868,999.94
26,633.40
22.. MMIISSSSIIOONN
“WWee wwoorrkk hhaarrdd ttoo iinnccrreeaassee tthhee pprroossppeerriittyy ooff oouurr ccuussttoommeerrss bbyy mmiinniimmiizziinngg
tthheeiirr eexxppeennddiittuurree oonn qquuaalliittyy ccoonnssuummeerr ggooooddss tthhrroouugghh::
-- EEffffiicciieenntt uussee ooff tthhee CCoommppaannyy''ss rreessoouurrcceess;;
-- OOnn--ggooiinngg iimmpprroovveemmeennttss iinn tteecchhnnoollooggyy;;
-- AAddeeqquuaattee ccoommppeennssaattiioonn ffoorr oouurr eemmppllooyyeeeess””
33.. CCHHIIEEFF EEXXEECCUUTTIIVVEE OOFFFFIICCEERR’’SS SSTTAATTEEMMEENNTT
The year 2013 marked an
important
milestone in Magnit's history, as it became
the market leader in Russian food retail as
measured by sales. 2013 was one of the
most successful years in Magnit's history.
On average, Magnit opened 3 new stores
EACH DAY throughout the year. Sales
grew more than 29% and our EBITDA
expanded to 11% with earnings growth for
the year surpassing 41%.
While the numbers certainly speak for themselves, the accomplishment I am most
proud of, as we marked our 20th anniversary on March 5th, 2014, is the culture that we,
together, have built here at Magnit over the past two decades. Our corporate culture is
predicated on hard work, trust, transparency, and optimism. While it may be
impossible to quantify Magnit's corporate culture, I am certain that it is the foundation
of our competitive strength.
Although much has changed in the Russian food retail marketplace over the past 20
years, Magnit remains a young, dynamic, and hungry competitor and thus, our
optimism on what we can accomplish in the next 20 years has never been stronger than
it is today.
As Magnit’s CEO and Founder, I would like to take a moment to thank all of you, our
shareholders, for your continued support and confidence in us over the course of 2013.
Chief Executive Officer of OJSC “Magnit”
Sergey Galitskiy
44.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPEERRSSOONN IINN TTHHEE PPOOSSIITTIIOONN OOFF AA SSOOLLEE EEXXEECCUUTTIIVVEE
BBOODDYY
On April 13, 2006 Sergey Galitskiy was elected as a Chief Executive Officer by the
resolution of the Board of directors of April 12, 2006. On April 12, 2012 the Board of directors
(minutes of 12.04.2012) decided to reappoint the chief executive officer .
Biographical information of the person in the position of a sole executive body:
Name: Sergey Galitskiy
Date of birth: 14.08.1967
Education: Mr. Galitskiy graduated from Kuban State University with a degree in
Economics in 1992.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 01.04.2004 – present day
Organization: OJSC “Magnit”
Position: member of the Board of Directors;
2) Period: 13.04.2006 – present day
Organization: OJSC “Magnit”
Position: CEO;
3) Period: 15.07.2010 – present day
Organization: OJSC “Magnit”
Position: Chairman of the Management board.
Stockholding of CEO in the Company’s share capital: 38.6659% (as of 31.12.2013).
Ordinary shares, owned by CEO: 38.6659% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
person in the position of a sole executive body within the reporting period:
Within the reporting period no transactions of acquisition/disposal of the Company’s
shares were made.
CCRRIITTEERRIIAA AANNDD AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN ((RREEFFUUNNDD OOFF CCHHAARRGGEESS)) OOFF
TTHHEE CCEEOO PPAAIIDD WWIITTHHIINN TTHHEE RREEPPOORRTTIINNGG YYEEAARR
Under Clause 6 of Regulations “On the chief executive officer of OJSC “Magnit”, ratified
by the resolution of the annual general shareholders’ meeting of 24.06.2010 (minutes of meeting
of 28.06.2010 and previous editions), the wage rate and other payments set upon CEO are
determined by the labor contract agreed with CEO.
Remuneration of CEO of OJSC “Magnit” paid in 2013 amounted to 192,732,163.39
rubles.
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE BBOODDYY MMEEMMBBEERRSS
((MMAANNAAGGEEMMEENNTT BBOOAARRDD)) aass ooff DDeecceemmbbeerr 3311,, 22001133
Sergey Galitskiy - Chairman of the Management board
Date of birth: 14.08.1967
Education: Mr. Galitskiy graduated from Kuban State University with a degree in Economics
in 1992.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 01.04.2004 – present day
Organization: OJSC “Magnit”
Position: member of the Board of Directors;
2) Period: 13.04.2006 – present day
Organization: OJSC “Magnit”
Position: CEO;
3) Period: 15.07.2010 – present day
Organization: OJSC “Magnit”
Position: Chairman of the Management board.
Stockholding of the person in the Company’s share capital: 38.6659% (as of 31.12.2013).
Ordinary shares, owned by the person: 38.6659% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
person in the position of Chairman of the management board within the reporting period:
Within the reporting period no transactions of acquisition/disposal of the Company’s shares
were made.
Alexander Barsukov
Date of birth: 08.07.1977
Education: higher - in 1998 graduated from Rostov Law Institute of Ministry of the interior of
Russian Federation with a degree in law.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 02.10.2006 – 15.07.2008
Organization: JSC “Tander”
Position: Naberezhnye Chelny Branch Manager;
2) Period: 16.07.2008 – 16.12.2012
Organization: JSC “Tander”
Position: Hypermarkets sales director;
3) Period: 15.07.2010 – present day
Organization: OJSC “Magnit”
Position: Member of the Management Board;
4) Period: 17.12.2012 - present day
Organization: JSC “Tander”
Position: Director of hypermarkets sales department;
Stockholding of the person in the Company’s share capital: 0.0033% (as of 31.12.2013).
Ordinary shares owned by the person: 0.0033% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
person in the position of the management board member within the reporting period:
№
Date of
transaction
1
27.12.2013
Type of
transaction
Acquisition of
securities
Quantity of
securities
Description of securities
700
Ordinary registered shares
Marina Ivanova
Date of birth: 02.01.1964
Education: higher - in 1990 graduated from Lenin Tadjik State University, chemistry and
biology teacher.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 01.09.2007 – 11.08.2008
Organization: JSC "Tander"
Position: Corporate Purchasing Director (Head Office);
2) Period: 12.08.2008– present day
Organization: JSC "Tander"
Position: Business Director;
3) Period: 12.10.2012 – present day
Organization: OJSC "Magnit"
Position: Member of the Management Board;
Stockholding of the person in the Company’s share capital: 0.0083% (as of 31.12.2013).
Ordinary shares, owned by the person: 0.0083% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
person in the position of the management board member within the reporting period:
№
Date of
transaction
1
2
3
4
5
6
7
09.01.2013
15.01.2013
21.01.2013
26.02.2013
18.03.2013
27.03.2013
26.04.2013
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
200
198
35
88
85
36
32
Description of securities
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
8
9
23.05.2013
25.06.2013
10
19.07.2013
11
23.10.2013
12
27.12.2013
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
28
28
27
73
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
1300
Ordinary registered shares
Ilya Sattarov
Date of birth: 13.07.1976
Education: higher - in 1998 graduated from Kuban State University with a degree in Economics.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 02.07.2007 – 07.12.2010
Organization: Commercial joint-stock bank “Societe Generale Vostok Bank”, joint-stock
company
Position: CEO (JSC “BSGV” Krasnodar Branch);
2) Period: 08.12.2010 – 31.01.2011
Organization: JSC “Tander”
Position: Director for Assets Acquisition and Management (Head Office);
3) Period: 01.02.2011 – 31.07.2011
Organization: JSC “Tander”
Position: Director for Transport (Transport Department);
4) Period: 01.08.2011 – present day
Organization: JSC “Tander”
Position: Deputy CEO for Logistics (Head Office);
5) Period: 12.10.2012 – present day
Organization: OJSC “Magnit"
Position: Member of the Management Board.
Stockholding of the person in the Company’s share capital: 0.0018% (as of 31.12.2013).
Ordinary shares, owned by the person: 0.0018% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
person in the position of the management board member within the reporting period:
№
1
2
Date of
transaction
15.01.2013
27.12.2013
Type of
transaction
Disposal of
securities
Acquisition of
securities
Quantity of
securities
1 580
1 250
Description of securities
Ordinary registered shares
Ordinary registered shares
CCRRIITTEERRIIAA AANNDD AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN ((RREEFFUUNNDD OOFF CCHHAARRGGEESS)) OOFF TTHHEE
CCOOMMPPAANNYY’’SS MMAANNAAGGEEMMEENNTT BBOOAARRDD MMEEMMBBEERRSS PPAAIIDD WWIITTHHIINN TTHHEE RREEPPOORRTTIINNGG
YYEEAARR
According to the Regulations on collegial executive body (Management Board) of OJSC
“Magnit” remuneration of a Management Board member consists of remuneration under a
labor contract or an additional agreement to it. Management Board members can be
remunerated every year from the amount of net profit according to the year accounting report.
Payment terms and order shall be determined by the Board of directors. Salary for the work
within the Management Board according to a labor contract constitutes 50 000 rubles.
Remuneration to the Management Board members of OJSC “Magnit” paid in 2013 amounted to
2,508,388.20 rubles (the amount does not include the remuneration received by S. Galitskiy as a
chief executive officer).
66.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD MMEEMMBBEERRSS aass ooff DDeecceemmbbeerr 3311,, 22001133
Khachatur Pombukhchan – the Chairman of the Board
Date of birth: 16.03.1974.
Education: higher - graduated from Kuban State University with a degree in applied
mathematics in 1996; from Russian Distance-Learning finance & economics institute with a
degree in Economics in 2000.
Positions held in the issuer and other companies in the last five years including plural offices
1) Period: 02.03.2006 – 03.05.2008
Organization: JSC “Tander”
Position: Marketing director;
2) Period: 29.11.2006 – 26.05.2009
Organization: JSC “Digital Gallery”
Position: member of the Board;
3) Period: 09.01.2008 – 03.05.2008
Organization: JSC “Tander”
Position: first Deputy CFO (joint appointment);
4) Period: 04.05.2008 – 30.06.2008
Organization: JSC “Tander”
Position: first Deputy CFO;
5) Period: 04.05.2008 – 30.06.2008
Organization: OJSC “Magnit”
Position: Deputy CFO;
6) Period: 19.06.2008 – 17.05.2012
Organization: LLC “Magnit Finance”
Position: CEO;
7) Period: 25.06.2008 – 23.06.2010
Organization: OJSC “Magnit”
Position: member of the BOD;
8) Period: 01.07.2008 – present day
Organization: JSC “Tander”
Position: CFO;
9) Period: 01.07.2008 – present day
Organization: OJSC “Magnit”
Position: CFO;
10) Period: 15.12.2008 – 01.04.2009
Organization: LLC “Magnit – Nizhniy Novgorod”
Position: member of the Board;
11) Period: 13.12.2008 –24.02.2009
Organization: LLC “Tandem”
Position: member of the Board.
12) Period: 24.06.2010 – present day
Organization: OJSC “Magnit”
Position: Chairman of the BOD.
Stockholding of the person in the Company’s share capital: 0.0028% (as of 31.12.2013).
Ordinary shares, owned by the person: 0.0028% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the
Chairman of the BOD within the reporting period:
№
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Date of
transaction
24.01.2013
19.02.2013
19.03.2013
19.04.2013
20.05.2013
18.06.2013
18.07.2013
20.08.2013
03.10.2013
04.10.2013
22.10.2013
31.10.2013
20.11.2013
27.12.2013
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Quantity of
securities
50
50
50
50
40
45
40
35
25
13
35
30
1 626
1 730
Description of securities
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Andrey Arutyunyan
Date of birth: 12.01.1969.
Period: higher – in 1993 graduated from Kuban State University with a degree in Economics.
Positions held in the issuer and other companies in the last five years including plural offices:
1) Period: 01.12.2003 – present day.
Organization: OJSC “Magnit”.
Position: first Deputy CEO;
2) Period: 01.04.2004 – 24.06.2008.
Organization: OJSC “Magnit”.
Position: Chairman of the Board;
3) Period: 01.10.2004 – 30.06.2009
Organization: JSC ”Tander”.
Position: Director of Development department;
4) Period: 30.01.2006 – 01.04.2009.
Organization: LLC “Magnit – Nizhniy Novgorod”.
Position: Chairman of the Board;
5) Period: 25.06.2008 – present day.
Organization: OJSC “Magnit”.
Position: member of the Board;
6) Period: 13.12.2008 – 24.02.2009.
Organization: LLC “Tandem”.
Position: member of the Board.
7) Period: 01.07.2009 – present day
Organization: JSC “Tander”.
Position: Deputy chief executive officer in charge of development.
Shareholding of the person in the issuer’s charter capital: 0.2068% (as of 31.12.2013).
Ordinary shares owned by the person: 0.2068% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the BOD
member during the reporting period:
№
1
2
Date of
transaction
09.01.2013
27.12.2013
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
1 500
1 300
Description of securities
Ordinary registered shares
Ordinary registered shares
Valeriy Butenko
Date of birth: 25.11.1965
Education: higher – in 1988 graduated from Novorossiysk higher engineering sea school -
navigator engineer.
Positions held in the issuer and other companies in the last five years including plural offices:
Period: 01.03.2004- 31.07.2009
Organization: JSC «Tander»
Position: Director in charge of reviser and analytical job;
Period: 29.05.2005- 31.03.2009
Organization: JSC «Tander»
Position: Member of the Revision Committee;
Period: 01.04.2004- 24.06.2009
Organization: OJSC “Magnit”
Position: Chairman of the Revision Committee;
Period: 25.06.2009 – present day
Organization: OJSC “Magnit”
Position: Member of the Board of directors;
5) Period: 01.08.2009- present day
Organization: JSC «Tander»
Position: Deputy chief executive officer in charge of reviser and analytical job.
Shareholding of the person in the issuer’s charter capital: 0.0827% (as of 31.12.2013).
Ordinary shares owned by the person: 0.0827% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares made by the BOD
member within the reporting period:
№
1
2
Date of
transaction
09.01.2013
27.12.2013
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
1 500
1 300
Description of securities
Ordinary registered shares
Ordinary registered shares
Sergey Galitskiy
Date of birth: 14.08.1967
Education: higher – in 1992 graduated from Kuban State University with a degree in Economics
1) Period: 01.04.2004 – present day
Organization: OJSC “Magnit”
Position: member of the Board;
2) Period: 13.04.2006 – present day
Organization: OJSC “Magnit”
Position: CEO;
3) Period: 15.07.2010 – present day
Organization: OJSC “Magnit”
Position: Chairman of the Management board.
Stockholding of the person in the Company’s share capital: 38.6659% (as of 31.12.2013).
Ordinary shares, owned by the person: 38.6659% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares, made by the BOD
member within the reporting period:
Within the reporting period no transactions of acquisition/disposal of the Company’s shares
were made.
Alexander Zayonts
Date of birth: 10.01.1967
Education: higher - Moscow Institute of Chemical Engineering n.a. D.I.Mendeleev – chemical
process engineer.
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 01.2008 – present day
Organization: LLC "Domashniy Interier"
Position: General Director;
2) Period: 01.12.2009 – present day
Organization: LLC "Obiedinennye resursy"
Position: BOD member;
3) Period: 24.06.2010 – present day
Organization: OJSC "Magnit"
Position: BOD member.
Shareholding of the person in the Company’s charter capital: no share.
Ordinary shares owned by the person: no share.
Information on transactions of acquisition/disposal of the Company’s shares made by the BOD
member within the reporting period:
Within the reporting period no transactions of acquisition/disposal of the Company’s shares
were made.
Alexey Makhnev
Date of birth: 24.05.1976
Education: higher - in 1998 graduated from Saint Petersburg University of economics
and finance - Ph.D. in Economics
Positions held in the Company and other companies in the last five years including plural
offices:
1) Period: 09.2007– 12.2008
Organization: LLC “Morgan Stanley Bank”
Position: vice president, investment banking department;
2) Period: 12.2008 – 05.2009
Organization: LLC “Morgan Stanley Bank”
Position: executive director, investment banking department;
3) Period: 05.2009– present day
Organization: CJSC “VTB Capital”
Position: managing director, head of consumer sector and retail direction, investment banking
on global markets department;
4) Period: 25.06.2009 – present day
Organization: OJSC "Magnit"
Position: member of the board of directors.
Shareholding of the person in the issuer’s charter capital: no share.
Ordinary shares owned by the person: no share.
Information on transactions of acquisition/disposal of the Company’s shares made by the BOD
member within the reporting period:
Within the reporting period no transactions of acquisition/disposal of the Company’s shares
were made.
Aslan Skhachemukov
Date of birth: 22.08.1962
Education: higher – in 1987 graduated from Krasnodar Polytechnic Institute of the Order of
Labour Glory - industrial engineer.
Positions occupied in the Company and other companies in the last five years including plural
offices:
1) Period: 01.10.2007 – 10.03.2012
Organization: JSC “Tander”
Position: Deputy General Director;
2) Period: 23.06.2011 – present day
Organization: OJSC ”Magnit”
Position: member of the BOD;
3) Period: 11.03.2012 – 10.03.2012
Organization: JSC “Tander”
Position: Deputy CEO for economic security and organizational issues.
Shareholding of the person in the issuer’s charter capital: 0.0028% (as of 31.12.2013).
Ordinary shares owned by the person: 0.0028% (as of 31.12.2013).
Information on transactions of acquisition/disposal of the Company’s shares made by the BOD
member within the reporting period:
№
Date of
transaction
1
27.12.2013
Type of
transaction
Acquisition of
securities
Quantity of
securities
Description of securities
450
Ordinary registered shares
CCRRIITTEERRIIAA AANNDD AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN ((RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS)) OOFF
EEVVEERRYY MMEEMMBBEERR OOFF TTHHEE CCOOMMPPAANNYY’’SS BBOOAARRDD OOFF DDIIRREECCTTOORRSS PPAAIIDD WWIITTHHIINN TTHHEE
RREEPPOORRTTIINNGG YYEEAARR
According to the Regulations “On the Board of Directors of OJSC “Magnit””, ratified by the
resolution of the annual General Shareholders’ meeting of 24.06.2010 (minutes of meeting of
28.06.2010), remuneration of the Board members is paid upon the resolution of general
shareholders’ meeting in the form of remuneration for participation in the board operation and
remuneration for the achieved results.
Remuneration for participation in the board operation amounts to 120,000 (one hundred twenty
thousand) rubles per month.
Remuneration to the independent director for participation in the board operation amounts to
30,000 (thirty thousand) USD per year, additionally
- 2,000 (two thousand) US dollars for participation by personal presence in each meeting in the
form of joint presence of the board,
- 500 (hundred) US dollars for participation by directing the written opinion for each meeting
in the form of joint presence of the board, or for participation in each meeting in absentee form.
Year-end bonus, based on the operation results, is also paid to the members of the board in
addition to remuneration. Fixed amount of year-end bonus is paid to the members of the board
after approval of appropriate annual financial report by the general shareholders’ meeting of
the Company.
On May 24, 2013 the General shareholders´ meeting made a decision not to pay year-end bonus,
based on the operation results (minutes of 24.05.2013)
In 2013 upon the resolution of shareholders’ meeting of 24.05.2013 (minutes of meeting of
24.05.2013) the Board members were paid remuneration for participation in the board operation
in 2012 in the amount of 10,847,352.60 rubles.
77.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001133 OOPPEERRAATTIIOONNSS
The structure of the Board of directors (elected by annual general shareholders’ meeting on
May 28, 2012, minutes of May 28, 2012):
№
Full name of a member of the board of directors
Date of birth
Andrey Arutyunyan
Valeriy Butenko
Sergey Galitskiy
Alexander Zayonts
Alexey Makhnev
Khachatur Pombukhchan
Aslan Shkhachemukov
12.01.1969
25.11.1965
14.08.1967
10.01.1967
24.05.1976
16.03.1974
22.08.1962
The structure of the Board of directors (elected by the annual general shareholders’ meeting
on May 24, 2013, minutes of May 24, 2013) was not changed.
The current Board of directors includes four independent directors; they are Valeriy Butenko,
Alexander Zayonts, Alexey Makhnev and Aslan Shkhachemukov.
Khachatur Pombukhchan was elected a Chairman of the Board of directors by the unanimous
resolution at the first Board meeting of 25.06.2013, Valeriy Butenko was appointed a Deputy
Chairman and Andrey Arutyunyan was elected a Secretary of the Board.
The Board of directors of the Company operated under the Law “On joint-stock companies”,
the Charter of the Company, Regulations of the Board of directors of OJSC “Magnit” and
Regulations of the Committees of the Board of directors.
According to the provisions of the corporate documents the following committees of the Board
were formed to provide its efficiency and prepare the most important issues attributed to the
competence of the Board of directors:
HR and Remuneration Committee of the Board of Directors:
№
1
2
3
Full name of a member of the board of
directors
Alexey Makhnev
Valeriy Butenko
Position in the committee
chairman of the committee
member of the committee
Alexander Zayonts
member of the committee
Audit Committee of the Board of Directors:
№
Full name of a member of the board of
directors
Position in the committee
1
2
3
Alexander Zayonts
Alexey Makhnev
chairman of the committee
member of the committee
Aslan Shkhachemukov
member of the committee
Within 2013 the Board of directors held 10 meetings and examined 68 issues. All meetings of the
Board of directors were held in the form of joint presence.
Main issues considered by the Board of directors in 2013:
Date of
meeting
Considered issues
04.02.2013
04.02.2013
04.02.2013
Suggestions on the issues to be placed on the agenda of the annual
shareholders’ meeting were considered.
The nominees for election into the Board of directors were considered and put
in the list at the annual shareholders’ meeting.
The nominees for the auditor position were considered and put in the list at the
annual shareholders’ meeting.
11.03.2013
The decisions on approval of the related party transactions were adopted.
25.03.2013
The decision on calling of the annual shareholders’ meeting was adopted.
25.03.2013
The decisions on approval of the related party transactions were adopted.
25.03.2013
25.03.2013
The decision on determination of the price of the transaction the approval of
which as major related-party transaction is included to the agenda of the
general shareholders’ meeting of OJSC “Magnit” was adopted.
The decision on determination of the price of the transactions the approval of
which as related-party transactions is included to the agenda of the general
shareholders’ meeting of OJSC “Magnit” was adopted.
25.03.2013
The decisions on approval of the related party transactions were adopted.
25.03.2013
25.03.2013
The annual report over 2012 financial year was preliminarily approved and
submitted for consideration of the general shareholders’ meeting.
The recommendations to the general shareholders’ meeting on the profit
distribution, including the dividend amount on OJSC “Magnit” shares and
procedure of its payment, and losses following the results of 2012 financial year
were approved.
25.03.2013
The payment amount for the auditor’s services was determined.
23.04.2013
25.06.2013
25.06.2013
25.06.2013
The decision on determination of the main business priorities of OJSC
“Magnit” was adopted.
The Chairman of the Board of directors, the Deputy Chairman of the Board of
directors and the Secretary of the Board of OJSC “Magnit” were elected.
The members of the Audit Committee of the Board of directors of OJSC
“Magnit” and its Chairman were elected.
The members of the HR and Remuneration Committee of the Board of directors
of OJSC “Magnit” and its Chairman were elected.
25.06.2013
The members of the Management Board were elected.
25.06.2013
25.06.2013
25.06.2013
25.06.2013
31.07.2013
31.07.2013
31.07.2013
The decision on determination of the main business priorities of OJSC
“Magnit” was adopted.
The decisions on securities issue (exchange-traded bonds to the bearer of BO-
10, BO-11 series) were made.
The Decisions on securities issue (exchange-traded bonds to the bearer of BO-
10, BO-11 series) and the Prospectus were ratified.
The decision on approval of the major transaction (several associated
transactions) on placement of the exchange-traded bonds to the bearer of BO-
10, BO-11 series by open subscription was made.
The recommendations to the general shareholders’ meeting on the dividend
amount on OJSC “Magnit” shares and procedure of its payment following the
results of the 6 months of 2013 financial year were approved.
The decision on calling of the extraordinary shareholders’ meeting was
adopted.
The nominee to the position of the head of Internal Audit Service was
approved.
31.07.2013
The decision on approval of the related party transaction was adopted.
29.10.2013
The decision on determination of the main business priorities of OJSC
“Magnit” was adopted.
29.10.2013
The decision on approval of the related party transaction was adopted.
29.10.2013
The payment amount for the auditor’s services was determined.
29.10.2013
12.12.2013
12.12.2013
The decision to give consent for CEO (Chairman of the Management Board) to
hold concurrently position in the regulatory body of other organization was
made.
The decision on payment of bonus to the person in the position of CEO of OJSC
“Magnit” following 2013 results was adopted.
The decisions to amend the Decision on securities issue and Prospectus
securities (with respect to non-convertible interest-bearing certified bonds to
the bearer with obligatory centralized custody of 02, 03 series) were made.
Besides, within the reporting period the issues related to determination of the position of OJSC
“Magnit” representative on realization of the voting rights on the Company’s stocks and shares
in other organizations (companies) were examined by the Board of directors of OJSC “Magnit”
in accordance with the Clause 14.2 of the Charter. Thus, the meetings on the issues concerning
determination of the position of OJSC “Magnit” representative on realization of the voting
rights on the Company’s shares of CJSC “Tander”, shares in LLC “Retail import”, LLC
“Tandem”, LLC “Alcotrading” and “AgroTorg” were held in March, June, July, November, and
December 2013.
The management of the Company achieved the following results in 2013:
1. Revenue of the Company increased by 29.21% from 448,661.13 million rubles in 2012 to
579,694.88 million rubles in 2013. Top line growth was due to an increase in selling space as well
as to a 3.88% increase of like-for-like sales (excl. VAT). Revenue growth in dollar terms
amounted to 26.14%: from US$ 14,429.65 million to US$ 18,201.92 million8.
At the end of the first quarter 2013 OJSC "Magnit" became the largest Russian food retailer in
terms of revenue. Thus, the Company became the absolute leader in the Russian food retail
sector in terms of sales, total number of stores, selling space, growth rates, profitability margins
and capitalization.
2. During 2013 the Company added 1,209 stores (1,154 convenience stores, 35 hypermarkets and
26 “Magnit Family” stores). The total store base as of December 31, 2013 reached 8,093 stores
(7,200 convenience stores, 161 hypermarkets, 46 “Magnit Family” stores and 686 cosmetics
stores). Total selling space of the stores increased by 18.13% from 2,549.26 thousand sq. m. to
3,011.38 thousand sq. m.
8093
6884
5309
7200
6046
5006
4057
3228
4002
3204
368
610
1014
1893
1500
2197
2582
2194
2568
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Convenience Stores
Hypermarkets
Magnit Family
Cosmetics Stores
3. Number of customers increased by 21.23% from 2,033.43 million in 2012 to 2,465.05 million in
2013.
4. Sales of private label products as a % of sales in 2013 amounted to 13%, the number of private
label SKUs in 2013 amounted to 681. The Company will continue to increase the sales of private
label products primarily through expansion of their offer in hypermarkets specifically in non-
food.
8 Based on the average exchange rate for 2013 of 31.8480 RUR per 1 US$, 2012 – 31.0930 RUR per 1 US$.
12,1
12,1
12,3
12,7
14,0
13,2
13,0
700
700
530
614
637
613
681
2007
2008
2009
2010
2011
2012
2013
Number of items
Share in revenue, %
5. In 2013 the Company opened four distribution centers: Zelenodolsk (Republic of Tatartan),
Yaroslavl, Shakhty (Rostov region) and Ekaterinburg. Launch of the new distribution centers
improved the quality of service in the Volga, Central, Southern and Urals regions. Total space of
22 distribution centers as of December 31, 2013 amounted to 634,997 thousand sq. m.
6. During the reporting year the fleet of the Company’s vehicles increased by 1,176 trucks, total
number of vehicles amounted to 5,577 which resulted in the considerable reduction of
transportation costs.
7. In 2013 the Company increased the share of products processed via its distribution centers
from 83% in 2012 to 85% which is also one of the gross margin drivers.
8. The Company was actively working with its employees increasing their loyalty and
developing corporate culture. In 2013 the average weighted number of the Company’s
employees amounted to 175,720 out of which 121,228 are in-store personnel; 36,497 people are
engaged in distribution; 11,636 people - in regional branches and 6,359 are employees of the
head office. Average monthly salary in the Company in 2013 amounted to 25 899 rubles.
As of December 31, 2013 total number of employees of "Magnit" group of companies amounted
to 217,258 people. Based on the publicly available information the management of the Company
assumes that OJSC “Magnit” is the largest private employer in Russia.
9. LFL revenue growth in 2013 vs. 2012 in ruble terms amounted to 3.88%, LFL average ticket
increased by 5.22% and LFL traffic decreased by 1.28%.
6%
5%
5%
4%
0%
-1%
LFL sales
LFL average ticket
LFL traffic
10. Gross margin increased from 26.53% in 2012 to 28.51% in 2013 primarily due to continued
improvement of purchasing terms. Gross profit in rubles increased by 38.82% from 119,051.79
million RUR (US$ 3,828.89 million) to 165,262.99 million RUR (US$ 5,189.12 million).
11. EBITDA increased by 36.60% from 47,380.48 million RUR (US$ 1,523.83 million) in 2012 to
64,721.23 million RUR (US$ 2,032.19 million) in 2013. EBITDA margin in 2013 amounted to
11.16%. Net debt/EBITDA ratio (in ruble terms) at the end of 2013 amounted to 1.05.
12. Net income in 2013 increased by 41.82% and amounted to 35,620.38 million RUR (US$
1,118.45 million) vs. 25,117.28 million RUR (US$ 807.81 million) in 2012. Net income margin in
2013 amounted to 6.14%.
