RRaattiiffiieedd bbyy tthhee rreessoolluuttiioonn
ooff tthhee BBooaarrdd ooff DDiirreeccttoorrss
ooff PPJJSSCC ““MMaaggnniitt”” ooff AApprriill 66,, 22001155,,
mmiinnuutteess ww//oo №№ ooff AApprriill 66,, 22001155
RRaattiiffiieedd bbyy tthhee rreessoolluuttiioonn
ooff tthhee aannnnuuaall sshhaarreehhoollddeerrss mmeeeettiinngg
ooff PPJJSSCC ““MMaaggnniitt”” ooff JJuunnee 44,, 22001155,,
mmiinnuutteess ww//oo №№ ooff JJuunnee 55,, 22001155
22001144 AANNNNUUAALL RREEPPOORRTT
PPUUBBLLIICC JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNYY
““MMAAGGNNIITT””
1155//55 SSoollnneecchhnnaayyaa ssttrreeeett,, KKrraassnnooddaarr,, RRuussssiiaann FFeeddeerraattiioonn
CChhiieeff EExxeeccuuttiivvee OOffffiicceerr
__________________________________________ SS.. GGaalliittsskkiiyy
sseeaall
KKRRAASSNNOODDAARR 22001155
TTAABBLLEE OOFF CCOONNTTEENNTTSS
11.. PPEERRFFOORRMMAANNCCEE HHIIGGHHLLIIGGHHTTSS ......................................................................................... 3
22.. MMIISSSSIIOONN .................................................................................................................................. 6
33.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPEERRSSOONN IINN TTHHEE PPOOSSIITTIIOONN OOFF AA SSOOLLEE EEXXEECCUUTTIIVVEE
BBOODDYY ............................................................................................................................................. 7
44.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE BBOODDYY MMEEMMBBEERRSS
((MMAANNAAGGEEMMEENNTT BBOOAARRDD)) aass ooff DDeecceemmbbeerr 3311,, 22001144 .......................................................... 9
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS MMEEMMBBEERRSS aass ooff DDeecceemmbbeerr
3311,, 22001144 ......................................................................................................................................... 14
66.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001144 OOPPEERRAATTIIOONNSS ..................... 21
77.. MMAAIINN 22001144 CCOORRPPOORRAATTEE EEVVEENNTTSS .................................................................................. 28
88.. PPOOSSIITTIIOONN OOFF TTHHEE CCOOMMPPAANNYY IINN IINNDDUUSSTTRRYY ........................................................... 29
99.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS OOPPEERRAATTIIOONNSS ..................................................... 42
1100.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS DDEEVVEELLOOPPMMEENNTT .............................................. 44
1111.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS ............................................................ 47
1122.. SSEECCUURRIITTIIEESS ......................................................................................................................... 48
1133.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001144 CCOONNSSIIDDEERREEDD MMAAJJOORR
TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW ““OONN JJOOIINNTT--SSTTOOCCKK
CCOOMMPPAANNIIEESS”” ............................................................................................................................ 65
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001144 CCOONNSSIIDDEERREEDD
RREELLAATTEEDD--PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW OONN
““JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNIIEESS”” ............................................................................................ 66
1155.. MMAAIINN RRIISSKK FFAACCTTOORRSS IINNHHEERREENNTT IINN TTHHEE ССOOMMPPAANNYY OOPPEERRAATTIIOONN ............... 85
1166.. RREEPPOORRTT OONN TTHHEE CCOOMMPPLLIIEENNCCEE WWIITTHH TTHHEE PPRRIINNCCIIPPLLEESS AANNDD
RREECCOOMMMMEENNDDAATTIIOONNSS OOFF TTHHEE CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE CCOODDEE ................. 115
1177.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY ............................................................................................................................... 139
1188..
IINNFFOORRMMAATTIIOONN OONN TTHHEE VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY
RREESSOOUURRCCEESS WWIITTHHIINN 22001144 .................................................................................................. 141
1199.. MMAANNAAGGEEMMEENNTT RREESSPPOONNSSIIBBIILLIITTYY SSTTAATTEEMMEENNTT ................................................. 142
AANNNNEEXXEESS TTOO FFYY 22001144 AANNNNUUAALL RREEPPOORRTT OOFF PPJJSSCC ““MMAAGGNNIITT””
ANNEX № 1: Consolidated financial statements of PJSC “Magnit” for the year ended
on December 31, 2014
ANNEX № 2: Consolidated financial statements of PJSC "Magnit" for the year 2014
prepared in accordance with the Federal law N 208-FZ "On consolidated financial
statements"
ANNEX № 3: Accounting report of JSC “Tander” for the year 2014 prepared in
accordance with RAS
ANNEX № 4: Accounting report of PJSC “Magnit” for the year 2014 prepared in
accordance with RAS
11.. PPEERRFFOORRMMAANNCCEE HHIIGGHHLLIIGGHHTTSS
2014 Key Operational Results1:
Number of opened stores, NET
Total number of stores,
Selling space, thousand sq. m.
Number of customers, million
Convenience stores
Hypermarkets
Magnit Family
Drogerie stores
Convenience stores
Hypermarkets
Magnit Family
Drogerie stores
Convenience Stores
Hypermarkets
Magnit Family
Drogerie stores
Convenience stores
Hypermarkets
Magnit Family
Drogerie stores
1 "Magnit" group of companies
3
1,618
1,144
29
51
394
9,711
8,344
190
97
1,080
3,590.64
2,673.31
559.09
109.07
249.17
2,944.12
2,567.15
237.59
60.93
78.45
LFL Results:
Formats
Convenience Stores
Hypermarkets
Magnit Family
Drogerie Stores
Total
FY 2014 - FY 20132
# of Stores
Average ticket
Traffic
6,014
152
33
500
6,699
9.81%
7.98%
9.28%
3.76%
9.58%
3.68%
5.63%
8.87%
35.69%
4.47%
Sales
13.85%
14.05%
18.97%
40.79%
14.47%
2 LFL calculation base includes stores (months prior to the last month of the reporting period. i.e. by
December 1, 2013
4
2014 Key Financial Results3:
Net sales, mn RUR
Net sales, mn US$5
Gross profit, mn RUR
Gross profit, mn US$
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
Convenience stores4
Hypermarkets4
Magnit Family4
Drogerie stores4
Wholesale4
Convenience stores4
Hypermarkets4
Magnit Family4
Drogerie stores4
Wholesale4
763,527.25
577,775.77
139,655.12
25,533.74
19,756.68
805.94
19,872.29
15,037.75
3,634.80
664.57
514.21
20.98
220,520.56
5,739.49
28.88%
106,483.50
2,771.45
13.95%
85,909.67
2,235.97
13.95%
68,300.00
1,777.64
8.95%
47,685.84
1 241.12
6.25%
931,807.59
16,439.77
3 Audited financial statements prepared in accordance with IFRS
4 Management accounts
5 Based on the average exchange rate for 2014 of 38.4217 RUR per USD 1
6 CJSC «MICEX Stock Exchange» as of December 30, 2014
7 Based on the exchange rate for December 30, 2014 of 56.6801 RUR per USD
5
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””
6
33.. 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 of PJSC
“Magnit” (hereinafter – “the Company” or “the Issuer”) by the resolution of the Board of
Directors of April 12, 2006. On April 12, 2012 the Board of Directors (Minutes w/o № of
12.04.2012) decided to reappoint the Chief Executive Officer.
Biographical information on the person in the position of a sole executive body:
Name: Sergey Galitskiy
Date of birth: 14.08.1967
Education: higher - in 1992 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: 01.04.2004 – present day
Organization: PJSC “Magnit”
Position: member of the Board of Directors;
2) Period: 13.04.2006 – present day
Organization: PJSC “Magnit”
Position: CEO;
3) Period: 05.08.2009-03.10.2014
Organization: NP “FC “Krasnodar”
Position: President (secondary empoyment);
4) Period: 15.07.2010 – present day
Organization: PJSC “Magnit”
Position: Chairman of the Management Board;
5) Period: 09.10.2014 - present day
Organization: LLC “Football Club “Krasnodar”
Position: President (secondary empoyment).
Stockholding of CEO in the Company’s share capital: 37.5820% (as of 31.12.2014).
Ordinary shares, owned by CEO: 37.5820% (as of 31.12.2014).
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:
№№
DDaattee ooff
ttrraannssaaccttiioonn
11
1111..0099..22001144
22
1188..1122..22001144
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
550000 000000
552244 997799
DDeessccrriippttiioonn ooff sseeccuurriittiieess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
7
MMAAIINN PPRROOVVIISSIIOONNSS OOFF TTHHEE CCOOMMPPAANNYY’’SS PPOOLLIICCYY OOFF RREEMMUUNNEERRAATTIIOONN AANNDD
((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF TTHHEE SSOOLLEE EEXXEECCUUTTIIVVEE BBOODDYY OOFF TTHHEE
CCOOMMPPAANNYY
Under Clause 6 of Regulations “On the Chief Executive Officer of PJSC “Magnit”,
ratified by the resolution of the annual General Shareholders Meeting of 24.06.2010 (minutes 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.
8
44.. IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE BBOODDYY MMEEMMBBEERRSS
((MMAANNAAGGEEMMEENNTT BBOOAARRDD)) aass ooff DDeecceemmbbeerr 3311,, 22001144
Sergey Galitskiy, Chairman of the Management Board
Date of birth: 14.08.1967
Education: higher - in 1992 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: 01.04.2004 – present day
Organization: PJSC “Magnit”
Position: member of the Board of Directors;
2) Period: 13.04.2006 – present day
Organization: PJSC “Magnit”
Position: CEO;
3) Period: 05.08.2009 – 03.10.2014
Organization: NP “FC “Krasnodar”
Position: President (secondary empoyment);
4) Period: 15.07.2010 – present day
Organization: PJSC “Magnit”
Position: Chairman of the Management board;
5) Period: 09.10.2014 - present day
Organization: LLC “Football Club “Krasnodar”
Position: President (secondary empoyment).
Stockholding of the person in the Company’s share capital: 37.5820 % (as of 31.12.2014).
Ordinary shares, owned by the person: 37.5820 % (as of 31.12.2014).
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:
№№
DDaattee ooff
ttrraannssaaccttiioonn
11
1111..0099..22001144
22
1188..1122..22001144
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
550000 000000
552244 997799
DDeessccrriippttiioonn ooff sseeccuurriittiieess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
Alexander Barsukov
Date of birth: 08.07.1977
Education: higher - in 1998 graduated from Rostov Law Institute of Ministry of Internal
Affairs of the 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: 16.07.2008 – 16.12.2012
Organization: JSC “Tander”
Position: Hypermarkets Sales Director;
9
2) Period: 15.07.2010 – present day
Organization: PJSC “Magnit”
Position: Member of the Management Board;
3) 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: 0.006754% (as of 31.12.2014).
Ordinary shares owned by the person: 0.006754% (as of 31.12.2014).
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
03.07.2014
21.11.2014
16.12.2014
18.12.2014
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Quantity of
securities
785
1680
1000
252
Description of securities
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Marina Ivanova
Date of birth: 02.01.1964
Education: higher - in 1990 graduated from Tajik State University n.a. Lenin with a
degree in Chemistry and Biology Teaching.
Positions held in the Company and other companies in the last five years including
plural offices:
1) Period: 12.08.2008– present day
Organization: JSC "Tander"
Position: Business Director (Head Office);
2) Period: 12.10.2012 – present day
Organization: PJSC "Magnit"
Position: Member of the Management Board;
Stockholding of the person in the Company’s share capital: 0.004748% (as of 31.12.2014).
Ordinary shares, owned by the person: 0.004748% (as of 31.12.2014).
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
13.01.2014
Type of
transaction
Acquisition of
securities
Quantity of
securities
Description of securities
43
Ordinary registered shares
10
2
3
4
5
6
7
8
9
22.01.2014
17.02.2014
28.03.2014
18.04.2014
23.04.2014
30.05.2014
16.06.2014
03.07.2014
10
22.07.2014
11
13.08.2014
12
02.09.2014
13
06.10.2014
14
20.11.2014
15
26.11.2014
16
16.12.2014
17
16.12.2014
18
18.12.2014
19
22.12.2014
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Disposal of
securities
23
Ordinary registered shares
2350
1250
25
25
837
632
785
21
600
21
21
34
1680
1300
524
500
700
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
Ordinary registered shares
Ordinary registered shares
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 “SGVB” Krasnodar Branch);
11
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: PJSC “Magnit"
Position: Member of the Management Board.
Stockholding of the person in the Company’s share capital: 0.0034% (as of 31.12.2014).
Ordinary shares, owned by the person: 0.0034% (as of 31.12.2014).
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
3
4
5
6
7
Date of
transaction
15.05.2014
03.07.2014
17.09.2014
19.09.2014
19.09.2014
21.09.2014
16.12.2014
Type of
transaction
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
Description of securities
1 730
Ordinary registered shares
785
1
550
1
1 680
1 300
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
MMAAIINN PPRROOVVIISSIIOONNSS OOFF TTHHEE CCOOMMPPAANNYY’’SS PPOOLLIICCYY OOFF RREEMMUUNNEERRAATTIIOONN AANNDD
((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE
BBOODDYY MMEEMMBBEERRSS AANNDD TTHHEE AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN ((RREEIIMMBBUURRSSEEMMEENNTT OOFF
EEXXPPEENNSSEESS)) PPAAIIDD WWIITTHHIINN TTHHEE RREEPPOORRTTIINNGG YYEEAARR
According to the Regulations on collegial executive body (Management Board) of PJSC
“Magnit” remuneration of a Management Board member consists of remuneration under a
labor contract or an additional agreement to it. Management Board members yearly can be
remunerated from the amount of net profit according to the year accounting report. The terms
and order of payment 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.
12
Remuneration to the Management Board members of PJSC “Magnit” paid in 2014
amounted to 2,517,244.88 rubles (the amount does not include the remuneration received by
S. Galitskiy as a Chief Executive Officer).
The Company’s policy of remuneration and reimbursement of expenses does not stipulate
the reimbursement of expenses of the Company’s Management Board members related to the
performance of their functions.
In 2014 the expenses of the Management Board members related to the performance of
their functions were not reimbursed.
13
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS MMEEMMBBEERRSS aass ooff
DDeecceemmbbeerr 3311,, 22001144
Khachatur Pombukhchan, the Chairman of the Board of Directors
Date of birth: 16.03.1974.
Education: higher - in 1996 graduated from Kuban State University with a degree in
Applied Mathematics; in 2000 from All-Russian Distance Institute of Finance and Economics
with a degree in Economics.
Positions held in the issuer and other companies in the last five years including plural
offices
1) Period: 19.06.2008 – 17.05.2012
Organization: LLC “Magnit Finance”
Position: CEO;
2) Period: 25.06.2008 – 23.06.2010
Organization: PJSC “Magnit”
Position: Member of the BOD;
3) Period: 01.07.2008 – present day
Organization: JSC “Tander”
Position: Chief Financial Officer;
4) Period: 01.07.2008 – present day
Organization: PJSC “Magnit”
Position: Chief Financial Officer;
5) Period: 24.06.2010 – present day
Organization: PJSC “Magnit”
Position: Chairman of the BOD.
Stockholding of the person in the Company’s share capital: 0.004241% (as of 31.12.2014).
Ordinary shares, owned by the person: 0.004241% (as of 31.12.2014).
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
Date of
transaction
21.01.2014
20.02.2014
24.03.2014
08.04.2014
22.04.2014
07.05.2014
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
22.05.2014
Acquisition of
Quantity of
securities
31
35
40
460
35
1100
35
14
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
10
11
12
13
14
15
16
17
18
29.05.2014
03.07.2014
07.07.2014
22.07.2014
30.07.2014
26.08.2014
21.10.2014
13.11.2014
21.11.2014
24.11.2014
16.12.2014
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
600
785
500
30
450
200
25
25
1680
30
1850
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: PJSC “Magnit”.
Position: First Deputy CEO;
2) Period: 25.06.2008 – present day.
Organization: PJSC “Magnit”.
Position: Member of the Board;
3) 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: 0.210758% (as of 31.12.2014).
Ordinary shares owned by the person: 0. 210758% (as of 31.12.2014).
Information on transactions of acquisition/disposal of the Company’s shares, made by
the BOD member during the reporting period:
15
№
1
2
3
Date of
transaction
03.07.2014
26.11.2014
16.12.2014
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
785
1680
1300
Description of securities
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
Alexey Pshenichniy
Date of birth: 23.02.1967
Education: higher – in 1990 graduated from Krasnodar State Institute of Physical
Culture with a degree in Teaching and Organization of culture and health activity and tourism;
additional (to higher) education – in 2004 graduated from Academy of National Economy under
the Government of the Russian Federation, Master of Business Administration (MBA) degree.
Positions held in the issuer and other companies in the last five years including plural
offices:
1) Period: 01.02.2010 - present day
Organization: Limited Liability Company “Bazis”
Position: Director (secondary empoyment);
2) Period: 01.02.2010 – present day
Organization: Limited Liability Company “Yunior”Position: Director (plural offices);
3) Period: 01.01.2004 - present day
Organization: Limited Liability Company “Sports goods chain “Visshaya LIGA””
Position: Director (primary empoyment);
4) Period: 13.12.2012 – present day
Organization: Limited Liability Company “Sport Plyus”
Position: Director (secondary empoyment);
5) Period: 29.05.2014- present day
Organization: PJSC “Magnit”
Position: Member of the Board of Directors.
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.
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: PJSC “Magnit”
Position: member of the Board of Directors;
16
2) Period: 13.04.2006 – present day
Organization: PJSC “Magnit”
Position: CEO;
3) Period: 05.08.2009 – 03.10.2014
Organization: NP “FC “Krasnodar”
Position: President (secondary empoyment);
4) Period: 15.07.2010 – present day
Organization: PJSC “Magnit”
Position: Chairman of the Management board;
5) Period: 09.10.2014 - present day
Organization: LLC “Football Club “Krasnodar”
Position: President (secondary empoyment).
Stockholding of the person in the Company’s share capital: 37.5820% (as of 31.12.2014).
Ordinary shares, owned by the person: 37.5820% (as of 31.12.2014).
Information on transactions of acquisition/disposal of the Company’s shares, made by
the BOD member within the reporting period:
№№
DDaattee ooff
ttrraannssaaccttiioonn
11
1111..0099..22001144
22
1188..1122..22001144
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
550000 000000
552244 997799
DDeessccrriippttiioonn ooff sseeccuurriittiieess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd sshhaarreess
Alexander Zayonts
Date of birth: 10.01.1967
Education: higher – graduated from Moscow Institute of Chemical Engineering n.a. D.I.
Mendeleev with a degree in Chemical process engineering.
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 – 09.2013
Organization: LLC "Obiedinennye resursy"
Position: Member of the Board of Directors;
3) Period: 24.06.2010 – present day
Organization: PJSC "Magnit"
Position: Member of the Board of Directors;
4) Period: 13.04.2012 – present day
Organization: LLC "EDELWEISS"
Position: General Director.
Shareholding of the person in the Company’s charter capital: no share.
Ordinary shares owned by the person: no share.
17
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: 05.2009– 24.01.2013
Organization: CJSC “VTB Capital”
Position: Managing Director, Head of the Consumer Sector and Retail, Investment
Banking on Global Markets Department;
2) Period: 25.06.2009 – present day
Organization: PJSC "Magnit"
Position: Member of the Board of Director;
3) Period: 25.01.2013 – present day
Organization: CJSC "VTB Capital"
Position: Head of the Consumer Sector, Retail and Real Estate, Corporate and
Investment Department;
4) Period: 25.01.2013 – present day
Organization: OJSC "Bank VTB".
Position: Head of the Trade, Consumer Goods, Agro and Pharmaceutical Industries
Business Unit of Market Sector Clients Service Department – Senior Vice-President;
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 Schkhachemukov
Date of birth: 22.08.1962
Education: higher – in 1987 graduated from Krasnodar Polytechnic Institute of the
Order of the Red Banner of Labor with a degree in Industrial Engineering.
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: PJSC ”Magnit”
Position: Member of the Board of Directors;
3) Period: 11.03.2012 – present day
Organization: JSC “Tander”
Position: Deputy CEO for Economic Security and Organizational Issues.
18
Shareholding of the person in the issuer’s charter capital: 0.006845% (as of 31.12.2014).
Ordinary shares owned by the person: 0.006845% (as of 31.12.2014).