26,5%
28,5%
24,3%
336
8,2%
3,7%
2011
449
10,6%
5,6%
2012
580
11,2%
6,1%
2013
sales, RUR bn
EBITDA Margin, %
Gross Margin, %
NI Margin, %
In general, the Board of Directors of the Company considers the achieved financial and
economic results positive and in line with 2013 targets.
Following the results of the conducted work the Board of the Company’s directors
recommends the annual general shareholders’ meeting to approve the activity of the
Company’s management bodies during 2013 and to ratify 2013 annual report submitted for
the meeting agenda.
88.. MMAAIINN 22001133 CCOORRPPOORRAATTEE EEVVEENNTTSS
February
Within one day OJSC “Magnit” placed bonds of 01 series for a total amount
of 5 billion rubles.
Bonds of 01 series were admitted to trading in the process of circulation
within listing procedure by inclusion into the quotation list “A” level 1 of
CJSC “MICEX Stock Exchange”.
Within one day OJSC “Magnit” placed exchange-traded bonds of BO-08, BO-
09 series for a total amount of 10 billion rubles.
Exchange-traded bonds of BO-08, BO-09 series were included into the
quotation list “A” level 1 of CJSC “MICEX Stock Exchange”.
April
Standards & Poors Rating Agency upgraded the individual credit rating of
OJSC “Magnit” from BB-, to BB level, Outlook Stable.
The National Rating Agency upgraded the individual credit rating of OJSC
“Magnit” from “AA” - very high reliability level 2 to “AA+ - very high
reliability level 1”.
Magnit Group of companies became an absolute leader in Russian Food
Retail Sector by revenue.
The new membership of the OJSC “Magnit” Board of directors including
four independent directors was formed by the annual general shareholders’
meeting.
May
The decision to pay dividends following the results of 2012 financial year
was adopted by the annual general shareholders’ meeting.
The decisions on approval of major related party transaction was adopted by
the annual shareholders’ meeting.
The membership of the OJSC “Magnit” Management Board was formed by
the Board of directors.
The Board of directors formed the committees of the BOD, appointed the
chairman, deputy chairman and secretary of the BOD.
The Board of directors made a decision to issue securities – exchange-traded
bonds of BO-10, BO-11.
OJSC “Magnit” shares were included into Blue Chip Index Constituents of
MICEX.
June
August
The total headcount of OJSC “Magnit” group of companies exceeded 200
thousand.
September
The decision to pay dividends following the results of the 6 months of 2013
financial year was adopted by the extraordinary general shareholders’
meeting.
November
"Magnit" group of companies acquired 100% shares in the charter capital of
limited liability company “TD-holding”.
December
JSC “Tander, the subsidiary company of OJSC “Magnit”, acquired 99,9%
shares in the charter capital of limited liability company “MagnitEnergo”.
Magnit CEO Sergey Galitskiy has been named Businessman of the Year by
Forbes Russia.
99.. PPOOSSIITTIIOONN OOFF TTHHEE CCOOMMPPAANNYY IINN IINNDDUUSSTTRRYY
RRUUSSSSIIAANN MMAARRKKEETT
This section was prepared with the use of the following materials: IA Infoline, public
sources of companies.
Retail turnover amounted to 23 668.4 billion RUR in 2013 which is 103.9% to the level of 2012 in
terms of mass of commodities. In December 2013 turnover increased by 104% compared to
December 2012 and amounted to 2 519.4 billion RUR.
In 2013 food retail turnover amounted to 102.5% compared to 2012, non-food - 105% compared
to 2012. In December 2013 food retail turnover amounted to 101.8% compared to December
2012 and 119.2 % compared to November 2013. Non-food retail turnover In December 2013
amounted to 105.5% compared to December 2012 and 119.5% compared to November 2013.
Dynamics of the key figures of the consumer market in 2005-2013, % Y-o-Y
25
20
15
10
5
0
-5
-10
-15
19,6
18,7
21,6
20,5
18,7
17,9 17,6
16,5
15,1 15,1
13,8
11,8 12,3 12,1
15,4 16,1
14,8
13,4 12,5
15,8 15,8 16,7
11,3 10,8
13,3
13,4
11,2
9
10,1
14,4 14,4
9,3
7,2
10,5
8,2
5,4
0,4
0,3
0,2
9,5
7,3
8,4
8,1
6,9
11
7,4
3,7
2,2
0,9
5,7
3,7
7,6
6,4
5,1
12,3
10,7
8,7
5,7
5
1,3
0,8
7,9
3,4
11,1
9
6,7
9,9
7,9
9,2
7,4
8,5
7,4
5,6
5,2
5,6
4,9
2,2
2
6
4
1,6
4,6
3,6
2,3
4,4
4,1
3,5
5
4
2,6
6
0
Q
1
6
0
Q
2
6
0
Q
3
6
0
Q
4
7
0
Q
1
7
0
Q
2
7
0
Q
3
7
0
Q
4
8
0
Q
1
8
0
Q
2
8
0
Q
3
8
0
Q
4
Growth rate of retail turnover
Growth rate of food turnover
Growth rate of non-food turnover
9
0
Q
1
-0,7
9
0
Q
2
-5,1
9
0
Q
3
-4,4
9
-1,2
0
Q
4
0
1
Q
1
0
1
Q
2
0
1
Q
3
0
1
Q
4
0
1
0
2
1
1
Q
1
1
1
Q
2
1
1
Q
3
1
1
Q
4
2
1
Q
1
2
1
Q
2
2
1
Q
3
2
1
Q
4
3
1
Q
1
3
1
Q
2
3
1
Q
3
3
1
Q
4
-5,5
-8,6
-9,1
-9,3
-12,3
Source: IA Infoline
Monthly dynamics of the retail turnover in Russia in 2005-2013 is provided in the diagram. The
monetary base (broad definition) characterizing money supply by the monetary regulation
agencies increased for December 2013 by 1366.3 bn RUR compared to November 2013 (growth
for December 2012 amounted to 1595.8 bn RUR). The monetary base (broad definition) for
2013 increased by 651.1 bn RUR (growth for 2012 amounted to 1208.7 bn RUR).
Dynamics of retail turnover and monetary base in 2005-2013, bn RUR
Retail turnover (in current prices), bn RUR
Monetary base (in broad definition), bn RUR
2900
2400
1900
1400
900
400
12 000
10 000
8 000
6 000
4 000
2 000
0
5
0
n
a
J
5
0
r
p
A
5
0
l
u
J
5
0
t
c
O
6
0
n
a
J
6
0
r
p
A
6
0
l
u
J
6
0
t
c
O
7
0
n
a
J
7
0
r
p
A
7
0
l
u
J
7
0
t
c
O
8
0
n
a
J
8
0
r
p
A
8
0
l
u
J
8
0
t
c
O
9
0
n
a
J
9
0
r
p
A
9
0
l
u
J
9
0
t
c
O
0
1
n
a
J
0
1
r
p
A
0
1
l
u
J
0
1
t
c
O
1
1
n
a
J
1
1
r
p
A
1
1
l
u
J
1
1
t
c
O
2
1
n
a
J
2
1
r
p
A
2
1
l
u
J
2
1
t
c
O
3
1
n
a
J
3
1
r
p
A
3
1
l
u
J
3
1
t
c
O
Source: IA Infoline
Dynamics of retail turnover in Russia in 2006-2013
Period
Turnover, bn
RUR
FY 2006
8693,4
FY 2007
10757,8
FY 2008
13853,2
FY 2009
14599,2
FY 2010
16499
FY 2011
19082,6
1Q 2012
4689,7
2Q 2012
5112,2
1H 2012
9801,9
3Q 2012
5492,4
4Q 2012
6100,2
FY 2012
21394,5
1Q 2013
5242,4
April 2013
1847,2
May 2013
1893,8
June 2013
1933,9
2Q 2013
5674,9
1H 2013
10917,3
1990,4
July 2013
August 2013 2036,7
2016,6
September
2013
3Q 2013
6043,7
October 2013 2085,6
2102,6
November
2013
December
2013
4Q 2013
FY 2013
6707,4
23668,4
2519,2
As a %9 to the
corresponding period
of the preceding year
113,9
115,2
113,0
94,9
106,4
107,0
107,9
107,4
107,7
105,6
104,9
106,3
104,1
104,2
103,0
103,6
103,6
103,8
104,6
104,2
103,3
104,1
103,6
104,5
103,8
104,0
103,9
Source: data of the Federal State Statistics Service and the Ministry of Economic Development and Trade
SSTTRRUUCCTTUURREE OOFF RREETTAAIILL TTUURRNNOOVVEERR BBYY TTYYPPEESS OOFF PPRROODDUUCCTTSS
Retail turnover in 2013 increased by 3.9% compared to 2012 and amounted to 23 668.4 billion
RUR, at that consumption of food products increased by 2.5%, non-food – by 5%.
Long-term dynamics and structure of retail turnover by types of products is presented in the
diagram.
9 Dynamics of retail turnover in terms of mass of commodities
Dynamics of retail turnover by types of products in 2000-2013, %
25
20
15
10
5
0
-5
-10
20,4
13,9
13,5
10,1
9,3
8,6
10,5
11
7,6
9
7,5
5,4
10,3
9,7
8,8
7,7
15,1
12,8
13,3
12,1
11,4
15,1
14,1
10,5
8,7
19,1
16,8
16,1
12,6
8,5
11
5,9
15,1
13,6
11,5
5,7
7,6
7
6,3
5,1
-1,8
1,2
10,7
6,3
8,6
3,6
3,1
3,6
2,7
3,9
2,5
5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
-2,7
2010
2011
2012
2013
Total retail turnover
Food products
-5,1
Alcohol drinks
-8,2
Non-food
Source: IA Infoline
Note that the data of the Federal State Statistics Service for 2009-2013 and for preceding years
are not fully compatible as in 2002-2008 the data on food products including beverages were
provided by the Federal State Statistics Service without tobacco products but starting from 2009
– with tobacco products. Therefore, the graph below provides the adjusted data on the share of
food products (excluding tobacco products).
Dynamics of share of food products in retail turnover in 2005-2013, %
50
49
48
47
46
45
44
5
0
n
a
J
5
0
r
p
A
5
0
l
u
J
5
0
t
c
O
6
0
n
a
J
6
0
r
p
A
6
0
l
u
J
6
0
t
c
O
7
0
n
a
J
7
0
r
p
A
7
0
l
u
J
7
0
t
c
O
8
0
n
a
J
8
0
r
p
A
8
0
l
u
J
8
0
t
c
O
9
0
n
a
J
9
0
r
p
A
9
0
l
u
J
9
0
t
c
O
0
1
n
a
J
0
1
r
p
A
0
1
l
u
J
0
1
t
c
O
1
1
n
a
J
1
1
r
p
A
1
1
l
u
J
1
1
t
c
O
2
1
n
a
J
2
1
r
p
A
2
1
l
u
J
2
1
t
c
O
3
1
n
a
J
3
1
r
p
A
3
1
l
u
J
3
1
t
c
O
Source: IA Infoline
Share of food products in retail turnover (excl. tobacco products), %
Share of food products in retail turnover (incl. tobacco products), %
Polynomial (Share of food products in retail turnover (incl. tobacco products), %
In 2013 the share of food products increased to 47% vs. 46.6% in 2012. In December 2013 the
share of food products increased by 0.2 pp vs. December 2012.
Structure of retail turnover by groups of products in 2002-201310
Figures
Retail turnover
food products
non-food products
share of food products, %
share of non-food products,
%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2013 Dec2012 Dec2013
3765 4530 5642 7042 8712 10869 13915 14599 16499 19083 21394,5 23668,4 2295,4 2519,2
1822 2164 2671 3316 4061 5022 6510 7095 8035 9122 9961,4 11127,2 1079,3 1188,1
1944 2365 2972 3725 4651 5847 7405 7504 8464 9961 11433,1 12541,2 1216,1 1331,1
48,4 47,8 47,3 47,1 46,6 46,2 46,8 48,6 48,7 47,8 46,6
47,0
47,0
47,2
51,6 52,2 52,7 52,9 53,4 53,8 53,2 51,4 51,3 52,2 53,4
53,0
52,8
53,0
Source: data of the Federal State Statistics Service
10 For comparison with 2009-2011 data on the turnover and the share of food products in 2002-2008 are adjusted for tobacco products
Structure of retail turnover by groups of products in 2011-2013 (monthly), bn RUR
3000
2500
2000
1500
1000
500
0
non-foof products
food-products
689 681 749 765 792 808 835 876 873 903 898
803 806
1077
871 882 914 935 962 999 100110271017
904 891
1216
970 982 989 102110571088108311131113
1331
672 673 716 720 740 743 764 777 771 798 796
967
722 718 770 768 799 814 832 850 848 878 883
1079
806 800 871 866 905 913 934 948 934 973 990
1188
I-11
III-11
V-11
VII-11
IX-11
XI-11
I-12
III-12
V-12
VII-12
IX-12
XI-12
I-13
III-13
V-13
VII-13
IX-13
XI-13
Source: IA Infoline
In December 2013 the share of food products amounted to 47.2%, while the share of non-food
products in the retail turnover in Russia amounted to 52.8% (in December 2012 – 47% and 53%
correspondingly).
Structure of retail turnover by groups of products in 2011-2013 (monthly), %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
50,6%50,3%51,1%51,5%51,7%52,1%52,2%53,0%53,1%53,1%53,0%52,7%52,6%52,9%53,1%53,4%53,4%53,5%53,6%54,0%54,1%53,9%53,5%53,0%52,8%52,7%52,7%53,2%52,3%52,9%53,2%53,5%53,7%53,4%53,0%52,8%
49,4%49,7%48,9%48,5%48,3%47,9%47,8%47,0%46,9%46,9%47,0%47,3%47,4%47,1%46,9%46,6%46,6%46,5%46,4%46,0%45,9%46,1%46,5%47,0%47,2%47,3%47,3%46,8%47,7%47,1%46,8%46,5%46,3%46,6%47,0%47,2%
I-11 II-11 III-
11
IV-
11
V-11 VI-
11
VII-
11
VIII-
11
IX-
11
X-11 XI-
11
XII-
11
I-12 II-12 III-
12
IV-
12
V-12 VI-
12
VII-
12
VIII-
12
IX-
12
X-12 XI-
12
XII-
12
I-13 II-13 III-
13
IV-
013
V-13 VI-
13
VII-
13
VIII-
13
IX-
13
X-13 XI-
13
XII
Source: IA Infoline
SSTTRRUUCCTTUURREE OOFF RREETTAAIILL TTUURRNNOOVVEERR BBYY TTYYPPEESS OOFF OORRGGAANNIIZZAATTIIOONNSS
share of non-food products, %
share of food products, %
At the end of 2013 in terms of structure of retail turnover by types of organizations the trend of
decrease of the share of marketplaces (by 1.1 pp compared to 2012 and 2.1 pp compared to 2011)
continued. The share of small enterprises also decreased by 0.5 pp at the end of 2013 compared
to 2012. The share of large and mid organizations (mostly these are retail networks) increased
by 1 pp compared to 2012 and decreased by 0.4 pp compared to the first half of 2013. The share
of individual entrepreneurs increased by 0.6 pp in 2013 exceeding the figure of 2011.
In 2013 90.5% of the retail turnover was formed by trading organizations and individual
entrepreneurs operating outside of the marketplace and the share of retail marketplaces and
fairs amounted to 9.5% (in 2012 – 89.4% and 10.6% correspondingly). Dynamics of the structure
of retail turnover in Russia by types of organizations is presented in the diagram.
Structure of formation of retail turnover in 2006-2013 by types of
organizations, %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
32,7
22,3
25,3
19,5
37,3
22,2
25,2
15,3
2007
2006
Large and mid enterprises
Source: IA Infoline
35,2
34,5
36,2
26,3
25,2
13,3
2008
25,8
26,1
13,6
2009
25,2
25,9
12,7
2010
38,2
25,5
24,7
11,6
2011
Small enterprises
Individual entrepreneurs
40,2
41,2
25,0
24,2
10,6
2012
Open markets
24,5
24,8
9,5
2013
In December 2013 90.9% of retail turnover was formed by trading organizations and individual
entrepreneurs operating outside of the marketplaces, the share of retail marketplaces and fairs
amounted to 9.1% (in December 2012 – 89.7% and 10.3% correspondingly).
Turnover of trading organizations and marketplaces in 2002-2013, bn RUR
Figure
2002 2003 2004 2005 20062007
2008 2009
2010
2011 2012
2013 Dec2012Dec2013
Retail turnover
3765 4529 5642 7038 869010866,213853,214599,216499 19082,621394,523668,42295,4 2519,2
turnover of trading
organizations
2838,8 3451,14420,55558,2 69879214,5 12015,912613,714403,616697,319126,721430,12059,0 2289,4
sales of open markets
926,2 1077,91254,11479,8 17031651,7 1837,3 1985,5 2095,4 2385,3 2267,8 2238,3 236,4
229,8
share of trading organizations,
%
share of open markets, %
Source: data of the Federal State Statistics Service
75,4 76,2 77,9 79,0 80,4 84,8
24,6 23,8 22,1 21,0 19,6 15,2
86,7
86,4
87,3
88,5
89,4
90,5
89,7
90,9
13,3
13,6
12,7
11,5
10,6
9,5
10,3
9,1
Compared to December 2012 the turnover of trading organizations increased by 5.2% and sales
of the marketplaces decreased by 7.6%.
Dynamics of turnover of trading organizations and markets in 2011-2013 (monthly), trn RUR
Sales of marketplaces, trn RUR
Turnover of trading organizations, trn RUR
0,21
0,17 0,17 0,17 0,17 0,18 0,19 0,19 0,20 0,20
0,17 0,17
1,19 1,18 1,30 1,32 1,36 1,38 1,42 1,47 1,45 1,50 1,49
0,23
1,82
0,17 0,17 0,18 0,18 0,19 0,20 0,20 0,20 0,20
0,18 0,18
0,17 0,17
2,30
0,18 0,17 0,18 0,18 0,18 0,19 0,19 0,20 0,20
1,35 1,35 1,46 1,47 1,52 1,57 1,61 1,65 1,64 1,69 1,70
1,53 1,51
1,66 1,67 1,72 1,75 1,80 1,84 1,82 1,89 1,90
0,23
2,29
3
2,5
2
1,5
1
0,5
0
I-11 II-11 III-
11
IV-
11
V-11 VI-
11
VII-
11
VIII-
11
IX-
11
X-11 XI-
11
XII-
11
I-12 II-12 III-
12
IV-
12
V-12 VI-
12
VII-
12
VIII-
12
IX-
12
X-12 XI-
12
XII-
12
I-13 II-13 III-
13
IV-
13
V-13 VI-
13
VII-
13
VIII-
13
XI-
13
X-13 XI-
13
XII-
13
Source: IA Infoline
In December 2013 compared to November 2013 the turnover of trading organizations increased
by 19.9% while the sales of the marketplaces grew by 13.8%.
Structure of retail turnover in 2011-2013 (monthly), %
12,8%12,5%11,6%11,4%11,2%11,2%11,2%11,3%11,6%11,6%11,8%11,1%
12,5%
11,2%10,6%10,6%10,4%10,5%10,5%10,4%10,7%10,6%10,7%10,2%10,4%10,4%9,5%9,4%9,3%9,3%9,1%9,0%9,1%9,1%9,1%9,0%
100%
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
I-11 II-11 III-
11
IV-
11
V-11 VI-
11
VII-
11
VIII-
11
IX-
11
X-11 XI-
11
XII-
11
I-12 II-12 III-
12
IV-
12
V-12 VI-
12
VII-
12
VIII-
12
IX-
12
X-12 XI-
12
XII-
12
I-13 II-13 III-
13
IV-
13
V-13 VI-
13
VII-
13
VIII-
13
XI-
13
X-13 XI-
13
XII-
13
share of open markets, %
share of trading organizations, %
Source: IA Infoline
Due to the ban effective from January 1, 2013 on the use of temporary facilities for organization
of market trade (except for agricultural markets and agricultural cooperative markets), the
process of reorganization of retail markets and their conversion to shopping centers (roofed
shopping rows) was intensified in many subjects of the Russian Federation. 126 markets were
closed and converted to fairs, shopping centers, nonpermanent trading objects compared to
October 1, 2013 and 573 markets compared to October 1, 2012. The breakdown of the retail
markets by types has changed in the fourth quarter of 2013 towards the increase of the share of
agricultural markets (from 22.1% to 24.1%), agricultural cooperative markets (from 1.2% to
1.4%), specialized food markets (from 4.3% to 4.6%) and specialized merchandize markets (from
7.3 to 7.4%), on the back of the decrease of share of multipurpose markets (from 60.3% to 57.9%)
and other specialized markets (from 3% to 2.8%). The shares of specialized radio and electrical
household appliances markets and construction markets remained unchanged in the fourth
quarter of 2013 and amounted to 0.1% and 0.7% correspondingly. In 2013 the breakdown of the
retail markets by types has changed towards the increase of the share of agricultural markets –
by 10.2 pp, agricultural cooperative markets – by 0.3 pp and specialized food markets – by 0.9
pp. At that the decrease of share was demonstrated by multipurpose markets – by 9.4 pp,
specialized merchandize and other markets – by 0.8 pp, specialized construction markets – by
0.4 pp. The share of specialized radio and electrical household appliances markets has not
changed in 2013 and amounted to 0.1 pp.
As of January 1, 2014 there were 1 589 retail markets functioning on the territory of the Russian
Federation. The number of market slots on the marketplaces as of January 1, 2014 amounted to
423.8 thousand, their number reduced by 33.1 thousand or 7.2% compared to October 1, 2013
and by 201.2 (32.2%) compared to January 2013. The level of actual use of the market slots as of
January 1, 2014 increased by 3.3 pp on average through the Russian Federation compared to
October 1, 2013, by 0.3 pp vs. January 2013. Individual entrepreneurs still remain the principal
economic entities, while the share of their market slots is gradually decreasing – by 0.6 pp vs.
October 1, 2013 and by 6.4% vs. January 2013. At that the increase of share of market slots by 0.7
pp was shown by individuals, by 0.3 pp – by legal entities and subsidiary individual holdings,
by 0.2 pp – by peasant (farm) enterprises. As of January 1, 2014 194.7 thousand individual
entrepreneurs operated at retail markets that is almost one and a half times less y-o-y.
Dynamics of the number of open markets in the Russian Federation and their share in the retail
turnover in 2001-2013
6444
5780
25,3%
5926
6016
23,8%
24,6%
5831
5892
22,1%
21,0%
4771
19,6%
3728
15,3%
3497
3427
3159
13,3%
13,6%
12,7%
11,6%
2162
10,6%
30%
25%
20%
15%
1589
9,2%
10%
5%
0%
7000
6000
5000
4000
3000
2000
1000
0
2001
2002
2003
2004
2005
2006
Number of markets in the Russian Federation e-o-p
2007
2013
2010
Market share in retail turnover in the Russian Federation (right scale)
2009
2008
2012
2011
Source: IA Infoline
RREEGGIIOONNAALL SSTTRRUUCCTTUURREE OOFF RREETTAAIILL TTUURRNNOOVVEERR
Regional structure of retail turnover in Russia is uneven: 11 constituent territories generated
51.12% of retail turnover in 2013 (Moscow, Moscow region, Saint-Petersburg, Sverdlovsk
region, Krasnodar region, Samara region, Republics of Tatarstan and Bashkortostan, Tyumen
region, Chelyabinsk and Rostov regions), which is 0.05 pp lower than in 2012.
Structure of retail turnover by federal
Structure of retail turnover by federal
districts of the Russian Federation in 2012,
districts of the Russian Federation in 2012,
%
Structure of retail turnover by federal districts
Structure of retail turnover by federal districts
of the Russian Federation in 2013, %
of the Russian Federation in 2013, %
North-
Caucasian
5,1%
Southern
9,0%
North-Western
9,2%
Volga
18,3%
Urals
9,5%
North-Caucasian
5,1%
Southern
9,0%
Volga
18,5%
Urals
9,7%
North-Western
9,1%
Central
34,1%
Far-Eastern
3,8%
Siberian
10,8%
Central
33,9%
Eastern
Far-Eastern
3,9%
3,9%
Siberian
10,8%
Source: IA Infoline
In 2013 the shares of Volga and Urals federal districts increased; the shares of Far-Eastern,
In 2013 the shares of Volga and Urals federal districts increased; the shares of Far
In 2013 the shares of Volga and Urals federal districts increased; the shares of Far
North-Caucasian, North-Western and Southern federal
Central federal district decreased by 0.3 pp, Siberian – by 0.1 pp.
Central federal district decreased by 0.3 pp, Siberian
districts have not changed; the share of
Western and Southern federal districts have not changed; the share of
Structure of retail turnover by subjects of
Structure of retail turnover by subjects of
the Russian Federation in 2012, %
the Russian Federation in 2012, %
Structure of retail turnover by subjects of the
Structure of retail turnover by subjects of the
Russian Federation in 2013, %
Russian Federation in 2013, %
Samara region
2,4%
Sverdlovsk
region
Tyumen region
4,0%Tyumen region
2,9%
Republic of
Tatarstan
3,1%
Republic of
Bashkortostan
3,0%
Republic of
Tatarstan
3,0%
Republic of
Bashkortostan
3,0%
Chelyabinsk
region
2,2% Other
48,8%
Samara region
2,4%
Sverdlovsk
region
4,0%
Tyumen region
3,1%
Rostov
region
2,9%
Krasnodar
region
3,8%
Saint-
Oetersburg
4,0%
Moscow
17,1%
Source: IA Infoline
Moscow region
5,9%
Krasnodar
region
3,9%
Rostov region
2,9%
Saint-Oetersburg
4,0%
Moscow
17,0%
Chelyabinsk
region
2,1% Other
48,9%
Moscow region
5,7%
In 2013 the share of Tyumen region increased by 0.2 pp, Republic of Bashkortostan – by 0.1 pp;
In 2013 the share of Tyumen region increased by 0.2 pp, Republic of Bashkortostan
In 2013 the share of Tyumen region increased by 0.2 pp, Republic of Bashkortostan
regions in the Russian Federation, the shares of Saint-Petersburg,
regions in the Russian Federation, the shares of Saint
in the retail turnover by regions in the Russian Federation, the shares of Saint
Krasnodar region, Samara region, Sverdlovsk region, Rostov region, Chelyabinsk region and
Krasnodar region, Samara region, Sverdlovsk region, Rostov region, Chelyabinsk region and
Krasnodar region, Samara region, Sverdlovsk region, Rostov region, Chelyabinsk region and
Republic of Tatarstan remained unchanged vs. 2012; the share of Moscow region decreased by
Republic of Tatarstan remained unchanged vs. 2012; the share of Moscow region decreased by
Republic of Tatarstan remained unchanged vs. 2012; the share of Moscow region decreased by
by 0.1 pp, while the share of other regions remained unchanged.
0.2 pp, Moscow – by 0.1 pp, while the share of other regions remained unchanged.
by 0.1 pp, while the share of other regions remained unchanged.
Dynamics of share of 69 regions of the Russian Federation (apart from 11
largest) in retail turnover in 2003-2013, %
47,1%
46,6%
47,8%
47,4%
48,2%
48,8%
48,9%
44,7%
45,1%
45,4%
45,7%
52%
50%
48%
46%
44%
42%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: IA Infoline
In 2013 the most dynamic growth of share in the total retail turnover vs. 2012 was demonstrated
by the Urals federal district – by 0.174 pp, Volga federal district – by 0.136 pp, Southern federal
district – by 0.005 pp and Far-Eastern federal district – by 0.031 pp, while the decline in retail
turnover in 2013 was demonstrated by the Central federal district (by 0.251 pp), in particular
Moscow region (by 0.239 pp), Moscow (by 0.1 pp), Siberian federal district – by 0.052 pp, North-
Caucasian – 0.009 pp. The share of the North-Western federal district decreased by 0.033 pp in
2013, and the share of Saint-Petersburg increased by 0.042 pp.
Regional structure of retail turnover of the Russian Federation in 2003-2013, %
Region
Central federal district
Moscow region
Moscow
North-Western federal district
Saint-Petersburg
Southern federal district
North-Caucasian federal district
Volga federal district
Urals federal district
Siberian federal district
Far-Eastern federal district
Source: data of the Federal State Statistics Service
2003 2004 2005 2006 2007 2008 2009 2010
33,83 34,21
39,2
6,12
4,3
6,16
17,31 17,47
26,0
9,36
9,35
9,1
4,15
4,15
3,6
8,99
8,73
7,7
4,66
3,0
4,85
18,27 18,20
16,7
10,14 9,69
8,4
10,95 10,72
11,7
3,98
4,07
4,2
36,9
5,3
22,5
9,5
4,0
7,9
3,7
16,9
9,3
11,7
4,1
34,4
6,1
18,8
9,4
4,1
8,5
3,8
17,9
10,4
11,7
3,9
38,4
5,1
24,3
9,3
3,8
7,8
3,4
16,7
8,7
11,6
4,1
33,4
6,4
17,0
9,3
4,2
8,8
4,0
18,4
10,8
11,6
3,8
35,8
5,7
20,9
9,4
4,1
8,0
3,6
17,5
10,0
11,7
4,1
2011
2013
2012
34,57 34,15 33,89
6,33
5,66
5,90
17,41 17,07 16,97
9,13
9,17
9,14
4,00
3,96
3,89
9,02
9,01
8,92
4,97
5,13
5,14
18,18 18,33 18,46
9,52
9,71
9,54
10,82 10,83 10,78
3,87
3,84
3,89
In 2013 there were no regions to demonstrate the decrease of retail turnover vs. 2012 among
largest regions (which share in retail turnover of the Russian Federation is above 1%). The
highest growth (more than 7.5%) was demonstrated by Primorskiy region (8.3%), Republic of
Bashkortostan (8.1%) and Tyumen region (7.8%).
Growth of retail turnover by districts in 2007 - 2013, % Y-o-Y, in comparable prices
2009
2011
2012
2013
108,3
104,8
103,4
107
104,5
103,8
95,9
94,4
94,8
107,6
106,3
104,9
110,3
108,7
106,7
107,6
106,6
105,5
105,2
95,1
107
105,3
105,1
108,3
106,1
103,2
90
89,4
105,3
104,9
104,9
100,7
125
120
115
110
105
100
95
90
85
80
Central
North-Western
Southern
North-Caucasion
Volga
Urals
Siberian
Far-Eastern
Source: IA Infoline
In general, in 2011 there was a y-o-y decline in turnover in 7 regions11, in 8 regions in 2012 and
in 4 regions in 2013. At that by the end of the year negative trends at the consumer market
intensified dramatically: thus, in December 2013 16 regions demonstrated the decline in retail
turnover compared to December 2012.
Number of regions with positive dynamics of retail turnover in physical terms, Y-o-Y
80
70
60
50
40
30
20
10
0
Source: IA Infoline
GGOOVVEERRNNMMEENNTT RREEGGUULLAATTIIOONN OOFF RREETTAAIILL
According to the Federal Law № 381 – FZ “On fundamental principles of government
regulation of trade activity in the Russian Federation” which came into effect on
February 1, 2010, food retail chains (which threshold of dominance on retail market
within the boundaries of one region, municipality or urban district exceeds 25%) are
prohibited from acquiring and renting additional selling space within the boundaries of
the corresponding administrative-territorial entity. The law does not apply to
agricultural consumer cooperatives and organizations of consumer cooperation.
The law “On fundamental principles of government regulation of trade activity in the
Russian Federation” also aims to regulating the cooperation of retail chains and
suppliers. The law № 381 – FZ introduced special legal regulation with regard to food
supplies and set forth the list of terms which cannot be imposed by food suppliers and
their buyers (trading networks) upon each other. In particular, these terms include:
reduction of price by suppliers to the level which will not exceed the minimum selling
price of this product by economic entities performing corresponding activity subject to
11 80 subjects of the Russian Federation were included in the analysis (excluding Khanty-Mansiisk Autonomous District, Yamal-
Nenets and Nenets Autonomous Area), which existed as of June 1, 2011 (data for 2006-2009 are adjusted for consolidation).
the determination of the trade mark-up; payment for the change in the product mix;
responsibility for failure to perform obligations on goods supply on more favorable
terms than for other economic entities; fee paid by suppliers for access to trade objects
within one trading network. Wholesale trade under commission agreement is
prohibited. It is prohibited to set a ban on substitution of persons under the food supply
agreement through assignment of a claim and liability for noncompliance with this
regulation. Payment due date for some food products was set forth. For example,
products with up to 10-days expiry period should be paid for within 10 working days
from the date of acceptance of goods, for products with up to 30-days expiry period the
payment due period is up to 30 calendar days, and for the rest food products including
alcoholics drinks – up to 45 calendar days.
MMAAIINN CCOOMMPPEETTIITTOORRSS1122
The concentration level of the Russian food retail market is quite low – the share of 3 largest
players is little over 10% of the market, which is considerably inferior to comparable figures in
Eastern and Western European countries.
Such a low capital concentration creates conditions for competition intensification
among retail chains in the nearest future. Currently, development of competition is
expressed in capturing extra markets due to growth of the chain itself including
franchising schemes as well as M&A deals. As a result, chains operating in the Russian
market actively increase their presence in Moscow and regions which leads to the
record rates of business growth.
X5 Retail Group
X5 Retail Group N.V. is a leading Russian food retailer. The Company operates several retail
formats: the soft discounter chain under the Pyaterochka brand, the supermarket chain under
the Perekrestok brand, the hypermarket chain under the Karusel brand, the online retail
channel under the E5.RU brand and Express convenience stores under various brands.
As of 31 December 2013, X5 operates 4,544 stores. It has the leading market position in both
Moscow and St. Petersburg and a significant presence in the European part of Russia. Its store
base includes 3,882 Pyaterochka soft discounter stores, 390 Perekrestok supermarkets, 83
Karusel hypermarkets and 189 convenience stores. The Company operates 32 DCs and 1,848
Company-owned trucks across the Russian Federation. As of 31 December 2013, the number of
X5 employees amounted to 102 thousand.
In 2013 net sales stood at USD 16,784.7 mln, EBITDA reached USD 1,204.2 mln, and net profit
amounted to USD 344.9 mln.
METRO Cash & Carry
Metro Cash and Carry is the largest operating company of cash & carry international
business format (individual wholesale) of Metro Group. The holding is presented in 32
countries of the world by 2,200 outlets.
As of December 31, 2013 "Metro Cash & Carry" LLC operates 72 trading centers in 45
regions of Russia. Total selling space of the company as of December 31, 2013 amounted
to 563.56 thousand sq. m.
12 Source: IA Infoline, public sources of companies.
In 2006-2008 "Metro Cash & Carry" used to open 8-9 stores per year, however since 2009
“Metro group” reduced its expansion rates not only in Russia but in the other countries
as well. Four trading centers were opened in Russia in 2009 (Bryansk,
Zheleznodorozhny, Kirov, Novosibirsk). In 2011 the company opened 7 Metro C&C
hypermarkets in Kemerovo region, Chelyabinsk region, Altai region, Republic of
Udmurtia, Tatarstan, Chuvash Republic and in Smolensk region.
In 2013 the company opened 4 Metro C&C hypermarkets. The first store of the new
format of the chain – “Metro Punct” supermarket – was opened in May 2012. As of
December 31, 2013 the company operated 1 “Metro Punct” supermarket with the total
selling space of about 1.6 thousand sq. m. Moreover, in June 2012 the first two
franchised “Fasol” stores were opened in St. Petersburg. As of December 31, 2013 there
were 15 franchised “Fasol” stores: 10 in Saint-Petersburg and 5 in Rostov region.
Sales of METRO Cash & Carry, Russia for 2013 amounted to 183,224 million rubles
(which represents 11.3% growth vs. 2012).
Auchan
Auchan is a large hypermarket chain operating on the Russian market since 2002. As of
December 31, 2013 “Auchan” in Russia operates 79 trading outlets (including 1 under
reconstruction): 53 “Auchan” hypermarkets were opened in 24 regions (17 - in Moscow
and Moscow region, 6 – in Saint-Petersburg and Leningrad region, 3 – in Samara,
Nizhny Novgorod and Rostov region, 2 – in Volgograd region and Republic of
Tatarstan, 1 in Novosibirsk, Lipetsk, Yaroslavl, Krasnodar, Republic of Adygea,
Tambov, Yekaterinburg, Ulyanovsk, Omsk, Voronezh, Ufa, Ryazan, Chelyabinsk,
Tyumen, Saratov, Ivanovo and Izhevsk). Besides, Auchan operates 21 “Auchan-city”
mini-hypermarkets in Moscow (9 stores), Yekaterinburg (1), Moscow region (2),
Novosibirsk (2), Nizhniy Novgorod (1), Saint-Petersburg (3), Saratov (1), Togliatti (1),
Rostov-on-Don (1) as well as 5 “Nasha Raduga” hypermarkets in Penza region
(Kuznetsk and Penza), Yaroslavl, Kaluga, Kostroma.
In 2013 the company opened 22 new trading outlets. Total selling space as of December
31, 2013 amounted to 739.9 thousand sq. m.
The company plans to increase the number of hypermarkets to 100 by 2015, to 150 by
2017, and the number of employees to 50 thousand people.
Dixy
“Dixy” Group of Companies is one of Russia's leading retailers of food and everyday
products. The company specializes in developing neighbourhood store supermarkets in
Moscow, St. Petersburg and three federal districts of Russia: Central, Northwestern and
Urals and also in Kaliningrad region, which together account for more than half of the
retail market for foods and everyday products in the Russian Federation. As of
December 31, 2013 the company operated 1,779 stores, including: 1,681 “Dixy”
neighbourhood stores, 86 “Victoria” stores, 1 “CASH” store and 31 “MEGAMART” and
“MINIMART” compact hypermarkets.
The company is the third largest in terms of the amount of sales, selling space and the
number of stores among the national retailers operating in the food segment. The total
number of employees of the company exceeds 40 thousand.
Net selling space of the Group as of December 31, 2013 amounted to 617,168 sq. m.
In 2013 total sales of “Dixy” Group of Companies increased by 22.7% in ruble terms
compared to the same period last year and stood at 180.5 billion rubles.
Lenta
“Lenta”, the company which operates the hypermarket chain under the same brand,
was founded in 1993. As of December 31, 2013 "Lenta" operates 77 hypermarkets
located in 45 cities across Russia and 10 supermarkets in Moscow region.
Total selling space of the chain as of December 31, 2013 amounted to 508 thousand sq.
m.
The number of the company’s employees amounted to about 27,800 employees. 4.1
million people throughout Russia are the active loyalty cards holders of the chain.
In 2013 net sales of “Lenta” retail chain increased by 31.3% compared to 2012 and
amounted to 144.3 billion rubles.
О'KEY
“O’KEY” is one of the largest retail chains in Russia. Its primary retail format is the
modern Western European hypermarket under the “O’KEY” brand, complemented by
“O’KEY - Express” supermarkets.
As of December 31, 2013 "O'KEY" operated 94 stores across Russia: 19 hypermarkets
and 18 supermarkets in Saint-Petersburg and Leningrad region, 3 hypermarkets and 4
supermarkets in Moscow, 4 hypermarkets and 2 supermarkets in Moscow region, 2
hypermarkets in Murmansk, 4 hypermarkets and 1 supermarket in Krasnodar, 2
hypermarkets in Rostov-on-Don and 1 supermarket in Rostov region, 2 hypermarkets
and 1 supermarket in Astrakhan, 3 hypermarkets and 1 supermarket in Krasnoyarsk, 1
hypermarket and 1 supermarket in Omsk, 1 hypermarket and 1 supermarket in
Togliatti, 1 hypermarket and 3 supermarkets in Volgograd, 2 hypermarkets in
Voronezh, 1 hypermarket and 1 supermarket in Saratov, 3 hypermarkets in Ufa, 2
hypermarkets in Yekaterinburg, Surgut and Novosibirsk, 1 hypermarket in Nizhniy
Novgorod, Ivanovo, Stavropol, Lipetsk, Tyumen, Sochi.
As of December 31, 2013 total selling space of the Company amounted to about 489
thousand sq. m.
In 2013 “O’KEY” retail chain opened 8 hypermarkets in Moscow and Moscow region,
Ivanovo, Krasnoyarsk, Saint-Petersburg, Ufa and Novosibirsk and 3 supermarkets in
Togliatti, Omsk and Saratov.
In 2013 “О'KEY” audited net sales amounted to 139.460 billion rubles, increasing by
18.9% compared to 117.333 billion rubles in 2012. In 2013 like-for-like revenue growth
rate amounted to 8.0% compared to 7.0% in 2012. Average ticket amounted to 7.5%
compared to 4.3% in 2012. Traffic for 2013 decreased to 0.5% compared to 2.5% for 2012.
Number of stores of the largest FMCG retailers in 2007-2013, eop.
Legal name
Brand
Main formats1
2007
2008 2009
2010
2011 2012 2013
1 Key: D - Discounter, H - Hypermarket, S - Supermarket, CS - Convenience Store, МК – Cosmetics Store, MF – Magnit Family
Legal name
X5 Retail Group N.V.
”Magnit”, OJSC
“Auchan”, LLC
“МЕТRО Cash and Carry”,
LLC
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”, OJSC
Brand
Pyaterochka
Perekrestok
Karusel, Perekrestok Hyper
Perekrestok Express, Kopeyka
All formats
Magnit
Magnit Hypermarket
Magnit Kosmetik
Magnit Family
All formats
Auchan, Auchan-City, Nasha Raduga
Metro C&C, Metro Punct
О'Кей, О'Кей-экспресс
Lenta
Megamart, Minimart, Dixy
Victoria, Cash, Deshevo, Kvartal, Semeynaya
Kopilka
All formats
Main formats1
D
S
H
CS
all formats
CS
H
МК
MF
all formats
H
2007
674
194
22
0
890
2194
3
-
-
2197
18
2008 2009
1039
848
275
207
58
46
0
0
1101 1372
2568 3204
14
-
-
2582 3228
33
24
-
-
38
2010
1392
301
71
45
1809
4004
51
2
-
4055
44
2011 2012 2013
1918 3220 3882
390
370
321
83
78
77
70
189
134
2386 3802 4544
5006 6046 7200
161
126
93
686
692
210
-
46
20
5309 6884 8093
57
49
79
S, H
S, H
H, S
D, S, H
39
48
52
57
62
68
72
24
26
388
37
34
481
46
36
537
57
39
646
71
42
894
94
87
83
56
1422 1712
CS, S, H
194
215
208
257
225
77
87
all formats
388
493
537
646
1119 1499 1799
Total selling space of FMCG retailers in Russia in 2007-2013, eop, thousand sq. m.
Legal name
X5 Retail Group N.V.
”Magnit”, OJSC
“Auchan”, LLC
“МЕТRО Cash and Carry”,
LLC
“O'key”, LLC
“Lenta”, LLC
Brand
Pyaterochka
Perekrestok
Karusel, Perekrestok Hyper
Perekrestok Express, Kopeyka
All formats
Magnit
Magnit Hypermarket
Magnit Kosmetik
Magnit Family
All formats
Auchan, Auchan-City, Nasha Raduga H
Main formats
D
S
H
CS
all formats
CS
H
МК
MF
all formats
Metro C&C, Metro Punct
О'Кей, О'Кей-экспресс
Lenta
Megamart, Minimart, Dixy
S, H
S, H
H, S
D, S, H
2007
357,5
251,7
126,0
-
735,2
640,1
11,6
-
-
651,7
250,6
2008
419,2
222,4
232,5
-
874,1
767,1
56,4
-
-
823,5
340,1
2012
1191,4
383,5
368,2
26,7
2009
493,0
284,4
285,6
-
1063
978,5
81,4
-
-
1059,9 1422,3
452,3
386,6
2011
735,2
333,9
371,3
12,7
1453,1 1969,7
1637,8 1977,5
387,6
159,8
24,4
2010
586,3
313,0
351,8
9,2
1260,3
1256,8
165,081 282,2
50,1
0,4
-
-
1970,2 2549,3
565,9
498,1
2013
1414,1
397,8
375,8
35,2
2222,9
2312,2
482,9
163,0
53,3
3011,4
739,9
326,3
394,5
427,4
464,5
499,5
538,1
563,6
149,2
186,7
149,1
191,7
244,7
189,8
232,7
260,9
206,0
287,4
281,7
227,9
346,0
306,0
286,7
428,0
413,1
447,3
489,0
508,0
541,3
“Dixy Group”, OJSC
Victoria, Cash, Deshevo, Kvartal,
Semeynaya Kopilka
CS, S, H
99,7
109,6
104,6
123,5
118,4
67,6
75,9
All formats
all formats
149,1
191,0
206,0
227,9
405,1
514,9
617,2
Dynamics of net sales (excluding VAT) of the largest FMCG retailers in 2007-2013,
billion RUR
Legal name
Brand
X5 Retail Group N.V.
Pyaterochka, Perekrestok,
Karusel, E5.RU
”Magnit”, OJSC
“Auchan”, LLC
“МЕТRО Cash and
Carry”, LLC
“O'key”, LLC
“Lenta”, LLC
Magnit
Auchan, Auchan-City, Nasha
Raduga
O'key, O'key-express
Lenta
“Dixy Group”, OJSC
All formats
Main
formats
CS, D, S,
H
CS, H,
МК, MF
Data
IFRS
IFRS
H
RAS
2007 2008 2009 2010 2011 2012
2013
136,10 207,20 275,08 342,58 452,48 490,09 532,69
94,04 132,4 169,86 236,19 335,70 448,66 579,69
90,6 128,1 158,36 178,1 205,1 232,3
-
Metro C&C, Metro Punct
S, H
IFRS
89,2 111,2 114,30 117,99 139,96 164,6 183,2
S, H
H, S
CS, D, S,
H
IFRS
IFRS
30,53 51,14 67,88 82,67 92,21 115,92 139,46
109,9 144,3
32,9 50,8 55,6 70,6 89,8
МСФО, 2013 – trading update
36,65 48,3 54,26 64,80 102,23 147,05 180,48
CCOOMMPPEETTIITTIIVVEE AADDVVAANNTTAAGGEESS OOFF ““MMAAGGNNIITT””
Multi-format business
Implementation of the strategic decision to develop the additional format of hypermarket
allows the Group to conduct more profound segmentation of existing markets and consider
population with the different level of income as potential customers as well as to achieve high
results of turnover per store and of the average ticket and fast rates of business growth.
Moreover, pricing policy of the Group allows it to compete with open-air markets targeting
customers with the level of income below the average.
Strong regional coverage
“Magnit” group of companies has considerable experience of operation in regions: in 2002 –
2013 the impressive growth of the Group turnover was a result of its expansion into the cities
with a population of less than 500 thousand people. In the nearest future the regions are
expected to face the highest growth of consumer demand, which creates favorable conditions
for medium-term dynamics of the Group business.
Russia’s largest retailer
“Magnit” is the largest food retail chain in Russia, which has a positive impact on cooperation
with the largest food and beverage producers promoting their products on the regional
markets. First of all, it is reflected in favorable purchasing terms and corresponding efficiency
improvement.
Recognized brand
According to the independent expert research, IGD in particular, Russian customers pay
significant attention to the brand when purchasing non-food and food items. Moreover, loyalty
of Russian customer to one or another brand is higher vs. European citizens, which makes
Russian customers less price-sensitive. Therefore, large store chain under “Magnit” brand
allows the Group to strengthen its positions in the occupied market niche.
Efficient logistics system
Developed logistics system, distribution centers and own fleet of vehicles enable the Group to
strictly monitor its delivery costs. Operating distribution centers results in lower purchasing
prices and less pressure on the store at goods acceptance which ultimately contributes to more
efficient business organization.
The Group employs highly efficient automated stock replenishment system, which gives
opportunity to achieve high turnover level as well as to reduce costs.
1100.. PPRRIIOORRIITTYY A
AARREEAASS OOFF TTHHEE CCOOMMPPAANNYY’’SS OOPP
PPEERRAATTIIOONNSS
Headquartered in the southern Russia city of Krasnodar, open joint
Headquartered in the southern Russia city of Krasnodar
, open joint-stock company
“Magnit” is the holding company for a group of entities that operate in the retail trade under
“Magnit” is the holding company for a group of entities that operate in the retail trade under
“Magnit” is the holding company for a group of entities that operate in the retail trade under
gnit” stores is the largest food retail network in Russia.
the “Magnit” brand. The chain of “Magnit” stores is the largest food retail network in Russia.
the “Magnit” brand. The chain of “Ma
As of December 31, 2013 the chain consisted of 8,093 stores: 7,200 convenience stores, 161
As of December 31, 2013 the chain consisted of 8,093 stores: 7,200 convenience stores, 161
As of December 31, 2013 the chain consisted of 8,093 stores: 7,200 convenience stores, 161
hypermarkets, 46 “Magnit Family” stores and 686 cosmetics stores (drogerie) in 1,868 cities and
hypermarkets, 46 “Magnit Family” stores and 686 cosmetics stores (drogerie) in 1,868 cities and
hypermarkets, 46 “Magnit Family” stores and 686 cosmetics stores (drogerie) in 1,868 cities and
ughout the Russian Federation.
towns throughout the Russian Federation.
thirds of the Magnit’s stores are located in cities with a population
Approximately two-thirds of the Magnit’s stores are located in cities with a population
Approximately two
of less than 500,000 inhabitants. Most of its stores are located in the Southern, North-Caucasian,
of less than 500,000 inhabitants. Most of its stores are located in the Southern, North
of less than 500,000 inhabitants. Most of its stores are located in the Southern, North
y also operates stores in the North-Western, Urals and
Central and Volga regions. The Company also operates stores in the North
Central and Volga regions. The Compan
Siberian regions.
At the end of 2013 stores located in the Southern Federal district accounted for 1,669, in
At the end of 2013 stores located in the Southern Federal district accounted for 1,669, in
At the end of 2013 stores located in the Southern Federal district accounted for 1,669, in
2,100, North-Western – 671, the
the Volga region – 2,483, North
number of stores in the Urals and Siberian regions amounted to 671 and 120 correspondingly.
number of stores in the Urals and Siberian regions amounted to 671 and 120 correspondingly.
number of stores in the Urals and Siberian regions amounted to 671 and 120 correspondingly.
2,483, North-Caucasian – 379, Central – 2,100, North
As of December 31, 2013
rict (Engels, Togliatti, Dzerzhinsk, Izhevsk, Sterlitamak and Zelenodolsk
house logistics system consisting
December 31, 2013 the Company operates an in-house logistics system consisting
of 22 modern distribution centers (DCs): five of them are located in the Southern Federal district
of 22 modern distribution centers (DCs): five of them are located in the Southern Federal district
of 22 modern distribution centers (DCs): five of them are located in the Southern Federal district
Kuban, Erzovka and Shakhty), six are in the Volga Federal
(Bataysk, Kropotkin, Slavyansk-On-Kuban, Erzovka and Shakhty), six are in the Volga Federal
(Bataysk, Kropotkin, Slavyansk
Zelenodolsk), another six DCs
district (Engels, Togliatti, Dzerzhinsk, Izhevsk, Sterlitamak and
are based in the Central Federal district (Ivanovo, Oryol, Tambov, Tver, Tula and Yaroslavl),
are based in the Central Federal district (Ivanovo, Oryol, Tambov, Tver, Tula and Yaroslavl),
are based in the Central Federal district (Ivanovo, Oryol, Tambov, Tver, Tula and Yaroslavl),
two in the Urals Federal district (Chelyabinsk and Yekaterinburg), one in the North-Western
two in the Urals Federal district (Chelyabinsk and Yekaterinburg), one
two in the Urals Federal district (Chelyabinsk and Yekaterinburg), one
Federal district (Lermontov)
Federal district (Veliky Novgorod), one in the North-Caucasian Federal district (Lermontov)
Federal district (Veliky Novgorod), one in the
Federal district (Omsk).
and one in the Siberian Federal district (Omsk).
City
Federal District
Warehousing
space, sq. m.
Number of
serviced stores
% of total DC
turnover
Bataysk
Kropotkin
Slavyansk-on-
Kuban
Erzovka
(Volgograd)
Shakhty
Engels
Togliatti
Dzerzhinsk
Izhevsk
Sterlitamak
Zelenodolsk
Ivanovo
Oryol
Tambov
Tver
Tula
Yaroslavl
Southern
Southern
Southern
Southern
Southern
Volga
Volga
Volga
Volga
Volga
Volga
Central
Central
Central
Central
Central
Central
Veliky Novgorod
North-Western
Chelyabinsk
Yekaterinburg
Urals
Urals
Lermontov
North-Caucasian
Omsk
Total
Siberian
17,407
30,048
20,496
26,074
17,807
19,495
19,157
30,523
34,141
22,043
22,524
52,929
14,326
26,733
15,726
51,205
58,904
21,060
17,623
75,159
34,503
7,114
276
407
343
492
206
348
466
338
500
526
403
328
421
517
195
559
314
428
295
227
345
159
634,997
6,884
5,27%
4,90%
6,85%
7,62%
0,15%
4,12%
5,74%
5,74%
5,78%
5,46%
1,50%
7,73%
5,75%
5,59%
3,27%
7,03%
0,35%
5,05%
5,56%
0,14%
4,13%
2,27%
8 093
The Company operates automated stock replenishment system and a fleet of 5,577
vehicles.
1111..
PPRRIIOORRIITTYY DDIIRREECCTTIIOONNSS OOFF
TTHHEE CCOOMMPPAANNYY’’SS
DDEEVVEELLOOPPMMEENNTT
The Company marks out the following mid-term development trends:
• Further expansion of the chain by increasing the density of coverage of the
key markets as well as organic expansion in the least developed regions of
Russia;
• Development of the multi-format business-model through continuing
aggressive opening of convenience stores, hypermarkets, Magnit Family and
cosmetics stores;
• Building of the high level loyalty of the key audience to the brand
•
Implementation of additional measures to minimize costs and improve
profitability;
Chain expansion
In the nearest 2-3 years the Company plans to keep high pace of business growth
with the annual number of openings of not less than 500 convenience stores and not less
than 250 cosmetics stores in the cities with the population from 5,000 people and about
50 hypermarkets (including “Magnit Family” stores) in the cities with the population
from 25,000 people.
The key territories of presence for the Company are Southern, Volga and Central
regions, it is planned to increase the number of stores in Urals and Siberia regions. In
the long-term outlook the management of the chain does not exclude the opportunity of
entering the market of the Far East.
Development of the multi-format model
Currently the Company is actively expanding into four formats: “convenience
store”, hypermarket, “Magnit Family” and “cosmetics store” (drogerie).
The format of a convenience store is a neighbourhood store oriented all
customers living within 500 meters radius. The assortment of the convenience store
consists of little more than 3,000 food and non-food essential items offered at reasonable
prices. Average total space of a store is 458 sq. m., average selling space is 321 sq. m.
As of December 31, 2013 “Magnit” retail chain operates 7,200 convenience stores,
out of which 1,154 were opened in 2013.
Starting from 2007 the Company has been opening hypermarkets. As of
December 31, 2013 “Magnit” retail chain operates 161 stores of this format, out of which
35 were opened in 2013.
The Company opens its hypermarkets mainly in the cities with population from
50,000 to 500,000 citizens, at that the retail outlet is located in the city (within the city
boundaries) and targets people living within the radius of 7 km.
Based on location (size of the location or of the area in a large city) there are 3 sub-
formats of the hypermarket:
“small” with the selling space of up to 3,000 sq. m. (excluding rental space);
“medium” with the selling space of 3,000 – 6,000 sq. m. (excluding rental space);
“large” with the selling space of over 6,000 sq. m.; (excluding rental space).
Strategic development of the hypermarket format enables to conduct deeper
segmentation of the existing markets and consider population with different income as
potential customers on the back of high turnover per store and average ticket as well as fast
pace of business growth.
In 2010 the Group started to study a new segment of the retail market and launched 2
trial stores of a new format – “drogerie”. Unlike convenience stores, stores under “Magnit
Kosmetik” brand offer a mix of non-food group of products: personal care products, household
cleaning products, cosmetics and perfumery goods. As of December 31, 2013 the chain of
cosmetics stores consists of 686.
In May 2012 the new format – “Magnit Family” was launched. One of the reasons to
expand into this format is to meet the needs of customers in wider assortment and aggressive
pricing in premises which are not suitable for a standard hypermarket due to space limitations.
Key features of the new format are:
- Selling space of up to 1,500 sq. m.;
- Assortment of about than 7,000 SKUs;
- Expanded fresh zone;
- Limited non-food assortment;
- Own production facilities (ready meals);
- Main technologies of the hypermarket format;
- Pricing of the hypermarket format;
- Location primarily in the leased premises of the shopping and entertainment malls.
The number of the new format stores is growing through opening of new objects as well as
reformatting certain convenience stores with excessive selling space for this format (about 1,000
sq.m.) and upside sales potential.
In 2013 the Group opened 26 “Magnit Family” stores. As of December 31, 2013
“Magnit” retail chain operates 46 “Magnit Family” stores.
Pricing policy of the Company allows it to compete with open markets considering
customers with income below average as the target audience.
Brand recognition and customer loyalty
The Company management takes measures to adjust its formats to changing
customers’ preferences. In the regions with the highest purchasing power the work is
carried out with the traditional assortment of the convenience store towards its
expansion in favor of more expensive products (for example, ready-made cookery and
semi-prepared meat).
Within the complex measures taken to increase the loyalty to the “Magnit” brand
the analysis is carried out to study the customers’ preferences to adjust marketing
program to the peculiarities of different formats.
As an additional factor of the brand popularity the management of the Company
plans to improve the service in its stores through corresponding work with its
employees.
Minimization of expenses
The main drivers of successful development in the above direction are further
improvement of the logistics processes and investments in the IT system which
provides the Company with maximum effective stock and transport flow management
systems, and contributes to its leadership in terms of cost control.
Active introduction of private label products to the assortment is in place to
increase Company’s profitability.
The status of Russia’s absolute leader in terms of sales, number of stores and
the Company’s efficient cooperation with suppliers and
customers supports
achievement of most favorable purchasing terms.
Development of direct import, first of all direct import of fresh fruits and
vegetables, also contributes to minimization of logistics costs.
1122.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS
The annual general shareholders’ meeting held on May 24, 2013 (minutes of 24.05.2013)
decided to distribute dividends on ordinary registered shares of OJSC “Magnit” following the
results of 2012 financial year.
The extraordinary general shareholders’ meeting held on September 26, 2013 (minutes of
26.09.2013) decided to distribute dividends on ordinary registered shares of OJSC “Magnit”
following the results of the 6 months of 2013 financial year.
Information on the paid dividends:
Dividend period: 2012.
The amount of declared (accrued) dividends on shares of this category (type) per share,
RUB:
-the amount of dividend accrued per one ordinary registered uncertified share following
the results of 2012 financial year - 55.02 rubles.
The total amount of the declared (accrued) dividends on all shares of this category
(type), RUB:
-the total amount of dividends accrued on the ordinary registered uncertified shares
following the results of 2012 financial year – 5,202,765,752.10 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 5,202,758,929.62.
Dividend period: 6 months of 2013 financial year.
The amount of declared (accrued) dividends on shares of this category (type) per share,
RUB:
-the amount of dividend accrued per one ordinary registered uncertified share following
the results of 6 months of 2013 financial year - 46.06 rubles.