Information on transactions of acquisition/disposal of the Company’s shares made by
the BOD member within the reporting period:
№
1
2
3
Date of
transaction
03.07.2014
26.11.2014
16.12.2014
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
785
1680
1300
Description of securities
Ordinary registered shares
Ordinary registered shares
Ordinary registered shares
MMAAIINN PPRROOVVIISSIIOONNSS OOFF TTHHEE CCOOMMPPAANNYY’’SS PPOOLLIICCYY OOFF RREEMMUUNNEERRAATTIIOONN AANNDD
((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS BBOOAARRDD OOFF DDIIRREECCTTOORRSS
AANNDD TTHHEE AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN ((RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS)) PPAAIIDD
WWIITTHHIINN TTHHEE RREEPPOORRTTIINNGG YYEEAARR
According to the Regulations “On the Board of Directors of PJSC “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 of Directors
operation amounts to 30,000 (thirty thousand) US dollars 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 of Directors,
- 500 (five hundred) US dollars for participation by directing the written opinion for
each meeting in the form of joint presence of the Board of Directors, 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
of Directors in addition to remuneration. Fixed amount of year-end bonus is paid to the
members of the Board of Directors after approval of appropriate annual financial report by the
General Shareholders Meeting of the Company.
In case if the Company does not gain net profit (allocated profit), remuneration shall not
be paid to the members of the Board of Directors (remuneration for the participation in work of
the Board of Directors, remuneration following the results of the year).
The members of the Board of Directors shall not be entitled to receive remuneration and
(or) reimbursement of expenses for the fulfillment of their obligations in any manner and form,
for making decisions by the Board of Directors or other bodies of the Company, as well as for
the exercise of their rights and performance of their obligations as members of the Board of
19
Directors, except for the remuneration and (or) reimbursement of expenses received upon the
decision of the General Shareholders Meeting.
On May 29, 2014 the General Shareholders Meeting made a decision not to pay year-end
bonus based on the operation results (minutes of 30.05.2014)
In 2014 upon the resolution of the annual General Shareholders Meeting of 29.05.2014
(minutes w/o № of 30.05.2014) the members of the Board of Directors were paid remuneration
for participation in the Board of Directors operation in 2013 in the amount of 10,144,269.90
rubles and wages to the members of the Board of Directors, who are employed in the Company,
as well as work at secondary employment, in the amount of 94,933.30 rubles (the amount does
not include the remuneration of Sergey Galitskiy as a Chief Executive Officer and the Chairman
of the Management Board).
In accordance with the Regulations on the Board of Directors of PJSC “Magnit”
approved by the decision of the annual General Shareholders Meeting of June 24, 2010 (minutes
of June 28, 2010) the expenses of the Board of Directors members related to the fulfillment of
their obligations are subject to compensation by the Company. These expenses are the
following:
expenses on travel to the venue of the Board of Directors meetings;
expenses on accommodation in the period of the Board of Directors meetings;
hospitality expenses;
expenses on the professional consulting on the issues considered at the Board of
Directors meetings and on the translation of the documents/ materials presented to the Board of
Directors for examination.
The amount of these expenses shall be preliminarily approved by the Chairman of the
Board of Directors, the Chairman of the Revision Commission. Reimbursement of expenses
shall be executed over the counter of the Company on the basis of the Board of Directors
member’s application on the expenses reimbursement. Original documents confirming the
actual incurred expenses (tickets, invoices, receipts, etc.) must be attached to the application. At
the meeting the Board of Directors may make a decision by the majority of votes of the elected
members not to reimburse the expenses incurred by a member of the Board of Directors, if it is
established that actions of this Board of Directors member conflict with the Company’s
interests.
In 2014 the expenses of the Board of Directors members related to the fulfillment of their
obligations were not reimbursed.
20
66.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001144 OOPPEERRAATTIIOONNSS
The structure of the Board of Directors (elected by the annual General Shareholders
Meeting on May 24, 2013 (minutes of 24.05.2013):
№
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 29, 2014 (minutes of 30.05.2014):
№
Full name of a member of the Board of Directors
Date of birth
Andrey Arutyunyan
Alexey Pshenichniy
Sergey Galitskiy
Alexander Zayonts
Alexey Makhnev
Khachatur Pombukhchan
Aslan Shkhachemukov
12.01.1969
23.02.1967
14.08.1967
10.01.1967
24.05.1976
16.03.1974
22.08.1962
The current Board of Directors includes three independent directors; they are Alexey
Pshenichniy, Alexander Zayonts, Alexey Makhnev.
Khachatur Pombukhchan was elected as a Chairman of the Board of Directors by the
unanimous resolution at the first Board of Directors meeting of 03.06.2014, Aslan
Shkhachemukov as a Deputy Chairman and Andrey Arutyunyan as a Secretary of the Board of
Directors.
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 PJSC
“Magnit” and Regulations of the Committees of the Board of Directors.
21
According to the provisions of the corporate documents the following committees of the
Board of Directors 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
№
1
2
3
Full name of a member of the board of
directors
Alexey Makhnev
Alexey Pshenichniy
Alexander Zayonts
Audit Committee of the Board of Directors:
Full name of a member of the board of
directors
Alexander Zayonts
Alexey Makhnev
Alexey Pshenichniy
Position in the committee
chairman of the committee
member of the committee
member of the committee
Position in the committee
chairman of the committee
member of the committee
member of the committee
Within 2014 the Board of Directors held 15 meetings and examined 90 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 2014:
Date of
meeting
04.02.2014
04.02.2014
04.02.2014
Considered issues
The nominees to the Board of Directors were considered and enrolled on a
voter list for election at the annual General Shareholders Meeting.
The nominees for the office of auditor were considered and enrolled on a voter
list for election at the annual General Shareholders Meeting.
The business priorities of PJSC “Magnit” for the year 2014 and the first quarter
of 2014 were determined.
25.02.2014
The Anti-Corruption Policy of PJSC “Magnit” was approved.
20.03.2014
04.04.2014
04.04.2014
04.04.2014
The business priorities of PJSC “Magnit” for the II quarter of 2014 were
determined.
The decision on calling of the annual General Shareholders Meeting was
adopted.
The recommendations to the General Shareholders Meeting on the profit
distribution, including the dividend amount on PJSC “Magnit” shares and
procedure of its payment, and losses following the results of 2013 financial year
were approved.
The annual report of PJSC “Magnit” for 2013 financial year was preliminarily
approved and submitted for consideration of the General Shareholders
Meeting.
04.04.2014
The payment amount for the auditor’s services was determined.
04.04.2014
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
22
General Shareholders Meeting of PJSC “Magnit” was adopted.
04.04.2014
03.06.2014
03.06.2014
03.06.2014
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 PJSC “Magnit” was adopted.
The Chairman of the Board of Directors, the Deputy Chairman and the
Secretary of the Board of Directors of PJSC “Magnit” were elected.
The members of the Audit Committee of the Board of Directors of PJSC
“Magnit” and its Chairman were elected.
The members of the HR and Remuneration Committee of the Board of directors
of PJSC “Magnit” and its Chairman were elected.
03.06.2014
The members of the Management Board of PJSC “Magnit” were elected.
09.07.2014
31.07.2014
31.07.2014
31.07.2014
31.07.2014
07.10.2014
The business priorities of PJSC “Magnit” for the year 2014 and the III quarter of
2014 were determined.
The recommendations to the General Shareholders Meeting on the dividend
amount on PJSC “Magnit” shares and procedure of its payment following the
results of the 6 months of 2014 financial year were approved.
The decision on calling of the extraordinary General Shareholders Meeting of
PJSC “Magnit” was adopted.
The decision on determination of the price of the transactions the approval of
which as major related-party transactions is included in the agenda of the
General Shareholders Meeting of PJSC “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 PJSC “Magnit” was adopted.
The main business priorities of PJSC “Magnit” for the IV quarter of 2014 were
determined.
07.10.2014
The payment amount for the auditor’s services was determined.
29.10.2014
29.10.2014
29.10.2014
29.10.2014
17.11.2014
15.12.2014
15.12.2014
The recommendations to the General Shareholders Meeting on the dividend
amount on PJSC “Magnit” shares and procedure of its payment following the
results of the 9 months of 2014 financial year were approved.
The decision on calling of the extraordinary General Shareholders Meeting of
PJSC “Magnit” was adopted.
The decision on determination of the price of the transactions the approval of
which as major related-party transactions is included to the agenda of the
General Shareholders Meeting of PJSC “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 PJSC “Magnit” was adopted.
The decision on determination of the price of the transactions the approval of
which as major related-party transactions is included to the agenda of the
General Shareholders Meeting of PJSC “Magnit” was adopted.
The decision on payment of bonus to the person in the position of CEO of PJSC
“Magnit” following 2014 results was adopted.
The decisions to amend the Decision on securities issue and Prospectus for
securities (with respect to non-convertible interest-bearing certified bonds to
the bearer with obligatory centralized custody of 02, 03 series) were made.
23
Besides, within the reporting period the issues related to determination of the position of
PJSC “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 PJSC
“Magnit” in accordance with the Clause 14.2 of the Charter. Thus, the meetings on the issues
concerning determination of the position of PJSC “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” were held in February, March, April, June, August, September,
October, November and December of 2014.
The management of the Company achieved the following results in 2014:
1. Revenue of the Company8 (also referred to hereinafter as “Magnit” Group of
companies or “Magnit” Group or the Group) increased by 31.71% from 579,694.88 million
rubles in 2013 to 763,527.25 million rubles in 2014. Top line growth was due to an increase in
selling space as well as to a 14.47% increase of like-for-like sales (including VAT).
In 2014 "Magnit" remained the leader of the Russian food retail in terms of revenue as
well as number of stores, selling space, growth rates, profitability margins and capitalization.
2. During 2014 the Company added 1,618 stores (1,144 convenience stores, 29
hypermarkets, 51 “Magnit Family” stores and 394 drogerie stores). The total store base as of
December 31, 2014 reached 9,711 stores (8,344 convenience stores, 190 hypermarkets, 97
“Magnit Family” stores and 1,080 drogerie stores). Total selling space of the stores increased by
19.24% from 3,011.38 thousand sq. m. to 3,590.64 thousand sq. m.
9711
8093
6884
5309
4055
4002
5006
6046
3228
2582
2568
3204
8344
7200
610
610
1014
1014
1500
1500
1893
2197
1893
2194
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Convenience
Hypermarkets
Magnit Family
Drogerie
3. Number of customers increased by 19.43% from 2,465.05 million in 2013 to 2,944.12
million in 2014.
4. Sales of private label products as a % of sales in 2014 amounted to 10.9%, the number
of private label SKUs in 2014 amounted to 605. The Company will continue to increase the sales
of private label products primarily through their expansion in hypermarkets.
8 PJSC “Magnit” and its subsidiaries
24
800
700
600
500
400
300
200
100
0
12,1% 12,1% 12,3% 12,7%
14,0%
13,2% 13,0%
10,9%
700
700
530
614
637
613
681
605
2007
2008
2009
2010
2011
2012
2013
2014
Number of items
Share in Revenue, %
16%
14%
12%
10%
8%
6%
4%
2%
0%
5. In 2014 the Company opened five distribution centers: Voronezh, Novosibirsk,
Kolpino (Saint-Petersburg), Novorossiysk and Kolomna (Moscow region). Launch of the new
distribution centers improved the quality of service in the Central, Southern, North-Western
and Siberian regions. Total space of 27 distribution centers as of December 31, 2014 exceeded
900 thousand sq. m.
6. During the reporting year the fleet of the Company’s vehicles increased by 361 trucks,
total number of vehicles amounted to 5,938. This enabled to optimize the transportation costs.
7. In 2014 the Company increased the share of products processed via its distribution
centers from 85% in 2013 to 86% 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 2014 the total number of the Company’s employees exceeded
250 thousand, out of which 184,680 are in-store personnel; 45,081 people are engaged in
distribution; 18,229 people - in regional branches and 9,561 are employees of the head office.
Average monthly salary in the Company in 2014 amounted to 28 143 rubles.
As of December 31, 2014 the average number of employees of "Magnit" group of
companies amounted to 207,853 people. Based on the publicly available information the
management of the Company assumes that PJSC “Magnit” is the largest private employer in
Russia.
9. LFL revenue growth in 2014 vs. 2013 in ruble terms amounted to 14.47%, LFL average
ticket increased by 9.58% and LFL traffic increased by 4.47%.
25
14%
10%
4%
7%
6%
2%
2013
2014
LFL sales
LFL average ticket
LFL traffic
10. Gross margin increased from 28.51% in 2013 to 28.88% in 2014 primarily due to
continued improvement of purchasing terms. Gross profit in rubles increased by 33.44% from
165,262.99 million RUR (US$ 5,189.12 million) to 220,520.56 million RUR (US$ 5,739.49 million).
11. EBITDA increased by 32.74% from 64,721.23 million RUR (US$ 2,032.19 million) in
2013 to 85,909.67 million RUR (US$ 2,235.97 million) in 2014. EBITDA margin in 2014 amounted
to 11.25%. Net debt/EBITDA ratio (in ruble terms) at the end of 2014 amounted to 0.91.
12. Net income in 2014 increased by 33.87% and amounted to 47,685.84 million RUR
(US$ 1,241.12 million) vs. 35,620.38 million RUR (US$ 1,118.45 million) in 2013. Net income
margin in 2014 amounted to 6.25%.
26,5%
449
10,6%
5,6%
2012
28,5%
580
11,2%
6,1%
2013
28,9%
764
11,3%
6,3%
2014
Sales, RUR bn
EBITDA Margin, %
Gross Margin, %
NI Margin, %
13. The Company paid 65% of its net income in dividends for the 9 months 2014.
Dividend per share amounted to 230.37 rubles (accumulatively, including 78.3 rubles for the
first half of 2014 and 152.07 rubles for the third quarter 2014).
Overall, the Board of Directors of the Company considers the achieved financial and
economic results positive and in line with 2014 targets.
26
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 2014 and to ratify 2014 annual report submitted for
the meeting agenda.
27
77.. MMAAIINN 22001144 CCOORRPPOORRAATTEE EEVVEENNTTSS
February
PJSC “Magnit” Anti-Corruption Policy was approved.
Credit Rating Service Standard & Poor’s revised the outlook of PJSC
“Magnit” from “Stable” to “Positive” and confirmed “BB” Company long-
time credit rating.
National Rating Agency confirmed PJSC “Magnit” individual credit rating at
the level “AA+” – very high reliability, first level.
May
The new Board of Directors membership was formed at the annual General
Shareholders Meeting.
The decision to pay dividends following the results of 2013 financial year
was adopted by the annual General Shareholders Meeting.
The decision on approval of major related party transaction was adopted by
the annual General Shareholders Meeting.
Shares of PJSC “Magnit” were admitted to trading at OJSC “Saint Petersburg
Exchange”.
June
The membership of the PJSC “Magnit” Management Board was formed by
the Board of Directors.
July
August
The Board of Directors formed the committees of the BOD, appointed the
chairman, deputy chairman and secretary of the BOD.
“Magnit” topped the Boston Consulting Group’s (BCG) 2014 List of Value
Creators Ranking of the “Retail Top Ten”.
The number of employees of “Magnit” group of companies exceeded 200
thousand people.
PJSC “Magnit” CEO Sergey Galitskiy has been named Businessman of the
Year 2014.
September
Top-managers of PJSC “Magnit” joined the list of business leaders and
became the best in the sector.
The decision to pay dividends following the results of the 6 months of 2014
financial year was adopted by the extraordinary General Shareholders
Meeting.
October
Capitalization of PJSC “Magnit” exceeded 1 trillion rubles.
November
The number of employees of “Magnit” Group of Companies exceeded 250
thousand people.
December
PJSC “Magnit” CEO Sergey Galitskiy has been named “The CEO of the
Year” by The Moscow Times.
The decision to pay dividends following the results of the 9 months of 2014
financial year was adopted by the extraordinary General Shareholders
Meeting.
28
88.. 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 26 118.9 billion RUR in 2014 and increased by 2.5% in terms
of mass of commodities which is lower than the level of 2013 (3.9%). In December 2014 turnover
increased by 5.3% in terms of mass of commodities compared to December 2013 and amounted
to 2 941.8 billion RUR.
In 2014 food retail turnover decreased by 0.1% (in 2013 grew by 2.6%), non-food
retail turnover increased by 4.7% (in 2013 grew by 4.9%). In December 2014 food retail
turnover decreased by 0.4% compared to December 2013 and increased by 21.1%
compared to November 2014. Non-food retail turnover In December 2014 increased by
10.5% compared to December 2013 and by 25.8% compared to November 2014.
Dynamics of the key figures of the consumer market in 2007-2014, % Y-o-Y
25
20
15
10
5
0
-5
-10
-15
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
9
0
Q
1
9
0
Q
2
9
0
Q
3
9
0
Q
4
0
1
Q
1
0
1
Q
2
0
1
Q
3
0
1
Q
4
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
4
1
Q
1
4
1
Q
2
4
1
Q
3
4
1
Q
4
4
1
c
e
D
10,5
6,5
5,3
3,1
Growth rate of retail turnover
Growth rate of food turnover
Growth rate of non-food turnover
Source: IA Infoline
Monthly dynamics of the retail turnover in Russia in 2007-2014 is provided in the
diagram. The monetary base (broad definition) characterizing money supply by the monetary
regulation agencies increased for December 2014 by 1381.1 bn RUR compared to
November 2014 (growth for December 2013 amounted to 1366.3 bn RUR). The
monetary base (broad definition) for 2014 increased by 828.1 bn RUR (growth for 2013
amounted to 651.1 bn RUR).
Dynamics of retail turnover and monetary base in 2007-2014, bn RUR
Retail turnover (in current prices), bn RUR
Monetary base (in broad definition), bn RUR
3400
2900
2400
1900
1400
900
400
12 000
10 000
8 000
6 000
4 000
2 000
0
7
0
n
a
J
7
0
y
a
M
7
0
p
e
S
8
0
n
a
J
8
0
y
a
M
8
0
p
e
S
9
0
n
a
J
9
0
y
a
M
9
0
p
e
S
0
1
n
a
J
0
1
y
a
M
0
1
p
e
S
1
1
n
a
J
1
1
y
a
M
1
1
p
e
S
2
1
n
a
J
2
1
y
a
M
2
1
p
e
S
3
1
n
a
J
3
1
y
a
M
3
1
p
e
S
4
1
n
a
J
4
1
y
a
M
4
1
p
e
S
Source: IA Infoline
29
Dynamics of retail turnover in Russia in 2006-2014
Period
Turnover, bn RUR
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
1Q 2013
2Q 2013
1H 2013
3Q 2013
4Q 2013
FY 2013
January 2014
February 2014
March 2014
1Q 2014
April 2014
May 2014
June 2014
2Q 2014
1H 2014
July 2014
August 2014
September 2014
3Q 2014
October 2014
November 2014
December 2014
4Q 2014
FY 2014
8693,4
10757,8
13853,2
14599,2
16499
19082,6
21394,5
5241,3
5692,8
10934,1
6052,0
6699,8
23685,9
1851,8
1853,3
2033,7
5738,8
2027,3
2077,7
2097,1
6202,1
11940,9
2166,3
2231,7
2222
6620
2289,7
2326,5
2941,8
7558,0
26118,9
As a %9 to the corresponding
period
of the preceding year
113,9
115,2
113,0
94,9
106,4
107,0
106,3
104,0
103,8
103,9
104,0
103,6
103,9
102,7
104,0
104,1
103,6
102,8
102,2
100,8
101,9
102,7
101,3
101,4
101,7
101,4
101,6
101,8
105,3
103,1
102,5
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 2014 increased by 2.5% in terms of mass of commodities compared to
2013 and amounted to 26 118.9 billion RUR, at that consumption of food products decreased by
0.1%, non-food – increased by 4.7%. In 2014 consumption of alcohol products decreased by 2.3%
compared to 2013 and amounted to 119.3 mln dL. Consumption of beer (excluding beer
cocktails and malt beverages) in 2014 increased by 1.7%, champagne and sparkling wine – by
3.1%.
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
30
Dynamics of retail turnover by types of products in 2000-2014, %
25
20
15
10
5
0
-5
-10
13,9
10,5
8,6
9,7
15,1
15,1
19,1
16,8
15,1
10,7
8,6
7,6
10,5
5
4,7
2,5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
дек.14
2014
-2,3
Total retail turnover
Food products
-8,2
Alcohol drinks
Non-food
Source: IA Infoline
Note that the data of the Federal State Statistics Service for 2009-2014 and for preceding
years are not fully compatible as until 2009 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 2007-2014, %
50
49
48
47
46
45
44
7
0
n
a
J
7
0
y
a
M
7
0
p
e
S
8
0
n
a
J
8
0
y
a
M
8
0
p
e
S
9
0
n
a
J
9
0
y
a
M
9
0
p
e
S
0
1
n
a
J
0
1
y
a
M
0
1
p
e
S
1
1
n
a
J
1
1
y
a
M
1
1
p
e
S
2
1
n
a
J
2
1
y
a
M
2
1
p
e
S
3
1
n
a
J
3
1
y
a
M
3
1
p
e
S
4
1
n
a
J
4
1
y
a
M
4
1
p
e
S
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 (excl. tobacco products), %
Polynomial (Share of food products in retail turnover (incl. tobacco products), %
Source: IA Infoline
In 2014 the share of food products remained unchanged vs. 2013. In December 2014 the
share of food products dropped off by 1.1 pp vs. December 2013.
Structure of retail turnover by groups of products in 2006-201410
Figures
2006
2007 2008 2009 2010 2011 2012
2013
2014 Dec2013 Dec2014
Retail turnover
food products
non-food products
share of food products, %
share of non-food products, %
8712
10869 13915 14599 16499 19083 21394,5 23685,9 26118,9 2517,2
2941,8
4061
4651
46,6
53,4
5022 6510 7095 8035 9122 9961,4 11143,0 12286,5 1189,7
1360,0
5847 7405 7504 8464 9961 11433,1 12542,9 13832,4 1327,5
1581,8
46,2 46,8 48,6 48,7 47,8
46,6
53,8 53,2 51,4 51,3 52,2
53,4
47,0
53,0
47,0
53,0
47,3
52,7
46,2
53,8
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 2006-2008 are adjusted for tobacco products
31
Structure of retail turnover by groups of products in 2011-2014 (monthly), bn RUR
1582
1360
3500
3000
2500
2000
1500
1000
500
0
II-11 IV-11 VI-11 VIII-11 X-11 XII-11 II-12 IV-12 VI-12 VIII-12 X-12 XII-12 II-13 IV-13 VI-13 VIII-13 X-13 XII-13 II-14 IV-14 VI-14 VIII-14 X-14 XII-14
food products
non-food products
Source: IA Infoline
In December 2014 the share of food products amounted to 46.2%, while the share of non-
food products in the retail turnover in Russia amounted to 53.8% (in December 2013 – 47.3%
and 53.8% correspondingly).
Structure of retail turnover by groups of products in 2011-2014 (monthly), %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
53,8
46,2
II-11 IV-11 VI-11 VIII-11 X-11 XII-11 II-12 IV-12 VI-12 VIII-12 X-12 XII-12 II-13 IV-013 VI-13 VIII-13 X-13 XII-13 II-14 IV-14 VI-14 VIII-14 X-14 XII-14
share of food products, %
share of non-food products, %
Source: IA Infoline
SSTTRRUUCCTTUURREE OOFF RREETTAAIILL TTUURRNNOOVVEERR BBYY TTYYPPEESS OOFF OORRGGAANNIIZZAATTIIOONNSS
At the end of 2014 in terms of structure of retail turnover by types of organizations the
trend of decrease of the share of marketplaces (by 0.8 pp compared to 2013) continued. The
share of small enterprises also decreased by 0.8 pp and the share of mid organizations – by 0.3
pp at the end of 2014 compared to 2013. The share of large organizations (mostly these are retail
networks) increased by 2.2 pp compared to 2013. The share of individual entrepreneurs
increased slightly in 2014 and amounted to 24.7%.
Dynamics of the structure of retail turnover in Russia by types of organizations is
presented in the diagram.
32
100%
80%
60%
40%
20%
0%
37,3
22,2
25,2
15,3
2007
Structure of formation of retail turnover in 2007-2014 by types of
organizations, %
35,2
34,5
36,2
38,2
40,2
41,3
26,3
25,2
13,3
2008
25,8
26,1
13,6
2009
25,2
25,9
12,7
2010
25,5
24,7
11,6
2011
25,0
24,2
10,6
2012
24,6
24,7
9,4
2013
43,2
23,8
24,4
8,6
2014
Open markets
Individual entrepreneurs
Small enterprises
Large and mid enterprises (incl. chains)
Source: IA Infoline
In December 2014 91.4% 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 8.6% (in December 2013 – 90.9% and 9.1% correspondingly).
Turnover of trading organizations and marketplaces in 2006-2014, bn RUR
Figure
2006
2007
2008 2009
2010
2011
2012
2013
2014 Dec2013 Dec2014
Retail turnover
8690 10866,2 13853,2 14599,2 16499 19082,6 21394,5 21459,4 23880,4 2288,1
2699
turnover of trading
organizations
6987 9214,5 12015,9 12613,7 14403,6 16697,3 19126,7 2226,5 2238,5
229,1
242,8
sales of open markets
1703 1651,7 1837,3 1985,5 2095,4 2385,3 2267,8 90,6
91,4
90,9
91,7
share of trading
organizations, %
share of open markets, %
80,4
84,8
86,7
86,4
87,3
88,5
89,4
9,4
8,6
9,1
8,3
19,6
15,2
13,3
13,6
11,5
12,7
10,6 21459,4 23880,4 2288,1
Source: data of the Federal State Statistics Service
2699
Compared to December 2013 the turnover of trading organizations increased by 6.3%
and sales of the marketplaces decreased by 4.5%. In 2014 the turnover of trading organizations
grew by 3.5% compared to 2013, sales of the marketplaces dropped by 6.8%.
Dynamics of turnover of trading organizations and markets in 2011-2014 (monthly), trn RUR
3
2,5
2
1,5
1
0,5
0
0,24
2,70
III-11
VI-11
IX-11
XII-11
III-12
VI-12
IX-12
XII-12
III-13
VI-13
IX-13
XII-13
III-14
VI-14
IX-14
XII-14
Turnover of trading organizations, trn RUR
Sales of marketplaces, trn RUR
Source: IA Infoline
In December 2014 compared to November 2014 the turnover of trading organizations
increased by 24.7% while the sales of the marketplaces grew by 12.3%.
33
Structure of retail turnover in 2011-2014 (monthly), %
8,6
91,4
100%
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
I-11
IV-11
VII-11
X-11
I-12
IV-12
VII-12
X-12
I-13
III-13
VI-13
XI-13
XII-13
III-14
VI-14
IX-14
XII-14
share of trading organizations, %
share of open markets, %
Source: IA Infoline
As of January 1, 2015 there were 1 447 retail markets functioning on the territory of the
Russian Federation. 30 markets were closed and converted to fairs, shopping centers,
nonpermanent trading objects compared to October 1, 2014 and 142 markets compared to
January 1, 2014. The breakdown of the retail markets by types has changed in the fourth quarter
of 2014 towards the increase of the share of multipurpose markets, specialized merchandize
markets, specialized construction markets and other specialized markets on the back of the
decrease of share of specialized food markets, agricultural markets and agricultural cooperative
markets. The level of actual use of the market slots as of January 1, 2015 amounted to 69.8% on
average through the Russian Federation, which is lower compared to October 1, 2014 and to
January 1, 2014. Individual entrepreneurs still remain the principal economic entities on the
marketplaces. As of January 1, 2015 174.9 thousand individual entrepreneurs operated at retail
markets (as of October 1, 2014 – 174.7 thousand). The increase of share of market slots by 0.5 pp
compared to October 1, 2014 was shown by individuals. The decrease of share of market slots in
the fourth quarter of 2014 was demonstrated by peasant (farm) enterprises, individual
entrepreneurs and legal entities – by 0.1 pp, subsidiary individual holdings – by 0.2 pp.
7000
6000
5000
4000
3000
2000
1000
0
Dynamics of the number of open markets in the Russian Federation and their share in the retail
turnover in 2003-2014.
23,8%
22,1%
21,0%
19,6%
15,3%
13,3%
13,6%
12,7%
11,6%
10,6%
9,5%
8,6%
6016
6444
5831
5892
4771
3728
3497
3427
3159
2162
1589
1477
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
9 мес. 2014
Number of markets in the russian Federation e-o-p
Share of markets in retail turnover in the Russian Federation (right scale)
25%
20%
15%
10%
5%
0%
Source: IA Infoline
RREEGGIIOONNAALL SSTTRRUUCCTTUURREE OOFF RREETTAAIILL TTUURRNNOOVVEERR
Regional structure of retail turnover in Russia is uneven: 11 constituent territories
generated 51.1% of retail turnover in 2014 (Moscow, Moscow region, Saint-Petersburg,
Sverdlovsk region, Krasnodar region, Samara region, Republics of Tatarstan and Bashkortostan,
Tyumen region, Chelyabinsk and Rostov regions).
34
Structure of retail turnover by federal districts
of the Russian Federation in 2013, %
Structure of retail turnover by federal districts
of the Russian Federation in 2014, %
North-
Caucasian
5,1%
Volga
18,5%
North-
Caucasian
5,1%
Southern
9,0%
North-
Western
9,1%
Urals
9,7%
Siberian
10,8%
Southern
9,2%
North-
Western
9,0%
Central
33,9%
Far-Eastern
3,9%
Volga
18,5%
Urals
9,3%
Central
34,5%
Far-Eastern
3,9%
Siberian
10,3%
In 2014 the share of the Southern federal district increased by 0.2 pp, Central – by 0.6 pp,
Volga – by 0.1 pp, Far-Eastern – by 0.1 pp; the share of the North-Caucasian federal district
remained unchanged; the share of the North-Western federal district decreased by 0.1 pp, Urals
and Siberian – by 0.4 pp.
Structure of retail turnover by subjects of the
Russian Federation in 2013, %
Structure of retail turnover by subjects of the
Russian Federation in 2014, %
Source: IA Infoline
Republic of
Tatarstan
3,0%
Samara
region
2,4%
Sverdlovsk
region
4,0%
Tyumen
region
3,1%
Republic of
Bashkortostan
3,0%
Krasnodar
region
3,9%
Rostov
region
2,9%
Saint-
Petersburg
4,0%
Moscow
17,0%
Moscow
region
5,7%
Chelyabinsk
region
2,1%
Other
48,9%
Samara region
2,4%
Republic
Republic of
of
Bashkortostan
Tatarstan
3,0%
3,0%
Rostov region
2,9%
Krasnodar
region
4,1%
Saint-
Petersburg
3,8%
Sverdlovsk
region
3,8%
Tyumen
region
3,0%
Chelyabinsk
region
2,1%
Other
48,9%
Moscow
17,0%
Moscow
region
6,1%
Source: IA Infoline
In 2014 the share of Krasnodar region increased by 0.2 pp, Moscow region – by 0.4 pp in
the retail turnover by regions in the Russian Federation, the shares of Rostov region, Samara
region, Republic of Tatarstan, Moscow and other regions remained unchanged; the shares of
Saint-Petersburg, Sverdlovsk region, Chelyabinsk region, Tyumen region and Republic of
Bashkortostan decreased.
Dynamics of share of 69 regions of the Russian Federation (apart from 11 largest) in
retail turnover in 2003-2014, %
46,6%
47,1%
47,8%
47,4%
48,2%
48,8%
48,9%
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
2014
35
Source: IA Infoline
In 2014 the most dynamic growth of share in the total retail turnover vs. 2013 was
demonstrated by the Central federal district – by 0.62 pp (including Moscow region 0.44 pp),
Volga federal district – by 0.2 pp, Southern federal district – by 0.19 pp and Far-Eastern federal
district – by 0.04 pp, while the decline in retail turnover in 2014 was demonstrated by the
North-Western federal district (by 0.12 pp), in particular Saint-Petersburg (by 0.18 pp), Siberian
federal district (by 0.44 pp), Urals federal district (by 0.36 pp), North-Caucasian federal district
(by 0.12pp) and Moscow (by 0.1 pp).
Regional structure of retail turnover of the Russian Federation in 2006-2014, %
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
6,1
6,4
5,90
5,66
6,12 6,16 6,33
2006 2007 2008 2009 2010 2011 2012 2013 2014
35,8 34,4 33,4 33,83 34,21 34,57 34,15 33,89 34,51
5,7
6,10
20,9 18,8 17,0 17,31 17,47 17,41 17,07 16,97 16,88
9,01
9,4
3,82
4,1
9,21
8,0
3,6
5,01
17,5 17,9 18,4 18,27 18,20 18,18 18,33 18,46 18,66
10,0 10,4 10,8 10,14 9,69 9,52
9,35
11,7 11,7 11,6 10,95 10,72 10,82 10,83 10,78 10,34
3,91
4,1
9,35 9,36 9,14
4,15 4,15 3,89
8,73 8,99 8,92
4,66 4,85 4,97
9,13
4,00
9,02
5,13
9,17
3,96
9,01
5,14
4,07 3,98 3,89
9,3
4,2
8,8
4,0
9,4
4,1
8,5
3,8
9,71
3,87
9,54
3,84
3,8
3,9
Source: data of the Federal State Statistics Service
In 2014 the largest decrease (more than 5%) of retail turnover vs. 2013 among largest
subjects of the Russian Federation (share in retail turnover of the Russian Federation is above
1%) was demonstrated by Kemerovo region (-8.7%). There was a decline within 5% in
Sverdlovsk region (-2.9%), Chelyabinsk region (-0.5%), Krasnodar region (-0.3%), Altai region (-
0.1%). The highest growth (more than 5%) was demonstrated by Moscow region (7.9%),
Voronezh region (7.2%), Republic of Dagestan (7%), Krasnodar region (6.6%) and Nizhniy
Novgorod region (5.9%).
Growth of retail turnover by districts in 2010 - 2014, % Y-o-Y, in comparable prices
108,3
104,8
103,4
103,9
107
104,5
103,8
101,2
125
120
115
110
105
100
95
90
85
80
107,6
106,3
104,9
104,2
110,3
108,7
105,2
104
2011
2012
2013
2014
105,1
107
105,3
108,3
106,1
99
103,2
98,7
105,3
104,9
104,9
103,8
107,6
106,6
105,5
103,2
Central
North-Western
Southern
North-Caucasian
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. In December 2014 15 regions demonstrated the decline in retail
turnover compared to December 2013, in January-December 2014 14 regions demonstrated the
decline in retail turnover compared to January-December 2013.
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).
36
Number of regions with positive dynamics of retail turnover in physical terms, Y-o-Y
80
70
60
50
40
30
20
10
0
7
0
n
a
J
7
0
r
a
M
7
0
y
a
M
7
0
l
u
J
7
0
p
e
S
7
0
v
o
N
8
0
n
a
J
8
0
r
a
M
8
0
r
a
M
8
0
l
u
J
8
0
p
e
S
8
0
v
o
N
9
0
n
a
J
9
0
r
a
M
9
0
y
a
M
9
0
l
u
J
9
0
p
e
S
9
0
v
o
N
0
1
n
a
J
0
1
r
a
M
0
1
y
a
M
0
1
l
u
J
0
1
p
e
S
0
1
v
o
N
1
1
n
a
J
1
1
r
a
M
1
1
y
a
M
1
1
l
u
J
1
1
p
e
S
1
1
v
o
N
2
1
n
a
J
2
1
r
a
M
2
1
y
a
M
2
1
l
u
J
2
1
p
e
S
2
1
v
o
N
3
1
n
a
J
3
1
r
a
M
3
1
y
a
M
3
1
l
u
J
3
1
p
e
S
3
1
v
o
N
4
1
n
a
J
4
1
r
a
M
4
1
y
a
M
4
1
l
u
J
4
1
p
e
S
4
1
v
o
N
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 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 CCOOMMPPEETTIITTOORRSS12
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
12 Source: IA Infoline, public sources of companies.
37
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 and Express
convenience stores under various brands.
As of December 31, 2014, X5 operats 5,483 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 4,789 Pyaterochka soft discounter stores, 403 Perekrestok supermarkets, 82
Karusel hypermarkets and 209 Express stores. As of December 31, 2014 the total selling space of
the company amounted to 2,572.2 thousand sq. m.
The Company operates 34 DCs and 1,438 Company-owned trucks across the Russian
Federation.
In 2014 net sales stood at 633,873 mln RUR, EBITDA reached RUR 45,860 mln, and net
profit amounted to RUR 12,691 mln.
METRO Cash & Carry
Metro Cash and Carry is the largest operating company of cash & carry international
business format (individual wholesale) of Metro Group.
As of December 31, 2014 "Metro Cash & Carry" LLC operates 78 trading centers in 44
regions of Russia (excluding the Republic of Crimea). The company also operates “Metro
Punct” supermarket with the total selling space of 1.587 thousand sq. m. which was opened in
May 2012, and a real,-, with the total space of 8.39 thousand sq. m. managed by "Metro Cash &
Carry" as a result of the transaction with “Real-Hypermarket” LLC (Metro Group). Moreover,
in June 2012 the first two franchised “Fasol” stores were opened in St. Petersburg, and in
September 2012 – 5 “Fasol” stores in Rostov-on-Don. As of December 31, 2014 there were more
than 15 franchised “Fasol” stores in Moscow, 6 in Saint-Petersburg, 4 in Rostov-on-Don, 1 in
Kaluga, 1 in Kazan.
In 2014 METRO Cash & Carry opened 7 trading centers: 2 – in Moscow region
(Lagovskoye village and Akseno-Butyrskoye village), Voronezh region (Semiluki), Moscow,
Krasnodar region (Novorossiysk), Novosibirsk, Vladimir. Total selling space of the company as
of December 31, 2014 amounted to 619.2 thousand sq. m.
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, 2014 “Auchan” in Russia operates 85 trading outlets (including one Auchan-city
store in Moscow under reconstruction): 55 “Auchan” hypermarkets were opened in 25 regions
(18 - in Moscow and Moscow region, 6 – in Saint-Petersburg and Leningrad region, 5 – in
Samara, 3 – in 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, Izhevsk and Republic of Crimea). Besides, Auchan operates 23 “Auchan-city” mini-
hypermarkets in Moscow (9 stores), Yekaterinburg (1), Moscow region (3), Novosibirsk (2),
38
Nizhniy Novgorod (1), Saint-Petersburg (3), Saratov (1), Togliatti (1), Rostov-on-Don (1), Ufa
(1), as well as 6 “Nasha Raduga” hypermarkets in Penza region (Kuznetsk and Penza), Nizhniy
Novgorod region (Arzamas), Yaroslavl, Kaluga, Kostroma.
In 2014 the company opened 6 new trading outlets. Total selling space as of December
31, 2014 amounted to 788.5 thousand sq. m.
The company plans to open from 7 to 12 hypermarkets in 2015.
Dixy
“Dixy” Group of Companies is one of Russia's leading retailers of food and everyday
products. The Company operates in Central, Northwestern, Volga and Urals federal districts of
Russia, and in Kaliningrad and Kaliningrad region.
As of December 31, 2014 the company operated 2,195 stores, including: 2,065 “Dixy”
neighbourhood stores, 94 “Victoria” stores, 1 “CASH” store and 35 “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 50 thousand.
Net selling space of the Group as of December 31, 2014 amounted to 746,5 sq. m.
In 2014 total sales of “Dixy” Group of Companies increased by 26.9% in ruble terms
compared to the same period last year and stood at 229.0 billion rubles.
Lenta
“Lenta”, the company which operates the hypermarket chain under the same brand, was
founded in 1993. As of December 31, 2014 "Lenta" operates 108 hypermarkets located in 60 cities
across Russia and 24 supermarkets in Moscow and Moscow region.
Total selling space of the chain as of December 31, 2014 amounted to 701 thousand sq. m.
As of January 1, 2015 the company’s total headcount amounted to 35,100 employees. The
average headcount of “Lenta” in 2014 amounted to 27,200 employees. 6.5 million people
throughout Russia are the active loyalty cards holders of the chain.
In 2014 net sales of “Lenta” retail chain increased by 34.5% compared to 2013 and
amounted to 194.0 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, 2014 "O'KEY" operated 108 stores across Russia: 69 hypermarkets
and 39 supermarkets in 28 cities of Russia.
As of December 31, 2014 total selling space of the Company amounted to about 552
thousand sq. m.
In 2014 “O’KEY” retail chain opened 9 hypermarkets: in Syktyvkar, Moscow (3),
Sterlitamak (Republic of Bashkortostan), Gatchina (Leningrad region) and Orenburg,
Cherepovets (Vologda region) and Nizhniy Novgorod and 7 supermarkets: in Volzhskiy
(Volgograd
Ivanovo, Tambov, Barnaul. One
supermarket in Volzhskiy (Volgograd region) was closed.
region)-2, Saint-Petersburg, Voronezh,
In 2014 “О'KEY” audited net sales amounted to 151.98 billion rubles, increasing by 9.0%
compared to 139.46 billion rubles in 2013.
39
Number of stores of the largest FMCG retailers in 2007-2014, eop.
Legal name
Brand
X5 Retail Group N.V.
”Magnit”, PJSC
“Auchan”, LLC
“МЕТRО Cash and Carry”,
LLC
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”, OJSC
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, real,-
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
S, H
S, H
H, S
D, S, H
CS, S, H
all formats
2007
674
194
22
0
890
2194
3
-
-
2197
18
39
24
26
388
194
388
2008
848
207
46
0
1101
2568
14
-
-
2582
33
48
37
34
481
215
493
2009
1039
275
58
0
1372
3204
24
-
-
3228
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
79
57
49
2014
4789
403
82
209
5483
8344
190
1080
97
9711
85
52
57
62
68
72
80
46
36
537
57
39
646
71
42
894
94
83
87
56
1422 1712
108
132
2100
208
257
225
77
87
95
537
646
1119 1499 1799
2195
Total selling space of FMCG retailers in Russia in 2007-2014, eop, thousand sq. m.
Legal name
Brand
X5 Retail Group N.V.