The total amount of the declared (accrued) dividends on all shares of this category
(type), RUB:
-the total amount of dividends accrued on the ordinary registered uncertified shares
following 6 months of 2013 financial year – 4,355,496,011.30 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 4,355,488,181.10.
1133.. SSEECCUURRIITTIIEESS
AAUUTTHHOORRIIZZEEDD CCAAPPIITTAALL SSTTOOCCKK
The authorized capital stock of the Company determines the minimum amount of assets that
guarantees its creditors’ interests.
As of December 31, 2013 authorized capital stock of the open joint-stock company “Magnit”
amounts to 945,613.55 rubles. It consists of 94,561,355 ordinary registered uncertified shares
with a nominal value per share of 0.01 ruble.
The Company is entitled to offer additional ordinary registered shares in the amount of
106,288,645 with the nominal value per share of 0.01 ruble (authorized shares).
Information on the listed shares of OJSC “Magnit” as of 31.12.2013:
Description of
security
Number of state
registration
Date of state
registration
Nominal,
RUR
Total number
of securities
Ordinary registered
uncertified shares
Total:
1-01-60525-Р
04.03.2004
0.01
94,561,355
94,561,355
Structure of OJSC “Magnit” share capital as of 31.12.2013:
Name
Legal entities
including nominal holders
Individuals
Total:
Number of registered
entities
3
2
17
20
Share in the charter
capital, %
57,91
57,90
42,09
100
Information on OJSC “Magnit” outstanding shares listed outside the Russian Federation in
accordance with the foreign law of securities of foreign issuers certifying rights in respect of
the above shares of the Company:
Category (type) of shares outstanding outside the Russian Federation: ordinary registered
shares;
Percentage of shares outstanding outside the Russian Federation as a % of the total number of
shares of the corresponding category (type): 29.94%;
name, address of the foreign issuer which securities certify the rights in respect of the shares of
the Company of the corresponding category (type): JP Morgan Chase Bank, N. A., 4 New York
Plaza, 13th Floor, New York, 10004 New York United States of America);
short description of the program (type of the program) of the securities issue of the foreign
issuer certifying the rights in respect of the shares of the corresponding category (type): in
accordance with foreign law JPMorgan Chase Bank, N. A. issued securities (global depositary
receipts, “GDRs”) certifying the rights in respect of the ordinary registered shares of OJSC
“Magnit”;
information on obtaining a permit of the federal executive body for the securities market to list
the issuer’s shares of the corresponding category (type) outside the Russian Federation:
- in accordance with the order of FFMS of Russia of March 27, 2008 № 08-661/pz-i placement
and listing outside the Russian Federation of the ordinary registered uncertified shares of OJSC
“Magnit”, state registration number of the securities issue 1-01-60525-P of 04.03.2004, state
registration number of the additional securities issue 1-01-60525-Р-004D of 20.03.2008 in the
amount of 11,522,000 (eleven million five hundred and twenty two thousand) ordinary
registered uncertified shares is permitted;
- in accordance with the order of FFMS of Russia of October 02, 2009 № 09-3132/pz-i offering
and listing outside the Russian Federation of ordinary registered uncertified shares of OJSC
“Magnit”, state registration number of the securities issue 1-01-60525-P of 04.03.2004, state
registration number of the additional securities issue 1-01-60525-Р-005D of 02.10.2009 in the
amount of 16 792 946 (sixteen million seven hundred ninety two four thousand nine hundred
forty six) ordinary registered uncertified shares is permitted;
name of the foreign trade organizer (trade organizers) through which securities of the foreign
issuer certifying the rights in respect of the issuers’ shares are listed: London Stock Exchange.
BBOONNDDSS
Bond issue of LLC “Magnit Finance” of 01 series:
In 2005 the Company entered the stock market and offered its investors bond issue of limited
liability company “Magnit Finance”, subsidiary of OJSC “Magnit”. The bond issue enabled the
Company to optimize its debt portfolio and develop the process of cooperation with investors
for the purpose of further introduction of the Company’s shares to the market.
Issue comprised 2 million securities with the nominal value of 1 thousand rubles guaranteed by
OJSC “Magnit” and JSC “Tander”. Maturity of the bonds was 3 years. The main objective of the
bond issue was to refinance short-term debt of the group. Not less than 75% of the raised funds
were channeled for these purposes, and the remaining funds were spent on the development of
“Magnit” retail chain.
Placement of the certified interest-bearing non-convertible bonds payable to bearer of 01 series
with the obligatory centralized custody of LLC “Magnit Finance” on the MICEX stock exchange
commenced on November 23, 2005. The number of the placed securities amounted to 2,000
thousand bonds which constitutes 100% of the total number of securities subject to placement.
The entire bond issue was realized in full in the course of auction in the fist day of placement.
On November 19, 2008 LLC “Magnit Finance” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of 01 series.
Bond issue of LLC “Magnit Finance” of 02 series:
In 2007 the Company offered its investors the second bond issue of limited liability company
“Magnit Finance”, subsidiary of OJSC “Magnit”.
Issue comprised 5 million securities with the nominal value of 1 thousand rubles guaranteed by
OJSC “Magnit” and JSC “Tander”. Maturity of the bond issue was 5 years. Similar to the first
issue, the second bond issue was conditioned by the necessity of refinancing short-term
liabilities of the group.
Placement of the certified interest-bearing non-convertible bonds payable to bearer of 02 series
with the obligatory centralized custody of LLC “Magnit Finance” on the MICEX stock exchange
commenced on March 30, 2007. The number of the placed securities amounted to 5,000
thousand bonds which constitutes 100% of the total number of securities subject to placement.
The entire bond issue was realized in full in the course of auction in the first day of placement.
Parameters of the bond issue of LLC “Magnit Finance” of 02 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
7 coupon interest rate
8 coupon interest rate
9 coupon interest rate
10 coupon interest rate
№ 4-02-36102-R of March 6, 2007
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
30.03.2007
open subscription
1,820th day from the date of placement
(23.03.2012)
10
RU000A0JP4W7
RU000A0JP4W7
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
8.20 %
The first coupon yield of 02 series bond issue was paid on September 28, 2007. The total amount
of yield paid on the first coupon amounted to 204.45 million rubles, the amount of yield of the
first coupon paid per one bond amounted to 40.89 rubles.
The second coupon yield of 02 series bond issue was paid on March 28, 2008. The total amount
of yield paid on the second coupon amounted to 204.45 million rubles, the amount of yield of
the second coupon paid per one bond amounted to 40.89 rubles.
The third coupon yield of 02 series bond issue was paid on September 26, 2008. The total
amount of yield paid on the third coupon amounted to 204.45 million rubles, the amount of
yield of the third coupon paid per one bond amounted to 40.89 rubles.
The forth coupon yield of 02 series bond issue was paid on March 27, 2009. The total amount of
yield paid on the forth coupon amounted to 204.45 million rubles, the amount of yield of the
forth coupon paid per one bond amounted to 40.89 rubles.
The fifth coupon yield of 02 series bond issue was paid on September 25, 2009. The total amount
of yield paid on the fifth coupon amounted to 204.45 million rubles, the amount of yield of the
fifth coupon paid per one bond amounted to 40.89 rubles.
The sixth coupon yield of 02 series bond issue was paid on March 26, 2010. The total amount of
yield paid on the sixth coupon amounted to 204.45 million rubles, the amount of yield of the
sixth coupon paid per one bond amounted to 40.89 rubles.
The seventh coupon yield of 02 series bond issue was paid on September 24, 2010. The total
amount of yield paid on the seventh coupon amounted to 204.45 million rubles, the amount of
yield of the seventh coupon paid per one bond amounted to 40.89 rubles.
The eighth coupon yield of 02 series bond issue was paid on March 25, 2011. The total amount
of yield paid on the eighth coupon amounted to 204.45 million rubles, the amount of yield of
the eighth coupon paid per one bond amounted to 40.89 rubles.
The ninth coupon yield of 02 series bond issue was paid on September 23, 2011. The total
amount of yield paid on the ninth coupon amounted to 204.45 million rubles, the amount of
yield of the ninth coupon paid per one bond amounted to 40.89 rubles.
The tenth coupon yield of 02 series bond issue was paid on March 23, 2012. The total amount of
yield paid on the tenth coupon amounted to 204.45 million rubles, the amount of yield of the
tenth coupon paid per one bond amounted to 40.89 rubles.
On March 23, 2012 LLC “Magnit Finance” fulfilled its obligations to bond holders on time and
in full and redeemed the nominal value of bonds of 02 series.
Based on trading for the period from 03.01.2012 to 23.03.2012 the weighted average price of
transactions with bonds of 02 series varied from min 96.73 % (24.02.12) to max 100.14 %
(03.01.12) of the nominal value. Acknowledgeable quote within this period fluctuated from min
96.73% (24.02.12) to max 100.1% (03.01.12, 04.01.12, 06.01.12).
Bond issue of OJSC “Magnit” of BO-01 series:
In 2010 the Company offered its investors the first Exchange-traded bond issue.
The issue comprised 1 million securities with the nominal value of 1 thousand rubles. The
maturity of the issue was 3 years. The purpose of the issue of the exchange-traded bonds of BO-
01 series was to attract funds to finance operating activity and expansion of “Magnit” group of
companies, to reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-01 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on September 13, 2010. The number of the placed securities
amounted to 1 million bonds which constitutes 100% of the total number of securities subject to
placement. The entire bond issue was realized in full in the course of auction in the first day of
placement.
Parameters of the bond issue of OJSC “Magnit” of BO-01 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
№ 4B02-01-60525-P of February 02, 2010
1,000,000,000 rubles
1,000,000 bonds
1,000 rubles
100% of nominal value
13.09.2010
open subscription
1,092nd day from the date of placement
(09.09.2013)
6
RU000A0JR118
RU000A0JR118
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
5 coupon interest rate
6 coupon interest rate
8.25 %
8.25 %
The first coupon yield of BO-01 series Exchange-traded bond issue was paid on March 14, 2011.
The total amount of yield paid on the first coupon amounted to 41.14 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.14 rubles.
The second coupon yield of BO-01 series Exchange-traded bond issue was paid on September
12, 2011. The total amount of yield paid on the second coupon amounted to 41.14 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.14 rubles.
The third coupon yield of BO-01 series Exchange-traded bond issue was paid on March 12,
2012. The total amount of yield paid on the third coupon amounted to 41.14 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 41.14 rubles.
The forth coupon yield of BO-01 series Exchange-traded bond issue was paid on September 10,
2012. The total amount of yield paid on the forth coupon amounted to 41.14 million rubles, the
amount of yield of the forth coupon paid per one bond amounted to 41.14 rubles.
The fifth coupon yield of BO-01 series Exchange-traded bond issue was paid on March 11, 2013.
The total amount of yield paid on the fifth coupon amounted to 41.14 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-01 series Exchange-traded bond issue was paid on September 9,
2013. The total amount of yield paid on the sixth coupon amounted to 41.14 million rubles, the
amount of yield of the sixth coupon paid per one bond amounted to 41.14 rubles.
On September 9, 2013 OJSC “Magnit” fulfilled its obligations to bond holders on time and in
full and redeemed the nominal value of bonds of BO-01 series.
Based on trading for the period from 08.01.2013 to 09.09.2013 the weighted average price of
transactions with the Exchange-traded bonds of BO-01 series varied from min 95.56%
(17.01.2013) to max 100.5 % (22.03.2013) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 99.85% (21.01.2013) to max 100.3% (04.06.13, 05.06.13, 06.06.13,
07.06.13, 10.06.13, 14.06.13, 17.06.13, 18.06.13).
Bond issue of OJSC “Magnit” of BO-02 series:
In 2010 the Company offered its investors the second Exchange-traded bond issue.
The issue comprised 1 million securities with the nominal value of 1 thousand rubles. Maturity
of the issue was 3 years. The purpose of the issue of the exchange-traded bonds of BO-02 series
was to attract funds to finance operating activity and expansion of “Magnit” group of
companies, to reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-02 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on September 13, 2010. The number of the placed securities
amounted to 1 million bonds which constitutes 100% of the total number of securities subject to
placement. The entire bond issue was realized in full in the course of auction in the first day of
placement.
Parameters of the bond issue of OJSC “Magnit” of BO-02 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
№ 4B02-02-60525-P of February 02, 2010
1,000,000,000 rubles
1,000,000 bonds
1,000 rubles
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
100% of nominal value
13.09.2010
open subscription
1,092nd day from the date of placement
(09.09.2013)
6
RU000A0JR126
RU000A0JR126
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
The first coupon yield of BO-02 series Exchange-traded bond issue was paid on March 14, 2011.
The total amount of yield paid on the first coupon amounted to 41.14 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.14 rubles.
The second coupon yield of BO-02 series Exchange-traded bond issue was paid on September
12, 2011. The total amount of yield paid on the second coupon amounted to 41.14 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.14 rubles.
The third coupon yield of BO-02 series Exchange-traded bond issue was paid on March 12,
2012. The total amount of yield paid on the third coupon amounted to 41.14 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 41.14 rubles.
The forth coupon yield of BO-02 series Exchange-traded bond issue was paid on September 10,
2012. The total amount of yield paid on the forth coupon amounted to 41.14 million rubles, the
amount of yield of the forth coupon paid per one bond amounted to 41.14 rubles.
The fifth coupon yield of BO-02 series Exchange-traded bond issue was paid on March 11, 2013.
The total amount of yield paid on the fifth coupon amounted to 41.14 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-02 series Exchange-traded bond issue was paid on September 9,
2013. The total amount of yield paid on the sixth coupon amounted to 41.14 million rubles, the
amount of yield of the sixth coupon paid per one bond amounted to 41.14 rubles.
On September 9, 2013 OJSC “Magnit” fulfilled its obligations to bond holders on time and in
full and redeemed the nominal value of bonds of BO-02 series.
Based on trading for the period from 08.01.2013 to 09.09.2013 the weighted average price of
transactions with the Exchange-traded bonds of BO-02 series varied from min 99.38%
(04.03.2013) to max 100.4% (08.04.2013) of the nominal value. There was no acknowledgeable
quote within this period.
Bond issue of OJSC “Magnit” of BO-03 series:
In 2010 the Company offered its investors the third Exchange-traded bond issue.
Issue comprised 1.5 million securities with the nominal value of 1 thousand rubles. The
maturity of the issue was 3 years. The purpose of the issue of the exchange-traded bonds of BO-
03 series was to attract funds to finance operating activity and expansion of “Magnit” group of
companies, to reduce the cost of credit portfolio as well as to build public credit history.
The offering of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-03 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on September 13, 2010. The number of the placed securities
amounted to 1.5 million bonds which constitutes 100% of the total number of securities subject
to placement. The bond issue was realized in full in the course of auction in the first day of
placement.
Parameters of the bond issue of OJSC “Magnit” of BO-03 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4B02-03-60525-P of February 02, 2010
1,500,000,000 rubles
1,500,000 bonds
1,000 rubles
100% of nominal value
13.09.2010
open subscription
1,092nd day from the date of placement
(09.09.2013)
6
RU000A0JR142
RU000A0JR142
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
The first coupon yield of BO-03 series Exchange-traded bond issue was paid on March 14, 2011.
The total amount of yield paid on the first coupon amounted to 61.71 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.14 rubles.
The second coupon yield of BO-03 series Exchange-traded bond issue was paid on September
12, 2011. The total amount of yield paid on the second coupon amounted to 61.71 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.14 rubles.
The third coupon yield of BO-03 series Exchange-traded bond issue was paid on March 12,
2012. The total amount of yield paid on the third coupon amounted to 61.71 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 41.14 rubles.
The fourth coupon yield of BO-03 series Exchange-traded bond issue was paid on September 10,
2012. The total amount of yield paid on the fourth coupon amounted to 61.71 million rubles, the
amount of yield of the fourth coupon paid per one bond amounted to 41.14 rubles.
The fifth coupon yield of BO-03 series Exchange-traded bond issue was paid on March 11, 2013.
The total amount of yield paid on the fifth coupon amounted to 61.71 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-03 series Exchange-traded bond issue was paid on September 9,
2013. The total amount of yield paid on the sixth coupon amounted to 67.71 million rubles, the
amount of yield of the sixth coupon paid per one bond amounted to 41.14 rubles.
On September 9, 2013 OJSC “Magnit” fulfilled its obligations to bond holders on time and in
full and redeemed the nominal value of bonds of BO-03 series.
Based on trading for the period from 08.01.2013 to 09.09.2013 the weighted average price of
transactions with the Exchange-traded bonds of BO-03 series varied from min 100.0%
(20.08.2013) to max 100.5% (17.06.2013) of the nominal value. Acknowledgeable quote within
this period took a value only equal to 100.14%.
Bond issue of OJSC “Magnit” of BO-04 series:
In 2010 the Company offered its investors the fourth Exchange-traded bond issue.
Issue comprised 2 million securities with the nominal value of 1 thousand rubles. Maturity of
the issue was 3 years. The purpose of the issue of the exchange-traded bonds of BO-04 series
was to attract funds to finance operating activity and expansion of “Magnit” group of
companies, to reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-04 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on September 13, 2010. The number of the placed securities
amounted to 2 million bonds which constitutes 100% of the total number of securities subject to
placement. The bond issue was realized in full in the course of auction in the first day of
placement.
Parameters of the bond issue of OJSC “Magnit” of BO-04 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4B02-04-60525-P of February 02, 2010
2,000,000,000 rubles
2,000,000 bonds
1,000 rubles
100% of nominal value
13.09.2010
open subscription
1,092nd day from the date of placement
(09.09.2013)
6
RU000A0JR159
RU000A0JR159
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
8.25 %
The first coupon yield of BO-04 series Exchange-traded bond issue was paid on March 14, 2011.
The total amount of yield paid on the first coupon amounted to 82.28 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.14 rubles.
The second coupon yield of BO-04 series Exchange-traded bond issue was paid on September
12, 2011. The total amount of yield paid on the second coupon amounted to 82.28 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.14 rubles.
The third coupon yield of BO-04 series Exchange-traded bond issue was paid on March 12,
2012. The total amount of yield paid on the third coupon amounted to 82.28 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 41.14 rubles.
The fourth coupon yield of BO-04 series Exchange-traded bond issue was paid on September 10,
2012. The total amount of yield paid on the fourth coupon amounted to 82.28 million rubles, the
amount of yield of the fourth coupon paid per one bond amounted to 41.14 rubles.
The fifth coupon yield of BO-04 series Exchange-traded bond issue was paid on March 11, 2013.
The total amount of yield paid on the fifth coupon amounted to 82.28 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-04 series Exchange-traded bond issue was paid on September 9,
2013. The total amount of yield paid on the sixth coupon amounted to 82.28 million rubles, the
amount of yield of the sixth coupon paid per one bond amounted to 41.14 rubles.
On September 9, 2013 OJSC “Magnit” fulfilled its obligations to bond holders on time and in
full and redeemed the nominal value of bonds of BO-04 series.
Based on trading for the period from 08.01.2013 to 09.09.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-04 series varied from min 96.1% (12.04.2013) to
max 100.4 % (08.04.2013) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 100.0% (08.01.2013 and 09.01.2013) to max 100.29% (15.05.13, 16.05.13,
17.05.13, 20.05.13, 21.05.13, 22.05.13, 23.05.13, 24.05.13, 27.05.13).
Bond issue of OJSC “Magnit” of BO-05 series:
In 2011 the Company offered its investors the fifth Exchange-traded bond issue.
Issue comprised 5 million securities with the nominal value of 1 thousand rubles. Maturity of
the issue is 3 years. The purpose of the issue of the exchange-traded bonds of BO-05 series was
to attract funds to finance operating activity and expansion of “Magnit” group of companies, to
reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-05 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on March 4, 2011. The number of the placed securities amounted to
5 million bonds which constitutes 100% of the total number of securities subject to placement.
The bond issue was realized in full in the course of auction in the first day of placement.
Parameters of the bond issue of OJSC “Magnit” of BO-05 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
№ 4B02-05-60525-P of February 16, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
04.03.2011
open subscription
1,092nd day from the date of placement
(28.02.2014)
6
RU000A0JR9N3
RU000A0JR9N3
8.00 %
8.00 %
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
The first coupon yield of BO-05 series Exchange-traded bond issue was paid on September 2,
2011. The total amount of yield paid on the first coupon amounted to 199.45 million rubles, the
amount of yield of the first coupon paid per one bond amounted to 39.89 rubles.
The second coupon yield of BO-05 series Exchange-traded bond issue was paid on March 2,
2012. The total amount of yield paid on the second coupon amounted to 199.45 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 39.89 rubles.
The third coupon yield of BO-05 series Exchange-traded bond issue was paid on August 30,
2012. The total amount of yield paid on the third coupon amounted to 199.45 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 39.89 rubles.
The fourth coupon yield of BO-05 series Exchange-traded bond issue was paid on March 1,
2013. The total amount of yield paid on the fourth coupon amounted to 199.45 million rubles,
the amount of yield of the fourth coupon paid per one bond amounted to 39.89 rubles.
The fifth coupon yield of BO-05 series Exchange-traded bond issue was paid on August 30,
2013. The total amount of yield paid on the fifth coupon amounted to 199.45 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 39.89 rubles.
Based on trading for the period from 08.01.2013 to 30.12.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-05 series varied from min 99.66% (10.01.2013)
to max 100.5 % (16.08.13, 30.09.13, 04.10.13, 07.10.13, 09.10.13) of the nominal value.
Acknowledgeable quote within this period fluctuated from min 99.59% (11.01.13) to max
100.37% (04.09.2013).
Bond issue of OJSC “Magnit” of BO-06 series:
In 2011 the Company offered its investors the sixth Exchange-traded bond issue.
Issue comprised 5 million securities with the nominal value of 1 thousand rubles. Maturity of
the issue is 3 years. The purpose of the issue of the exchange-traded bonds of BO-06 series was
to attract funds to finance operating activity and expansion of “Magnit” group of companies, to
reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-06 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on April 26, 2011. The number of the placed securities amounted to
5 million bonds which constitutes 100% of the total number of securities subject to placement.
The bond issue was realized in full in the course of auction in the first day of placement.
Parameters of the bond issue of OJSC “Magnit” of BO-06 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
№ 4B02-06-60525-P of February 16, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
26.04.2011
open subscription
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
1,092nd day from the date of placement
(22.04.2014)
6
RU000A0JRFQ4
RU000A0JRFQ4
7.75 %
7.75 %
7.75 %
7.75 %
7.75 %
7.75 %
7.75 %
The first coupon yield of BO-06 series Exchange-traded bond issue was paid on October 25,
2011. The total amount of yield paid on the first coupon amounted to 193.2 million rubles, the
amount of yield of the first coupon paid per one bond amounted to 38.64 rubles.
The second coupon yield of BO-06 series Exchange-traded bond issue was paid on April 24,
2012. The total amount of yield paid on the second coupon amounted to 193.2 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 38.64 rubles.
The third coupon yield of BO-06 series Exchange-traded bond issue was paid on October 23,
2012. The total amount of yield paid on the third coupon amounted to 193.2 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 38.64 rubles.
The fourth coupon yield of BO-06 series Exchange-traded bond issue was paid on April 23,
2013. The total amount of yield paid on the fourth coupon amounted to 193.2 million rubles, the
amount of yield of the fourth coupon paid per one bond amounted to 38.64 rubles.
The fifth coupon yield of BO-06 series Exchange-traded bond issue was paid on October 22,
2013. The total amount of yield paid on the fifth coupon amounted to 193.2 million rubles, the
amount of yield of the fifth coupon paid per one bond amounted to 38.64 rubles.
Based on trading for the period from 08.01.2013 to 30.12.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-06 series varied from min 98.68% (17.09.2013)
to max 100.4 % (30.12.2013) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 98.68% (17.09.2013, 18.09.2013, 19.09.2013) to max 100.3% (25.09.2013,
26.09.2013).
Bond issue of OJSC “Magnit” of BO-07 series:
In 2012 the Company offered its investors the seventh Exchange-traded bond issue.
Issue comprised 5 million securities with the nominal value of 1 thousand rubles. Maturity of
the issue is 3 years. The purpose of the issue of the exchange-traded bonds of BO-07 series was
to attract funds to finance operating activity and expansion of “Magnit” group of companies, to
reduce the cost of credit portfolio as well as to build public credit history.
Placement of the certified interest-bearing non-convertible Exchange-traded bonds payable to
bearer of BO-07 series with the obligatory centralized custody of OJSC “Magnit” on the MICEX
stock exchange commenced on September 24, 2012. The number of the placed securities
amounted to 5 million bonds which constitutes 100% of the total number of securities subject to
placement. The bond issue was realized in full in the course of auction in the first day of
placement.
Parameters of the bond issue of OJSC “Magnit” of BO-07 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4B02-07-60525-P of August 10, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
24.09.2012
open subscription
1,092nd day from the date of placement
(21.09.2015)
6
RU000A0JT171
RU000A0JT171
8.90 %
8.90 %
8.90 %
8.90 %
8.90 %
8.90 %
8.90 %
The first coupon yield of BO-07 series Exchange-traded bond issue was paid on March 25, 2013.
The total amount of yield paid on the first coupon amounted to 221.9 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 44.38 rubles.
The second coupon yield of BO-07 series Exchange-traded bond issue was paid on September
23, 2013. The total amount of yield paid on the second coupon amounted to 221.9 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 44.38 rubles.
Based on trading for the period from 08.01.2013 to 30.12.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-07 series varied from min 99.75% (11.11.2013)
to max 108.4% (16.04.2013) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 100.5% (19.02.2013) to max 102.5% (21.05.2013 and 23.05.2013).
Parameters of the bond issue of OJSC “Magnit” of 01 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
№ 4-01-60525-P of December 27, 2012
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
26.02.2013
open subscription
1,092nd day from the date of placement
(23.02.2016)
6
RU000A0JTP09
RU000A0JTP09
8.50 %
8.50 %
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
8.50 %
8.50 %
8.50 %
8.50 %
8.50 %
The first coupon yield of 01 series bond issue was paid on August 27, 2013. The total amount of
yield paid on the first coupon amounted to 221.9 million rubles, the amount of yield of the first
coupon paid per one bond amounted to 42.38 rubles.
Based on trading for the period from 04.03.2013 to 30.12.2013 the weighted average price of
transactions with bonds of 01 series varied from min 100% (20.03.2013 and 27.03.2013) to max
101.5% (22.05.2013) of the nominal value. Acknowledgeable quote within this period fluctuated
from min 100.06% (04.03.2013) to max 101.27% (15.11.2013).
Parameters of the bond issue of OJSC “Magnit” of BO-08 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4B02-08-60525-P of August 10, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
02.04.2013
open subscription
1,092nd day from the date of placement
(29.03.2016)
6
RU000A0JTT21
RU000A0JTT21
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
The first coupon yield of BO-08 series Exchange-traded bond issue was paid on October 1, 2013.
The total amount of yield paid on the first coupon amounted to 209.4 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.88 rubles.
Based on trading for the period from 03.04.2013 to 30.12.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-08 series varied from min 100.00% (19.07.2013
and 23.07.2013) to max 101.55% (30.10.2013 and 29.11.2013) of the nominal value.
Acknowledgeable quote within this period fluctuated from min 100.7% (17.05.13, 20.05.13,
21.05.13, 22.05.13, 23.05.13, 24.05.13, 27.05.13, 28.05.13, 29.05.13, 30.05.13) to max 101.5%
(21.11.13, 22.11.13, 25.11.13, 26.11.13, 27.11.13, 28.11.13, 29.11.13, 02.12.13, 03.12.13, 04.12.13).
Parameters of the bond issue of OJSC “Magnit” of BO-09 series:
Date and the number of state registration
№ 4B02-09-60525-P of August 10, 2011
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
02.04.2013
open subscription
1,092nd day from the date of placement
(29.03.2016)
6
RU000A0JTT39
RU000A0JTT39
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
The first coupon yield of BO-09 series Exchange-traded bond issue was paid on October 1, 2013.
The total amount of yield paid on the first coupon amounted to 209.4 million rubles, the amount
of yield of the first coupon paid per one bond amounted to 41.88 rubles.
Based on trading for the period from 03.04.2013 to 30.12.2013 the weighted average price of
transactions with Exchange-traded bonds of BO-09 series varied from min 100.25% (08.08.2013
and 09.08.2013) to max 101.55% (30.10.2013) of the nominal value. Acknowledgeable quote
within this period fluctuated from min 100.7% (17.05.13, 20.05.13, 21.05.13, 22.05.13, 23.05.13,
24.05.13, 27.05.13, 28.05.13, 29.05.13, 30.05.13) to max 101.5% (21.11.13, 22.11.2013, 25.11.13,
26.11.13, 27.11.13, 28.11.13, 29.11.13, 02.12.13, 03.12.13, 04.12.13).
SSHHAARREESS TTRRAADDIINNGG
The shares of OJSC “Magnit” entered the Russian stock market in April 2006.
On April 14, 2006 the shares of OJSC “Magnit” were admitted to trading in the section of the
List “Listed securities but not included into the quotation lists” of non-profit partnership
““Russian Trading System” Stock Exchange”.
On April 24, 2006 trading of OJSC “Magnit” shares in the List of non-listed securities of Close
joint-stock company “MICEX Stock Exchange” commenced.
On April 28, 2006 the IPO of OJSC “Magnit” on the Russian Trading System (RTS) and the
Moscow Interbank Currency Exchange (MICEX) was completed.
The price of one share of OJSC “Magnit” in the course of offering on RTS and MICEX was
determined on the level of 27 USD. Proceeds from the stock comprising 18.94% of the charter
capital amounted to 368,355 million USD. Deutsche UFG functioned as an IPO coordinator;
foreign investors could participate by purchasing the securities of “Magnit” according to the
rule “S”.
Since December 11, 2007 the shares of OJSC “Magnit” have been included into the Quotation
list “B” of OJSC “Russian Trading System” Stock Exchange”. OJSC “Magnit” shares have been
admitted to trading in the corresponding list on December 13, 2007.
On December 21, 2007 OJSC “Magnit” shares were included in the quotation list “B” of CJSC
“MICEX SE” and admitted to trading in the corresponding list.
On February 13, 2008 OJSC “Magnit” announced its intention to list global depositary receipts
(“GDRs”) representing its ordinary shares on the London Stock Exchange in connection with an
offering by the Company of 11,300,000 newly issued ordinary shares in the form of GDRs and
shares (including as part of the exercise of statutory pre-emptive rights by the existing
shareholders of the Company and by a Company’s shareholder of ordinary shares in the form
of shares and GDRs.
The offer price was set at 42.50 USD per share. The offer price in ruble terms was set based on
the rate of 23.4450 rubles per dollar.
A total of 9,719,638 shares including the shares in the form of GDRs were allocated to
international institutional investors. In connection with the offering the selling shareholders has
granted the joint bookrunners an over-allotment option to purchase up to an additional 506,585
shares in the form of GDRs at the offer price per GDR which was exercised in full.
Conditional dealings in the GDRs commenced on the London Stock Exchange on April 16, 2008
(5 GDRs representing an interest in one share). Admission of the GDRs to the Official List of the
UK Listing Authority occurred on April 22, 2008.
Free float of OJSC “Magnit” as of 30.06.2008 amounted to 35.48%. Proceeds from the offering
amounted to approximately 480.25 million USD and were used to finance further expansion of
the Company’s chain of hypermarkets as well as to continue the expansion of its convenience
store operations and further development of its logistics capabilities.
In 2009 ordinary shares of the Company were included (transferred) into the Quotation list “A”
of the second level at the Moscow Interbank Currency Exchange and “Russian Trading System”
Stock Exchange”.
On September 2, 2009 OJSC “Magnit” announced its intention to offer additional shares at 65
USD per ordinary share and 13 USD per GDR.
A total of 5,680,000 newly issued ordinary shares in the form of GDRs have been allocated to
international institutional investors, resulting in a total free float of 46.51% of the Company’s
issued share capital as of December 31, 2009.
Gross proceeds to the Company from the follow-on offering amounted to approximately 369.2
USD and were used to finance further expansion of its chain of hypermarkets as well as to
continue the expansion of its convenience stores operations and further development of its
logistic capabilities.
Since November 14, 2010 shares of OJSC “Magnit” have been included (transferred) into the
Quotation list “A” of the first level at the “Russian Trading System” Stock Exchange”.
According to the Instruction of CJSC “MICEX Stock Exchange ” № 1387-p of 29.12.2010 OJSC
“Magnit” shares are included in (transferred to) the quotation list “A” of the first level of CJSC
“MICEX Stock Exchange”.
On November 30, 2011 OJSC “Magnit” announced its intention to offer newly issued ordinary
shares via an accelerated bookbuild placing to Russian and international institutional investors.
In connection with the placement the Company has registered with the Russian Federal
Financial Market Service 10,813,516 new shares to be placed through an open subscription.
The offer price in the Placement has been set at US$ 85 per new share. Payments for shares in
rubles were made at an exchange rate of US$1 = RUB 30.8486.
The Company placed 5,586,282 ordinary shares out of which 4,117,648 shares were allocated to
investors resulting in a free float of 53.83% of the Company’s issued share capital as of
December 31, 2011.
Gross proceeds to the Company from the placement of additional shares amounted to
approximately US$ 475 mn and used to finance its capital expenditure program aimed at
further expansion of its chain of hypermarkets as well as the expansion of its convenience store
operations and the further development of its logistics capabilities.
On December 19, 2011 ordinary shares of OJSC “Magnit” were excluded from the Quotation list
“A” of the first level of OJSC “RTS Stock Exchange” as a result of its reorganization through
merger with CJSC MICEX.
Since June 18, 2013 the shares of OJSC "Magnit" have been included into the Blue Chip Index
Constituents of MICEX. Moscow Exchange Blue Chip Index is an indicator of the market of the
most liquid stocks of the Russian companies. The index is calculated on the basis of the most
liquid stocks of the Russian stock market. The index is based on the share prices denominated
in rubles.
According to trading held from 01.01.2013 to 31.12.2013 on MICEX Stock Exchange the average
weighted price of transactions with shares varied from min 4,924.5 rubles (09.01.2013) to max
9,234.1 (19.12.2013).
The growth of OJSC “Magnit” shares in 2012 amounted to 83%.
According to trading held from 01.01.2013 to 31.12.2013 on the London Stock Exchange the
price of transactions with the global depositary receipts as of closing varied from min $40.48
(09.01.2013) to max $66.50 (28.11.2013).
The growth of OJSC “Magnit” global depositary receipts in 2013 amounted to 57%.
Market capitalization of OJSC “Magnit” as of December 30, 2013 amounted to 868,999.94 million
rubles according to OJSC “MICEX SE”.
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001133 CCOONNSSIIDDEERREEDD
MMAAJJOORR TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW ““OONN JJOOIINNTT--
SSTTOOCCKK CCOOMMPPAANNIIEESS””
Within the year 2013 the Company did not execute any transactions considered major
transactions according to the Federal Law “On joint-stock companies”.
1155.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001133 CCOONNSSIIDDEERREEDD
RREELLAATTEEDD--PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW OONN
““JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNIIEESS””
1
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
22.01.2013
Provision of the interest-bearing loan at the
rate of 11.55% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
24,200
0.0354
19.01.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in per cent of the issuer’s
balance sheet assets as of the termination date of
the last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 28, 2012,
minutes № w/n of May 28, 2012.
2
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
18,000
14.02.2013
Provision of the interest-bearing loan at the
rate of 11.91% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
0.0263
11.02.2016
fulfillment of obligations under
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
for
Term
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
The Lender´s and the Borrower’s obligations
are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 28, 2012,
minutes № w/n of May 28, 2012.
3
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
22.02.2013
Provision of the interest-bearing loan at the
rate of 11.67% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
20,900
0.0305
19.02.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 28, 2012,
minutes № w/n of May 28, 2012.
4
Date of transaction
Subject and essentials of transactionSubject and
essentials of transaction
Parties of transactionParties of transaction
27.02.2013
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
“Tander”
Company
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Liability
(JSC
“Asset
5,000,000
7.3075
26.02.2016
in money
Transaction amount in money terms, thousand
rubles.Transaction amount
terms,
thousand rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
fulfillment of obligations under
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 28, 2012,
minutes № w/n of May 28, 2012.
None
5
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 8.80% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
for
Term
transaction
Information
obligations
fulfillment of obligations under
of mentioned
fulfillment
on
1,200,000
1.5870
02.04.2014
The Lender´s obligations are fulfilled on time.
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
None
The transaction was approved by the Board of
Directors on March 11, 2013, minutes № w/n of
March 11, 2013.
6
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.00% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
1,000,000
1.3225
02.10.2014
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 11, 2013, minutes № w/n of
March 11, 2013.
None
7
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.20% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
900,000
1.1902
02.04.2015
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 11, 2013, minutes № w/n of
March 11, 2013.
None
8
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
900,000
1.1902
02.04.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 11, 2013, minutes № w/n of
March 11, 2013.
None
9
Date of transaction
Subject and essentials of transaction
03.04.2013
Provision of the interest-bearing loan at the
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Company
rate of 8.80% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
“Tander”
Liability
(JSC
“Asset
1,000,000
1.3225
02.04.2014
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
None
10
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.00% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
fulfillment of obligations under
fulfillment
on
1,000,000
1.3225
02.10.2014
of mentioned The Lender´s obligations are fulfilled on time.
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
None
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
11
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.10% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
1,100,000
1,4547
31.12.2014
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
None
12
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.20% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Company
Company
“Tander”
Liability
“Asset
(JSC
Management Company “Premier-Liga”.
1,200,000
1.5870
02.04.2015
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
for
Term
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
None
13
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
03.04.2013
Provision of the interest-bearing loan at the
rate of 9.40% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
1,000,000
1,3225
02.10.2015
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
None
14
Date of transaction
03.04.2013
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
Company
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
“Tander”
Liability
“Asset
(JSC
700,000
0,9257
02.04.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
The Lender´s obligations are fulfilled on time.
The transaction was approved by the Board of
Directors on March 25, 2013, minutes № w/n of
March 25, 2013.
None
21.05.2013
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
15
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
fulfillment of obligations under
2,000,000
2,6450
18.05.2016
on
fulfillment
of mentioned
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
None
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 28, 2012,
minutes № w/n of May 28, 2012.
16
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
2,480,000
2.9847
Term
for
transaction
fulfillment of obligations under
Information
obligations
on
fulfillment
of mentioned
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
none
17
joint-stock bank
07.08.2013
Provision of guarantee to the contract on the
revolving credit facility № 130628/0249018 of
June 28, 2013.
The Lender: commercial
“Rosbank” (open joint-stock company),
The Guarantor: OJSC “Magnit”,
The Beneficiary: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
for credit amount repayment and
The guarantee shall be terminated with duly
performance of the Borrower’s obligations
under the revolving credit facility .
Term
payment of interest is 26.06.2015
JSC “Tander”
it’s
obligations before the Lender. There was no
situation when the demand on fulfillment of
JSC "Tander”'s outstanding obligations could
have been raised before the Guarantor.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
is duly performing
07.10.2013
Provision of the guarantee to the LOC
agreement № 29-15/1/356 of 07.10.2013.
The Creditor: OJSC "Sberbank of Russia"
The Borrower: JSC "Tander"
The Guarantor: OJSC "Magnit"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction by the legislation of the Russian
Federation
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of the end date of the last
complete reporting period preceding the date of
transaction, %
2,500,000
3.2102
for
Term
transaction
fulfillment of obligations under
Information on fulfillment of the underlying
obligations
Issuer’s authority which made a decision to
approve the transaction, date of decision (date
and number of minutes)
Other information on transaction indicated at the
issuer’s discretion
none
18
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
is
“Tander”
interest payment period
The guarantee shall be terminated subject to
duly performance of the borrower’s obligations
under the credit agreement.
Credit and
06.10.2016
its
JSC
obligations to the Creditor. Any claims to the
Guarantor from the Creditor to fulfill the
unfulfilled by JSC "Tander" obligations have
not been asserted.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
is duly performing
05.11.2013
Provision of the interest-bearing loan at the
rate of 8.35% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
3,800,000
4.8796
02.11.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
19
Date of transaction
Subject and essentials of transaction
Parties of transaction
joint-stock bank
19.11.2013
Provision of guarantee to the credit contract
№ 133-ВКЛ/КРД-13 of October 23, 2013.
The Lender: commercial
“Absolut-Bank” (open joint-stock company),
The Guarantor: OJSC “Magnit”,
The Beneficiary: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
for credit amount repayment and
The guarantee shall be terminated with duly
performance of the Borrower’s obligations
under the revolving credit facility .
Term
payment of interest is 07.10.2015
JSC “Tander”
it’s
obligations before the Lender. There was no
situation when the demand on fulfillment of
JSC "Tander”'s outstanding obligations could
have been raised before the Guarantor.
is duly performing
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
1,250,000
1.6051
Term
for
transaction
fulfillment of obligations under
Information
obligations
on
fulfillment
of mentioned
Issuer’s authority which made a decision on The transaction was approved by the Board of
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
none
Directors on October 29, 2013, minutes № w/n
of October 29, 2013.
20
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
the
person considered
transaction
related-party
for
11.12.2013
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
435,300
0.5590
09.12.2016
fulfillment of obligations under
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
for
Term
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
21
Date of transaction
Subject and essentials of transaction
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Transaction amount in money terms, thousand 14,700,000
23.12.2013
Provision of the interest-bearing loan at the
rate of 9.60% per annum by the Company.
The Lender: OJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
fulfillment of obligations under
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
Term
for
transaction
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
of mentioned
fulfillment
on
none
18.8762
21.12.2016
The Lender´s obligations are fulfilled on time.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
22
Date of transaction
Subject and essentials of transaction
Parties of transaction
company
joint-stock
26.12.2013
Provision of guarantee to the revolving credit
facility № 29-15/1/399 of December 26, 2013.
The Lender: open
“Sberbank of Russia”,
The Guarantor: OJSC “Magnit”,
The Beneficiary: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
The guarantee is effective till December 23,
2019. Before the guarantee matures it shall be
terminated with duly performance of the
Borrower’s obligations under the revolving
credit facility .
it’s
JSC “Tander”
obligations before the Lender. There was no
situation when the demand on fulfillment of
JSC "Tander”'s outstanding obligations could
have been raised before the Guarantor.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
is duly performing
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
3,398,356
4.3638
for
Term
transaction
fulfillment of obligations under
Information
obligations
on
fulfillment
of mentioned
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
none
minutes № w/n of May 24, 2013.
23
Date of transaction
Subject and essentials of transaction
Parties of transaction
company
joint-stock
26.12.2013
Provision of guarantee to the revolving credit
facility № 29-15/1/399 of December 26, 2013.
The Lender: open
“Sberbank of Russia”,
The Guarantor: OJSC “Magnit”,
The Beneficiary: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
Gumoski Enterprises Limited;
Tomiana Investments Limited;
Limited
Management Company “Premier-Liga”.
Company
Company
“Tander”
Liability
“Asset
(JSC
The guarantee is effective till December 23,
2019. Before the guarantee matures it shall be
terminated with duly performance of the
Borrower’s obligations under the revolving
credit facility .
JSC “Tander”
it’s
obligations before the Lender. There was no
situation when the demand on fulfillment of
JSC "Tander”'s outstanding obligations could
have been raised before the Guarantor.
The transaction was approved by the annual
general shareholders’ meeting on May 24, 2013,
minutes № w/n of May 24, 2013.
is duly performing
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered
the
transaction
related-party
for
Transaction amount in money terms, thousand
rubles.
Transaction amount in percent of the issuer’s
balance sheet assets as of termination date of the
last accounting period preceding the date of
transaction, %
3,398,356
4.3638
Term
for
transaction
fulfillment of obligations under
Information
obligations
on
fulfillment
of mentioned
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
none
1166.. MMAAIINN RRIISSKK FFAACCTTOORRSS IINNHHEERREENNTT IINN TTHHEE ССOOMMPPAANNYY
OOPPEERRAATTIIOONN
Since OJSC “Magnit” and its subsidiaries operate within one group of companies - OJSC
“Magnit” (hereafter - “the Group”, “Magnit” retail chain”, “the Company” or “the Issuer“), the
description of risks to the greater extent is provided for the entire Group.
The description of risk factors provided herein is not complete, it only reflects the view
of the Company and its individual assessment. Apart from the risks specified in this
report, other risks which are not included in this report may negatively affect the cost of
investments in the shares of OJSC “Magnit”. Other risks, including those which the
Company is not aware of or which it considers immaterial at the present time, may lead
to the decrease of earnings, increase of expenses or other events and (or) consequences,
in the result of which the price of the Company’s securities may fall.
In case one or several risks hereof occur, OJSC “Magnit” will take all possible measures to
minimize the effect of negative changes. Today it is impossible to determine specific acts of the
Company if any out of the provided risks occur because the elaboration of measures adequate
to the corresponding events is complicated due to uncertainty of the situation in future.
Parameters of the taken measures will depend on the specific situation on a case-by-case basis.
OJSC “Magnit” cannot guarantee that the measures taken to overcome negative changes will
remedy the situation, as the majority of the described risks are beyond the Company’s control.
Risk Management Policy of the Company
The Company and the Group apply systematic approach to risk management. The key elements
of the risk management policy in each area are:
Risk identification
Assessment methodology
Elaboration and implementation of risk management framework
Ongoing monitoring of risks
Risk management is carried out in respect of the entire Group.
In respect of the industry risks the mid and long-term assessment of the industry is made based
on the macroeconomic forecasts of the Ministry of Economic Development and Trade and
investment analysts. The assessment covers the future demand based on the forecasts of the
population incomes and the level of consumption. The assessments includes industry trends in
respect of various channels, segmentation of demand by channels and competitive
environment.
Based on the analysis the strategy of development is worked out to strengthen the competitive
position and increase the market share of the Company.
In respect of the country and regional risks, the Company monitors political and economic
situation and estimates the level of risk of acts of elements, possible disruption of transportation
in the regions of “Magnit” stores’ presence. Territorial diversification of operation of “Magnit”
group of companies contributes to additional reduction of these risks.
In respect of the financial risks, the level of interest rate, currency, credit and liquidity risks is
estimated.
Interest risk is managed by means of choosing the most optimal financing methods and
matching of timing of mobilization of resources with the timing of the projects which are
financed by them. To optimize the resources the Company develops its credit history, expands
the data base of potential creditors and diversifies instruments to receive the funds.
The reduction of cost of the received resources is achieved due to the policy aiming at
improvement of the information transparency. One of the tools of interest risk management is
the forecasting the changes of interest rates and assessment of the appropriate leverage level of
the Company adjusted for this possible change of interest rates.
In respect of the currency risk, the Company estimates forecasts of the analysts on the possible
change of the exchange rates and makes decisions on the acceptable amount of assets and
liabilities in the foreign currency.
In respect of the liquidity risks, the Company and the Group in general maintain well-balanced
ratio of assets and liabilities in terms of timing.
In respect of credit risks, the Company analyzes financial position of counteragents and applies
the system of limits.
Legal risks management is based on the strict compliance with the applicable Russian
legislation. Legal department monitors all changes in legislation concerning the Company’s
activity, and conducts legal examination of all contracts and agreements.
IINNDDUUSSTTRRYY RRIISSKKSS
Risks related to the consumer demand and competition
Negative changes of macroeconomic conditions and decrease of consumer demand in Russia
may negatively affect sales and income of the Group
The Group operates in the FMCG retail sector.
The development of the retail sector, in which the Group operates, in many aspects depends on
macroeconomic factors because the demand for the consumer goods is conditioned by the
disposable income of population.
In case of economic instability the decrease of the real disposable income of population may
lead to weaker dynamics of growth and profitability of the industry. It should be noted that the
state of the Russian economy is conditioned a lot by the oil price and other energy and mineral
resources on the world market. The reduction of prices on the mineral resources will negatively
influence the economy of the Russian Federation overall due to prevailing share of the raw
material component in the GDP. Deterioration of the economic situation will also result in the
decline of the effective demand in the country.
Consumer demand on the markets where the Group operates depends on the number of factors
which are beyond the Group’s control, including demographic factors, consumer preferences
and their purchasing power. The decline of the consumer demand or the change of the
consumer preferences may significantly reduce sales and income of the Group and negatively
influence the business activity, financial condition and the results of the Group and the
Company. Besides, seasonality of the consumer demand may lead to considerable fluctuations
of the Group’s results in different periods of time.
High level of competition may lead to the decline of the Group’s market share and
the reduction of its revenue.
As of December 31, 2013 the Group operates in 7 federal districts in more than 1,868 cities and
towns of the Russian Federation with the highest concentration in the Southern, North-
Caucasian, Central and Volga regions. Magnit stores also operate in the North-West, Urals and
Siberian regions. Retail market of the Southern Federal district is competitive enough and is
represented by most of the large Russian players as well as by the number of foreign
companies.
Russian retail is characterized by a high level of competition. The Group competes with a the
significant number of Russian and international companies. In recent years the growth of
consumer demand in Russia has attracted new market participants and resulted in the increase
of competition. Retail chains compete with each other primarily on the ground of the store
locations, product quality, service and price, product mix and store conditions. Entrance of
additional players to the Russian market may further intensify competition and reduce the
efficiency of the Group. Main competitors of the Group in “the convenience store” format are
“Pyaterochka” and “Dixy”, while in “the hypermarket” format these are “Auchan”,
“Perekrestok”, “Karusel”, “Lenta”, “O’key”. The Group also competes with regional and local
retail chains, individual groceries and open markets.
Some of the Group’s competitors which are present on the market today, and also those
planning to enter the Russian market, are large international companies and have better
opportunities to mobilize the resources than the Group. Moreover, many other international
players including those with better financial and other opportunities vs. the Group will enter
the Russian market in the nearest years through acquisition of local players or building up their
own greenfield networks.
If the above process is intensive, competition may substantially increase, which may negatively
influence the market share of the Group and its competitive position. The ability of “Magnit”
retail chain to retain its competitive position depends on its opportunities to maintain and
adjust the existing stores and open new stores in favorable locations, as well as to offer
competitive prices and services. There is no guarantee that the Group will be able to
successfully compete with the existing or new competitors in future.
At the current stage of competitive activity considerable risks for the Group are also
linked to the fact that the main competitors of the Group use more aggressive methods,
such as winning the additional target markets through expansion of franchising
schemes. Such approach enables the competitors to expand their presence rapidly in
many regions of Russia as well as to considerably reduce the costs of the new store
openings. Non-use of the franchising schemes by the Group which may lead to serious
reduction of flexibility in geographical coverage, and as a result to the loss of a
considerable market share.
These factors together with the economic environment and strategy of the discount pricing may
lead to further competition intensification and negatively affect business, financial position and
operational results of the Group and the Company.
Risks related to the intensive growth.
Failure of the Group’s strategy of intensive expansion may hamper its further growth.
As of December 31, 2013 the stores operating under “Magnit” brand are located in the
Southern Federal district (1,699), Central Federal district (2,100), Volga Federal district
(2,483), North-Caucasian Federal district (379), North-Western Federal district (671),
Urals Federal district (671) and Siberian Federal district (120).
Following its strategy the Group plans to considerably increase the number of its stores
in the above regions maintaining the same development rates as well as to further
expand its chain in a number of subjects of Russian Federation. The development
strategy of the Group makes it dependent on the economic conditions and some other
factors.
The successful roll-out of the Group’s development strategy depends on its ability to
identify and acquire the suitable premises or land plots for store construction on
commercially reasonable terms, to open new stores in due time in compliance with the
Group standards, to employ, train and keep extra store and management personnel and
to integrate new stores into the Group’s existing operation on a profitable basis. It is
impossible to guarantee that the Group will achieve the target growth and that the new
stores will profit. Among other factors, the development strategy plans also depend on
the general economic situation, availability of financing and no negative changes in
legislation. There is no guarantee that operational, administrative, financial and human
resources will be sufficient for successful implementation of the Group’s development
strategy. Moreover, there is no guarantee that the expansion plans, if carried out, will
have no negative impact on the quality of service and sales profitability.
Expansion of the Group through acquisition of other companies or their assets may be
fraught with different risks which may have serious negative impact on the economic
activity of the Group and its financial position.
The Group does not rule out the possibility to expand its operation through acquisitions.
Acquisition opportunities presuppose certain risks, including failure to identify the objectives
for acquisition, and/or to carry out adequate complex inspection of their operation and/or
financial position, financial risks and operation expenses which may be considerably higher
than the estimated ones. Moreover, there is a risk of incapability to assimilate the operation and
employees of the acquired companies, deficiency of installation and integration of all the
required systems and control, the risk of customer loss, as well as the risk of entering the
markets, where the Group has no or minor experience, and/or markets with the limited access
to the necessary logistic support and distribution network, as well as the risk of business
interruption and diffusion of the Group management resources. If the Group is not able to
successfully integrate its acquisitions, such failures may have a material negative effect on its
financial position and results of operation.
Failure to raise enough funds may prevent the Group from realization of its expansion plans.
Implementation of the Group’s expansion strategy may require large capital expenditures.
There’s no guarantee that the operational cash flow of the Group and/or borrowings from
financial institutions or proceeds received from the stock market would be enough to finance its
scheduled expenses in the nearest future. If the Group fails to raise enough funds to finance its
capital expenditures, there is risk of reduction or cease of expansion.
Rapid growth of the Group may lead to deficiency of administrative, industrial and financial
resources.
Historically volume of the Group’s operations has been growing fast. The growth is expected to
continue in the projected future which may lead to the significant lack of administrative,
operational and financial resources. As a result, “Magnit” retail chain will have particularly to
continue the improvement of its operational and financial systems, administrative management
and techniques. The Group will also have to achieve strict coordination of operation of
transportation, technical, accounting, legal, financial, marketing, warehouse and store
personnel. If the Group fails to manage the above tasks, its operation and financial position may
seriously suffer.
Moreover, the Group may experience difficulties with application, expansion and improvement
of its management information system due to the ongoing growth. If the Group fails to
maintain its management information system, financial accounting and in-house audit systems
at a proper level, its economic activity and financial position may substantially suffer.
There is a risk of target audience reduction in the course of time. Gradual increase/decrease of
population income may lead to the attrition of “Magnit” chain customers, and as a result to the
material negative effect on the Group. The Russian food retail market is subject to changing
customers’ preferences, needs and trends. The Group’s target audience is mainly the consumers
with low or medium income level. If the level of disposable consumer income continues to
grow nationwide (either generally or in certain federal districts, especially in the Southern
Federal District where the Group collects a larger share of the total revenue), the Group may not
be able to adjust quickly enough the product assortment in the stores to the changes in
consumer trends, and thus will lose a part of its target audience. As a result of such changes, the
number of customers shopping at “Magnit” stores may decline (or increase more slowly than
previously), or the average ticket in “convenience” format may decline (or increase more slowly
than previously), which would have a material adverse effect on business, results of operation,
financial position and prospects of the Group.
Risks related to investments in and lease of real estate.
Lack of reliable information about the real estate market in Russian Federation makes it
difficult to estimate the value of the real estate owned by the Group.
The amount of reliable public information and research concerning the real estate market in
Russia is limited. The volume of the available data is not that comprehensive and complete as
similar data on the real estate market in other industrially developed countries. The lack of
information makes it difficult to assess the market value and the rent price of the real estate in
Russia. Therefore, there is no confidence that the price set to the real estate of the Group reflects
its market value.
The value of Group’s investments into real estate may decline.
The Group in whole and the Company in particular make substantial investments into the real
estate for store premises. The market of any goods including commercial property is subject to
fluctuations. Market value of the real estate may decline or grow due to different factors, i.e.:
changes in the competitive environment;
changes of the attractiveness level of the real estate on the Russian market in general and on the
regional markets where the property objects of the Company are located due to the changes of
the country and regional risks;
fluctuations of the demand for commercial real estate.
As a result of any negative changes on the real estate market, the value of the real estate
acquired by the Company or its subsidiaries may decline and thus negatively affect the assets’
value of the Group. Thus, in case of disposal of such property the Group won’t be able to
compensate its acquisition costs, what may negatively affect the financial position of the Group
and the Company.
Inability to obtain rights on the suitable real estate object on commercially reasonable terms,
to protect rights of the Group for the real estate or to construct new stores on the acquired
land plots may have a material adverse effect on the economic operation and financial
position of the Group.
Ability of the Group to open new stores largely depends on identification and lease and/or
acquisition of the premises appropriate for its needs on commercially reasonable terms. The
property market in large cities of Russia is highly competitive, and in conditions of favorable
economic environment the competition for and therefore the cost of high quality land plots may
increase. However, there’s no guarantee that the Group will manage to exercise it in the future.
If due to any reason, including competition from the third parties seeking similar land plots and
premises, the Group is not able to identify and obtain the new objects in due time, the Group’s
anticipated growth will be negatively affected. Even after the Group procures rights on the
suitable land plots and premises, it may experience difficulties or delays when obtaining
permissions from various regional authorities, required for the exercise of the Group rights to
use, renovate or reequip the stores. Therefore, there’s no guarantee that the Group will
successfully identify, lease and/or purchase the suitable property objects on acceptable terms or
upon the necessity.
Failure to renew lease contracts for the stores or extend them on reasonable terms may have
materially adverse effect on the economic activity and financial position of the Group.
There can be no guarantee that the Group will be able to extend the lease contracts on
reasonable terms, and even that there will be the opportunity itself to extend the lease contracts
as they expire, the share of which is large enough. If the Group is not able to extend the lease
contracts for its stores as they expire or lease another suitable objects on reasonable terms, or if
the actual lease contracts of the Group are terminated for any reason (including loss of right on
such objects by the lessor), or if the contract terms are revised in the prejudice of the Group, it
may have a negative impact on its financial position and operation results.
Deficiency of professional building contractors may negatively affect the development
strategy of the Group.
The ability of the Group to construct and update specially constructed new stores is extremely
important for its strategy and commercial success. The Group operates in the markets which
face the deficiency of highly-skilled contractors able to build new stores in due time and in
compliance with standardized requirements of the Group. There’s no guarantee that the Group
will be able to find the properly trained and experienced team of designers for building and
launching new stores in due time. Failure of the Group to construct and develop new stores on
the newly acquired land plots may have a substantial negative impact on its potential to follow
its strategy and to achieve the required financial position and operation results.
Dispute of the Group’s rights for the real estate or cessation of the Group’s projects
for new stores’ construction may have materially adverse effect on the economic
activity and financial position of the Group.
Group’s activity includes obtaining ownership and lease rights for land plots and premises for
the new stores. In addition, the Group owns buildings and facilities where its offices are
located. Russian land and property legislation is complex and often ambiguous, and may
contain contradictory provisions at the federal and regional levels. In particular, it is not always
clear which state authority is entitled to lend particular land plots, besides the procedures of
construction approval are complex and subject to challenge or complete abolition. Construction
and environmental regulations often contain the requirements which are in practice impossible
to meet in full. As a result, ownership and lease rights of the Group for land plots and premises
may be challenged by governmental authorities and third parties, and thus, its construction
projects may be delayed or cancelled.
Under Russian law, real estate transactions may be disputed on many grounds, including
ineligibility of the property seller or right holder to dispose such property, breach of internal
corporate requirements of the counterparty and failure to register the transfer of rights in the
unified state register. As a result, violations in previous real estate transactions may lead to
invalidation of such transactions with individual property objects, and thus, may affect the
rights of the Group for this property.