”Magnit”, PJSC
“Auchan”, LLC
“МЕТRО Cash and Carry”,
LLC
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”, OJSC
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, real,-
О'Кей, О'Кей-экспресс
Lenta
Megamart, Minimart, Dixy
Victoria, Cash, Deshevo, Kvartal,
Semeynaya Kopilka
Main formats
D
S
H
CS
all formats
CS
H
МК
MF
all formats
H
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
2012
2013
397,8
375,8
35,2
2010
586,3
313,0
351,8
9,2
2009
493,0
284,4
285,6
-
1063
978,5
81,4
-
-
2008
419,2
222,4
232,5
-
874,1
767,1
56,4
-
-
2011
2014
735,2 1191,4 1414,1 1754,3
415,8
333,9
383,5
358,6
371,3
368,2
43,6
12,7
26,7
1260,3 1453,1 1969,7 2222,9 2572,2
1256,8 1637,8 1977,5 2312,2 2673,3
559,1
387,6
165,1
282,2
249,2
159,8
0,4
50,1
109,1
24,4
-
-
823,5 1059,9 1422,3 1970,2 2549,3 3011,4 3590,6
788,5
498,1
340,1
482,9
163,0
53,3
452,3
739,9
386,6
565,9
326,3
394,5
427,4
464,5
499,5
538,1
566,5
619,2
149,2
191,7
232,7
287,4
346,0
428,0
489,0
552,0
186,7
149,1
244,7
189,8
260,9
206,0
281,7
227,9
306,0
286,7
413,1
447,3
508,0
541,3
701,2
663,6
CS, S, H
99,7
109,6
104,6
123,5
118,4
67,6
75,9
82,9
All formats
all formats
149,1
191,0
206,0
227,9
405,1
514,9
617,2
746,5
Dynamics of net sales (excluding VAT) of the largest FMCG retailers in 2007-2014,
billion RUR
Legal name
Brand
X5 Retail Group N.V.
Pyaterochka, Perekrestok,
Karusel, E5.RU
”Magnit”, PJSC
Magnit
“Auchan”, LLC
Auchan, Auchan-City, Nasha
Raduga
Main
formats
CS, D, S,
H
CS, H,
МК, MF
H
Data
IFRS
IFRS
RAS
2007
2008 2009
2010 2011 2012 2013
2014
136,1
207,2 275,08 342,58 452,48 490,09 532,7
633,87
94,04
132,4 169,86 236,19 335,7 448,66 579,7
763,53
90,6
128,1 158,36 178,1 205,1 232,6 287,4
-
1 Key: D - Discounter, H - Hypermarket, S - Supermarket, CS - Convenience Store, МК – Drogerie Store, MF – Magnit Family
40
Legal name
Brand
Main
formats
Metro C&C, Metro Punct
S, H
“МЕТRО Cash and
Carry”, LLC
“O'key”, LLC
“Lenta”, LLC
O'key, O'key-express
Lenta
“Dixy Group”, OJSC
All formats
S, H
H, S
CS, D, S,
H
Data
IFRS
IFRS
IFRS
IFRS
2007
2008 2009
2010 2011 2012 2013
2014
89,2
30,53
32,9
111,2 114,3 117,99 139,96 164,6 183,2
51,14 67,88 82,67 92,21 115,92 139,5
89,8 109,9 144,3
50,8
70,6
55,6
-
151,98
194,0
36,65
48,3 54,26
64,8 102,23 147,05 180,5
229,0
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 – 2014 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.
41
99.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS OOPPEERRAATTIIOONNSS
Headquartered in the southern Russia city of Krasnodar, public joint-stock company
“Magnit” is the holding company for a group of entities that operate in the retail trade under
the “Magnit” brand. The chain of “Magnit” stores is the largest food retail network in Russia.
As of December 31, 2014 the chain consisted of 9,711 stores: 8,344 convenience stores, 190
hypermarkets, 97 “Magnit Family” stores and 1,080 drogerie stores in 2,108 cities and towns
throughout the Russian Federation.
Approximately two-thirds of the Magnit’s stores are located in cities with the population
of less than 500,000 inhabitants. Most of its stores are located in the Southern, Central and Volga
regions. The Company also operates stores in the North-Western, North-Caucasian, Urals and
Siberian regions.
At the end of 2014 stores located in the Southern Federal region accounted for 1,876, in
the Volga region – 3,018, North-Caucasian – 397, Central – 2,466, North-Western – 870, the
number of stores in the Urals and Siberian regions amounted to 836 and 248 correspondingly.
As of December 31, 2014 the Company operates an in-house logistics system consisting
of 27 modern distribution centers (DCs): six of them are located in the Southern Federal region
(Bataysk, Kropotkin, Slavyansk-On-Kuban, Erzovka, Shakhty and Novorossiysk), six are in the
Volga Federal region (Engels, Togliatti, Dzerzhinsk, Izhevsk, Sterlitamak and Zelenodolsk),
another eight DCs are based in the Central Federal region (Ivanovo, Oryol, Tambov, Tver, Tula,
Yaroslavl, Voronezh and Kolomna), two in the Urals Federal region (Chelyabinsk and
Yekaterinburg), two in the North-Western Federal region (Veliky Novgorod and Kolpino), two
42
in the Siberian Federal region (Omsk and Novosibirsk) and one in the North-Caucasian Federal
region (Lermontov).
Warehousing
space, sq. m.
Number of
serviced stores
% of total DC
turnover
City
1
Bataysk
2 Kropotkin
Federal
District
Southern
Southern
Slavyansk-on-Kuban
Southern
Erzovka (Volgograd)
Southern
3
4
5
Shakhty
6 Novorossiysk
7
8
Engels
Togliatti
9 Dzerzhinsk
10
Izhevsk
11 Sterlitamak
12 Zelenodolsk
13
Ivanovo
14 Oryol
15 Tambov
16 Tver
17 Tula
18 Yaroslavl
19 Voronezh
20 Kolomna
Southern
Southern
Volga
Volga
Volga
Volga
Volga
Volga
Central
Central
Central
Central
Central
Central
Central
Central
21 Veliky Novgorod
North-Western
22 Kolpino
North-Western
23 Chelyabinsk
24 Yekaterinburg
25 Omsk
26 Novosibirsk
27 Lermontov
Urals
Urals
Siberian
Siberian
North-
Caucasian
17,407
30,048
20,496
26,074
58,982
25,321
19,495
19,157
30,523
34,141
22,043
22,524
52,929
14,326
26,733
15,726
51,205
58,904
53,523
84,160
21,060
50,800
17,623
75,159
7,114
18,950
34,503
271
376
338
459
536
-
301
351
332
555
572
587
513
299
343
215
525
355
414
336
150
370
273
663
149
85
343
3,07%
4,00%
5,43%
5,68%
4,14%
3,00%
3,16%
4,16%
3,70%
4,54%
5,20%
5,09%
5,38%
4,13%
3,57%
2,27%
8,28%
3,27%
3,20%
0,51%
3,68%
1,81%
3,18%
4,55%
1,34%
0,20%
3,46%
100%
Total
908,926
9,711
The Company operates automated stock replenishment system and a fleet of 5,938
vehicles.
43
1100.. PPRRIIOORRIITTIIEESS 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
drogerie 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 a purpose to open 1,200 convenience stores, 90 hypermarkets (including “Magnit
Family” stores) and 800 drogerie stores in 2015. The Company’s accumulated
experience and technologies enable it to open profitable convenience and drogerie
stores even in locations with the population of as little as 5,000 people and 25,000
people for hypermarkets and “Magnit Family” stores.
The Company’s stores are present in 7 out of 8 federal regions: Southern, Central,
Volga, North-Caucasian, North-Western, Urals and Siberian. The Company plans to
increase the density of its outlets in these regions and continue to expand in the markets
of Moscow, Saint-Petersburg and Western Siberia.
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 “drogerie store”.
The format of a convenience store is a neighbourhood store oriented at all
customers living within 500 meters radius. The assortment of a convenience store
consists of about 3,500 food and non-food essential items offered at reasonable prices.
Average total space of a store is 459 sq. m., average selling space is 320 sq. m.
As of December 31, 2014 “Magnit” retail chain operates 8,344 convenience stores,
out of which 1,144 were opened in 2014.
Since 2007 the Company has been opening hypermarkets. As of December 31,
2014 “Magnit” retail chain operates 190 stores of this format, out of which 29 were
opened in 2014.
44
The Company opens its hypermarkets mainly in the cities with population of
50,000 - 500,000 people; the outlets are located in the city (within the city boundaries)
and target 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 examine a new segment of the retail market and launched 2
trial stores of a new format – “drogerie store”. Unlike convenience stores, stores under “Magnit
Kosmetik” brand offer a mix of non-food group of products: personal care, household cleaning
products, cosmetics and perfumery goods. As of December 31, 2014 the chain of drogerie stores
comprises 1,080 outlets out of which 394 were opened in 2014.
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.;
- 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 the opening of the new outlets
as well as the reformatting of the certain convenience stores with excessive selling space for this
format (about 1,500 sq.m.) and upside sales potential.
In 2014 the Group opened 51 “Magnit Family” stores. As of December 31, 2014
“Magnit” retail chain operates 97 “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 undertaken to study the customers’ preferences to adjust marketing
program to the peculiarities of different formats.
45
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 fruit and
vegetables, also contributes to minimization of logistics costs.
46
1111.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS
The annual General Shareholders Meeting held on May 29, 2014 (minutes of 30.05.2014)
decided to pay dividends on ordinary registered shares of PJSC “Magnit” following the results
of 2013 financial year.
The extraordinary General Shareholders Meeting held on September 25, 2014 (minutes
of 26.09.2014) decided to pay dividends on ordinary registered shares of PJSC “Magnit”
following the results of the 6 months of 2014 financial year.
The extraordinary General Shareholders Meeting held on December 18, 2014 (minutes of
23.12.2014) decided to pay dividends on ordinary registered shares of PJSC “Magnit” following
the results of the 9 months of 2014 financial year.
Information on the paid dividends:
Dividend period: 2013.
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 2013 financial year – 89.15 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 2013 financial year – 8,430,144,798.25 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 8,430,135,348.35.
Dividend period: 6 months of 2014 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 2014 financial year – 78.30 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 2014 financial year – 7,404,154,096.50 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 7,404,145,796.70.
Dividend period: 9 months of 2014 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 9 months of 2014 financial year – 152.70 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 9 months of 2014 financial year – 14,379,945,254.85 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 14,379,929,135.43.
47
1122.. 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, 2014 authorized capital stock of the public 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 PJSC “Magnit” as of 31.12.2014:
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 PJSC “Magnit” share capital as of 31.12.2014:
Number of registered
entities
Name
Share in the charter
capital, %
Legal entities
including nominal holders
Individuals
Total:
3
2
15
18
60.27
60.27
39.73
100
Information on PJSC “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 PJSC
“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:
48
- 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 PJSC “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
PJSC “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 PJSC “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 PJSC “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 PJSC “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
49
№ 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 %
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
8.25 %
8.25 %
8.25 %
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 PJSC “Magnit” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of BO-01 series.
Bond issue of PJSC “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 PJSC “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 PJSC “Magnit” of BO-02 series:
Date and the number of state registration
Volume of the issue
№ 4B02-02-60525-P of February 02, 2010
1,000,000,000 rubles
50
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
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
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 PJSC “Magnit” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of BO-02 series.
Bond issue of PJSC “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-
51
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 PJSC “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 PJSC “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.
52
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 PJSC “Magnit” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of BO-03 series.
Bond issue of PJSC “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 PJSC “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 PJSC “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
53
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 PJSC “Magnit” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of BO-04 series.
Bond issue of PJSC “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 PJSC “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 PJSC “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
№ 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 %
54
1 coupon interest rate
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 %
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.
The sixth coupon yield of BO-05 series Exchange-traded bond issue was paid on
February 28, 2014. The total amount of yield paid on the sixth coupon amounted to 199.45
million rubles, the amount of yield of the sixth coupon paid per one bond amounted to 39.89
rubles.
Based on trading for the period from 06.01.2014 to 28.02.2014 the weighted average price
of transactions with Exchange-traded bonds of BO-05 series varied from min 100.00%
(03.02.2014) to max 100.15% (10.01.2014) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 100.02% (29.01.2014, 30.01.2014, 03.02.2014) to max 100.11%
(08.01.2014, 10.01.2014, 13.01.2014, 14.01.2014, 15.01.2014).
Bond issue of PJSC “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 the bearer of BO-06 series with the obligatory centralized custody of PJSC “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.
55
Parameters of the bond issue of PJSC “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
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
№ 4B02-06-60525-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
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.
The sixth coupon yield of BO-05 series Exchange-traded bond issue was paid on April
22, 2014. The total amount of yield paid on the sixth coupon amounted to 193.2 million rubles,
the amount of yield of the sixth coupon paid per one bond amounted to 38.64 rubles.
On April 22, 2014 PJSC “Magnit” fulfilled its obligations to bond holders on time and in
full and redeemed the nominal value of bonds of BO-06 series
Based on trading for the period from 06.01.2014 to 22.04.2014 the weighted average price
of transactions with Exchange-traded bonds of BO-06 series varied from min 99.01%
(06.01.2014) to max 100.11% (07.02.2014) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 99.2% (24.03.2014) to max 100.1% (13.02.2014).
56
Bond issue of PJSC “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 PJSC “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 PJSC “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.
The third coupon yield of BO-07 series Exchange-traded bond issue was paid on March
24, 2014. The total amount of yield paid on the third coupon amounted to 221.9 million rubles,
the amount of yield of the third coupon paid per one bond amounted to 44.38 rubles.
57
The fourth coupon yield of BO-07 series Exchange-traded bond issue was paid on
September 22, 2014. The total amount of yield paid on the fourth coupon amounted to 221.9
million rubles, the amount of yield of the fourth coupon paid per one bond amounted to 44.38
rubles.
Based on trading for the period from 06.01.2014 to 30.12.2014 the weighted average price
of transactions with Exchange-traded bonds of BO-07 series varied from min 90.14%
(16.12.2014) to max 101.78% (27.01.2014) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 90.14% (16.12.2014) to max 101.6% (16.01.2014, 17.01.2014,
27.01.2014).
Bond issue of PJSC “Magnit” of 01 series:
In 2013 the Company offered its investors the issue of non-convertible certified interest-
bearing Exchange-traded bonds to the bearer with the obligatory centralized custody of 01
series.
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 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 the bearer of 01 series with the obligatory centralized custody of PJSC “Magnit” on
the MICEX stock exchange commenced on February 26, 2013. 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 PJSC “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
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
58
№ 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 %
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.
The second coupon yield of 01 series Exchange-traded bond issue was paid on February
27, 2014. The total amount of yield paid on the second coupon amounted to 211.9 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 42.38 rubles.
The third coupon yield of 01 series Exchange-traded bond issue was paid on August 26,
2014. The total amount of yield paid on the third coupon amounted to 211.9 million rubles, the
amount of yield of the third coupon paid per one bond amounted to 42.38 rubles.
Based on trading for the period from 06.01.2014 to 30.12.2014 the weighted average price
of transactions with bonds of 01 series varied from min 88.09% (23.12.2014) to max 101.5%
(13.03.2014) of the nominal value. Acknowledgeable quote within this period fluctuated from
min 88.09% (23.12.2014) to max 100.89% (14.02.2014, 17.02.2014, 18.02.2014).
Bond issue of PJSC “Magnit” of BO-08 series:
In 2013 the Company offered its investors the ninth 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-08
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-08 series with the obligatory centralized custody of PJSC “Magnit” on the MICEX
stock exchange commenced on April 2, 2013. 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 PJSC “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
59
№ 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 %
6 coupon interest rate
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.
The second coupon yield of BO-08 series Exchange-traded bond issue was paid on April
1, 2014. The total amount of yield paid on the second coupon amounted to 209.4 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.88 rubles.
The third coupon yield of BO-08 series Exchange-traded bond issue was paid on
September 30, 2014. The total amount of yield paid on the third coupon amounted to 209.4
million rubles, the amount of yield of the third coupon paid per one bond amounted to 41.88
rubles.
Based on trading for the period from 06.01.2014 to 30.12.2014 the weighted average price
of transactions with Exchange-traded bonds of BO-08 series varied from min 101.00%
(16.06.2014) to max 101.5% (30.01.2014) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 101.1% (29.08.2014, 01.09.2014, 02.09.2014, 03.09.2014,
04.09.2014, 05.09.2014, 08.09.2014, 09.09.2014, 10.09.2014, 11.09.2014) to max 101.25% (03.07.2014,
04.07.2014, 07.07.2014, 08.07.2014, 09.07.2014, 10.07.2014, 11.07.2014, 14.07.2014, 15.07.2014,
16.07.2014, 17.07.2014).
Bond issue of PJSC “Magnit” of BO-09 series:
In 2013 the Company offered its investors the nineth 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-09
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-09 series with the obligatory centralized custody of PJSC “Magnit” on
the MICEX stock exchange commenced on April 4, 2013. 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 PJSC “Magnit” of BO-09 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
№ 4B02-09-60525-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
RU000A0JTT39
60
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
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.
The second coupon yield of BO-09 series Exchange-traded bond issue was paid on April
1, 2014. The total amount of yield paid on the second coupon amounted to 209.4 million rubles,
the amount of yield of the second coupon paid per one bond amounted to 41.88 rubles.
The third coupon yield of BO-09 series Exchange-traded bond issue was paid on
September 30, 2014. The total amount of yield paid on the third coupon amounted to 209.4
million rubles, the amount of yield of the third coupon paid per one bond amounted to 41.88
rubles.
Based on trading for the period from 06.01.2014 to 30.12.2014 the weighted average price
of transactions with Exchange-traded bonds of BO-09 series varied from min 101% (16.06.2014)
to max 101.5% (30.01.2014) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 101.09% (29.08.2014, 01.09.2014, 02.09.2014, 03.09.2014, 04.09.2014,
05.09.2014, 08.09.2014, 09.09.2014, 10.09.2014, 11.09.2014) to max 101.25% (03.07.2014, 04.07.2014,
07.07.2014, 08.07.2014, 09.07.2014, 10.07.2014, 11.07.2014, 14.07.2014, 15.07.2014, 16.07.2014,
17.07.2014).
SSHHAARREESS TTRRAADDIINNGG
The shares of PJSC “Magnit” entered the Russian stock market in April 2006.
On April 14, 2006 the shares of PJSC “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 PJSC “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 PJSC “Magnit” on the Russian Trading System (RTS) and
the Moscow Interbank Currency Exchange (MICEX) was completed.
The price of one share of PJSC “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 PJSC “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 PJSC “Magnit” shares were included in the quotation list “B” of
CJSC “MICEX SE” and admitted to trading in the corresponding list.
61
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 11,245,660 ordinary shares were offered including 9,719,638 shares allocated to
international institutional investors. In connection with the offering the selling shareholder has
granted the joint bookrunners an over-allotment option to purchase up to an additional 506,585
shares at the offer price 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.
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.
Since July 22, 2009 ordinary shares of the Company were included (transferred) into the
Quotation list “A” of the second level at the “Russian Trading System” Stock Exchange”.
On August 7, 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
admitted to trading in the corresponding list.
On September 2, 2009 PJSC “Magnit” announced its intention to offer additional
11,154,918 ordinary shares by public subscription.
The offer price amounted to 65 USD per ordinary share and 13 USD per GDR.
A total of 5,729,413 ordinary shares were offered. 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 million 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 PJSC “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
PJSC “Magnit” shares are included in (transferred to) the quotation list “A” of the first level of
CJSC “MICEX Stock Exchange”.
On November 30, 2011 PJSC “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.
62
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 PJSC “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 PJSC "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.
On June 6, 2014 the ordinary registered shares of PJSC “Magnit” were in included in the
list of securities admitted to trading on the OJSC “Saint-Petersburg Exchange”.
According to trading held from 06.01.2014 to 30.12.2014 on MICEX Stock Exchange the
average weighted price of transactions with shares varied from min 6,696.8 rubles (28.04.2014)
to max 12,261 (03.12.2014).
According to trading held from 02.01.2014 to 31.12.2014 on the London Stock Exchange
the price of transactions with the global depositary receipts as of closing varied from min $38.07
(16.12.2014) to max $67 (31.10.2014).
63
Market capitalization of PJSC “Magnit” as of December 30, 2014 amounted to
931,807,592,170.00 rubles according to OJSC “MICEX SE”.
64
1133.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001144 CCOONNSSIIDDEERREEDD
MMAAJJOORR TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW ““OONN JJOOIINNTT--
SSTTOOCCKK CCOOMMPPAANNIIEESS””
1.
Date of Transaction (Date of the Contract)
Subject and other essentials of transaction
Parties of transaction
the Company of
15.08.2014
Provision by
the
Guarantee under the agreement №29-
15/1/496 on the opening of the revolving
credit line as of August 15, 2014.
The Creditor: OJSC “Sberbank of Russia”
The Borrower: JSC “Tander”
The Guarantor: PJSC “Magnit”
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, %
20,395,068.49
28.98
Deadline for the fulfillment of the obligations
under the transaction
Information
obligations
on
performance
of
specified
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes)
Other information on transaction indicated at the
issuer’s discretion
Until August 13, 2020; prior to the
specified term the guarantee is terminated
upon fulfillment of all obligations under
the Credit Agreement by the Borrower, or
upon fulfillment of obligations under the
Agreement by the Guarantor or to the
extent otherwise permitted by
the
legislation of the Russian Federation.