Moreover, Russian law does not require certain encumbrances over real estate (including leases
for less than one year and uncompensated use agreements) to be registered with the unified
state register to legally validate the charge. In addition, the time limits within which the charge
liable for registration in the unified state register should be entered into this register, are not
stipulated in the law. Therefore, there is always a risk that the third parties may register at any
moment or claim the existence of encumbrances (of which the Group had not been aware of)
over the real estate of the Group whether owned or leased.
Risks related to the increase of costs
Unionization of the Group employees may have a material adverse effect on its
financial position and operation results.
At the present time the majority of Group employees do not league any labor unions. If the
considerable part of Group employees league labor unions, it may substantially affect the
payroll costs of the Group and/or settlement of labor conflicts, and as a result may have a
substantial negative impact on financial position and operation results of the Group.
Risks related to the possible fluctuations of the prices for raw materials, services applied by
the Group within its activity (separately on the internal and external markets), and their
influence on the Group’s activity and its fulfillment of obligations on the securities:
The Company and the Group operate only on the Russian internal market. The Company and
the Group do not operate on or plan to expand into the external market. The information about
the risks described refers to the internal market.
The increase of the Group’s expenses may have a material adverse effect on its profitability.
The operating efficiency of the Company and its subsidiaries largely depend on the prices for
the products purchased for the retail sale, as well as on the prices for the services used by them
in their operation and on the amount of rent payment for movable and real property and
construction, acquisition and opening costs. Changes in the agreement processes and
procedures of obtaining rights for the land plots (including lease right), fluctuations of the
norms and regulations applicable to the Group activity, town-planning, tax and environmental
legislations in particular, may entail the increase of new opening costs or costs for the use of the
premises, as well as the increase of the payback period of the stores.
The growth of the Group’s expenses may affect its profitability. The growth of the
purchase prices, the installation costs, the price for land plots (other real estate) and
amount of rent payment, as well as the growth of employees’ wages may lead to the
substantial growth of the Group’s expenses, and thus, seriously affect the Company
profitability in case if the Group is not able to adequately increase the sale prices due to
low purchasing capacity of the population in particular. Since the retail chain of the
Group while working with one of the most economical formats mainly targets at
customers with the income below the average, the Group is substantially subject to the
above risk. Decrease of profitability may negatively affect the ability of the Company’s
relevant authority to decide on the payment of yield on the securities and the market
value of the Company’s securities as well as affect the fulfillment of obligations on the
placed bonds in full.
Risks related to the possible fluctuations of the prices on products and/or services of
the Company (separately on the domestic and foreign markets), and their influence
on the Company’s activity and its fulfillment of obligations on the securities:
The Company and the Group operate only on the Russian local market. The Company
and the Group do not operate on or plan to expand into the foreign market. The
information about the risks described refers to the internal market.
The reduction of prices for products at “Magnit” stores may lead to the profitability decrease
of the Group.
Changes of product prices at “Magnit” stores are largely determined by changes of purchase
prices of the Group. The Group is doing their best not to increase the mark up for the products.
Product price changes may affect the level of purchasing capacity of the population. The price
growth is mainly forecasted within the inflation, which as well affects the decrease of the
purchasing capacity of the population. The deterioration of macroeconomic environment and
decrease of the purchasing capacity of the population may also lead to the decline of selling
prices. If the purchase prices are less reduced than the selling prices, it will lead to the decline of
Group profitability. The dramatic deterioration of macroeconomic situation and intensification
of competition may force “Magnit” chain to cut the prices for products in order to maintain the
target turnover growth and market share, which may also lead to the profitability decline.
The assumed actions of the Company in case of industrial fluctuations:
In case one or several risks arise the Company will undertake all possible measures to reduce
the effect of the existing fluctuations. It deems impossible to determine the specific measures of
the Group regarding any risk hereof, as it is hard to work out adequate measures due to
uncertainty of further situation development. The character of the applied actions will depend
on the specific situation of every case. The Company cannot guarantee that the activities taken
to overcome negative fluctuations will lead to considerable changes in the situation, as most of
the risks hereof are out of the Company’s control.
In case of situation deterioration in the industry sector the Company plans:
if possible, to further expand its operation in order to reduce the prime cost of goods and
diversify some risks;
to carry out the diversification between the most and the least perspective stores and to cut the
most unattractive stores;
to extend the territory of its operation by choosing the most profitable regions of Russian
Federation in terms of growth prospects;
to carry out adequate changes in pricing policy for maintaining the demand for goods on the
necessary level;
to optimize the expenses;
to continue engaging of highly-skilled specialists as well as to enter into agreements with
reliable specialists only, counteragents, contractors, which will allow to minimize risks and
carry out the detailed analysis of the scheduled operation of the Company in order to reduce
the prime cost of the investments, minimize the expenses’ structure and receive more profit.
CCOOUUNNTTRRYY AANNDD RREEGGIIOONNAALL RRIISSKKSS
The Company and JSC “Tander” (the main operating company of the Group which controls
trading assets and is the Group’s center of revenue consolidation) are registered as a tax-payer
in the Southern Federal district, Krasnodar. As of December 31, 2013 the Group operates in 7
federal districts in 1,868 locations of the Russian Federation. The Group does not operate
outside the Russian Federation.
As the Group operates in the Russian Federation, the main country and regional risks
affecting the operation of the Group and the Company are the risks within the Russian
Federation. However, due to the globalization of the world economy, considerable
deterioration of the economic situation in the world may lead to the serious economic
recession in Russia and as a result to the reduction of demand for consumer goods.
Despite the fact that during the last few years all public spheres in Russia saw positive changes,
i.e. the economy grew, some positive political stability was achieved, Russia is still the state
with the rapidly developing and changing political, economic and financial systems. The risks
of the industrial production decline, inflation, the increase of the national debt, negative
dynamics of the currency exchange rates, increase of unemployment, etc., have significantly
increased within the global financial and economic crisis. All this may lead to the drop in the
living standards in the country and negatively affect the operation of the Group, as the main
target customers of the “Magnit” chain are people with average income and income below
average. Apart from the risks of economic character, Russia is subject to the political and
regulatory risks to a greater extent than other countries with the developed market economy.
Political risks:
Political instability in Russia may have a negative effect on the investments in the country as
well as on the price for the Company’s shares.
Since 1991 Russia has moved from one party state with the centralized planned economy to
democratic state with the market economy. Russian political system remains vulnerable to the
public discontent and disorders among individual social and ethnic communities. Substantial
political instability may have a considerable negative effect on the value of foreign investments
into Russia including the price for the Company’s shares.
Changes in the government, major political changes and lack of consensus between different
branches of government and economic groups may also lead to disruption or converse turn of
economic, political and judicial reforms. Any significant contradictions on the course of the
future reforms, breakdown or resignation of reform policy, political instability and rise of
conflicts between powerful economic groups may negatively affect the operation of the Group,
its financial results and development prospects as well as the value of investments into Russia
and the price for the Company’s shares.
Reconsideration of reforms or state policy in respect of some individuals may have an
adverse negative effect on Company’s business and on the investment potential of Russia.
During the presidential term of Vladimir Putin and after the election of Dmitry Medvedev the
political and economic situation in Russia has generally become more stable and favorable for
investors. After the election of Vladimir Putin to the presidency in March 2012 the situation
remained stable. However any political discussions over the course of future reforms or
reconsideration of the existing reforms may lead to deterioration of Russian investment climate
that may limit the ability of the Group to receive financing on the international financial
markets, reduce Company’s sales in Russia or otherwise negatively affect Group’s business,
operation results, financial position and prospects.
In the recent past our law-enforcement authorities have opened cases against some Russian
companies, their officials and shareholders for tax evasion and related tax violations. Some
cases resulted in the imprisonment and repayment of understated taxes. Reportedly, such
companies were Yukos, TNK-BP and Vimpelcom. Some analysts consider that such
prosecutions demonstrate a willingness to reconsider key political and economic reforms of the
recent decade. Other analysts, however, believe that these prosecutions are isolated cases and
do not signal any deviation from large-scale political or economic reforms.
Conflicts between federal and regional authorities and other conflicts may set an
unfavorable economic environment which may have an adverse effect on the operation and
financial position of the Group.
Distribution of powers between federal and regional authorities, as well as between different
authorities on the federal level in some cases remains obscure. Therefore, Russian political
system is subject to certain internal contradictions and conflicts between federal and regional
authorities regarding different issues, particularly, tax collection, property right for land,
powers to regulate individual industry sectors and regional autonomy. Conflicts between
different authorities may have serious adverse effect on the price of the Company’s shares.
Besides, ethnical, religious and other segregations periodically provoke public tension and
sometimes result into conflicts including the armed ones. For example, the continuous conflict
in Chechnya negatively affected economic and political situation in Chechnya, the neighboring
regions and Russia on the whole. Terrorist activity and counter measures aimed at the
elimination of violence, particularly by imposing emergency rule in certain territorial subjects of
the Russian Federation may have an adverse negative effect on the potential of Russian
business on the whole and Group performance in particular, especially, taking into
consideration the significant scale of Group’s operation in the Southern federal district.
Social instability may lead to frustration among population, induce the call for powers’
change, outbreaks of nationalism or violence.
Failure of the Russian government to adequately address social problems led in the past and
may lead in the future to frustration among population. Such frustration may have social,
economic and political consequences, e.g. call for the change of powers, growth of nationalism
enhanced by the call for property nationalization, expropriation and constraints on overseas
property in Russia, as well as the increase of violence. Any of the above may have an adverse
negative effect on confidence in Russia’s social environment and investment potential, restrict
our operations and lead to the losses or otherwise affect Group’s business, operation results,
financial position and prospects.
Economic risks:
Deterioration of the economic situation in the Southern Federal district may arise from the
substantial changes in the economic situation in Russia, including dramatic fluctuations of the
national currency exchange rate, which may result in the reduction of the number of the
roundabout industrial enterprises and agriculture of all forms of ownership, unemployment
growth, decrease of the purchasing power of population. Such a scenario may lead to the
interruption of the investment program of the Group, slowdown of Group development rates
on the territory of the Southern Federal district and other regions of the Russian Federation, as
well as the slowdown of the revenue base growth.
Economic instability in Russia may affect the consumer demand which may have a serious
negative impact on the Company’s business.
Any of the risks provided herein previously experienced by the Russian economy may
seriously influence the investment climate in Russia and the Company’s activity.
Russian economy suffered from the following negative events in the past:
Significant declines in GDP;
Hyperinflation;
Currency instability;
High ratio level of state debt/GDP;
Weak banking system which provides Russian enterprises with the limited
liquidity;
Large amount of unprofitable enterprises which continue to operate due to deficiency of
effective bankruptcy procedure;
Wide use of barter and non-liquid bills in settlements of commercial transactions;
Prevalent practice of tax evasion;
Growth of black economy;
Continuous capital outflow;
High level of corruption and penetration of the organized crime into the
economy;
Serious growth of unemployment and underemployment level;
Low living standards of the substantial part of the Russian population
Russian economy faced abrupt downturns. In particular, the period of rapidly deteriorating
economic situation after August 17, 1998 when government defaulted on its ruble-denominated
bonds, the Central Bank of Russia stopped to support the ruble, and temporary restrictions
were imposed on certain foreign currency payments. These actions resulted in immediate and
severe ruble devaluation and sharp increase of inflation rate, dramatic decline of Russian share
and bonds quotes as well as failure of the Russian issuers to raise funds on the international
capital markets.
The problems were aggravated by almost a complete collapse of Russian banking sector after
the events of August 17, 1998, which is proved by the recall of banking licenses of a number of
Russian top banks. This even more reduced the opportunity of banking sector to provide stable
liquidity to Russian companies and resulted in the widespread loss of bank deposits.
Crisis of bank liquidity and consequently possible substantial reduction of legally
capable units of the credit and financial systems, substantial appreciation of the
borrowed resources which will result in economy growth slowdown, rise of
unemployment level and significant increase of the inflation rate are possible effects of
crisis situations in the global and European economy. Moreover, fluctuations of the
world prices for oil and gas, ruble weakening to US dollar and other currencies, as well
as consequences of monetary policy regression or other factors may in future negatively
affect Russian economy and Group’s business, especially its expansion plans.
Physical infrastructure of Russia is in extremely poor condition which may lead to
interruptions in the effective financial and economic activity.
Physical infrastructure of Russia was mainly set up in the soviet times and has not been
adequately funded and maintained in the recent years. The rail and road networks, power
generation and transmission, communication system and building stock were particularly
affected. Electricity and heat deficiency in some regions of Russia dramatically disrupted their
economies. Condition of roads throughout Russia is also improper, and many of them do not
meet the minimum requirements of safety standards.
Deterioration of Russian physical infrastructure damages the national economy, disrupts goods
and cargo transportation, adds costs to business activity in Russia and may lead to interruptions
in financial and economic activity thus negatively affecting the business of the Group and price
of the Company’s shares.
The fluctuations of global economy may negatively affect the economy of Russia,
limiting the access of the Company to the capital and negatively influencing the
purchasing power of the final consumers of the products sold by “Magnit” chain
stores.
Russian economy is vulnerable to market downturns and economic slowdowns in other
countries of the world. According to former practice, financial problems or exacerbated
perception of investment risks in the countries with developing economy may reduce
the volume of foreign investments in Russia, thus affecting Russian economy. As Russia
produces and exports large volume of natural gas, oil and other energy and mineral
resources, Russian economy is especially vulnerable to commodity prices, and decline
in such prices may slowdown or shake the economic development of Russia. These
events may severely limit Group’s access to the capital and have a negative effect on the
purchasing power of the Group’s consumers.
Social risks:
Social instability may lead to the increased support of resumption of the statism, nationalism
and violation, having serious negative effect on the opportunities of the Group to effectively
operate its business.
Social instability may lead to the increased support of resumption of the statism, nationalism
and violation, having serious negative effect on the opportunities of the Company to effectively
operate its business. Inability of the government and many private companies to pay out the
wages in time, and altogether deceleration of wages and benefits vs. rapidly growing living
costs, led in the past and may lead in the future to labor and social disorders. Similar actions,
labor and social disorders may have negative political, social and economic consequences
including the nationalism growth, imposing limitations on the foreign involvement in Russian
economy and the violence growth. All of the events above may lead to the restrictions on
activity of the Group and loss of its profits.
Crime and corruption may have an adverse negative effect on the operation and financial
position of the Group.
According to the reports of the local and international press, the level of the organized criminal
activity has considerably grown. Additionally, diverse publications indicate that some members
of the Russian media regularly publish biased articles for remuneration. The Group activity
may be affected by illegal actions, corruption and accusation of the Group of illegal operation
and therefore have a negative impact on the Group’s operation and price of Company’s shares.
Risks related to the fiscal policy of the Government of the Russian Federation:
The Company pays taxes to the federal, regional and local budgets. Within the economy
transformation there is a risk of changes of the enterprise activity tax treatment. Tax legislation
and peculiarities of tax accounting in Russia often change and bear ambiguous interpretation.
The process of tax legislation reforming has not been completed yet. In case of stiffening of the
tax legislation and increase of tax burden, the financial position of the Group may deteriorate.
Prospective measures of the Company in case if changes of the situation in the
country and region have negative effect on the Group’s operation.
The majority of the above risks of economic, political and legal character are out of the
Company’s control due to the global scale of the threat they present.
The Companies of the Group have reached the certain level of financial stability which helps to
overcome the short-term negative economic fluctuations in the country. In case if significant
political and economic instability which will negatively affect the operation and the profit of the
Group arises in Russia, the Company plans to undertake comprehensive measures of crisis
management aiming at mobilization of business and maximum reduction of the negative effect
of political and economic situation in the country and region on the business of the main
companies of the Group.
It deems impossible to determine the specific measures of the Group regarding any risk
hereof, as it is hard to work out adequate measures due to uncertainty of further
situation development. The character of the applied actions will depend on the specific
situation of every case. Company cannot guarantee that the activities taken to overcome
negative fluctuations will lead to considerable change in the situation as most of the
risks hereof are out of the Company’s control.
However, in case of negative effect of the country and regional fluctuations on the Group’s
operation, the Company plans to carry out the following common arrangements to maintain the
Group’s profitability:
if possible, to save main assets until the situation improves;
to undertake measures focused on the life support of the Group employees and on its
productivity;
to carry out adequate pricing adjustments to keep up the demand on the products on the proper
level;
to optimize the expenses, including measures on purchasing prices reduction and wages
expenses limitation;
to revise the program of capital investment.
To minimize the risks related to the force majeure circumstances (military conflicts, riots,
natural disasters, state of emergency) the Company reflects the possibility of such events within
its contract activity.
The Company acts under paragraph 401 of the Civil Code of the Russian Federation which
states that the person who does not exercise the obligations due to force majeure circumstances
provided herein does not bear responsibility to the counterparty.
To reduce the above risks the Group plans to further operate in different regions of Russia to
diversify risks.
Risks related to the possible military conflicts, state of emergency and strikes in the country
and regions where the Company is registered as a tax payer and/or operates its business:
The Company is a registered taxpayer and operates mainly in the Southern Federal District.
Political and social risks are of primary concern for the Southern Federal District among the
factors of the regional investment risk due to the potential hot spots on the frontiers of
territories of the Northern Caucasian republics and proximity to the Chechen republic.
Major risks are connected with the fact that private capitals (investments) may be nationalized
in case of a sudden change of policy course or destroyed in case of the armed conflict. However
the major area of the Southern Federal District is occupied by the subjects of the Russian
Federation with favorable conditions for business development and with the regional risk level
of not below average figures throughout the country. It’s worth noting that the Company does
not operate in the territory of the Chechen republic and Ingushetiya, social and political
instability of which substantially aggravate the integral index of the Southern Federal District
risks.
Practically all Northern Caucasian republics face substantial social-ethnical instability, thus,
economic and political risks remain high. Along with that, the South of Russia is characterized
by the rapid growth of industrial production, accommodation provision, increase of the real
income of population, and the financial market of the region playing a significant part in the
process.
Russian Federation is a multinational country consisting of the regions with different social and
economic development levels; thus, it is impossible to completely eliminate the possibility of
internal tension in Russia including the armed conflicts. The Company as well cannot
absolutely exclude risks related to the emergency state.
Risks related to the geographical peculiarities of the country (countries) and the region
where the Company is registered as a tax payer and/or performs the main activity, including
high threat of natural disasters, possible stop of transport connection due to remoteness
and/or inaccessibility, etc.
According to EMERCOM of Russia, factors of industrial, natural or terrorist character represent
one of the most real threats to the stable social-economic development of the country, increase
of the living standards of population and fortification of the national security of Russian
Federation.
The terrorism level recently escalated leads to the continuous danger of terrorism acts on the
whole territory of the Group’s operation.
The regions with the Group’s presence may face the drastic consequences of conflagrations on
the economic objects and in the public sector, accidents and failures of utility systems and
transport, natural fire, dangerous hydro-meteorological phenomena (strong winds, frosts,
heavy snowfalls and heavy rains), earthquakes, land subsidence and sinkhole collapse,
contagion outbreaks among people and animals. For example, exposure to natural and climatic
risks, including natural disasters (hurricanes, floods, earthquakes, etc) is distinctive
geographical feature of the Southern Federal District.
The geographical peculiarities of the region do not eliminate the risk of possible stop of
transport connection due to remoteness and/or inaccessibility of the city.
Ecological risks:
Accidents at the environmentally hazardous industrial facilities of the Russian Federation
and environmental pollution may have a negative effect on the Group’s activity.
In respect of all four components of the environment (air, water sources, soil and land
resources, wildlife) large industrial cities face the unfavorable ecological situation for
population. According to some reports, up to 15% of the Russian territory is zones of ecological
disaster. The above factors negatively affect the health of the nation. Moreover, nuclear and
other dangerous objects are located in the territory of Russia, while the system of control over
ecologically dangerous objects is not sufficiently effective. Accidents on these objects and an
unfavorable ecological situation in large Russian industrial cities may have an adverse negative
effect on the Group’s activity.
FINANCIAL RISKS
Risks related to the changes of the interest rates:
Exposure to risks of changes of the interest rates, foreign currency exchange rates
related to the Company’s operation or hedging carried out by the Company to reduce
unfavorable consequences of the risks indicated above:
The Company is exposed to risks related to the changes of interest rates. The Group’s
companies raise borrowed funds to finance business development of the Group and to expand
its resource base. Changes of the interest rates may have substantial negative effect on the
operation results of the companies of the Group.
The Group does not export its production, and all its main obligations are ruble denominated.
Import products comprise a certain share of revenue, which makes the Company dependent on
the possible fluctuations of exchange rates.
The Company does not hedge its risks.
Exposure of the financial position of the Company, its liquidity, funding sources, operation
results, etc., to the foreign exchange movements (currency risks).
Over the last fifteen years Russia faced considerable fluctuations of the exchange rate of Russian
ruble to the foreign currencies. Substantial ruble devaluation may result in the reduction of the
relative cost of ruble-denominated sales and assets of the Group, such as bank deposits and
accounts receivable. Additionally, decrease of the ruble exchange rate may lead to the decline of
the dollar cost of tax deductions arising from the realization of capital investments, since the
balance sheet assets will reflect their mark-up in ruble terms at the moment of acquisition.
The Group does not export its production, and all its main obligations are ruble denominated.
Import products comprise a certain share of revenue, which makes the Company dependent on
the possible foreign exchange fluctuations. In case of such fluctuations, the Group is able to
modify the structure of goods sales in favor of Russian counterparts, which may potentially
reduce the sales growth rate. Thus, the rise of such risk may have an adverse negative effect on
the Group’s revenue and profitability.
The Group purchases and plans to purchase in future the import equipment and vehicles for
foreign currency, thus, considerable decline of the ruble exchange rate may lead to the increase
of the Group’s expenses in ruble terms and negatively affect the results of its operation.
Dramatic changes of the exchange rate may have an adverse negative effect on the
country economy on the whole and lead to the decline of the purchasing power.
Prospective measures of the Company in case if currency fluctuations and interest rates have
negative effect on the Group operation.
In case if movements of exchange rates and interest rates are negative for the Company,
it plans to carry out tough policy of cost saving. However, it should be taken into
consideration, that part of the risk cannot be completely neutralized, since the indicated
risks mainly lie beyond Company’s control but depend on the general economic
situation in the country.
Inflation influence on the payment on securities. Inflation indices which the Company
considers to be critical, and potential actions which may be taken by the Company to reduce
risks specified herein.
The Company faces inflation risks which may have an adverse negative effect on its business
activity. The purchasing prices on the products depend on the overall price level in Russia. The
acceleration of inflation growth rates may affect the financial performance of the Group. The
growth of the purchasing prices may lead to further increase of retail prices on the products and
goods sold by the Company and its subsidiaries, and as a result negatively influence the
competitive environment of the Group.
If the exchange rate of ruble to US dollar increases simultaneously with inflation, the Group
may face expenses increase in dollar terms on certain cost items. Some expense items of the
Group, such as payroll, expenses on construction, rent and utilities are sensitive to the overall
growth of the price level in Russia. Within competitive pressure or legal restrictions the Group
may not be able to properly increase its prices in order to retain our profit rate. Consequently,
high inflation growth rate may increase the Group’s expenses, and there’s no guarantee that the
Group will be able to maintain or increase its profit rate.
Inflation growth in the Russian Federation may also entail the overall growth of the interest
rates.
Inflation indices critical for the Company:
Today the 30-35% level of inflation is considered critical by the Company. Serious acceleration
of the price increase rate may lead to the growth of Company’s expenses, loan funds costs, and
result in the profitability downturn. Therefore, in case of dramatic excess of actual inflation
indices over the forecasts of the Russian Federation Government, the Company plans to take all
required measures to limit the other expenses’ growth (not related to the purchase of the
products for disposal), to reduce the account receivables and its average term.
Risks arising from bank operations:
Russian bank system is yet underdeveloped, a new bank crisis may have a negative effect on
the operation of the Group and its financial position
Russian bank and other financial systems are not properly developed and regulated, and
Russian legislation related to banks and bank accounts may be interpreted ambiguously and
applied inconsistently. Financial crisis of 1998 led to the bankruptcy and liquidation of many
Russian banks and almost completely destroyed the developing market of crediting of
commercial banks.
Within the period from April to July 2004 Russian bank sector experienced one more
serious disruption. As a result of rumors spread over the market as well as certain
problems with legislative regulation and liquidity, several banks faced difficulties with
liquidity and were not able to attract capital on the inter-bank market or with clients.
Simultaneously, many individuals and corporations withdrew their deposits from these
banks. Some of these private Russian banks turned bankrupt, were liquidated or
substantially reduced their scope of activity. Generally, this situation did not have an
adverse effect on foreign banks and Russian banks owned by or under the management
of the government
Additionally, many Russian banks do not meet international banking standards, and
the transparency of the Russian bank sector to a certain extent falls behind the
international level. Supervision of bank activity is also often insufficient, whereby many
Russian banks do not observe the actual instructions of the Central Bank of the Russian
Federation regarding loan criteria, credit quality, loan loss provision, risks’
diversification and other requirements. Application of more severe regulations or
interpretations may result into undercapitalization or insolvency of some banks.
Before global financial crises Russian banks were increasing credit financing rapidly,
which, as considered by many, was accompanied by deterioration of level of refund
guarantee from the borrowers. Moreover, stability of the local corporate security market
led to the accumulation of ruble bonds issued by the Russian companies in the
investment portfolio of Russian banks, which even more aggravated the level of risks
attributable to the Russian banks’ assets.
The global financial crisis led to collapse and buyout of some Russian banks and serious
liquidity decline of others. Return level of the majority of Russian banks was also
seriously affected. Indeed, due to financial crisis and on the background of reports on
difficulties faced by Russian bank and financial organizations, the government had to
make substantial investments into the bank system. As a rule the Group supports
relations and keeps its accounts only with a limited number of reliable creditworthy
Russian banks, including open joint-stock company “Sberbank of Russia” (OJSC
“Sberbank of Russia”), OPEN JOINT-STOCK COMPANY “ALFA-BANK” (OJSC
“ALFA-BANK”), VTB Bank (open joint-stock company (OJSC “VTB Bank”),
“Gazprombank” (open joint-stock company), (GPB (OJSC), OJSC “Joint-stock
commercial bank “Rosbank” (OJSC AKB “ROSBANK”). Bankruptcy or insolvency of
one or several specified banks may negatively affect our business. Continuing or
aggravation of bank crisis, bankruptcy or insolvency of banks with which we keep our
funds may lead to inaccessibility to the cash assets for several days and influence our
opportunity to complete bank operations in Russia or to the loss of all our deposits,
which may have substantial negative effect on our business activity, operation results,
financial position and prospects.
Risks related to the transfer pricing:
On January 1, 2012 the Federal law of 18.07.2011 N 227-FZ "On amendments to certain
legislative acts of the Russian Federation in connection with the improvement of the
principles of pricing for tax purposes" (hereinafter - Federal law N 227-FZ), which
introduced new transfer pricing regulations in the Russian Federation, came into force.
The list of related party transactions includes transactions executed between affiliated
persons, as well as certain types of cross-border transactions.
Complexity and ambiguity of the new transfer pricing regulations are confirmed by a
large number of clarifications of the Ministry of Finance of Russia. Introduction of the
new transfer pricing regulations also increases significantly the load upon a tax payer
due to the necessity of identification and ring-fenced accounting of related party
transactions, "testing of prices" for the correspondence to the market level, documents
preparation, as well as provision of notifications on related party transactions.
The law stipulates the right of taxation authorities of Russia to apply amendments of
the tax base and to levy additional income taxes on all related party transactions, if the
price applied in a transaction differs from the range of market prices.
Due to ambiguous law enforcement and judicial practice taxation authorities and
arbitration courts are free to interpret the applicable regulations. Therefore pricing
regulations taxation authorities may dispute the prices of transactions of the Company
and its subsidiaries and adjust the accrued taxes.
The law stipulates large amounts of penalties for non-payment or underpayment of
taxes in the amount of 20% of unpaid tax until 2016, 40% but not less than 30 thousand
rubles from 2017, due to application in a party related transaction of the price not
corresponding to financial terms of transactions between unaffiliated persons.
Financial report statements of the Company mostly subject to changes under the
foregoing financial risks. Risks, probability of risks and nature of changes in
reporting.
Expenses and profit are mostly exposed to the influence of the foregoing financial risks. In
case of unfavorable change of the situation, the expenses will be the first to grow and will
entail profit reduction correspondingly.
In case of inflation growth and/or currency rate growth and therefore the expenses growth, the
Group may increase the prices on the products for sale.
In case of negative effect of fluctuations of the exchange rate, inflation and interest rates on the
operation of the Group, the following measures are to be taken:
revision of the financing structure;
optimization of the cost-based items of the operation;
revision of the programs of capital investments and loans;
increase the receivables turnover.
At the moment hedging of the foregoing risks is not carried out.
Liquidity risks:
The risks provided herein create the liquidity risk, i.e. the risk of losses due to deficiency of
funds within the established terms and as a result, risk of inability of the Group to fulfill its
obligations. Such risk event may entail penalties, fines, injury to the goodwill of the Group, etc.
The Group manages liquidity risk through analysis of the scheduled cash flows.
Exposure of the financial report statements to the foregoing financial risks:
Risks
Nature of changes in the report
Probability
Interest rates
growth
high
Inflation rates
growth
high
Interest rates growth will increase the cost of
borrowings for the Group, thus it may have
negative effect on the Group’s financial position,
particularly, will increase the operational
expenditures of the Group and reduce its profit.