JSC “Tander” timely and in full fulfils its
obligation to Creditor. There are no cases
when a Creditor makes demands on the
Guarantor
fulfill of unperformed
to
obligations of JSC “Tander”.
The transaction was approved by the
General Shareholders Meeting of May 29,
2014 (Minutes w/o № of May 30, 2014).
none
65
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001144 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 in accordance with the Russian
Federation Law a related-party for the transaction
12.02.2014
Provision by the Company of the guarantee
the additional agreement №8 of
under
February 12, 2014 to the bank account
agreement №0249018/RUB of October 25, 2007.
The Creditor: OJSC JSCB “Rosbank”
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
Limited
“Asset
Management Company “Premier-Liga” (LLC
“AMC “Primier-Liga””)
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
Company
“Tander”
Liability
(JSC
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, %
for
Term
transaction
fulfillment of obligations under
175,000
0.26
18.03.2014
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
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the Board of
Directors on February 4, 2014, minutes w/о №
of 04.02.2014.
2
Date of transaction
Subject and essentials of transaction
Parties of transaction
04.03.2014
Provision by the Company of the guarantee
under the agreement №29-15/1/415 on the
opening of the revolving credit line as of March
4, 2014.
The Creditor: OJSC “Sberbank of Russia”
66
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered in accordance with the Russian
Federation Law a related-party for the transaction
(JSC
“Tander”
Company
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
“Asset
Limited
Management Company “Premier-Liga” (LLC
“AMC ““Premier-Liga””)
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
Liability
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, %
8.94
6,120,000
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
to
Until March 3, 2020; prior to the specified term
the guarantee is terminated upon fulfillment of
all obligations under the credit agreement by
the Borrower, or upon
fulfillment of
obligations under the agreement by the
extent otherwise
the
Guarantor, or
permitted by the legislation of the Russian
Federation.
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the annual
General Shareholders Meeting on May 24,
2013, minutes w/o № of 24.05.2013.
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
person considered in accordance with the Russian
Federation Law a related-party for the transaction
67
19.03.2014
Provision by the Company of the guarantee
the additional agreement №9 of
under
19.03.2014 to the bank account agreement №
0249018/RUB of 25.10.2007.
The Creditor: OJSC JSCB “Rosbank”
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
Limited
Management Company “Premier-Liga”
Company
Company
“Tander”
Liability
“Asset
(JSC
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
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
175,000
0.26
18.05.2014
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
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the Board of
Directors on February 4, 2014, minutes w/o №
of 04.02.2014.
4
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 in accordance with the Russian
Federation Law a related-party for the transaction
01.04.2014
Provision by the Company to a Lessee a non-
living premises, 31.1 sq. m. in area, located at
15/5 Solnechnaya Street, Krasnodar, Russia on
fee basis for temporary possession and use.
The Lesser: PJSC "Magnit"
The Lessee: JSC "Tander"
Joint-Stock
Company
"Tander");
Limited
“Asset
Management Company “Premier-Liga” (LLC
“AMC “Premier-Liga””);
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
Liability
(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, %
217.17
0.0003
Term
for
transaction
fulfillment of obligations under
Rental period is 360 calendar days, expires
before March 26, 2015. Unless one of the
parties expresses its intention to terminate the
the
the
agreement before
expiry
term,
68
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
agreement shall be automatically extended
without day.
The obligations of Lesser are duly performed.
The transaction was approved by the Board of
Directors on March 20, 2014, minutes w/o № of
20.03.2014.
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
person considered in accordance with the Russian
Federation Law a related-party for the transaction
01.04.2014
Provision by the Company to a Lessee the
following non-living premises on fee basis for
temporary possession and use:
- part of non-living office building, Litter
B, B1, 7,983.7 sq. m. in area;
- boiler house, Litter G12, 61.6 sq. m. in
area;
- garage, Litter G11, 337.5 sq. m. in area,
located at 15/5 Solnechnaya Street, Krasnodar,
Russia.
The Lesser: PJSC "Magnit"
The Lessee: JSC "Tander"
Company
Joint-Stock
"Tander");
Limited
“Asset
Management Company “Premier-Liga” (LLC
“AMC “Premier-Liga””);
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
Liability
(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, %
0.07
53,575.52
Term
for
transaction
fulfillment of obligations under
on
fulfillment
Information
obligations
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
of mentioned
69
term,
expiry
Rental period is 11 months. Unless one of the
parties expresses its intention to terminate the
the
the
agreement before
agreement shall be automatically extended
under the same term and conditions.
The obligations of the Lesser are
performed.
The transaction was approved by the Board of
Directors on March 20, 2014, minutes № w/n of
fully
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
None
20.03.2014.
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 in accordance with the Russian
Federation Law a related-party for the transaction
Company
08.04.2014
Provision by the Company of the interest-
bearing loan at the rate of 9.6% per annum.
The Lender: PJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
Limited
“Asset
Management Company “Premier-Liga” (LLC
“AMC “Premier-Liga””);
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
Liability
(JSC
132,000
0.16
06.04.2017
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 obligations of the Lender are
performed.
The transaction was approved by the annual
General Shareholders Meeting on May 24,
2013, minutes w/o № of May 24, 2013.
fully
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 in accordance with the Russian
Federation Law a related-party for the transaction
70
19.05.2014
Provision by the Company of the guarantee
under the additional agreement №10 of
19.05.2014 to the bank account agreement
№0249018/RUB of 25.10.2007.
The Creditor: OJSC JSCB “Rosbank”
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
LAVRENO LIMITED;
Liability
Limited
Company
Company
“Tander”
“Asset
(JSC
Management Company “Premier-Liga” (LLC
“AMC “Premier-Liga””);
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
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
fulfillment of obligations under
175,000
0.23
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
18.05.2015 – term of Borrower’s fulfillment of
obligations under the credit agreement.
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the Board of
Directors on April 4, 2014, minutes w/o № of
04.04.2014.
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 in accordance with the Russian
Federation Law a related-party for the transaction
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
71
3,400,000
4.16
23.06.2014
Provision by the Company of the guarantee
under the agreement №KRD/RK/003/14 on the
opening of the revolving credit
line of
23.06.2014.
The Creditor: OJSC JSCB “Rosbank”
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
(JSC
22.07.2015 – term of Borrower’s refund of credit
amount and interest.
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
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
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the annual
General Shareholders Meeting on May 29,
2014, minutes w/o № of 30.05.2014.
9
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 in accordance with the Russian
Federation Law a related-party for the transaction
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
120,313.11
0.16
27.04.2022
09.07.2014
Provision by the Company to a Lessee non-
living premises, 1,391.9 sq. m. in area, located
at 18 K. Marksa Street, Rostov Region,
Zernograd, Russia on fee basis for temporary
possession and use.
The deal was effected by conclusion of
additional agreement №ГК/1599/12-1 to real
estate rental agreement № ГК/1599/12 of
07.03.2012.
The Lesser: PJSC "Magnit"
The Lessee: JSC "Tander"
Joint-Stock
Company
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
“Tander”
(JSC
The obligations of the Lesser are
performed.
The transaction was approved by the Board of
Directors on July 9, 2014, minutes w/o № of
09.07.2014.
fully
None
10
Date of transaction
Subject and essentials of transaction
09.07.2014
Provision by the Company to a Lessee non-
living premises, 584.5 sq. m. in area, located at
72
fee basis
Street, Krasnodar Krai,
for
5 Tobolskaya
Novorossiysk, Russia on
temporary possession and use.
The deal was effected by conclusion of
additional agreement w/o № of 09.07.2014 to
real estate rental agreement №НврФ/637/12 of
13.04.2012.
The Lesser: PJSC "Magnit"
The Lessee: JSC "Tander"
Joint-Stock
Company
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
“Tander”
(JSC
The obligations of the Company are fully
performed.
The transaction was approved by the Board of
Directors on July 9, 2014, minutes № w/o № of
09.07.2014.
None
31.07.2014
Sale of facility – Diesel Generator / DGA-100
kW
The Supplier: PJSC "Magnit"
The Buyer: JSC "Tander"
Joint-Stock
Company
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
“Tander”
(JSC
34,339.89
0.04
06.06.2022
Parties of transaction
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered in accordance with the Russian
Federation Law a related-party for the transaction
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
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 in accordance with the Russian
Federation Law a related-party for the transaction
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
1,935.20
0.003
fulfillment of obligations under 31.12.2014
73
on
fulfillment
of mentioned
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
None
The obligations of the Supplier are fully
performed.
The transaction was approved by the Board of
Directors on July 31, 2014, minutes w/o № №
of 31.07.2014.
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 in accordance with the Russian
Federation Law a related-party for the transaction
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, %
28.98
20,395,068.49
Term
for
transaction
fulfillment of obligations under
15.08.2014
Provision by the Company of the guarantee
under the agreement №29-15/1/496 on the
opening of the revolving credit line as of
15.08.2014.
The Creditor: OJSC “Sberbank of Russia”
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
(JSC
Until 13.08.2020; prior to the specified term the
guarantee is terminated upon fulfillment of all
obligations under the credit agreement by the
Borrower, or upon fulfillment of obligations
under the agreement by the guarantor or to the
extent otherwise permitted by the legislation of
the Russian Federation.
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the annual
General Shareholders Meeting on May 29,
2014, minutes w/o № of 30.05.2014.
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
74
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 in accordance with the Russian
Federation Law a related-party for the transaction
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, %
5.68
4,000,000
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
28.08.2014
Provision by the Company of the guarantee
under the credit agreement №133-ВКЛ/КРД-13
as of 23.10.2013.
The Creditor: JSCB “Absolut Bank” (OJSC)
The Borrower: JSC "Tander"
The Guarantor: PJSC "Magnit"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED.
Company
“Tander”
(JSC
The guarantee is valid until the borrower
fulfills obligations to the creditor under the
credit agreement but no longer than 1 (One)
year from the credit agreement end date, which
is on 07.10.2014.
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the annual
General Shareholders Meeting on May 29,
2014, minutes w/o № of 30.05.2014.
14
Date of transaction
Subject and essentials of transaction
Parties of transaction
75
located at
12.09.2014
Provision by the Company to a Lessee a one-
story non-living building, 575.2 sq. m. in area,
with production
52
sites
Oktyabrskaya Street, st. Dolzhanskaya, Yeysk
District, Krasnodar Krai, Russia on fee basis
for temporary possession and use.
The deal was effected by conclusion of
additional agreement w/o № of 12.09.2014 to
real estate rental agreement № ГК/3086/12 of
22.05.2012.
The Lesser: PJSC "Magnit"
Full and short firm name (names) of the legal
entity or surname, name, patronymic name of a
person considered in accordance with the Russian
Federation Law a related-party for the transaction
(JSC
“Tander”
The Lessee: JSC "Tander"
Company
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”)
Joint
30,212.53
0,04
01.07.2022
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 obligations of the Company are fully
performed.
The transaction was approved by the Board of
Directors on September 12, 2014, minutes w/o
№ of 12.09.2014.
None
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 in accordance with the Russian
Federation Law a related-party for the transaction
Company
24.09.2014
Provision by the Company of the interest-
bearing loan at the rate of 11.45% per annum.
The Lender: PJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITED;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(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
10,000,000
14.21
22.09.2017
of mentioned The obligations of the Lender are
fully
76
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
performed.
The transaction was approved by the annual
General Shareholders Meeting on May 29,
2014, minutes w/o № of 30.05.2014.
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
person considered in accordance with the Russian
Federation Law a related-party for the transaction
Company
30.09.2014
Provision by the Company of the interest-
bearing loan at the rate of 11.45% per annum.
The Lender: PJSC “Magnit”,
The Borrower: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(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
145,000
0.21
28.09.2017
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
fully
The obligations of the Lender are
performed.
the
transaction was approved by
The
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
17
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
77
10.10.2014
Provision by the Company of the interest-
bearing loan at the rate of 11.45% per annum.
The Lender: PJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
Company
“Tander”
(JSC
person considered in accordance with the Russian
Federation Law a related-party for the transaction
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
Joint
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, %
Term
for
transaction
Information on fulfillment of the underlying
obligations
fulfillment of obligations under
18,200
0.03
06.10.2017
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
fully
The obligations of the Lender are
performed.
The
the
transaction was approved by
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
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
person considered in accordance with the Russian
Federation Law a related-party for the transaction
Company
13.10.2014
Provision by the Company of the interest-
bearing loan at the rate of 11.45% per annum.
The Lender: PJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
“Non-
Stock Company
Closed
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(JSC
2,760,000
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 The
fulfillment of obligations under
of mentioned
fulfillment
on
3.92
11.10.2017
The obligations of the Lender are
performed.
fully
transaction was approved by
the
78
approval of the transaction, date of decision (date
and number of minutes of proceedings)
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
Other information on transaction indicated at the
issuer’s discretion
none
19
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 in accordance with the Russian
Federation Law a related-party for the transaction
the Company of
13.10.2014
Provision by
the
guarantee under the “Revolving credit line”
credit agreement №Крд-009/ВКЛ-2014 of
October 9, 2014.
The Creditor: CSJB “Absolut-Bank” (OJSC),
The Borrower: JSC “Tander”,
The Guarantor: PJSC “Magnit.
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
“Non-
Stock Company
Closed
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
Company
“Tander”
Joint
(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, %
5.68
4,000,000
for
Term
transaction
fulfillment of obligations under
The guarantee is valid until the borrower
fulfills obligations to the creditor under
the credit agreement (07.10.2015), but no
longer than 1 (one) year from the credit
agreement end date. The guarantee
terminates upon the expiration of the
indicated period if within this period the
creditor does not make a claim against
the guarantor and in accordance with the
legislation of the Russian Federation.
Information
obligations
on
fulfillment
of mentioned
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the annual
General Shareholders Meeting on May 29,
79
and number of minutes of proceedings)
Other information on transaction indicated at the
issuer’s discretion
none
2014, minutes w/o № of 30.05.2014.
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
person considered in accordance with the Russian
Federation Law a related-party for the transaction
Company
29.10.2014
Provision by the Company of the interest-
bearing loan at the rate of 11% per annum.
The Lender: PJSC "Magnit"
The Borrower: JSC "Tander"
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”)
“Tander”
Joint
(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
13,500
0.02
26.10.2017
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
fully
The obligations of the Lender are
performed.
The
the
transaction was approved by
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
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 in accordance with the Russian
Federation Law a related-party for the transaction
31.10.2014
Provision by the Company of the interest-
bearing loan at the rate of 11.45% per annum.
The Lender: PJSC "Magnit"
The Borrower: LLC “Selta”
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Stock Company
Closed
Company
“Tander”
“Non-
Joint
(JSC
80
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”)
885,000
1.02
27.10.2017
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 obligations of the Lender are
performed.
The transaction was approved by Boar of
Directors on October 7, 2014, minutes w/o № of
08.10.2014.
fully
22
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 in accordance with the Russian
Federation Law a related-party for the transaction
Company
21.11.2014
Provision by the Company of the interest-
bearing loan at the rate of 12% per annum.
The Lender:PJSC “Magnit”,
The Borrower: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(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
obligations
fulfillment of obligations under
of mentioned
fulfillment
on
249,000
0.29
19.11.2017
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 none
81
fully
The obligations of the Lender are
performed.
The
the
transaction was approved by
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
issuer’s discretion
23
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
Company
03.12.2014
Provision by the Company of the interest-
bearing loan at the rate of 12% per annum.
The Lender: PJSC “Magnit”,
The Borrower: JSC “Tander”.
Joint-Stock
“Tander”);
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
Closed
“Non-
Stock Company
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(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
obligations
fulfillment of obligations under
of mentioned
fulfillment
on
2,717,850
3.14
01.12.2017
The Lender´s obligations are fully performed.
Issuer’s authority which made a decision on
approval of the transaction, date of decision (date
and number of minutes of proceedings)
The
the
transaction was approved by
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
Other information on transaction indicated at the
issuer’s discretion
none
24
Date of transaction
Subject and essentials of transaction
Parties of transaction
05.12.2014
Provision by the Company of the guarantee
under the additional agreement №10 of
19.05.2014 to the bank account agreement
№0249018/RUB of October 25, 2007.
The deal was effected by conclusion of
additional agreement №1 of 05.12.2014 to bank
account agreement № KRD/PR/039/14 of
19.05.2014.
The Creditor: OJSC OJSB “Rosbank”
The Borrower: JSC “Tander”;
The Guarantor: PJSC “Magnit”,.
Full and short firm name (names) of the legal Joint-Stock
Company
“Tander”
(JSC
82
entity or surname, name, patronymic name of a
person considered in accordance with the Russian
Federation Law a related-party for the transaction
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
“Non-
Stock Company
Closed
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
Joint
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
350,000
0.40
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
18.05.2015 - term of Borrower’s refund of credit
amount and interest
JSC “Tander” is timely and in full performing
its obligations to the Creditor. There are no
situations when the demand on fulfillment of
outstanding obligations of JSC "Tander” could
have been raised before the Guarantor.
The transaction was approved by the Board of
Directors on July 9, 2014, minutes w/o № of
09.07.2014.
Company
08.12.2014
Provision by the Company of the interest-
bearing loan at the rate of 12% per annum.
The Lender: PJSC “Magnit”,
The Borrower: JSC “Tander”.
Joint-Stock
"Tander");
LAVRENO LIMITED;
GUMOSKI ENTERPRISES LIMITED;
TOMIANA INVESTMENTS LIMITE;
“Non-
Stock Company
Closed
Government Pension Fund “Magnit” (CJSC
“NGPF “Magnit”).
“Tander”
Joint
(JSC
25
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
8,756,000
10.13
06.12.2017
83
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)
fully
The obligations of the Lender are
performed.
The
the
transaction was approved by
extraordinary General Shareholders Meeting
on September 25, 2014, minutes w/o № of
26.09.2014.
Other information on transaction indicated at the
issuer’s discretion
none
84
1155.. MMAAIINN RRIISSKK FFAACCTTOORRSS IINNHHEERREENNTT IINN TTHHEE ССOOMMPPAANNYY OOPPEERRAATTIIOONN
The Company’s policy of the risk management
Since the Issuer and its subsidiaries operate within one group of companies, where PJSC
“Magnit” serves as the holding company (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 PJSC “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, PJSC “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. PJSC “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.
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.
85
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 Group 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 Issuer 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
Unfavorable 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. Oil prices decreased significantly in the second half of
2014 (from over $110 per barrel of Brent oil as of June 30, 2014 to less than $59 per barrel as of
January 2, 2015), which affected adversely the growth rate of the Gross Domestic Product (GDP)
in the Russian Federation in 2014 and which is expected to result in the fall in the GDP in 2015.
Further decrease of oil prices and prices on the other mineral resources may have material
negative impact on the economy of the Russian Federation due to the prevailing share of the
commodities in the Gross Domestic Product. Besides, introduction and further tightening of
ecomonic sanctions against the Russian Federation by the United States of America, European
Unioin and other countries due to the developments in Ukraine was and continues to be
detrimental to the state of the economy. According to the estimates of the Ministry of Economic
Development of the Russian Federation deterioration in the business environment in the
Russian Federation in 2015 will result in material decrease of real wages and real disposable
income of the Russian population and, consequently, in material decrease of effective demand
in the state.
86
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 operational results of the
Group and the Issuer. 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, 2014 the Group operates in 7 federal districts in 2,108 locations of the
Russian Federation with the highest concentration in the Southern, North-Caucasian, Central
and Volga regions. The Group plans to continue its expansion in the other regions of Russia:
North-West, Urals and Siberia. Retail market of the Southern federal region, where the Issuer is
registered and where its Head Office is located, as well as retail markets of the Central and
Volga regions, where most of the Group’s stores are located, are quite competitive regional
markets in Russia and are represented by most of the large Russian players as well as by a
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 food 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 develop the existing stores and open new stores in good 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.
87
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 delay its further growth
As of December 31, 2014 the stores operating under “Magnit” brand are located in the
Southern federal region (1,876), Central federal region (2,466), Volga federal region (3,018),
North-Caucasian federal region (379), North-Western federal region (870), Urals federal region
(836) and Siberian federal region (248).
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 the 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 imply certain risks, including failure to carry out adequate due
diligence of the acquirees’ operations, their assets and/or financial position, and much higher
financial risks and operational expenses than expected before acquisition. At the same time,
there is a risk of impossibility of successful assimilation of operations and personnel of the
acquiree, lack of introduction and integration of all necessary systems and control, 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 operational disruptions and loss of the Group’s
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 operational results.
Failure to raise enough funds may prevent the Group from realization of its
expansion plans
88
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 receive
sufficient cash flows or raise sufficient capital to finance its planned expenditures, it may have
to cut, slow down or cease expansion of its network.