Inflation rates growth will lead to the increase of
the prime cost expenses (raw commodities costs,
payroll expenses, etc.). At the same time the
acceleration of the inflation rate growth will
result in the growth of the consumer prices for
the Group products and correspondingly increase
the sales of the Group, so that the part of the
Group expenses will be compensated by the
increase of the product prices. Such inflation will
also lead to devaluation of the real price on the
Change of the
exchange rate of
US dollar to
ruble
high
Risk of due
obligation
fulfillment
medium
ruble obligation.
It does not produce strong effect, as the main
profits and losses of the Company are ruble
denominated.
Failure of the Group to fulfill its obligations in
due time may entail penalties, fines, etc., which
will result in unscheduled expenses and reduce
the Group’s profit. In connection herewith, the
Group carries out the policy of the cash flows’
planning.
LLEEGGAALL RRIISSKKSS
The Company and the Group operate only on the Russian domestic market. The Company
and the Group do not operate and do not plan to operate on the international market. The
description of the risks refers to the domestic market.
If one or several of the below risks occur the Company and the Group will undertake all
possible measures to minimize the negative consequences. The Company does not guarantee
that the measures taken to overcome the negative changes would improve the situation as the
described factors are beyond control of the Company and the Group.
The Company is exposed to the following legal risks:
Common risks inherent to legal entities according to the legislation of the Russian Federation:
Certain transactions with participation of the Group’s companies may be acknowledged
related party transactions. These transactions may include, inter alia, sales and purchase
agreements of manufactured goods, purchase of shares, service contracts. If such
transactions or their actual approvals are successfully contested, or if the approval of
transactions of the Group’s companies which require special approval according to the
legislation of the Russian Federation is prevented in future, it may limit the flexibility of
the Group’s companies in the operational issues and may have negative effect on its
operating activity. In practice, standards of corporate governance remain
underdeveloped in many Russian companies, minority shareholders of these companies
may experience difficulties with the exercise of their legal rights and may bear losses.
Although the Federal Law “On Joint-Stock Companies” entitles the shareholder who
holds not less than 1% of the company’s outstanding shares to file a claim against the
management who caused damages to the company, Russian courts do not have enough
experience of handling with such claims. Therefore, the feasibility of investors to get the
compensation from the Company is limited. As a result, protection of interests of
minority shareholders is limited.
The Civil Code and the Federal Law “On Joint-Stock Companies” provide that the
shareholders of the joint-stock company are not liable for its obligations and are only
exposed to the risk of loss of the investments. However, if the bankruptcy of the legal
entity is caused by the founders (participants), the owner of the property of the legal
entity or other persons who are entitled to give instructions, which are mandative for
this legal entity, or otherwise determine its actions, may rest subsidiary liability for the
obligations of the legal entity on them in case of deficiency of the property of the legal
entity. Thus, being the parent company with regard to the subsidiaries in which OJSC
“Magnit” directly or indirectly owns more than 50% of the charter capital, the Company
may bear responsibility for the obligations in the above cases. Responsibility for
obligations of subsidiaries may have significant negative effect on the Company.
Ensuring the rights of shareholders accroding the Russian legislation may lead to
additional expenses, which may lead to the deterioration of the Company’s
performance. According to the Russian legislation, shareholders who voted against or
abstained from voting on certain issues have appraisal rights according to the Russian
legislation. Shareholders have the appraisal rights if they vote against or abstain from
voting on the following issues:
reorganization;
major transaction which is subject to approval by the general shareholders’
meeting;
amendments restricting the shareholders’ rights to the charter of the Company or
ratification of the Charter in a new edition;
decision to make the statement on delisting of the Company’s shares and (or)
issued securities of the company convertible into its shares.
Obligation of the Company to buy the shares back may have significant negative effect
on the cash flows of the Company and its ability to manage the debt of the Group.
Legal risks inherent in the Russian Federation:
Weakness of the Russian legal system and imperfection of the Russian legislation provide
vague environment for investments and business activity.
Efficient legal system essential for the function of the market economy in Russia is still in the
formation process. It is only in recent times that many crucial laws have come into effect.
Sometimes insufficient consensus on the scope, contents and time of economic and political
reforms, rapid development of the Russian legal system which is not always in phase with the
directions for the development of the market relations is expressed in uncertainty, inconformity
and inconsistency of the provisions of the law and subordinate acts.
Additionally, the Russian legislation often refers to the statutory acts which are to be adopted,
leaving considerable loopholes in the mechanism of the legal regulation. Sometimes new laws
and regulatory acts are adopted without being comprehensively discussed by the interested
participants of the civil and legal society and do not contain any adequate transitional
provisions, which creates serious complexities in their application. Defaults of the Russian legal
system may negatively influence the ability of the Group to exercise its rights in accordance
with contracts as well as the ability to defend against the claims of the third parties. Besides, the
Group cannot guarantee that the governmental and judicial agencies as well as the third parties
would not litigate the Group’s meeting of the requirements of the laws and subordinate acts.
Risks inherent in the currency regulation:
There are risks of the regulation of a number of the currency operations. Significant changes in
the currency regulation and currency control may complicate fulfillment of obligations under
the agreements with the counterparties. In the opinion of the Company’s management these
risks influence the Group as is the case with the other market entities.
The Company conducts continuous monitoring of the regulatory environment of the currency
regulation and control and conforms to the established rules. During the reporting period there
were no amendments introduced to the Russian legislation on the currency regulation and the
currency control which may influence the operations of the Company and the Group.
Risks inherent in the protection of investors:
Russian investor protection legislation may be less favorable than the legislation of the other
countries with the developed market economy. Besides, there is a risk of changes of the
applicable legislation in future which may be unfavourable for investors. Income of the foreign
investors from the investments into the Company’s shares may be taxed in accordance with the
Russian legislation. Deterioration of the general economic and political situation in the country
may result in tightening of the currency regulation and control and in limitation of the
performance of transactions with the Company’s shares.
Risks inherent in the tax legislation:
Tax legislation of the Russian Federation is exposed to frequent changes. In the Company’s
opinion these risks influence it as is the case with the other market participants. Amendments in
the Russian tax system may negatively influence the operations of the Group’s.
The following factors may negatively influence the operations of the Group:
Amendments of the acts of the tax and revenue legislation related to the increase of the tax
rates;
Introduction of new taxes.
These significant and other amendments of the tax legislation may result in the increase of tax
payments and consequently in the reduction of the net profit of the Company. Amendments of
the Russian tax legislation may negatively influence the attractiveness of investments in the
Company’s shares.
Russian companies make considerable tax payments of the great number of taxes. These taxes,
inter alia, include:
Income tax;
Value added tax;
Excise taxes;
Land tax;
Property tax.
Legislative and subordinate acts which regulate the above taxes lack sufficient history of
application compared to the other countries. Therefore, the law enforcement practice is often
ambiguous or is not yet established. Currently there are very few generally accepted
clarifications and interpretations of the tax legislation. Sometimes different ministries and
authorities have different interpretations of tax legislation, which creates uncertainty and
grounds for the conflict.
Tax system in Russia changes frequently, and the tax legislation is inconsistently applied on the
federal, regional and local levels. Due to vague legislation the Group is exposed to the risk of
material penalty fees despite the Group’s efforts to comply with the legislation, which may lead
to the increase of tax burden. The Company complies with the applicable tax legislation in full,
which, nevertheless, does not eliminate the potential risk of division of opinions with the
relevant regulatory bodies on controversial issues. At present, tax administration is relatively
inefficient, and the government may have to introduce new taxes to increase its income. Thus,
the Company may have to pay considerably higher taxes, which may negatively influence the
business of the Company. In the course of operations the Company conducts operational
monitoring of the tax legislation and enforcement of the applicable legal provisions. The
Company estimates and forecasts the extent of potential negative influence of amendments of
the tax legislation aiming efforts at minimization of such changes.
Generally, the tax risks inherent in the Company’s activity characterize most of the businesses
operating on the territory of the Russian Federation and may be regarded as national.
Over the last years within the tax reform the tax system of the Russian Federation underwent
significant changes. At that some of initiatives may enhance the situation of the tax payers,
others, on the contrary, may make it worse as, in particular, Federal Law No. 227-FZ of
18.07.2011 “On introduction of amendments to certain legislative acts of the Russian Federation
due to the update of the principles of the price determination for the taxation” effective from
January 1, 2012 (with the exception of particular provisions) which introduced new pricing
control provisions for transactions between the related persons, which in practice may both
positively and negatively influence the Company’s operations.
According to the Federal Law of 16.11.2011 No. 321-FZ “On amendments to part one and two of
the Tax Code of the Russian Federation due to the establishment of the consolidated group of
taxpayers” from January 1, 2012 section II of the Tax Code of the Russian Federation (part one)
was supplemented with chapter 3.1. - “Consolidated group of taxpayers”. This law sets forth
certain criteria of such a group - ones are applicable to the association as a whole, another are
applicable to each enterprise of the group , as well as certain requirements to the accounting
and financial results of the group’s operations. Obligations arising from income tax assessment,
declaration and payment shall be fulfilled by the liable partner on the behalf of the group.
Today, despite the legislative possibility to establish the consolidated group of taxpayers, the
implementation is nearly impossible since the criteria of the consolidated group as well as the
requirements to the accounting and financial results of such group’s operations are
unreasonable and unenforceable for most of the taxpayers. Therefore, financial statements of
the majority of the Russian organizations not meeting the stipulated criteria are
nonconsolidated for the tax purposes, which makes every legal entity pay taxes separately and
makes it impossible to profit from losses of the other companies of the same group in order to
decrease the tax burden.
Risk inherent in the impossibility of foreign investors to export the return on shares
of the Company
Today, the Russian legislation on dividend payment set forth that dividends on shares
in rubles may be paid to the shareholders without limitations. Possibility of the foreign
investors to convert rubles into any freely convertible currency (FCC) depends on the
availability of such currency on the Russian exchange markets. Although there is the
market for conversion of rubles into FCC, including Moscow Interbank Currency
Exchange as well as over-the-counter markets and currency futures markets, further
development of this market remains vague.
Risks inherent in the customs control and duties
Changes of customs control and duties may entail the increase of the purchasing prices on the
imported goods, which may result in the decrease of the Group’s income.
The Company and the Group are exposed to certain risks inherent in the Customs legislation
regulating the setting of the procedure of movement of goods across the customs border of the
Russian Federation, setting and application of the customs regimes and introduction and
levying of customs payments.
The Company complies with the requirements of the customs control, processes all
documentation necessary for import transactions in time and has sufficient financial and
personnel resources to follow the regulations of the Customs legislation.
Risks inherent in the requirements of licensing of the primary activity of the company or
licensing of the right of use of objects which are limited in the turnover (including natural
resources).
The primary activity of the Company - coordination of operations of the companies of the
Group, lease of property and retail - are not subject to licensing. The companies of the Group
have the license for the retail sale of alcohol consumed not in the point of sale. If the licensing
requirements change, the Company will operate under the new requirements including re-
issuance and obtaining of the new licenses. The Company does not use the objects with the
limited presence in the turnover (including natural resources). The Company assesses risks
inherent in the licensing requirements minimal.
RRIISSKKSS RREELLAATTEEDD TTOO TTHHEE CCOOMMPPAANNYY’’SS OOPPEERRAATTIIOONN
Risks peculiar for the Company
Risks related to the inability to extend the Company’s license for a particular type of activity
or for the use of objects limited in the turnover (including natural resources):
The core business of the Company is coordination of Group companies’ operation, the lease of
property and retail business which is not subject to licensing. The Group sells a wide range of
product assortment, and today the retail sale of alcohol is subject to licensing for all Group’s
enterprises engaged in such activity.
The Group has licenses for retail sale of alcohol consumed not at the point of sale. In case of
changes in the requirements for licensing, the Company will operate under the new
requirements, including the license re-issuance and new licenses’ obtaining.
Risks related to the possible liability of the Company for the third party’s debts including
the subsidiaries of OJSC “Magnit”:
The Issuer provided the mandate in the form of the guarantee for the purpose of obtaining of
credit by JSC “Tander” (the main operating company of the Group which controls trading
division and is the center of profit consolidation of the Group). The Issuer shall be liable to
creditors for the fulfillment by JSC “Tander” of its obligations in full, including repayment of
credit amounts, payment of interest in credit, fees and penalties. The total amount of liabilities
of the Issuer within the provided guarantee accounts for 21 636 283.70 thousand rubles as of
December 31, 2013.
At the moment the Issuer considers that JSC “Tander” is able to fulfill its obligations properly.
However, as the majority of the risks are out of the Issuer’s control, the Issuer cannot entirely
exclude their possibility in future, which may negatively affect the ability of JSC “Tander” to
fulfill its obligations properly, which may cause material adverse effects to the operation of the
Group.
Risks related to the possible customer loss the turnover of which amounts to not less than 10
percent of the total sales of products (works, services) of the Company:
The receivers of the OJSC “Magnit” services are its subsidiaries. Therefore, the operation of the
Company and the risk of loss of its main consumers are determined by the financial condition
and position of the entire Group.
Other risks related to the Company’s operation
As the Company exercise functions of the holding company of the Group the Company
significantly depends on the operations of its subsidiaries.
Risks related to the possible restriction of competition:
Russian legislation limits the activity of the bodies which occupy the dominant position on the
market. If any of the Group’s companies is declared the body occupying the dominant position,
its activity (including pricing policy) may be restricted. Such situation may have negative effect
on the economic activity of the Group and its regional expansion strategy.
Some legislation initiatives aimed at competition protection and regulation of trade activity may
have negative consequences for the Group’s business. Specifically, in accordance with the
Federal Law № 381 – FL “On the principles of state regulation of trade activity in the Russian
Federation” effective from February 1, 2010 food chains (which threshold of dominance on the
retail market within the boundaries of the region, municipal area or urban district exceeds 25%)
are prohibited from purchasing and renting additional selling space within the boundaries of
the relevant administrative-territorial entity. Agricultural consumer cooperatives and
organizations of consumer cooperation are not subject to this prohibition.
Risks related to the implementation of the long-term strategy of the Group:
One of the main components of the long-term strategy of the Group is the expansion of existing
store chain. The expansion of the chain will have the following directions: within the existing
formats and the introduction to the market of the new formats. Within geographical position
the chain will expand within the traditional framework of the Southern region as well as in the
other regions of Russia.
The strategy success will depend on a number of factors within and out of Company’s
control. These factors include:
-Ability to raise enough funds for capital investments. If the Group fails to raise enough funds
for chain expansion at the scheduled scale, the Group may have to considerably limit the scale
of expansion and take disadvantageous position versus competitors who will develop their
business activity faster, which may lead to the loss of the market share and deterioration of the
operation results;
-Ability of the operating professional team to carry out the projects on business expansion and
subsequently to manage it. The abilities of the operating management team may turn out to be
insufficient for maintenance of the operation efficiency within the conditions of dynamic
expansion. Business expansion makes it more complicated to manage the Group in terms of
operation and increases the workload upon employees. Therefore, the improvement of
operational and financial systems together with control measures and procedures will be
required. Furthermore, the systems of purchasing, logistics, information technologies,
accounting, financing, marketing and sales will need to be revised. If the Group fails to update
the management system in time, it may negatively affect the business activity, operating results
and financial position;
-Success of the Group’s regional expansion will largely depend on its ability to identify
attractive opportunities on the markets of the potential growth, on the ability to successfully
implement assortment matrix for each region and establish the purchasing system as well as on
ability to manage the operation on the new local markets. Thus, the Group may not achieve the
expected profit and/or lose the part of the funds invested in the new projects;
-Implementation of the effective marketing strategy which will provide not lower level
of the effectiveness of sales or insignificant decline of sales than the Group experienced
in the past. Due to the increase of the competition in retail sector, the effectiveness of the
Group’s marketing campaign may considerably decrease which will reduce the amount
of its customers and consequently reduce the sales turnover. The chain expansion in the
territory of one urban area may result in the cannibalization which will lead to the
reduction of the sales turnover in the average within the stores of the Group;
-The Group’s growth strategy foresees changes in the business activity model concerning the
ownership rights on the sales areas. Within the development of the operating formats the
Group will carry out the independent construction/acquisition of premises and purchase the
equipment for the stores, which will mainly affect the structure of its assets and operating
results and, therefore, the performance indicators;
-Availability of the necessary space areas and land plots for the new stores. The market
may not have the sufficient number of areas suitable for store constructions, which may
slowdown the expansion rates against the scheduled strategy and result in the loss of
the Group’s market share in favor of competitors;
-Competition level in the corresponding regions at the moment of the store openings by
the Group may prove to be extremely high for Group to penetrate, which will not allow
to achieve the required profitability level;
- Within the economic slowdown on the regional markets, geographical expansion may
turn out to be not as successful as expected by the Group, which may have negative
effect on the Company’s business and profitability.
The risk related to management members’ loss and failure to engage qualified employees in
the future:
The future success of the Group will largely depend on the ongoing cooperation with the top
management of the Group, particularly with the following managers: Vladimir Gordeychuk,
Andrey Arutyunyan, Khachatur Pombukhchan, Eduard Smetanin, Valeriy Butenko. According
to the labor contracts entered between the Group’s companies and the bodies indicated above,
they have the right to resign office by filing the notification 1 month prior to the dismissal. The
Group is not insured from the harm which can be caused to the Group by the loss (discharge) of
its leading specialists and top managers.
The Company strives to hire the most qualified and experienced personnel, and adjust its
compensation policy to the changing standards of the Russian labor market.
The loss of one or more managers or failure to attract and motivate extra highly skilled
employees required for effective management of a large-scale business may have
material negative effect on the business activity, operating results and financial position
of the Group
Risks related to the accounting and control system:
The system of the Group’s financial and management reporting currently operating is based on
the volume of operations exercised by the Group within the certain period of time. In case of
substantial business expansion of the Group, the technical level of the accounting and control
system may fail to meet the requirements of the information processing efficiency and lead to
the delays in receiving the adequate data for making tactic and strategic management decisions
and thus damage the effective operation of the Group.
The risks related to the computer network failure:
Managing and processing of operational and financial information in the Group is carried out
via electronic devices of information transmission and processing including the network of the
personal computers, access to Internet and system of financial accounting and automated
system of stock management. As a result, operational effectiveness of the Group as well as its
ability to render adequate data to adopt accurate management decisions depend on the correct
and stable work of computer and information networks.
The systems and their functioning are subject to operation failures, which may be caused by
human factor, natural disasters, blackouts, computer viruses, willful acts of vandalism and
similar factors. There is no guarantee that there will be no serious breakdowns and delays in the
future. Any blackout in computer network or system breakdowns and delays may lead to the
sudden service interruptions, failures in the stock registration system, degradation of the
customer service quality and damage to the goodwill of the Company, mistakes in the
management decisions which may result in the loss of customers, the growth of operating
expenses and financial losses.
Risks related to the operations with the large cash flows:
The specific character of the Company’s business activity and the current level of the bank
sector development in Russia provide that the substantial part of the Group’s operations is
exercised with the cash funds. Thus, the risk of insufficient payments caused by unintentional
actions of the Group’s personnel as well as by deliberate thefts and robberies increases.
Risks related to the sale of private label products:
As a way of attracting customers and strengthening the consumer loyalty for private label, the
Group plans to continue the sale of private label products. Therefore, there exists the
probability of potential customer claims to the quality of the Group’s private label products.
High product quality is of the utmost importance for the private label, and chain operators are
exposed to serious risks while promoting poor quality products under private label. Claims to
the quality or other characteristics of such products may dramatically damage the image of the
Company on the whole, the brand attractiveness for the Company customers and lead to
considerable financial losses.
Risks related to the quality of products for sale:
There is a risk related to the Group’s responsibility for the quality of products sold at
the Group’s stores as well as the risk of filing a claim due to the harm to life and health.
According to the agreements entered into with the majority of suppliers, the producer
takes the material liability for the quality of sold products, provided that the Group
observes the necessary storage conditions.
Such claims may also be addressed to the seller of the products at the discretion of a
complainant. Any similar situation may damage the Company’s image and reputation,
reduce the market share of the Group and negatively affect its financial position.
Moreover, there is a risk related to the careless attitude of the Group personnel to the
storage conditions of the products, which may lead to legal material liability of the
Group under such claims
Risks related to the protection of intellectual property:
If the Group fails to protect its rights for the intellectual property or withstand claims for the
intellectual property from the third parties, connected with the violation of their rights, the
Group may lose its rights or bear serious responsibility for damages
For execution and protection of its rights for intellectual property, the Group firstly relies on
copyright, trade marks rights, legislation on commercial secret protection, on its user policy, on
the license agreements and the restrictions on the information disclosure. Despite the above
precautionary measures, third parties may illegally copy or otherwise receive or use intellectual
property of the Group. On the whole Russia does not provide enough protection of the rights
for the intellectual property as compared to many other countries with the developed economy.
Failure of the Group to protect the rights for the intellectual property from violation and
misappropriation may negatively affect its financial position and the ability of the Group to
develop its business activity. Moreover, the Group may be involved in the legal proceedings on
protection of its rights for intellectual property or on establishing the validity and the scope of
rights of other parties. Any lawsuit may lead to substantial expenses, distraction of the
management and of the Group resources, which may negatively affect the operation and
financial position of the Group.
Conduct of premature policy on securing interests in terms of intellectual property of the
Group may seriously hinder its future business activity
The Group is on the stage of intensive development and expansion of all its business spheres.
Measures on securing the rights of the Group for certain objects of intellectual property have to
be taken on the basis of the existing plans of commercial development and go ahead of any
commercial activity. Insufficient experience of Russian companies in elaborating policy related
to the objects of intellectual property produces the whole set of risks of unfavorable effect,
including the inability of the Group to use the promoted trade marks for individual products
(services) in a number of countries, conflicts with employees, involved specialists and
organizations regarding determination of rights for jointly manufactured products and split of
the use rights on these products between the Group and other bodies.
The “Magnit” trade mark is used by other participants of the sales turnover as a component
of the company name, which may have material effect on the operation of the Group.
The Group invested substantial funds in promotion of its “Magnit” brand on the
Russian market, which is also the part of the company name for the private label
products of the Group. Due to “Magnit” brand the Group achieved great success in its
operation.
Meanwhile, the trademark “Magnet” in Latin letters in the certain classes is registered in the
name of the third party. Today, the scope of legal protection for trademarks rights for trading
organizations, provided by the Russian law, is not completely clear. A certain risk of interests’
conflict between the owners of the trademark “Magnit” (or ‘’Magnet”) definitely exists, the
Group might be forced to re-brand its stores. The expenses for such re-branding may negatively
affect the operation results of the Group.
Moreover, due to the fact that Russian legislation provides limited protection for the company
names on the market, there exist a number of other organizations using “Magnit” in their
names. Business activity of some of them has partially similar features to the operation of the
Group. The Group cannot prevent these organizations from using such names, and this may
result in negative effect of these companies’ activity on the business activity and reputation of
the Group.
Risks related to the development of a new brand:
The expansion strategy of the Group presupposes the growth of sales share of the
products under “Magnit” brand (“for “Magnit” stores”). As of December 31, 2013 this
figure amounted to 12.97%. However it should be noted that together with the
increasing number of hypermarkets, the sales share of “private label” represented by
681 items in both formats may reduce as the total assortment of a hypermarket amounts
to more than 12,800 SKUs on average, while the product mix of a convenience store
amounts to more than 3,000.
The scheduled growth may prove to be unachievable if the commercial expenses for
popularization of such brand will considerably exceed the Group’s relevant budget.
Alongside, the creation of the new brands may weaken the existing brands and require
additional investments for maintaining their market position.
Risks related to insufficiency of insurance coverage for damages arising from the
interruption of activity, damages to the Group’s property or responsibility to the
third parties:
Insurance may turn out to be ineffective.
The Group does not apply insurance for interruption of its business activity, bringing to
responsibility for products quality, fire (except for stocks and supplies) or changes in core
management, and does not enter into insurance agreements on real estate property, distribution
center, stores or stocks at the warehouses (with rare exception). Moreover, the Group does not
form special reserve or other funds to cover possible losses or settle claims with the third
parties. Thus, such events may drastically disrupt the Group’s operation, cause considerable
damage and/or require expenses which will not be compensated. All the foregoing
circumstances may have negative effect on the business activity of the Group, its financial
position and prospects.
A major accident may result in substantial property losses and incapability to restore it.
If in case of a major accident one or more objects of the Group (e.g. the headquarters in
Krasnodar, distribution center or hypermarket) are seriously damaged, the Company may not
be able to resume its activity within the established time period. The Group does not exercise
the insurance or form special funds to cover such accidents. Any such accident may have
negative effect on the Group’s business activity, its operation results, financial position and
prospects.
1177.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOMMPPLLIIAANNCCEE WWIITTHH TTHHEE CCOORRPPOORRAATTEE CCOODDEE OOFF
CCOONNDDUUCCTT OOFF FFFFMMSS OOFF TTHHEE RRUUSSSSIIAANN FFEEDDEERRAATTIIOONN 1133
№
Clause of the corporate code of conduct
Complied /
not complied
Note
General Shareholders’ Meeting
1.
2.
3.
4.
Notification of shareholders on holding the
general shareholders’ meeting not later than
30 days prior to the date of a meeting
irrespective of the questions of the agenda,
if otherwise
the
legislation.
is not provided by
in
the
Shareholders’ ability to study the list of
persons entitled to participate in the general
shareholders’ meeting, starting from the
date of notification on holding of the
general meeting up to the closing of the
general meeting
joint
presence, and in case if the general meeting
is held in absentee form – up to the closing
date of acceptance of the voting ballots.
Shareholders’
ability
the
is to be
information (materials) which
submitted within the preparation for the
general shareholders’ meeting via electronic
communication facilities, including Internet.
form of
study
to
extract,
Shareholder’s ability to introduce a question
to the general meeting agenda or to call the
general meeting without submitting the
the
shareholders’
register
registration of his/her share rights
is
recorded in the system of shareholders’
register, and in case if his/her rights are
registered
account
sufficiency of the custody account extract to
exercise the above rights.
custody
the
in
if
Complied
Paragraph 13.10 of the OJSC
“Magnit” Charter.
Complied
Article 24 of the Regulation on
the OJSC
“Magnit” general
shareholders’ meeting.
Paragraph 4.16 article 4 of the
Regulation on OJSC “Magnit”
information policy.
Article 22 of the Regulation on
the OJSC
“Magnit” general
shareholders’ meeting.
Paragraph 5.1.3, 5.1.4 article 5 of
the Regulation on
the OJSC
“Magnit” information policy.
Complied
Paragraph 13.11 of the OJSC
“Magnit” Charter.
Article 28 of the Regulation on
“Magnit” general
the OJSC
shareholders’ meeting.
Paragraph 5.4 article 5 of the
Regulation on OJSC “Magnit”
information policy.
Article 5 and paragraph 2, article
13 of the Regulation on the OJSC
“Magnit” general shareholders’
meeting.
Partially
complied
13 The information is disclosed according to the “Methodical recommendations on the content and form of information
disclosure in compliance with the corporate code of conduct in the annual reports of joint-stock companies”, ratified by the
FFMS of 30.04.2003 № 03-849/р.
Complied /
not complied
Complied
upon the fact
Not complied
Note
to provide
the
According to paragraph 2 article
29 of the Regulation on the OJSC
“Magnit” general shareholders’
meeting, the Company makes all
the
arrangements
general
attendance
of
the
shareholders’ meeting by
members of
the board of
directors, sole executive body,
members
auditing
committee and other bodies of
the company. They are liable for
providing qualified answers to
the questions of the meeting
participants.
-
the
of
Complied
Article 42 of the Regulation on
the OJSC
“Magnit” general
shareholders’ meeting.
Board of directors
Complied
Paragraph 14.2. of
“Magnit” Charter
the OJSC
№
Clause of the corporate code of conduct
Availability in the company Charter or
internal documents of the requirement on
the obligatory attendance of the general
CEO,
meeting
shareholders’
management board members, members of
the board of directors, members of the
auditing committee and the auditor of the
joint - stock company.
by
The obligatory attendance by the candidates
of the general shareholders meetings with
agenda items on the election of the members
of the board, CEO, management bodies,
members of the auditing committee, and
items on the appointment of the auditor of
the joint-stock company.
Availability in the internal documents of the
joint-stock company of
the registration
procedure of
the general shareholders
meeting participants.
Availability in the Charter of the joint-stock
company of the right of the board members
to annually
financial and
economic plan of the joint-stock company.
ratify
the
5.
6.
7.
8.
9.
Availability of
risk management
structure in the joint-stock company, ratified
by the board of directors.
the
Not complied
board
“Magnit”
Article 5 of the Regulation on the
OJSC
of
directors.
Paragraphs 6.6 and 6.7 of the
article 6 of the Regulation on the
Committees of the board of OJSC
“Magnit”, according to which the
assessment of efficiency and
internal control
procedures of
the
financial and
related
economic
the
of
activity
Company and arrangement of
recommendations
the
improvement of such system
refer to the competence of the
Audit Committee.
on
to
Paragraph 3.1. and 6 article 1,
paragraph 2.4., article 2 of the
Regulation on the internal control
№
Clause of the corporate code of conduct
Complied /
not complied
Note
of financial and economic activity
of OJSC “Magnit”.
Complied
Not applicable Under paragraph 14.2. of the
the
OJSC “Magnit” Charter,
election of the sole executive
body of the company refers to the
competence of the Company’s
board of directors.
Under paragraph 14.2. of the
OJSC “Magnit” Charter,
the
ratification of the agreement with
the person exercising the rights of
the company’s sole executive
body and members of collegial
the
to
executive body refers
competence
the OJSC
“Magnit” board of directors.
of
According to article 7 of the
Regulation on the committees of
the OJSC “Magnit” board of
the
directors, elaboration of
eligibility criteria of candidates
for
the positions of CEO,
members of collegial executive
the main
body, directors of
structural departments of
the
Company, and work-out of the
remuneration procedure for CEO,
Management board members and
highly qualified employees of the
Company,
the
refer
to
the HR and
competence of
Remuneration Committee.