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
its operational and financial systems,
administrative management and management 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 meet the above challenges, it
may negatively influence the operations and financial position of the Group and the Issuer.
improvement of
Due to the ongoing growth, the Group may experience difficulties with continuation of
usage, extension and improvement of its management and information system.. 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.
Besides, there exist a risk of narrowing of the target audience in the course of time if the
population income grows significantly, which may lead to the outflow of customers from
“Magnit” stores. 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 disposable income will continue to grow, the Group may not be able to
adjust the product mix in its stores according to the changeed consumer needs, and thus may
lose part of its target audience. As a result, the number of customers who shop at the Group’s
stores may reduce (or the growth rate of the number of customers may significantly reduce
compared to the previous periods), or the size of the average ticket in “convenience” format
may reduce (or its growth rate may reduce compared to the previous periods), which could
detrimental to on the business of the Group, its operational results, financial position and
prospects.
Risks related to real estate investments and lease of real estate
Lack of reliable information on the real estate market in the 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.
89
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.:
a) changes in the competitive environment;
b) changes of the attractiveness level of the real estate on the Russian market in general and
on the regional markets where the real estate objects of the Company are located due to
the changes of the country and regional risks;
c) fluctuations of the demand for commercial real estate.
As a result of 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 real estate 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. If in the future due to any reason, including competition from the other
companies, which are interested in the similar objects, the Group is not able to identify and
lease and/or buy 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 be able to successfully identify, lease and/or purchase
the appropriate real estate objects on acceptable terms.
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
It is impossible to guarantee that the Group will be able to prolong its lease contracts on
acceptable terms, and even the possibility to prolong lease contracts itself upon their expiration.
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
90
The ability of the Group to construct and/or equip the new specially built 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. It is impossible to guarantee that
the Group will be able to find sufficient number of qualified projectors which could enable the
Group to construct and open new stores in due time. Failure of the Group to construct and
equip new stores on the newly acquired land plots in due time may be detrimental to its ability
to perform tasks, which are set in its plans of strategic development and to achieve planned
operational 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 operations include obtaining of ownership rights on land plots and buildings
for the purposes of the construction and/or equipping new stores. Besides, 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, the
decisions made in compliance with these procedures can be contested or cancelled.
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.
According to the Russian legislation, 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, breaches in the pst real estate transactions may
lead to invalidation of such transactions with certain real estate objects, which may negatively
influence the rights of the Group on this real estate.
It is also worth noting that, 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. Besides, 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 at any time may register or claim the existence of encumbrances (of which the Group
had not been aware of) on the real estate owned or leased by the Group.
Risks related to the increase of costs
Unionization of the Group employees may have a material adverse effect on its
financial position and operational 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, which in its turn may have a
substantial negative impact on financial position and operational results of the Group.
91
Risks related to the possible fluctuations of the prices for raw materials, services used
by the Issuer in its operations (separately on the internal and external markets), and their
influence on the Issuer’s operations 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 growth of the store opening costs or costs for the use of
the premises for stores as well as the increase of the payback period for the Issuer and its
subsidiaries. The growth of the purchasing prices, the growth of the store opening costs, growth
of the price of the land plots (or any other real estate) and the amount of rent payment for their
use, as well as the growth of employees’ wages may lead to the substantial growth of the
Group’s expenses, and thus, seriously affect the profitability of the Issuer if the Group is not
able to adequately increase the sale prices due to low purchasing power 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 Issuer (separately on the domestic and foreign markets), and their influence on the
Company’s activity and its fulfillment of obligations on the securities
The Issuer and the Group operate only on the Russian domestic market. The Issuer 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 product prices at “Magnit” stores may lead to the profitability decrease
of the Group. Changes of the 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 on the products. The growth of the product prices may negatively affect the purchasing
power of the population. Amidst inflation the growth of the product prices is more likely to
happen, which causes the erosion of purchasing power of the population. Deterioration of the
macroeconomic environment and the subsequent erosion of purchasing power 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
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“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 Issuer 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 is impossible to determine particular actions of
the Issuer in case any of the events listed in the risk factors and described in this paragraph
occur in future, because elaboration of the adequate is complicated due to uncertainties of the
developments in future. 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 above
risks are out of the Issuer’s control.
In case of deterioration of the situation in the sector, the Company plans:
To continue, if possible, to expanding its operations in order to reduce the cost of goods
and diversify some risks through the ongoing growth of scale;
To continue monitoring the least prospective stores and, if the measures to raise
profitability of these stores are not rewarding, to close such stores expeditiously;
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 take additional measures to cut the costs;
to continue attracting highly-skilled specialists as well as entering into agreements with
further risk
reliable partners, counteragents and contractors, which enables
minimization, and
To conduct the detailed analysis of the planned operations of the Issuer in order to
reduce the cost of investments, reduce the expenses and receive higher profits.
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 region, Krasnodar. As of December 31, 2014 the Group
operates in 7 federal regions in 2,108 cities and towns of the Russian Federation.
The Group does not have stores and other objects 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
decrease of demand for consumer goods.
Despite the fact that during the last few years there were positive changes in many
public spheres in Russia - the economy was growing, certain political stability was achieved,
Russia is still the state with the rapidly developing and changing political, economic and
financial systems. Apart from economic risks, Russia is more exposed to the political and
regulatory risks than the other countries with the developed market economy.
Political risks
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Political instability in Russia may have a negative effect on the cost of investments in
Russia as well as on share the price of the Issuer
Since 1991 Russia is undergoing the transformation from the single-party government
with the centralized planned economy to the federal republic with democratic institutions and
market-oriented economy. At that, Russian political system remains vulnerable to voices of
complaint, including call for autonomy from certain regional and ethnical groups.
The progress of political and other reforms from 1991 was uneven. The composition of
the Government of the Russian Federation, including the prime minister, was unstable on a
periodic basis. For example, from March 1998 to May 2008 there were six prime-minister shifts.
Vladimir Putin was elected the President of Russia in March 2000. Since that the composition of
the Government in Russia has been highly stable. In March 2008 Dmitry Medvedev was elected
the President of Russia, during his administration Vladimir Putin was the Prime Minister. In
March 2012 Vladimir Putin was again elected the President and came to office on the 7th of
May, 2012 for the six-year term. Currently Dmitry Medvedev is the Prime Minister. Although it
ensured state stability, oppositional organizations were very active from the end of 2011 to the
middle of 2013, mainly due to the results of the parliament and president elections. Increase of
protest activity, discontent in the society and political instability are also possible. Besides, a
new wave of protests may result in the growth of authoritarianism.
Future political instability may lead to deterioration of the macroeconomic situation,
including flight of capital, decrease of investments and business activity. Future changes of the
state policy and regulation in Russia may also lead to political instability and cessation or
cancellation of political, economic and regulatory reforms, which may have significant negative
impact on the cost of investments in Russia, including the share price of the Issuer, as well as
economic activity of the Issuer, its financial position and development prospects.
Developing countries such as Russia pertain higher market volatility due to political
conflicts. Cessation or backtracking on reforms, as well as return to political and government
instability or serious acts of terrorism (which Russia is exposed to, taking into account current
ethnical and religious conflicts) may lead to deterioration of the investment climate in Russia
and to instability of commercial activity, which may have significant negative impact on the
ability of the Issuer to raise equity or debt capital on the global markets, as well as on the
economic activity, financial position, operating results and development prospects of the Issuer.
Changes in the composition of the Government of the Russian Federation, the State
Duma or the change of the President shift, significant changes of the domestic policy or
disagreements between the President, the Government of the Russian Federation, the Russian
Parliament and influential economic groups may lead to political instability, which may have
significant negative impact on the cost of investments in Russia in general and on the share
price of the Issuer in particular.
Current armed conflict in the Eastern Ukraine and the reaction of the western countries
on the accession of Crimea to Russia and escalation of the conflict in the Eastern Ukraine
resulted in the significant deterioration of the geopolitical instability and negatively impacted
the macroeconomic situation in Russia.
Significant growth of domestic instability in Ukraine starting from Autumn 2013 and the
current armed conflict in the Eastern Ukraine negatively impacted the state of bilateral relations
between the Russian Federation and Ukraine, as well as the relations of Russia with the western
countries. On 16 March 2014 the referendum was held in Crimea, in the course of which the
majority of the participating Crimean population voted for joining Russia as a federal subject.
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On 17 March 2014 the parliament of Crimea declared the independence from Ukraine and
formally requested that the Russian authorities admit the Crimea to the Russian Federation. The
Treaty on Accession of the Republic of Crimea to Russia was signed between representatives of
the Republic of Crimea, Sevastopol and the Russian Federation on 18 March 2014 to lay out
terms for the immediate admission of the Republic of Crimea and Sevastopol as federal subjects
of Russia and part of the Russian Federation. It was ratified by the Federal Assembly by 21
March.
Accession of Crimea to Russia caused strong negative reaction of the western countries.
In particular, the United States of America and the European Union countries as well as
Ukraine strongly reject to acknowledge the referendum held in Crimea and further accession of
Crimea to the Russian Federation legitimate. Beginning from March 2014 the United States of
America, the European Union countries and some other countries started to introduce various
sanctions against a number of the Russian administrative officials, politicians, businessmen,
companies and banks.
The beginning and further escalation of the Ukrainian conflict between the army and the
other armed groups of Ukraine on one hand, and advocates of independency from Ukraine on
the other hand, caused significant expansion and toughening of sanctions against Russia on the
part of western countries starting from July 2014. In particular, the United States of America
introduced the so-called sectoral sanctions against Russian state banks as well as a number of
companies operating in the power generating and military sectors of economy. The most
meaningful part of the sectoral sanctions for the Russian economy and financial system is the
prohibition on purchase, sale, investment services and assistance in issuance or any other
transactions with the securities and money market instruments with the circulation period of
over 30 days if the issuer is (i) one of the five Russian state banks (Sberbank, VTB Bank,
Gazprombank, Vnesheconombank or Russian Agricultural Bank), one of their subsidiaries or a
person, acting on behalf of or on the instructions of these Russian state banks and their
subsidiaries; (ii) one of a number of the Russian companies, which operations are primarily
related to and is mainly about invention, production, sales and export of military equipment or
services related to the military sector, or one of its subsidiaries or a person, acting on behalf of
and on the instructions of these military companies or their subsidiaries; (iii) one of a number of
the Russian companies controlled by the government or with the government stake of over 50%
and the value of assets exceeding 1 trillion rubles and with the expected profit of over 50%
coming from sale and transportation of crude oil and oil products (such as Gazprom Neft,
Transneft and Rosneft), or one of their subsidiaries or a person, acting on behalf of and on the
instructions of these companies or their subsidiaries. Similar sanctions blocking access to the
western capital markets were also introduced by the European Union countries nearly against
the same Russian state banks, power generating and military companies. Besides, there were
sanctions introduced to prohibit export of products and technologies for military purposes,
dual-use products and technologies (which may be used for both civil and military purposes),
as well as products and technologies necessary for oilfield development in deep water areas,
Arctic shelf and shale stratum, to Russia.
Significant escalation of geopolitical situation due to the development in the Eastern
Ukraine and the introduction of the above sanctions not only restricted access to the western
capital markets for banks and companies under sanctions, but also extremely complicated
access to the international debt and equity capital markets for the other Russian companies and
banks, which may now turn to be unable to refinance its current debt in the foreign currencies
by new debt on the international capital markets. Very limited access to the international capital
markets together with the significant ruble devaluation in the end of 2014 against the US dollar
95
and euro create a threat that at least some of those companies and banks with significant debt in
the foreign currencies may be unable to settle their existing loans in the foreign currency in
time, which may result in their bankruptcy and negatively impact the entire Russian economy.
Besides, significant part of funds, earlier raised by the Russian banks on the international capital
markets, was channeled for crediting of the Russian companies and population. The restriction
of access to such relatively cheap source of financing may negatively cut volumes of crediting of
the Russian companies and population by the Russian banks and significantly increase the
credit rates, which may negatively impact the state of the Russian economy.
It is impossible to rule out further escalation of sanctions against Russian business and
individuals in future, which may have even more negative impact on the Russian economy,
financial and banking markets, and result in the increase of the capital outflow from Russia and
significantly deteriorate the investment climate and business environment in Russia.
Reconsideration of reforms and the government policy with regard to certain
individuals may negatively impact the business of the Group and the investment
attractiveness of Russia.
In the past, including the recent past, the Russian law enforcement agencies opened
criminal cases against a number of Russian companies, their officials and shareholders on a
charge of tax evasion, other tax crimes and absolutely different illegal actions. On some of such
investigations the accused people were sentenced to be confined and pay the understated taxes.
According to the statements in the Russian press, such companies included Yukos, TNK and
VimpelCom. In Autumn 2014 by the decision of the Moscow Court of Arbitration the
controlling interest in Bashneft, earlier owned by AFK “Sistema”, was transferred in state
ownership in grounds of maw violation in the course of privatization of Bashneft. AFK
“Sistema” acquired Bashneft, privatized earlier, for US$ 2 billion in 2009. In the course of
judicial proceedings the chairman of the Board of Directors and the largest shareholder of AFK
“Sistema” Vladimir Evtushenkov was accused of money laundering and he was temporarily
placed under house arrest. Some analysts think that such actions of government agencies speak
of the intention to reconsider political and economic reforms of the last two decades. However,
other analysts are confident that these were one-off cases and do speak of any backtracking on
major political and economic reforms.
Conflicts between federal and regional authorities and other domestic political
conflicts may create unfavorable economic conditions which may negatively impact the
operations 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 unclear and disputable. In this
connection, 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
96
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 the Group’s performance in particular, especially, taking
into consideration the significant scale of the Group’s operations in the Southern and North
Caucasian Federal Region.
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 development in the
social sphere may negatively impact the confidence in Russiaeconomy and its investment
potential, and may also have negative impact on the operations of the Group and result in
losses or impact the business of the Group, results of its operations, its financial position and
prospects in a different way..
Economic risks
Economic instability in Russia may have negative impact on the consumer demand
which may significant negative influence the business of the Issuer
In the past the Russian economy was and continues to be exposed to:
Significant decrease of its Gross Domestic Product and the growth rates of the Gross
Domestic Product;
High inflation;
High and rapidly growing interest rates;
Unstable crediting conditions;
Unstable ruble rate;
Massive flight of capital;
High level of government debt versus gross domestic product;
Low diversification of economy which is relies heavily on global commodity prices;
Sharp decline of oil prices, other energy materials and other commodities;
Inability of the banking system to provide Russian companies with sufficient liquidity;
Continuation of work of unprofitable enterprises due to lack of efficient bankruptcy
procedures;
High level of corruption and penetration of organized criminality in economics;
Significant growth of unemployment and subemployment; Introduction and further
escalation of various sanctions against a number of Russian companies, banks, officials,
politicians and businessmen;
Low incomes of the majority of the Russian population.
Over the past few years the Russian economy has been marked by instability of debt and
equity capital markets (for example, the Russian equity market saw significant slowdown in the
second half of 2008). As a result, the market regulators suspended trades on the Russian stock
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exchanges, MICEX and RTS (merged in 2011 into the MOEX) many times. The Russian
economy has been also marked by significant decline of foreign investments and sharp decrease
of the gross domestic product in certain years. For example, in 2009 the Russian gross domestic
product decreased by 7.8% in real terms.
As Russia produces and exports significant volumes of crude oil, natural gas, oil
products and other mineral resources, the Russian economy is very vulnerable to the
fluctuations of oil and gas prices and the other commodities, the prices on which significantly
decreased in the course of the global financial crisis, started in the second half of 2008. Oil prices
significantly decreased again in the second half of 2014 (from over US$ 110 per barrel of Brent
oil as of June 30, 2014 to less than US$ 59 per barrel as of January 2, 2015), which has negative
impact on the state of the Russian economy and the revenues of the Russian energy companies
and the government. Further significant decrease of gas and oil prices may cause losses to the
Russian economy and have significant negative impact on the activity of the Group.
Significant decrease of oil prices in the second half of 2014, introduction and further
escalation of sanctions against a number of Russian companies, banks, officials, politicians and
businessmen on the part of western countries and escalation of geopolitical tensions between
Russia and Ukraine, as well as a number of western countries, were among key reasons which
caused downgrades of long-term credit ratings of Russia by the leading international rating
agencies.
On January 9, 2015 Fitch Ratings, international rating agency, downgraded long-term
credit rating of Russia by one notch to “BBB-“, which is the lowest “investment” credit ratings
of the agency. Sharp ruble devaluation and decline of oil prices, as well as the increase of the
key rate of the Central Bank of Russia up to 17% were named the key reasons of the downgrade.
Fitch has also noted that western sanctions continue to have negative impact on the Russian
economy. According to the Fitch’s statement, the outlook of the Russian rating remains
“negative”.
On January 26, 2015, mainly due to geopolitical tensions between Russia and Ukraine,
Standard & Poor’s downgraded long-term sovereign foreign-currency rating of Russia from
“BBB-” to “BB+”, i.e. from “investment” to “speculative” with negative outlook. The agency
explained its decision by the weaker flexibility of the Russian monetary policy and economic
growth prospects.
On February 20, 2015 Moody’s downgraded Russian sovereign credit rating by one step
– from “Baa3” to “Ba1”, i.e. from “investment” to “speculative”, with negative outlook. Key
reasons of the downgrade were the impact of the Ukrainian conflict and sharp fall in the oil
price and ruble exchange rate. Moody’s forecasts that financial position of Russia will
significantly deteriorate as a result of the budget pressure, further erosion of the country’s
foreign exchange buffers and limited access to the international capital markets.
The downgrade of the Russian rating to “speculative” level may cause technical position
squaring of a number of the international funds, which declarations are limited to investment in
securities of not lower that “investment” category. The downgrade of the credit rating to
“speculative” level may also negative impact the ruble exchange rate.
Russia being the country with the developing economy is highly exposed to further
external shocks. Developments in economy and in the financial market of one of the large
countries of the region, sometimes lead to the situation when the international investors lose
their interest to the entire region or the class of investments – this is called “chain reaction”. In
the past Russia already suffered from similar chain reaction, and it is possible that the Russian
investment market, including the share price of the Issuer, will correspondingly suffer in future
due to negative economic and financial developments in the other countries. Economic
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instability or the future economic crisis may explode the confidence of investors in the Russian
markets and in the ability of the Russian companies to attract capital on the global markets,
which in its turn, may have significant negative impact on the Russian economy. Deterioration
of the economic situation may, in its turn, result in the significant decrease of the consumer
demand in the country, which may negatively impact the operating results, financial position
and development prospects of the Group and the Issuer.
Russian physical infrastructure is in poor condition, which may cause damage to the
regular operating activity, while the efforts of the Government of the Russian Federation on
improvement of the national infrastructure may result in the additional costs for the Group.
Most of the Russian physical infrastructure was established in the soviet period and
during many years it was not duly financed and maintained. In certain regions roads,
manufacturing, electric power delivery, communication systems and stock of buildings are in
the very poor condition.
Roads in Russia are of the poor quality, some of them do not meet the minimal
requirements in usability and safety, which complicates the in-time delivery of products to the
Group’s stores, taken into account the distance of deliveries. Further deterioration of the
Russian physical infrastructure may cause damage to the national economy, disrupt the product
deliveries, increase business costs and disrupt the operations.
In an effort to improve national infrastructure the Government of the Russian Federation
is reorganizing the national systems of power supply and telecommunications. Such
reorganization may result in the increase of fees and penalties but not bring the desired
improvements of infrastructure. Besides, the reorganization may be slowed down or suspended
in case of long-term economic slump, which is likely to result in further deterioration of the
Russian infrastructure.
Social risks:
Social instability may lead to the extension of support of recovery of statism and the
growth of nationalism and violation
Social instability may lead to the extension of support of recovery of statism, to the
growth of nationalism and violation, which may have significant negative impact on the ability
of the Issuer to do 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. If any of these results of the growth of social instability
materialize, the operations of the Issuer may be limited and the profitability of the Group may
decrease.
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, organized crime and
corruption remain significant problems for the companies operating in Russia. Besides, 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
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accusation of the Group of illegal operation and therefore have a negative impact on the
Group’s operation and price of Company’s shares.
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 political, economic and social risks are out of the Issuer’s
control due to their global scale. The companies which are included in 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 in Russia or in
the certain region, which will negatively impact the operations and the revenues of the Group, ,
the Issuer assumes that the Group will undertake a number of measures in order to mobilize
business and minimize negative impact of the unfavorable political and economic situation in
the country and/or region on the business of the main companies of the Group.
It is impossible to determine the specific measures of the Group in case some of the
above events occur in future, as the elaboration of the adequate and relevant measures is
complicated by the uncertainty of the future developments. The parameters of the applied
measure will depend on the specific situation in each case. The Issuer cannot guarantee that the
activities taken to overcome negative fluctuations will lead to considerable change in the
situation as most of the above risks hereof are out of the Issuer’s control.
However, in case of negative impact of the country and regional changes on the Group’s
operations, the Issuer plans to take the following measures to maintain the profitability of the
Group’s operations:
if possible, to save fixed assets until the situation improves;
to undertake measures aimed at sustainment of the Group’s employees and on their
productivity;
to introduce adequate changes to the pricing policy to maintain the demand on the
products on the proper level;
to take additional measures on cost saving, including measures to reduce purchasing
prices and to limit wage expense;
to revise the capital expenditure program. .
In order to minimize the risks related to the force majeure circumstances (military
conflicts, riots, natural disasters, state of emergency) the Issuer 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 expand its operations in different
regions of Russia in order to diversify risks.
Risks related to the possible military conflicts, state of emergency and strikes in the
country and regions where the Issuer is registered as a tax payer and/or operates its business
The Issuer is a registered taxpayer and conducts key activity in the Southern Federal
Region. 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.
100
Major risks are connected with the fact that private companies may be destroyed and
bear material losses in case of military conflict. Besides, there is a risk that such companies
might be nationalized in case of a sharp change of policy course. 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 above the 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 general 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.
The 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.
According to the Ministry of Emerging Situations of Russia, terrorism is one of the most
real threats to the stable social and economic development of the country as well as to an
improvement of the living standards of population and strengthening of the national security of
the Russian Federation. The danger of the acts of terror still exists on the entire territory of the
Group’s operations, especially in the North Caucasus and the Southern Federal Regions, as well
as in the larger cities of Russia.
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.
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
is distinctive
risks,
geographical feature of the Southern Federal District.
including natural disasters (hurricanes, floods, earthquakes, etc)
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 or any other location
Ecological risks:
Accidents at the environmentally hazardous industrial facilities of the Russian
Federation and environmental pollution may negatively impact the Group’s operations
In respect of all 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
101
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
Risks related to the changes of the interest rates, foreign currency exchange rates
associated with the Company’s operation or hedging carried out by the Company to reduce
adverse impact 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
operational results of the companies of the Group.
The Group does not export its products, 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,
operational results, etc. to the foreign exchange movements (currency risks)
Over the last twenty years Russia faced considerable fluctuations of the exchange rate of
the 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 ruble value at the moment of
acquisition.
The Group does not export its products, 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 the Russian counterparts. Thus, the rise
of such risk may have an adverse 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 ruble devaluation may have a substantial negative effect on the country’s
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/or 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
102
mainly lie beyond Company’s control but depend on the general economic situation in the
country.
Inflation influence on the payment on securities
The Company faces inflation risks which may have an adverse 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 negatively 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 other goods sold by the Company and its subsidiaries, and as a result negatively
influence the competitiveness of the Group.
If the exchange rate of the 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. Due to competitive pressure or legal restrictions the Group
may not be able to properly increase its prices in order to retain its profit rate and, moreover, to
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 and prospective measures of the Company
to reduce the risk
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 related to the dependence on the Russian banks
The Russian bank system is yet underdeveloped, and a new bank crisis may have a
negative effect on the operation of the Group and its financial position
The Russian bank and other financial systems are not properly developed and regulated,
and the Russian legislation related to banks and bank accounts may be interpreted ambiguously
and is applied inconsistently. Nowadays there are a limited number of creditworthy Russian
banks (most part of which have their headquarters in Moscow) that are able to provide services
to a company similar in size of the Issuer. 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.
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”), joint-stock company “ALFA-BANK” (JSC “ALFA-
BANK”), open joint-stock company VTB Bank (OJSC “VTB Bank”), “Gazprombank” (joint-stock
company) and joint-stock company “ROSBANK”. Bankruptcy of one or several of the specified
103
banks may negatively affect the Group’s business. Moreover, the lingering and severe bank
crisis or bankruptcy of those banks with which the Group keeps its funds may lead to
inaccessibility to the cash assets for several days or even to the loss of all Group’s deposits in
such banks, which may have substantial negative effect on the Group’s business activity,
operational 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", which introduced the 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 to 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 the Russian taxation authorities
and arbitration courts are free to interpret the applicable regulations. Therefore, 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 due to application in a party related transaction of the price not corresponding to financial
terms of transactions between unaffiliated persons. The amount of these penalties is 20% of the
unpaid tax until 2016 and 40% of the unpaid tax but not less than 30 thousand rubles from 2017.
The penalties have been applied since January 1, 2014.
Financial report statements of the Company mostly subject to changes under the
foregoing financial risks (including risks, probability of their occurrence and nature of
changes in reports)
The Group’s expenses and profit are mostly exposed to the influence of the foregoing
financial risks. In case of unfavorable change of the situation upon realization of one or
several risks, the expenses will be the first to grow and will entail profit reduction
correspondingly
In case of substantial inflation growth and/or significant ruble devaluation and therefore
the expenses growth, the Group may increase the prices on the products for sale.
Moreover, in case of significant ruble devaluation and growth of inflation and/or interest
rates the Group plans to take the following measures:
revision of the financing structure;
additional measures to reduce costs;
revision of the programs of capital investments and loans; and
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increase the receivables turnover.
At the moment hedging of the foregoing risks is not carried out.
The Group is also exposed to 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. Realization of such risk 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
Probability
Nature of changes in the report
Interest rates
growth
high
Inflation rates
growth
high
increase the cost of
Interest rates growth will
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
Group’s 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. Thus,
the part of increase of the Group’s expenses will be
compensated by the increase of the product prices.
Such inflation will also lead to devaluation of the real
cost of the ruble obligation.
Change of the
exchange rate of
US dollar to ruble
Liquidity risk
(risk of undue
obligation
fulfillment)
high
It does not produce strong effect, as the main profits
and losses of the Company are ruble denominated.
medium
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 reduce their negative impact on their operation. 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.
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The Company and the Group are 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 and 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, and 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” and the Civil Code of the Russian Federation (in the wording of the Federal law
№315-FZ of October 22, 2014) entitle the shareholder (shareholders) to file a claim against (i) an
individual authorized to act on behalf of the joint-stock company under the law, other legal act
or constituent document of this joint-stock company, (ii) members of collective bodies of the
joint-stock company and (iii) individuals who are actually able to determine actions of the joint-
stock company, who caused damage to the joint-stock company by their activity (or inactivity)
and who acted unscrupulously and irrationally during the performance of their duties, 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 of the Russian Federation 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 shareholders, the owner of the property of the
legal entity or other persons who are entitled to give instructions, which are mandatory for this
legal entity, or otherwise determine its actions, subsidiary liability for the obligations of the
legal entity may rest 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 PJSC “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 the subsidiaries may have
significant negative effect on the financial position of the Company.
Ensuring the rights of shareholders according 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 (exclusion
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of securities from the list of securities admitted to trading at the stock exchange)
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 functioning 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, content and period of economic and
political reforms, rapid development of the Russian legal system, which is not always consistent
with the directions for the development of the market relations, are 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 with the
interested participants, whose activity is related to the legal system and/or with the law
enforcement practice, or in the society in general and do not contain any adequate transitional
provisions, which creates serious complexities in their application. Defects 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
107
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. The
following 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 levy legislation related to the increase of the tax
rates; and
Introduction of new taxes.
These amendments, if they are significant, as well as other significant 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; and
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. Different ministries and authorities often
have different interpretations of the 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 is aimed at complying 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, operational results and financial position of the Company
and the Group. 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 risks related to 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.
Risk inherent in the impossibility of foreign investors to export the return on shares
of the Company
Today, the Russian legislation on dividend payment sets 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
108
availability of such currency on the Russian exchange markets. Although in Russia 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 prospects
of this market remain 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 amendments to 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 is aimed at complying with the requirements of the customs control,
processing of 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 rights of use of objects which are limited in the turnover
(including natural resources)
The primary activity of the Company is coordination of operations of the companies of
the Group, lease of property and retail which is 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
Company-specific risks
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 drinks is subject to licensing
which relates to 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 parties’ debts
including the subsidiaries of PJSC “Magnit”
The Issuer provided the security in the form of the guarantee for the purpose of
obtaining of credits by JSC “Tander” (the main operating company of the Group which controls
the trading division and is the center of profit consolidation of the Group). The Issuer is 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
109
of the Issuer within the provided guarantee accounts for 41,951,790,460.27 thousand rubles as of
December 31, 2014.
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 occurrence in future, which may negatively affect the ability of JSC
“Tander” to fulfill its obligations properly, which in turn 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 PJSC “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 exercises 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
The 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 operational 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.
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 in regions with the maximum concentration of existing stores (in
the Southern, North-Caucasian, Central and Volga regions) and 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 the chain 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 operational 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
110
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 expansion in new regions 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 appropriate for each region and establish the
effective 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 managed to achieve
in the past. Due to the increase of the competition in retail sector, the effectiveness of the
Group’s marketing campaign may considerably decrease in the future which will reduce the
amount of its customers and consequently reduce the sales turnover. Moreover, 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 plans to carry out the independent construction/acquisition of premises and
purchase the equipment for the stores more actively than before, 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 retail chain expansion rates against the scheduled strategy and result in the loss
of the Group’s market share in favor of competitors;
-Competition level in some regions at the moment of the store openings by the Group
may prove to be extremely high for Group to enter the markets of these regions, which will not
allow to achieve the expected profitability level; and
- Within the economic slowdown on the regional markets, the retail chain expansion on
new territories 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 and 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
111
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, effectiveness of operational performance
of the Group as well as its ability to collect, process and provide in time adequate data to adopt
accurate management decisions depend on the efficient 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 in the future there will be no serious systemic failures
resulting in interruption of functioning of the network or significantly slowing its functioning.
The blackout in computer network or system failures resulting in interruption of functioning of
the network or significantly slowing its functioning may lead to the sudden interruptions of
customers service, failures in the stock registration system, degradation of the customer service
quality and damage to the goodwill of the Company and the Group, 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
112
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 successfully protect its rights for the intellectual property or
successfully prove that it shall not be liable for it or forfeit any rights for the intellectual
property due to claims from the third parties for the intellectual property, supposedly caused
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, trademarks 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 problems of using 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.
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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 Company’s plans to increase the sales of the products under
“Magnit” brand and the development of new brands
The expansion strategy of the Group presupposes the growth of sales of the products
under “Magnit” brand (“for “Magnit” stores”). As of December 31, 2014 the sales share of the
products under “Magnit” brand amounted to 10.9%. However it should be noted that together
with the increasing number of hypermarkets, the sales share of “private label” represented by
605 items in all formats may reduce as the total assortment of a hypermarket amounts to more
than 15,000 SKUs on average, while the product mix of a convenience store amounts to about
than 3,500.
Moreover, 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
forced interruption of activity, damages to the Group’s property or responsibility to the third
parties
The Group does not apply insurance for the forced 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 centers, 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, in case of occurrence of any of such uninsured risks they 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 operational results, financial position and
prospects.
114
1166.. RREEPPOORRTT OONN TTHHEE CCOOMMPPLLIIEENNCCEE WWIITTHH TTHHEE PPRRIINNCCIIPPLLEESS AANNDD
RREECCOOMMMMEENNDDAATTIIOONNSS OOFF TTHHEE CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE CCOODDEE
Owing to the highly effective and constantly evolving corporate governance system,
PJSC “Magnit” is able to keep the rational balance of interests of the Company as both an
enterprise entity and a joint stock company and liaise between the shareholders and the
company management team basing on trust, standards of business relations and ethical norms,
which clearly demonstrates the high level of the Company’s existing business reputation.
Although the Company did not formally approve the Corporate Governance Code or
another similar document, PJSC “Magnit” strives to form its own corporate governance model
complying with the best practices and standards.
PJSC “Magnit” fully meets the requirements of securities laws, company laws and
statutory enactments of the Bank of Russia.
Hereby PJSC “Magnit” informs its shareholders that on March 21, 2014 the Board of
Directors of the Bank of Russia approved a new Corporate Governance Code which is
recommended for the public joint stock companies.
PJSC “Magnit” plans to extensively apply the provisions of the new Corporate
Governance Code to enhance the attractiveness of the Company for existing and potential
investors.
Board of Directors of PJSC “Magnit”
115
PPJJSSCC
““MMAAGGNNIITT”” CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE AANNDD CCOONNTTRROOLL
SSTTRRUUCCTTUURREE
The General Shareholders Meeting is the supreme management body of the Company.
The Board of Directors, elected by the shareholders and accountable to them, provides strategic
management and oversight of the work of the executive bodies, namely the Chief Executive
Officer, the Chairman of the Management Board and the Management Board.
The executive bodies effect the current management of the Company and carry out the
tasks entrusted to them by the shareholders and the Board of Directors.
The Company has built an effective system of the corporate governance and internal
control over financial and economic activity to protect the shareholders’ rights and legitimate
interests.
The Board of Directors oversees the Audit Committee which, in conjunction with the
Internal Audit Department, helps the management bodies ensure the Company’s effective
operation. The Revision Commission monitors the Company’s compliance with the regulations
and the legality of its operations.
To inspect and verify the Company’s financial statements PJSC “Magnit” outsources the
external auditor with no property interest related to the Company or its shareholders.
The HR and Remuneration Committee, which is a part of the Board of Directors,
provides the recommendations on the key appointments and incentives of the members of the
Board of Directors, executive and controlling bodies.
The Company timely and in full discloses reliable information, including details of its
financial position, economic performance and ownership structure, thereby giving shareholders
and investors the opportunity to make valid decisions.
The information is disclosed in compliance with the Russian legislation and the
requirements of the UK financial regulator, the Federal Conduct Authority (FCA). The
Company also has its own Regulations on the access to insider information, the PJSC “Magnit”
Rules of protection of confidential and insider information and control over compliance with
the legislative requirements against the misuse of insider information and market abuse.
PPJJSSCC ““MMAAGGNNIITT”” GGEENNEERRAALL SSHHAARREEHHOOLLDDEERRSS MMEEEETTIINNGG
The Company’s shareholders participate in the management of the Company by making
decisions at the General Shareholders Meeting. Shareholders may considerably influence the
business by means of voting, specifically, the powers of the General Shareholders Meeting
include approval of the annual report and accounting statements, profit allocation, including
the dividend payment, election of the Company’s core management and control bodies,
approval of major and related-party transactions, and some other important issues.
The procedure of holding of the General Shareholders Meeting is aimed at observance of
the shareholders’ rights and meets all requirements of the Russian legislation, as well as the UK
financial regulator, the Federal Conduct Authority (FCA).
PPJJSSCC ““MMAAGGNNIITT”” BBOOAARRDD OOFF DDIIRREECCTTOORRSS
The Company’s Board of Directors is a core element of the PJSC “Magnit” corporate
governance system.
116
The Board of Directors represents the shareholders’ interests and is responsible for the
increase of the business value by organizing the efficient management.
The Board of Directors of the Company carries out overall management of the
Company’s activities in compliance with the provisions of the Company’s Charter, Regulations
on the Board of Directors of PJSC “Magnit” and the requirements of the legislation of the
Russian Federation.
The main goals of the Board of Directors are the following:
to achieve the maximum profit amount and increase the Company’s assets;
to protect the rights and legitimate interests of the Company’s shareholders;
to monitor the executive bodies’ activity;
to ensure that the Company’s public information is complete, accurate and
objective.
Members of the Company’s Board of Directors are elected by the General Shareholders
Meeting for a term lasting until the next annual General Shareholders Meeting. The members of
the Board of Directors are elected by the cumulative voting.
Decisions of the Company’s Board of Directors are approved by the majority of the
Board of Directors members participating in the meeting, unless otherwise is stipulated by the
Charter or the Company’s internal documents and the legislation.
Every member of the Board of Directors has one vote while making the decisions at the
Board of Directors meeting.
Meetings of the Board of Directors are held on a regular basis.
The Chairman of the Board of Directors calls a meeting on his own initiative or at the
request of the Board of Directors’ member, the Revision Commission or the Auditor of the
Company, the Chief Executive Officer of the Company and at the request of other persons
specified by the Federal Law “On Joint Stock Companies” and the Company’s Charter.
The Chairman of the Company’s Board of Directors organizes and manages the Board of
Directors work.
In accordance with the best corporate governance practices the Board of Directors
comprises 3 (Three) independent directors. The Company uses recommendations of the
Corporate Governance Code and other acknowledged native and foreign criteria for
specification of the Board of Directors’ member independence criteria.
The Board of Directors has two specialized committees:
Audit Committee;
HR and Remuneration Committee.
The committees work in compliance with the Regulations on Committees of the Board of
Directors of PJSC “Magnit”.
The members of PJSC “Magnit” Board of Directors, information on the meetings of PJSC
“Magnit” Board of Directors in 2014, report of the PJSC “Magnit” Board of Directors and other
information are represented in the previous sections of the present PJSC “Magnit” Annual
report.
PPJJSSCC ““MMAAGGNNIITT”” MMAANNAAGGEEMMEENNTT BBOOAARRDD
The Management Board is the collective executive body of PJSC “Magnit” which
together with the Chief Executive Officer (Chairman of the Management Board) manage current
operations. The Management Board reports to the General Shareholders Meeting and the Board
of Directors.
117
The Management Board acts in compliance with the Russian legislation, the Charter and
the Regulations on the Management Board, which has been approved by the General
Shareholders Meeting.
The Board of Directors determines the personal composition of the Management Board,
elects and early terminates the powers of its members every year at the first BOD meeting held
after the annual General Shareholders Meeting.
The Chief Executive Officer forms a part of the Management Board and presides as the
Chairman of the Management Board. The powers of the Chairman of the Management Board
terminate with the powers of a Chief Executive Officer of the Company.
The Management Board is responsible for the Company’s current operations except for
the issues referred to the competence of the General Shareholders Meeting and the Board of
Directors, and implements the decisions adopted by these bodies. More detailed information on
the powers of the Management Board is provided in the Charter of the Company and in the
Regulations on the Management Board of PJSC “Magnit”.
TTHHEE CCHHIIEEFF EEXXEECCUUTTIIVVEE OOFFFFIICCEERR –– TTHHEE CCHHAAIIRRMMAANN OOFF TTHHEE
MMAANNAAGGEEMMEENNTT BBOOAARRDD OOFF PPJJSSCC ““MMAAGGNNIITT””
In accordance with the PJSC “Magnit” Charter, the Chief Executive Officer of the
Company has the full authority to manage the Company’s current operations and resolve the
relevant issues not referred to the competence of the General Shareholders Meeting, Board of
Directors and Management Board of the Company.
The Chief Executive Officer of the Company manages the Company’s operations in
accordance with the provisions of the Company’s Charter, the requirements of the legislation of
the Russian Federation and with the internal documents of the Company.
BBOODDIIEESS SSUUPPEERRVVIISSIINNGG FFIINNAANNCCIIAALL AANNDD EECCOONNOOMMIICC AACCTTIIVVIITTYY OOFF PPJJSSCC
““MMAAGGNNIITT””
Internal control and audit of the Group is an essential part of the corporate governance
and one of the most important factors of effective work of the Company. The internal control
and audit bodies ensure the sustainability of PJSC “Magnit” development and protect the
shareholders and investors’ interests, thus increasing the investment attractiveness of the
Company.
Internal control and audit comply with the best world practices and meet the
requirements of the Russian legislation.
The bodies supervising financial and economic activity of PJSC “Magnit” have the
following structure:
Revision Commission of PJSC “Magnit”;
Audit Committee of the PJSC “Magnit” Board of Directors;
External Auditor.
Internal Audit Department;
RREEVVIISSIIOONN CCOOMMMMIISSSSIIOONN OOFF PPJJSSCC ““MMAAGGNNIITT””
The Revision Commission of the Company verifies the Company’s compliance with the
applicable legislation and other statutory acts that regulate its activity and the legality of the
Company’s operations. The Revision Commission is elected at the annual General Shareholders
118
Meeting of PJSC “Magnit” and consists of 3 (Thee) members. The General Shareholders Meeting
determines its personal composition for the period until the next annual General Shareholders
Meeting.
On May 29, 2014 at the annual General Shareholders Meeting the following candidates were
elected to the Revision Commission:
1. Roman Efimenko;
2. Anzhela Udovichenko;
3. Denis Fedotov.
AAUUDDIITT CCOOMMMMIITTTTEEEE OOFF PPJJSSCC ““MMAAGGNNIITT”” BBOOAARRDD OOFF DDIIRREECCTTOORRSS
The Audit Committee was established in accordance with the Regulations on the
committees of PJSC “Magnit” Board of Directors.
The committee is established by the decision of the Board of Directors which determines
its quantitative and personal composition and elects the Chairman of the Committee.
The Committee consists of 3 (Three) members.
The Committee members are elected for the term until the termination of the BOD’s
powers.