According to paragraph 14.2. of
the OJSC “Magnit” Charter,
ratification of the agreement with
the person exercising the right of
the sole executive body and
members of collegial executive
body (Management board) of the
refers
company
the
competence
the OJSC
of
“Magnit” board of directors.
-
to
Complied
Not complied
10. Availability
in the
joint-stock company
charter of the right of the board to decide on
suspension of authority of CEO, appointed
by the general shareholders’ meeting.
11. Availability
in the
joint-stock company
charter of the right of the board to set the
requirements for the qualification and the
amount
of CEO,
management board members, directors of
the main structural departments of the joint-
stock company.
remuneration
of
12. Availability
in the
joint-stock company
charter of the right of the board to ratify the
conditions of the agreements with CEO and
management board members.
in the
internal documents of
joint-stock company
13. Availability
charter or
the
requirement that the votes of the board
and management
members,
members, are not counted in ratifying the
agreement conditions with CEO (managing
company, manager) and management board
if CEO
№
Clause of the corporate code of conduct
members.
14. Presence in the board of directors of the
joint-stock company of not less than 3
independent directors eligible for the Code
of corporate conduct.
Complied /
not complied
Complied
Complied
Complied
Complied
Complied
15. Absence in the joint-stock company board of
directors of members who were found
guilty of committing economic crimes and
crimes against the government, interests of
public service and local authorities, or
members
enforced
administrative penalty for entrepreneurial
or financial crimes, crimes related to taxes
and fees, securities market.
which
were
16. Absence in the joint-stock company board of
directors of members who are the member,
board
(manager), management
CEO
member or the employee of the legal entity
which is a competitor to the joint-stock
company.
in the
17. Availability
joint-stock company
Charter of the requirement on the election to
the board of directors by cumulative voting.
18. Availability in the internal documents of the
joint-stock company of the duty of the board
members to avoid any actions that will lead
or potentially may lead to the conflict
between their interests and interests of the
joint-stock company, and in case such a
conflict arises - the duty to disclose the
information about this conflict to the board
of directors.
Note
guilty
found
According to paragraph 1 article
33 of the Regulation on the OJSC
“Magnit” board of directors, the
board must include not less than
one independent member.
Four independent directors were
elected to the Board of directors,
they are:
1) Valery Butenko.
2) Alexander Zayonts;
3) Alexey Makhnev;
4) Aslan Shakhachemukov.
The company does not hold
information about any members
of the OJSC “Magnit” board of
directors
of
committing economic crimes and
crimes against the government,
interests of public service and
local authorities, or members
enforced
who
for
administrative
entrepreneurial
financial
crimes, crimes related to taxes
and fees, securities market.
The company does not hold
information about any OJSC
“Magnit” board of directors
members being
the members,
CEO
(manager), management
board member or the employee
of the legal entity which is a
competitor to OJSC “Magnit”.
Paragraph 14.7. of
“Magnit” Charter.
penalty
or
the OJSC
were
Article 7 and 32 of the Regulation
on the OJSC “Magnit” board of
directors.
Paragraph 7.4.10 article 7 of the
Regulation on the committees of
the OJSC “Magnit” board of
directors.
19. Availability in the internal documents of the
joint-stock company of the duty of the board
members to notify the board in writing on
the intention to make a transaction with
securities of the joint-stock company, being
Complied
Article 7 of the Regulation on the
of
OJSC
directors.
“Magnit”
board
Article 7, paragraph 11.6 article
№
Clause of the corporate code of conduct
the member of this company or of its
subsidiary (dependant) companies, and to
disclose the information on the transactions
with such securities as well.
20. Availability in the internal documents of the
joint-stock company of the requirement to
hold the meetings of the board not less than
once in six weeks.
21. Holding of the joint-stock company board
meeting within
year
the
periodically but not less than once in six
weeks.
reported
22. Availability in the internal documents of the
joint-stock company of the board meetings
procedure.
Complied /
not complied
Note
11 of the Regulation on the
information policy of OJSC
“Magnit”.
Not complied According to paragraph 1 article
22 of the Regulation on the OJSC
“Magnit” board of directors,
board meetings are held upon
necessity but not less than once in
three months.
Not complied Within 2013 the OJSC “Magnit”
board meetings were held not
less than once a month, except for
January, May, August
and
September when board meetings
were not held.
The regulations on the Board of
directors of OJSC “Magnit”
Complied
23. Availability in the internal documents of the
joint-stock company of the Regulation on
the obligatory approval by the board of
directors of
company
transactions at the amount of 10 and more
percent of the assets value of the company
excluding transactions entered into on a
regular economic activity basis.
joint-stock
the
24. Availability in the internal documents of the
joint-stock company of the right of the
board of directors to get from the joint-stock
company executive bodies and directors of
the main
the
information which is essential for them to
exercise functions, and the responsibility for
failure to submit such information
structural departments
25. Presence of the board committee of strategic
planning or assignment of the functions
hereof to the other committee (except for the
of
of
the
Not complied According to paragraph 14.2. of
the OJSC “Magnit” Charter, the
transactions
approval
(including several
interrelated
transactions)
on acquisition,
alienation, directly or indirectly,
by the company and possibility of
alienation
assets,
amounting to 5 or more percent
of the balance sheet assets of the
company and
its subsidiaries
(“the Group”), defined on the
basis of the
last consolidated
report of the Group, prepared in
IFRS,
accordance with
excluding
the
offering of the common shares of
the company and transactions in
the usual economic activity,
refers to the competence of the
board of directors.
Article 6 and 9 of the Regulation
on the OJSC “Magnit” board of
directors.
transactions on
Complied
the
Article 6 of the Regulation on the
OJSC
information
policy.
“Magnit
Not complied
The possibility of establishing the
committee is considered.
№
Clause of the corporate code of conduct
audit committee and HR and remuneration
committee)
26. Presence of the board committee (audit
committee) which advises on the joint-stock
company auditor
the board, and
to
cooperates with the board and revision
committee of the joint-stock company.
27. Presence
in
committee of
the audit
independent and non-executive directors
only.
Complied /
not complied
Complied
Complied
28. Management of the audit committee is
executed by the independent director.
Complied
29. Availability in the internal documents of the
joint-stock company of the right of all the
audit committee members to access any
documents and information of the joint-
stock company, provided that the do not
disclose the confidential information.
30. Establishment of the board committee (HR
committee), which
and Remuneration
function is to set the candidates criteria for
the board members and work out the
remuneration policy of
joint-stock
company.
the
Complied
Complied
Note
Alexander
committees
The Audit Committee of the
is
board
“Magnit”
OJSC
established in the Company.
The document assigning
the
functions to the audit committee
is the Regulation on the board
committees of OJSC “Magnit”.
According to the paragraph 6.4,
article 6 of the Regulation on the
board
of OJSC
“Magnit”, the audit committee
must have
independent
an
director.
The members of
the Audit
Committee of OJSC “Magnit” are
independent directors:
1)
(independent director);
2) Alexey Makhnev (independent
director);
3) Aslan Shkhachemukov
(independent director).
According to the point 6.5 of the
article 6 of the Regulation on the
board
of OJSC
“Magnit”,
independent
director only can be in charge of
the Audit Committee.
The Chairman of the board Audit
Committee of OJSC “Magnit” is
the
Alexander
independent director.
Paragraph 4.8 of the article 4 of
the Regulation on
the board
committees of OJSC “Magnit”.
committees
the
Zayonts,
Zayonts
and
“Magnit”
Paragraphs 11.5, 11.8, 11.12 of the
article 11 of the Regulation on the
information
OJSC
policy.
HR
Remuneration
Committee of the board of OJSC
“Magnit” is established in the
Company.
the
The document assigning
and
to
functions
Remuneration committee is the
Regulation
board
on
committees of OJSC “Magnit”.
the HR
the
№
Clause of the corporate code of conduct
31. Management of the HR and Remuneration
Committee is executed by the independent
director.
Complied /
not complied
Complied
32. Absence
in the HR and Remuneration
Committee of the officials of the joint-stock
company
Complied
33. Establishment of the risks committee of the
board or assignment of the functions hereof
to the other committee (except for the audit
committee and the HR and Remuneration
committee).
Not complied
Note
the
the
and
According to the article 7.3 of the
Regulation
board
on
committees of OJSC “Magnit”
the HR and
Management of
Remuneration Committee
is
executed by
independent
director.
Alexey Makhnev (independent
director) is the Chairman of the
HR
Remuneration
Committee of the OJSC “Magnit”
board.
There are no officials of the
company
and
Remuneration Committee (except
members of
the Board of
directors).
Members of the Committee are:
1) Alexey Makhnev,
2) Valeriy Butenko,
3) Alexander Zayonts.
The committee establishment is
under consideration.
the HR
in
conflict management
34. Establishment of the board committee of
corporate
or
assignment of the functions hereof to the
other committee
the audit
committee and the HR and Remuneration
committee).
(except
for
35. Absence in the committee of the corporate
joint-stock
the
conflict management of
company officials.
36. Management of
the corporate conflict
management committee is executed by the
independent director.
37. Availability of the internal documents of the
joint-stock company ratified by the board,
which
of
the
establishment and operation of the board
committees.
procedure
provide
Not complied
The committee establishment is
under consideration.
Not complied
See clause 34
Not complied
See clause 34
Complied
The Regulation on the board
committees of OJSC “Magnit” is
ratified by the board of OJSC
“Magnit”.
38. Availability in the charter of the joint-stock
company of the procedure of the board
quorum determination, which provides the
obligatory participation of the independent
directors in the board meetings.
Not complied
-
Executive bodies
№
Clause of the corporate code of conduct
39. Presence of the collegial executive body
joint-stock
body)
the
of
(managing
company.
40. Presence
in
the
charter or
internal
documents of the joint-stock company of the
regulation on the obligatory managing body
approval of the transactions with real estate,
receipt of credit by the joint-stock company,
if the transactions herein do not refer to the
major transactions and do not relate to the
regular economic activity of the joint-stock
company.
41. Availability in the internal documents of the
joint-stock company of the coordination
procedure of operations which are outside
the framework of financial and economic
activity of the joint-stock company.
42. Absence
in
the
joint-stock
company
executive bodies of members who are the
member, CEO
(manager), management
board member or the employee of the legal
entity which is a competitor to the joint-
stock company.
in
the
penalty
joint-stock
43. Absence
administrative
crimes against
company
executive bodies of members who were
found guilty of committing economic crimes
the government,
and
local
interests of public service and
authorities, or members which were
enforced
for
entrepreneurial or financial crimes, crimes
related to taxes and fees, securities market.
If the functions of the sole executive body
are
the management
organization or the manager – compliance
of CEO and management members of the
management organization or the manager
with the requirements set to CEO and
management members of the joint-stock
company.
44. Presence
charter or
exercised
internal
documents of the joint-stock company of the
management
prohibition
to exercise
organization
similar
competing
company, and to be involved in any other
(the manager)
the
in
functions
the
the
for
by
in
Complied /
not complied
Complied
Note
Article 12 of OJSC “Magnit
Charter
Complied
Paragraph 16.2 of the article 6 of
the Charter
Complied
Complied
Complied
The procedure of
the board
the Company
resolutions of
within its competence is provided
by the internal documents of
OJSC “Magnit” – the Charter of
the Company, the Regulation on
the board of OJSC “Magnit”.
The OJSC “Magnit” executive
bodies do not have among its
is a
members a person who
member,
(manager),
CEO
management board member or
the employee of the legal entity
which is a competitor to the joint-
stock company.
The company does not hold
information about any members
of the OJSC “Magnit” executive
bodies
of
committing economic crimes and
crimes against the government,
interests of public service and
local authorities, or members
administrative
were
penalty for entrepreneurial or
financial crimes, crimes related to
taxes and fees, securities market.
enforced
found
guilty
Not complied No management organization
(manager).
Complied /
not complied
Note
Complied
Paragraphs 18.1. – 18.2. of the
Charter of OJSC “Magnit”.
Article 5 of the Regulation on the
sole executive body of OJSC
“Magnit”.
Article 9 of the Regulations on
the
collegial executive body
(Management Board) of OJSC
“Magnit”.
Not complied
See clause 44
to
Not complied According to the article 69 of the
Federal Law “On the joint-stock
companies”, the executive bodies
of the joint-stock company are
accountable
the board of
directors, therefore the right of
the management board members
to get the information about the
operation and activity of the
executive bodies is essential and
does not require any special
prescription.
-
Complied
№
Clause of the corporate code of conduct
property relations with
joint-stock
company, except for providing services to
the
(the
management organization
manager).
the
45. Availability in the internal documents of the
joint-stock company of the duty of the
executive bodies to avoid any actions that
will lead or potentially may lead to the
conflict between their interests and interests
of the joint-stock company, and in case such
a conflict arises - the duty to disclose the
information about this conflict to the board
of directors.
46. Presence
in
the
charter or
internal
documents of the joint-stock company of the
the management
for
selection criteria
organization (manager).
47. Reporting by the executive bodies on their
activity to the board on a monthly basis.
48. Determination in contracts and agreements
entered into by the joint-stock company
with CEO
(management organization,
manager) and management board members
of the responsibility for breach and violation
of regulations on confidentiality and insider
information.
The secretary of the company
(the
secretary of
49. Presence in the joint-stock company of the
special official
the
company), whose duty is to provide the
compliance of the bodies and officials of the
joint-stock company with the procedural
requirements which ensure the exercise of
rights and legal interests of the joint-stock
company.
50. Availability
in
the charter or
internal
documents of the joint-stock company of the
procedure of appointment (election) of the
Not complied
-
Not complied
-
№
Clause of the corporate code of conduct
company’s secretary and assignment duties
to the secretary of the company.
51. Availability in the charter of the joint-stock
the
company of
candidates for the secretary position of the
company.
the requirements
to
Complied /
not complied
Note
Not complied
-
Substantial corporate actions
52. Presence
in
the
charter or
internal
documents of the joint-stock company of the
requirement on major transactions approval
before its settlement.
53. The
obligatory
the
independent appraiser for the assessment of
the subject of the major transaction.
involvement
of
the
share
stake of
54. Presence in the charter of the joint-stock
company of the prohibition on any actions
within the acquisitions (mergers) of the
joint-stock
major
company, aimed at the interests protection
of the executive bodies (members of such
joint-stock
bodies) and members of the
and
company
board
deteriorating
the
shareholders as compared to the present
(particularly, prohibition on the decision of
issue additional shares,
the board
securities
shares or
securities providing the right for acquisition
of company’s shares, before the end of the
presumptive date of shares acquisition,
even if the right to make such a decision is
provided by the Charter).
directors,
of
convertible
position
into
the
of
to
Not complied
-
Not complied
-
Since 01.07.2006
the prohibition on
realization of any
of such actions by
the company
management
authorities is
determined by the
article 84.6 of the
Federal Law “On
joint-stock
companies”,
which makes the
inclusion of such
regulations in the
Charter
unreasonable.
of
of
the offering by
the
According to the article 84.6 of
the Federal Law “On joint-stock
companies”, after receipt by the
open company of optional or
obligatory offer, the decisions on
the following issues are taken
only by the general shareholders’
meeting of the open company:
- increase of the charter capital of
the open company through the
offering of the additional shares
within the limits of number and
categories
the
(types)
announced shares;
the open
-
company
securities,
convertible into shares, including
the options of the open company;
- approval of the transaction or
several interrelated transactions
on acquisition, alienation or
possibility of alienation by the
open company of assets, directly
or indirectly, with the value of 10
or more percents of the balance
sheet value of the open company,
determined on the basis of its
accounting report for the last
reporting date,
if only such
transactions are not made in the
process of the ordinary economic
activity of the open company or
were not made before the open
company receives optional or
obligatory offer, and if the open
company receives the optional or
obligatory offer to acquire the
№
Clause of the corporate code of conduct
Complied /
not complied
Note
acquisition by
publicly traded securities, prior
to the information disclosure on
the delivery of the corresponding
offer to the open company;
- approval of the related party
transactions;
the open
-
company of the allocated shares
in cases provided by the present
Federal Law;
- increase of the remuneration to
the persons
the
positions
the management
in
bodies of the open company,
determination of conditions of
their authorities,
cessation of
including
of
increase of the compensations
paid out to these persons in case
of cessation of their authorities.
-
determination
occupying
Not complied
Complied
Paragraph 8.7 of the Charter of
OJSC “Magnit”.
Not complied
-
55. Availability in the charter of the joint-stock
company of the requirement on obligatory
involvement of the independent appraiser
for the assessment of the current market
price of the shares and possible changes of
their market price in the result of a merger.
56. Absence in the joint-stock company charter
of the acquirer’s release from the obligation
to offer
the
ordinary shares of the company, owned by
them, (securities convertible into ordinary
shares) within a merger.
the shareholders selling
57. Presence in the joint-stock company charter
or internal documents of the requirement on
obligatory involvement of the independent
appraiser for the assessment of shares’
conversion ratio within reorganization.
Information disclosure
58. Availability of
the
internal document
ratified by the board of directors, stipulating
the rules and approaches of the joint-stock
company
disclosure
(Regulations on information policy).
information
to
Complied
59. Availability in the internal documents of the
joint-stock company of the requirement to
disclose the
information on the shares
offering, on persons who intend to acquire
Not complied
is
on
Regulation
ratified by
The
the
information policy of OJSC
“Magnit”
the
resolution of
the board of
directors of OJSC “Magnit” on
September 6, 2012, minutes of
meeting w/o N of September 6,
2012.
Information disclosure is carried
the
in accordance with
out
requirements
actual
of
legislation of Russian Federation.
the
№
Clause of the corporate code of conduct
Complied /
not complied
Note
the offered shares, including the major share
stake, and on whether the senior officials of
the joint-stock company will take part in
acquisition of the shares offered by the
company.
60. Availability
of
list
the
joint-stock company
in the
internal documents
of
information, documents and materials
the
which
should be provided
the
shareholders
questions
general
submitted
shareholders’ meeting.
to
for consideration of
to
the
Complied
Paragraph 13.11 of the Charter of
OJSC “Magnit”.
Articles 26-28 of the Regulation
the general shareholders’
on
meeting of OJSC “Magnit”.
Paragraphs 5.4 article 5 of
Regulation on the OJSC “Magnit”
information policy.
The Company’s website on the
Internet:
http://www.magnit-
info.ru.
Beginning September 1, 2012 the
Company uses for information
disclosure the following internet
page rendered by the information
disclosure
provider:
http://www.e-
disclosure.ru/portal/company.asp
x?id=7671.
Information disclosure is carried
the
in accordance with
out
requirements
actual
of
legislation of Russian Federation.
the
61. Availability of the website of the joint-stock
company and regular disclosure of the
information about the joint-stock company
on its website.
Complied
Not complied
62. Availability in the internal documents of the
joint-stock company of the requirement to
disclose information about the transactions
of the joint-stock company with persons
referred to the top officials of the joint-stock
company by
, and about
the charter
transactions of joint-stock company with
organizations in which 20 or more percents
of the charter capital of the joint-stock
company directly or indirectly are owned
by
joint-stock
company, or organizations, which can be
otherwise considerably influenced by the
persons hereof.
top officials of
the
the
63. Availability in the internal documents of the
joint-stock company of the requirement to
disclose
the
transactions which may affect the market
value of the shares of the
joint-stock
company
information about all
the
Complied
Information disclosure is carried
the
in accordance with
out
requirements
actual
of
legislation of Russian Federation
the
Point 3.3 of the article 3, point 4.8
of the article 4 of the Regulations
on the information policy of OJSC
“Magnit”.
№
Clause of the corporate code of conduct
64. Availability of
the
internal document
ratified by the board of directors on the use
of material information on the activity of the
joint-stock company, shares and other
securities of the company and transactions
with them, which is not public and the
disclosure of which can considerably affect
the market value of shares and other
securities of the joint-stock company.
Complied /
not complied
Complied
Note
on
Regulation
(is ratified by
The
the
information policy of OJSC
“Magnit”
the
the board of
resolution of
directors of OJSC “Magnit” on
September 6, 2012, minutes of
meeting w/o N of September 6,
2012.
Control over financial and economic activity
65. Availability of procedures of the internal
control over the financial and economic
activity of the joint-stock company, ratified
by the board of directors.
Complied
Complied
Complied
Complied
66. Presence of a special department of the
joint-stock
the
company
compliance with the procedures of the
internal control (supervision and auditing
department)
regulating
67. Availability in the internal documents of the
joint-stock company of the requirement for
the board to determine the structure and
members of supervision and auditing
department of the joint-stock company
68. Absence
in
the revision and auditing
department of members who were found
guilty of committing economic crimes and
crimes against the government, interests of
public service and local authorities, or
enforced
members
administrative penalty for entrepreneurial
or financial crimes, crimes related to taxes
and fees, securities market
which
were
is
ratified by
Regulation on the internal control
over
financial and economic
activity of OJSC “Magnit” as
the
amended
resolution of the OJSC “Magnit”
board of directors on July 15,
2010, minutes w/o N as of July 15,
2010.
Internal audit department
is
established in the Company. The
document assigning the functions
to the service – Regulation on the
internal control over financial
and any economic activity of
OJSC “Magnit”.
Paragraph 3 of the article 3 of the
Regulation on the internal control
over
financial and economic
activity of OJSC “Magnit”.
The company does not hold
information about any members
of the OJSC “Magnit” revision
and auditing department found
guilty of committing economic
crimes and crimes against the
government, interests of public
service and local authorities, or
enforced
members
were
for
administrative
entrepreneurial
financial
crimes, crimes related to taxes
and fees, securities market.
penalty
or
69. Absence
in
the revision and auditing
department of members who are
the
member of the executive body of the joint-
stock company or who are the members,
CEO (manager), management member or
the employee of the legal entity which is a
competitor to the joint-stock company.
Complied
-
№
Clause of the corporate code of conduct
Complied /
not complied
Note
Not complied
-
70. Availability in the internal documents of the
the date of
joint-stock
company of
submitting the documents and materials for
assessment of the realized financial and
the revision and
to
economic activity
auditing department, and responsibility of
the officials and employees of the joint-stock
company for not submitting them in time.
71. Availability
in the
joint-stock company
internal documents of the obligation of the
revision and auditing department to inform
the audit committee of
the detected
breaches, and in case of absence of the audit
committee – to inform the board of directors
of the joint-stock company.
Complied
Paragraph 4.9 article 3 of the
Regulation on the internal control
over
financial and economic
activity of OJSC “Magnit”.
Not complied
-
72. Presence in the internal documents of the
joint-stock company of the requirement on
preliminary assessment by the revision and
auditing department of operations not
provided by the economic and financial
plan of the joint-stock company (irregular
operations).
73. Availability
in the
joint-stock company
internal documents of
approval
procedure for irregular operation with the
board.
the
74. Availability of
the
internal document
ratified by the board, which determines the
procedure of the revision commission’s
inspection of the financial and economic
activity of the joint-stock company.
Not complied
-
Complied
on
the
Regulation
revision
commission of OJSC “Magnit” is
ratified by the annual general
shareholders’ meeting of OJSC
“Magnit” on
June 24, 2010,
minutes of meeting w/o N of
June 28, 2010.
75. The assessment by the audit committee of
its
the
before
the shareholders at
auditors’
the
to
submission
general shareholders’ meeting.
conclusion
Complied
Paragraph 6.7. article 6 of the
Regulation on the committees of
the board of OJSC “Magnit”.
Dividends
76. Availability of
the
internal document
ratified by the board of directors, which
in adoption of
regulates
the board
recommendations on
the amount of
dividends (Regulations on dividend policy).
Complied
Regulation on
the dividend
is
policy of OJSC “Magnit”
ratified by the resolution of the
board of OJSC “Magnit” on
September 6, 2012, minutes w/o
№
Clause of the corporate code of conduct
Complied /
not complied
Note
N as of September 6, 2012.
77. Availability in the Regulation on dividend
policy of the procedure of determination of
the minimum share of net profit of the joint-
stock company for dividend payment, and
conditions under which the dividends on
privileged shares are not paid out or paid
out partially, the dividend amount on
which is set in the charter of the joint-stock
company.
it
in
to
78. Release of the information on dividend
joint-stock company and
policy of the
amendments
the periodical,
provided by the charter of the joint-stock
company for release of the announcements
on holding of the general shareholders’
meeting
above
the
information on the
joint-stock company
website.
and placing of
Complied
Complied
Paragraphs 2.4 and 2.5 of the
article 2 of the Regulation on
of OJSC
policy
dividend
“Magnit”.
There are no privileged shares in
the Company.
The Regulation on dividend
is
policy of OJSC “Magnit”
posted on the OJSC “Magnit”
website
(http://www.magnit-
info.ru), and on the internet page
information
rendered by
the
disclosure
provider
(http://www.e-
disclosure.ru/portal/company.asp
x?id=7671).
1188.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY
Under the resolution of the annual general shareholders’ meeting of May 24, 2013
(minutes of 24.05.2013) the auditing firm LLC AF “Faber Lex” was appointed as the Company
auditor for RAS for the year 2013.
Among the factors which were taken into account to choose the auditing firm are
duration, the cost of auditing services, the number of employees and their qualification.
Information on the auditor of the Company which conducted the audit on the
statements of the Company for the year 2013 in accordance with the Russian Accounting
Standards:
The auditor of the Company in 2013 was Limited Liability Company Auditing firm
“Faber Lex” (LLC AF “Faber Lex”), address: 144/2 Krasnykh Partizan street, Krasnodar, Russian
Federation.
LLC AF “Faber Lex” is the member of the Moscow Chamber of Auditors according and was
included in the register of auditors and audit firms of self-regulatory organization of auditors
on December 23, 2009 under the principal registration number 10203002910.
Telephone number: +7 (861) 220-03-20, 221-41-42, 226-41-41, 226-45-22, 226-38-15, 226-44-
54.
Information on the auditor of the Company which conducted the audit on the
statements of the Company for the year 2013 in accordance with the IFRS:
2013 statements in accordance with the International Financial Reporting Standards
were audited by “Ernst&Young” Limited liability Company (Ernst&Young LLC); address:
building 1, 77, Sadovnicheskaya naberezhnaya, Moscow, 115035, Russian Federation.
Ernst&Young LLC is the member of the Russian Chamber of Auditors in accordance with
the the Decision of the Board of the Noncommercial partnership of the Russian Chamber of
Auditors as of December 28, 2009, certificate number 3028 of December 21, 2009, Principal
Register Applicant Number 10201017420.
Telephone number: +7 (495) 755-97-00
Information on the financial consultant of the Company on the securities
market, which signed the securities prospectus registered on 06.03.2006:
Full name of organization
Short name of organization
Open Joint-Stock Company «Federal Fund
Corporation»
OJSC «FFC»
Address
25 Ostozhenka str., Moscow, Russia
Phone number (including city code)
+7 (495) 737-86-30
Fax number (including city code)
+7 (495) 737-86-32
Website of the financial consultant to disclose
the information about the Issuer according to
www.fscorp.ru
the requirements of the Regulation on the
information disclosure by the issuer of
securities, approved by FFMS
The number of license of the professional on
the securities market
Date of issue
Period of validity
Issuing authority
License of the professional participant of
the securities market for brokerage activity
№ 077-06174-100000, License of the
professional participant of the securities
market for dealer activity № 077-06178-
010000
August 29, 2003
Without restriction on the period of validity
Federal Financial Markets Service
Services provided by the financial consultant:
- Preparation of the draft prospectus according to the information provided by the
Company;
-
Signing of the prospectus approved by the Company, after adequate verification
based on all the documents provided by the Company, according to the written inquiries of the
Financial consultant and receipt of the proper written certifications of the Company on
reliability, adequacy and completeness of the information contained in the above indicated
document and to be included in the prospectus, except for the part, verified by the auditor
and/or appraiser;
- Expertise of the documents filed to the registration authority for the prospectus
registration;
-
Signing of documentation, which might be required from the Company for
organization of stock trading with the trade organizers;
- Advice services on securities issue, including information disclosure on the
securities market according to the requirements of the legislation.
1199.. IINNFFOORRMMAATTIIOONN OONN VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY RREESSOOUURRCCEESS
WWIITTHHIINN 22001133
Type of energy resources
Utilization
volume terms
capacity
in
Utilization capacity in money
terms, thousand rubles
Electrical energy
Thermal energy
Gas
1,500,012.8 kW
The quantitative accounting is
not kept
The quantitative accounting is
not kept
8,312.18
809.57
202.82
AANNNNEEXXEESS TTOO FFYY 22001133 AANNNNUUAALL RREEPPOORRTT OOFF OOJJSSCC ““MMAAGGNNIITT””
ANNEX № 1: Consolidated financial statements of OJSC “Magnit” for
the year ended on December 31, 2013.
ANNEX № 2: Consolidated financial statements of OJSC "Magnit" for
the year 2013 prepared in accordance with the Federal law N 208-FZ "On
consolidated financial statements".
ANNEX № 3: Accounting report of JSC “Tander” for the year 2013
prepared in accordance with RAS:
Auditor’s report of “Faber Leks” Audit Limited Liability Company of the annual
accounting report of JSC “Tander” for the financial year 2013
Accounting reports of JSC “Tander” for the year 2013
Explanations to the accounting reports of JSC "Tander" for the year 2013
ANNEX № 4: Accounting report of OJSC “Magnit” for the year 2013
prepared in accordance with RAS:
Auditor’s report of “Faber Leks” Audit Limited Liability Company of the annual
accounting report of OJSC “Magnit” for the financial year 2013
Accounting reports of CJSC “Magnit” for the year 2013
Explanations to the balance sheet and income statement of OJSC "Magnit" for the
year 2013