The exclusive powers of the audit committee are as follows:
to examine the consolidated financial statements and accounting (financial) statements
of the Company, the procedure of its preparation by the Company’s executive bodies
and the conduct of the audit;
to evaluate candidates to the auditor of the Company and its subsidiaries and affiliates,
prepare recommendations to the Board of Directors regarding the choice of the
Company’s auditor and its subsidiaries and affiliates;
to elaborate the draft contracts to be concluded with the auditors of the Company, as
well as to prepare recommendations to the Board of Directors regarding the maximum
payment amount for the services of the auditor;
to discuss a plan and quantity of work on the audit of financial statements of the
Company with the external auditor;
to supervise the quantity and the results of the audit procedures (including preparation
of the audit report evaluation) and their financial effectiveness, as well as evaluation of
the auditor’s objectivity level;
to examine any material disagreements between the auditors, revision commission and
the management of the Company, concerning its financial statements;
to examine jointly with the external auditor the results of annual and interim audits of
the Company and its subsidiaries and affiliates (including management response
following the results of these audits) before submission of the specified issues for
consideration to the Board of Directors;
to examine financial statements of the Company and any other published financial
information before its submission for consideration to the Board of Directors and before
its publication;
to analyze the Company’s annual report before its submission for consideration to the
Board of Directors for preliminary approval;
to prepare recommendations on the probable preliminary approval of the annual report
by the Board of Directors;
119
to prepare the evaluation of the report of the Company’s auditor for its further
submission to the shareholders as the material for the annual General Shareholders
Meeting;
to evaluate the effectiveness of the system, the procedure of internal control over
financial and operational activity and risk management system of the Company and
prepare recommendations on their improvement;
to analyze the results of the audit of the Company, its subsidiaries and affiliates;
to analyze the essential changes in the legislation that affect the financial statements of
the Company, as well as the results of the Company’s inspection by any supervisory
authorities;
to cooperate with the Revision Commission and the auditors of the Company;
to analyze the management system of the risks arising in the process of financial and
operational activity of the Company and prepare recommendations on the system’s
improvement;
to approve the procedures of the “hot line” which can be used by the Company’s
employees to confidentially and anonymously report the information on the alleged
violations and abuses in accounting statements, audit, financial reports, as well as to
approve the procedure of processing and reaction on the specified reports;
to prepare recommendations to the major and related party transactions which the
Company plans to execute in future;
to prepare the recommendations on approval of financial and economic activity
exceeding the limits of the Company’s annual budget;
to evaluate the effectiveness of the procedures on the Company’s compliance with the
legislation of the Russian Federation.
On June 25, 2013 the meeting of the Board of Directors made the decision to elect the
following 3 (Three) candidates to the audit committee of the PJSC “Magnit” Board of Directors:
Alexander Zayonts, Alexey Makhnev and Aslan Shkhachemukov.
On June 3, 2014 the meeting of the Board of Directors made the decision to elect the
following 3 (Three) candidates to the audit committee of the PJSC “Magnit” Board of Directors:
Alexander Zayonts, Alexey Makhnev and Alexey Pshenichniy.
IINNTTEERRNNAALL AAUUDDIITT DDEEPPAARRTTMMEENNTT OOFF PPJJSSCC ““MMAAGGNNIITT””
In accordance with the Regulations on the internal audit of financial and operational
activities of PJSC “Magnit” the Internal Audit Department was established in the Company.
The department was established to perform the following functions:
evaluation and improvement of risk management, control and corporate
governance processes;
control over the key areas of the financial and operational activity of the
Company and analysis of the results;
control over observing of financial discipline in the Company and over
implementation of decisions made by the management bodies and officials of the
Company;
provision of reasonable assurance in the fair presentation of the financial
statements of the Company and in compliance with procedures of its preparation
120
as well as compliance with the requirements of accounting record-keeping in the
Company;
control over the execution of the Company’s budget and its business units;
control over the compliance of the agreements between the Company and third
parties with the financial and operational interests of the Company;
control over the compliance of the internal documents and draft decisions of the
Company’s management bodies with the financial and operational interests of
the Company;
evaluation of the reliability of information and efficiency of resources use;
evaluation of compliance with law;
control over the compliance with the procedures of internal control over the financial
and operational activity of the Company.
IINNDDEEPPEENNDDEENNTT AAUUDDIITTOORR
Ernst & Young LLC (Taxpayer Id. Number 7709383532), registered in the Russian
Federation at 77 Sadovnicheskaya embankment, building 1, Moscow, was approved as the
auditor of the consolidated financial statements of the Company prepared in accordance with
the International Financial Reporting Standards by the annual General Shareholders Meeting on
May 29, 2014. Ernst & Young LLC is a member of the self-regulated organization Non-
commercial partnership ”Audit Chamber of Russia” (Certificate № 3028 as of December 28,
2009, the Decision of the Council of self-regulated organization Non-commercial partnership
“Audit Chamber of Russia” as of December 21, 2009, Principal Number of Registration Entry
10201017420) and is one of the global leaders in the audit services.
Ernst & Young LLC is part of Ernst & Young Global Limited.
Ernst & Young Global Limited received worldwide recognition and was awarded
many times for the high quality of services and unique corporate culture.
In the reporting year the auditor conducted the audit of the consolidated financial
statements of PJSC “Magnit” and its subsidiaries in accordance with the IFRS for the year ended
December 31, 2014.
Following the results of the conducted audit, the auditor of PJSC “Magnit” expressed
an opinion on the fair presentation of the consolidated financial statements prepared in
accordance with the IFRS.
Audit Firm Faber Leks LLC, located at 144/2 Krasnykh Partisan street, Krasnodar, was
approved as the auditor of the accounting (financial) statement of the Company for 2014
prepared in accordance with the Russian Accounting Standards by the annual General
Shareholders Meetings on May 29, 2014.
Faber Leks LLC is a member of the Moscow Chamber of Audit and was included in the
register of auditors and audit organizations of the self-regulated organization of auditors on
November 26, 2009 with the main registration number (Principal Number of Registration Entry)
of 10203002910.
Following the results of the conducted audit, the auditor of PJSC “Magnit” expressed
an opinion on the fair presentation of the financial position of the Company in all respects in the
accounting (financial) statements.
121
IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOMMPPLLIIAANNCCEE WWIITTHH TTHHEE PPRRIINNCCIIPPLLEESS AANNDD
RREECCOOMMMMEENNDDAATTIIOONNSS OOFF CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE CCOODDEE
Principles of corporate governance
(criteria of evaluation of the compliance with
principles of corporate governance)
1.1. The company shall ensure equitable and
fair treatment of all its shareholders at the
exercise of their rights to participate in the
management of the company.
Complied /
not complied
Complied
its
1.1.1. It is recommended to the company to
provide
shareholders with most
favorable opportunities to participate in the
general meeting and conditions to develop
legitimate position on its agenda issues, to
coordinate their actions, as well as the
opportunity to express their opinions on
the discussed issues.
1.1.2. Procedures for notification of the
general meeting and provision of materials
for it shall enable the shareholders to
properly prepare for participation therein.
the general meeting,
1.1.3. During the preparation for and
the
holding of
shareholders shall be able
to receive
information about the meeting and its
materials without hindrance and delay, to
put questions to the company’s executive
bodies and members of the Board of
Directors, to communicate with each other.
a
i
r
e
t
i
r
C
the holding of
1.1.4. Realization of shareholders’ rights to
demand
the general
meeting, to nominate candidates to the
company’s governing bodies and to make
its agenda shall not be
proposals on
associated with unjustified complexities.
122
2
2
1
1
During the preparation for
and holding of the general
shareholdings meetings the
Company
complies
fully
with the requirements of the
legislation and acts of the
Russia.
Bank
of
on
Recommendations
provision of shareholders
with the additional materials
recommended
the
Corporate Governance Code
is partially complied with by
the Company. The issue of
other
providing
documents
being
considered.
the
Possible extension of
term of making proposals on
the agenda items of annual
General
Shareholders
Meeting is not excluded.
of
is
by
1.1.5. Every shareholder shall be able to
exercise their right to vote in a free,
simplest and most convenient way.
1.1.6. Procedure of holding a general
meeting established by the company shall
provide an equal opportunity
to all
shareholders present at the general meeting
to express their opinions and ask questions
interesting for them.
2
2
1.2. Shareholders shall have equal and fair
opportunity to participate in the profits of the
company by means of receiving dividends.
Complied
Currently
technical
voting ballots on-line.
there
ability
is
to
no
fill
is
there
Currently
no
technical ability to provide
shareholders with a remote
access
the General
to
Shareholders Meeting.
1.2.1. The Company shall develop and
clear
transparent
introduce
mechanism to determine the amount of
dividends and their payment.
and
a
a
i
r
e
t
i
r
C
It
to
formally breaking
1.2.2.
the
is not recommended
Company to make a decision on the
payment of dividends, if such decision,
without
restrictions
established by legislation, is economically
unjustified and might lead to the formation
of false assumptions about the company’s
activity.
1.2.3. The Company shall not allow
deterioration of dividend rights of its
existing shareholders.
1.2.4. The Company shall be determined to
exclude the shareholders’ use of other ways
of obtaining the profit or gain at the
company’s expense other than dividends
and liquidation value.
1.3. The system and practice of corporate
governance shall ensure equal terms and
conditions for all shareholders owning shares
of the same category (type), including minority
and foreign shareholders as well as their equal
treatment by the Company.
a
i
r
e
t
i
r
C
1.3.1. The Company shall create conditions
which would enable management bodies
and controlling bodies of the Company to
treat every shareholder fairly, in particular,
which would exclude the possibility of any
abuse of minority shareholders by major
shareholders.
123
The Company does not
establish the procedure of
determination of minimum
share of consolidated profit
allocated for dividends.
2
2
2
2
Complied
2
1.3.2. The Company shall not perform any
acts which will or might result in artificial
reallocation of corporate control therein.
2
1.4. The shareholders shall be provided with
reliable and efficient means of recording their
rights for shares as well as with the opportunity
of free and non-onerous disposal of owned
shares.
the
2.1. The Board of Directors shall be in charge of
strategic management of
company,
determine major principles of and approaches
to creation of a risk management and internal
control system within the Company, control the
activity of the Company’s executive bodies, and
perform other key functions.
Complied
Complied
a
i
r
e
t
i
r
C
that
act
2.1.1. The Board of Directors shall be
responsible for making decisions related to
appointment and removal of executive
bodies, including due to their failure to
properly perform their duties. The Board of
Directors shall also procure
the
in
executive bodies
company’s
accordance with an approved development
strategy and main business goals of the
company.
2.1.2. The Board of Directors shall establish
basic long-term targets of the Company’s
activity, evaluate and approve its key
performance
indicators and principal
business goals, as well as evaluate and
approve its strategy and business plans in
respect of its principal types of activities.
2.1.3. The Board of Directors
shall
determine principles of and approaches to
creation of the risk management and
internal control system in the Company,
shall
2.1.4. The Board of Directors
the Company’s policy on
determine
remuneration and (or) reimbursement of
expenses incurred by members of the
Company’s Board of Directors, executive
bodies and other key managers.
2.1.5. The Board of Directors shall play a
key role
in prevention, detection and
resolution of internal conflicts between the
Company’s bodies,
shareholders and
employees.
124
2
2
1
2
2
The Company is considering
the issue of approval of risk
management policy.
in due
time, and provides
2.1.6. The Board of Directors shall play a
key role in procuring that the Company is
transparent, discloses information in full
and
its
shareholders with unhindered access to its
documents.
2.1.7. The Board of Directors shall control
the Company’s
corporate governance
practices and play a key role in its material
corporate events.
2
2
2.2. The Board of Directors shall be accountable
to the Company’s shareholders.
Complied
Information on
2.2.1.
the Board of
Directors’ work shall be disclosed and
provided to the shareholders.
a
i
r
e
t
i
r
C
2.2.2. The Chairman of the Board of
Directors shall be available to communicate
with the Company’s shareholders.
2.3. The Board of Directors shall be an efficient
and professional governing body of
the
Company which is able to make objective and
independent judgments and make decisions in
the best interests of the Company and its
shareholders.
1
2
Complied
Company
The
doesn’t
disclose information on the
BOD committees’ meetings
and results of evaluation of
work of the management
bodies
a
i
r
e
t
i
r
C
experience necessary
2.3.1. It is recommended to the members of
the Board of Directors to elect a person
with impeccable business and personal
reputation, as well as knowledge, skills,
to make
and
decisions that fall within the jurisdiction of
the Board of Directors and to perform its
functions efficiently.
2.3.2. The Board of Directors members shall
be elected pursuant
transparent
procedure enabling the shareholders to
candidates
obtain
sufficient for them to get an idea of the
candidates’ personal and professional
qualities.
2.3.3. The composition of the Board of
Directors shall be balanced, in particular, in
terms of qualifications, expertise and
business skills of its members. The Board of
Directors shall have credibility of the
shareholders.
information
about
to a
125
2
2
2
in particular,
2.3.4. The membership of the Board of
Directors of the Company shall enable the
board to organize its activities in a most
efficient way,
to create
committees of the Board of Directors, as
well as
substantial minority
shareholders of the Company to elect a
candidate to the Board of Directors for
whom they would vote.
enable
2
2.4. The Board of Directors shall include a
sufficient number of independent directors.
Complied
a
i
r
e
t
i
r
C
It
is
that
objective
and make
recommended
2.4.1.
an
independent director shall be a person who
has enough competence, experience and is
sufficiently able to have his/her own
position
and
conscientious judgments, which are not
subject to the influence of the Company’s
executive bodies, individual groups of
shareholders or other interested parties. It
should be noted that normally a candidate
(an elected member of the Board of
Directors) may not be deemed to be
independent, if he/she is associated with
the Company, its substantial shareholder,
essential partner or competitor, or the
government.
2.4.2. It is recommended to evaluate the
compliance of the candidates nominated to
the Board
the
independence criteria as well as to conduct
a regular analysis of the compliance of
independent Board of Directors members
with the independence criteria. In the
process of evaluation, the substance should
prevail over the form.
2.4.3. It is recommended that independent
directors shall amount to at least one-third
of all members elected to the Board of
Directors.
2.4.4. Independent directors shall play a
key role in prevention of internal conflicts
in the Company and in performance of
essential corporate actions.
of Directors with
contribute
2.5. The chairman of the Board of Directors
shall
efficient
performance of the functions imposed on the
126
the most
to
2
2
2
2
Complied
All the directors (including
independent) have equal
free and easy access to the
Chairman of the Board of
Directors for exercise of their
and
and duties
rights
achievement of goals set
before them.
Board of Directors.
a
i
r
e
t
i
r
C
the Company’s
2.5.1. It
is recommended to elect an
independent director to the position of the
Chairman of the Board of Directors or
identify the senior independent director
among
independent
directors who coordinates work of the
independent directors and cooperates with
the Chairman of the Board of Directors.
2.5.2. The Chairman of the Board of
Directors shall provide the constructive
atmosphere of the meetings, free discussion
of the agenda items and control over
fulfillment of decisions made by the Board
of Directors.
2.5.3. The Chairman of the Board of
Directors shall use reasonable efforts for
the timely provision of information to the
Board of Directors members required to
make decisions on agenda items.
1
2
2
2.6. Board of Directors members shall act
reasonably and in good faith in the best
interests of the Company and its shareholders,
being sufficiently informed, with due care and
diligence.
Complied
a
i
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t
i
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C
treatment of
2.6.1. Acting reasonably and in good faith
means that the Board of Directors members
shall make decisions considering all
available information, in the absence of a
conflict of interest, in consideration of
the Company’s
equal
shareholders,
assuming normal
business risks.
2.6.2. Rights and duties of the Board of
Directors members shall be clearly stated
and stipulated in the Company’s internal
documents.
2.6.3. Board of Directors members shall
have sufficient time to perform their duties.
and
2
2
2
127
be
2.6.4. All Board of Directors members shall
have an equal opportunity to access the
Company’s documents and information.
Newly elected Board of Directors members
sufficient
provided with
shall
information about the Company and work
of
its Board of Directors as soon as
possible.
the Board of Directors,
2.7. Meetings of
preparation for them, and participation of the
Board of Directors members therein shall
ensure efficient work of the Board of Directors.
2.7.1. It is recommended to hold meetings
of the Board of Directors as needed, taking
into account the range of activities and its
current goals.
2.7.2. It is recommended to develop a
procedure for preparing for and holding
meetings of the Board of Directors and set
it out
internal
documents. The above procedure shall
to prepare
shareholders
enable
properly for such meetings.
2.7.3. The form of a meeting of the Board of
in
be
Directors
accordance with the importance of the
agenda items. Most important items shall
be decided at
the meetings held by
personal attendance.
2.7.4 Decisions on most important issues
relating to the Company’s business shall be
made at a meeting of the Board of Directors
by a qualified majority or by majority votes
of all elected Board of Directors members.
the Company’s
determined
a
i
r
e
t
i
r
C
shall
the
in
2
Complied
2
2
2
0
Companies
In respect of provisions of
the Charter of the Company
and the legislation on Joint
Stock
the
decisions at
the BOD’s
meetings are made by a
majority vote of the BOD
members taking part in the
meeting, except as permitted
by applicable law.
2.8. The Board of Directors shall
form
committees for preliminary consideration of
most
the Company’s
issues of
business.
important
a
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r
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t
i
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C
2.8.1. For the purpose of preliminary
examination of the issues of control over
the Company’s financial and business
activities, it is recommended to form an
128
Complied
2
Audit
Committee
independent directors.
comprised
of
of
the
succession
issues relating
2.8.2. For the purpose of preliminary
examination of the issues of development
of efficient and transparent remuneration
practices, it is recommended to form a
remuneration committee comprised of
independent directors and chaired by an
independent director who
shall not
concurrently hold the position of the Board
of Directors Chairman.
2.8.3. For the purpose of preliminary
examination of
to
human resources planning (making plans
directors),
regarding
professional composition and efficiency of
the Board of Directors, it is recommended
(a
form a nominating committee
to
committee on appointments and human
resources), which majority members shall
be independent directors.
2.8.4. Due to the scope of activities and
levels of related risks, it is recommended
that
form other
committees of its Board of Directors, (in
particular,
a
strategy
corporate governance committee, an ethics
committee, a risk management committee,
a budget committee or a committee on
health, security and environment, etc.).
2.8.5. It is recommended to determine the
composition of the committees in such a
way that it would allow a comprehensive
discussion of issues being considered on a
preliminary basis with respect to differing
opinions.
2.8.6 The chairmen of the committees shall
regularly inform the Board of Directors and
its Chairman about the work of the
committee.
the Company shall
committee,
a
2
2
0
2
2
Due to the scope of activities
and levels of related risks,
the
current number of
members of the Board of
Directors
is
sufficient for the efficient
performance of the Board of
Directors functions.
committees
2.9. The Board of Directors shall procure
evaluation of quality of its work and the work
of its committees and the Board of Directors
members.
Partially
complied
t
i
r
C
2.9.1. Evaluation of quality of the Board of
shall be aimed at
Directors work
a
i
r
e
1
The results of the Board of
Directors work evaluation
129
their work with
determining the level of efficiency of work
of the Board of Directors, its committees
and Board of Directors members and the
compliance of
the
Company’s needs, as well as at making
their work more intensive and identifying
areas of improvement.
2.9.2 Quality of work of the Board of
Directors, its committees and Board of
Directors members shall be evaluated on a
regular basis, at least once a year. To
conduct an independent evaluation of the
quality of the Board of Directors’ work, it is
recommended to retain an external entity
(consultant) on a regular basis, at least once
every three years.
3.1. The Company’s corporate secretary shall be
responsible for efficient interaction with its
shareholders, coordination of the Company’s
actions designed to protect the rights and
interests of its shareholders, and support of
efficient work of its Board of Directors.
3.1.1. The corporate secretary shall have
knowledge, experience, and qualifications
sufficient for performance of his/her duties,
as well as an impeccable reputation and
shall have shareholders’ credibility.
a
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3.1.2. The corporate secretary shall be
sufficiently independent of the Company’s
executive bodies and be vested with
powers and resources required to perform
his/her tasks.
are not considered at a
the
physical meeting of
Board
Directors.
of
Introduction of such practice
is not planned.
The Company does not
external
an
involve
consultant for the evaluation
of efficiency of the Board of
The
Directors’
Company
an
independent evaluation of
the work efficiency.
work.
conducts
0
Not complied
the
At
annual General
Shareholders Meeting held
following the 2014 results,
the Company plans
to
specify the provisions on the
the corporate
position of
(corporate
secretary
secretary body).
A possibility to create the
position is planned.
0
0
4.1. The level of remuneration paid by the
Company shall be sufficient to enable it to
attract, motivate, and retain personnel having
required
qualifications.
Remuneration
the Board of Directors
members, the executive bodies and other key
managers of the Company shall be paid in
accordance with
remuneration policy
approved by the Company.
skills
to
and
a
Complied
i
r
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t
i
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C
a
4.1.1. It is recommended that the level of
remuneration paid by the Company to its
Board of Directors members, executive
2
130
of
the
help
them
that of
to motivate
individuals and
bodies and other key managers shall be
to work
sufficient
efficiently and enable the Company to
attract and retain knowledgeable, skilled
and duly qualified personnel. The
Company shall avoid setting the level of
remuneration any higher than necessary, as
well as an excessively large gap between
the level of remuneration of any of the
above
the
Company’s employees.
4.1.2. The Company’s remuneration policy
shall be developed by its remuneration
committee and approved by the Board of
its
Directors. With
remuneration committee, the Board of
Directors shall control implementation of
and compliance with the remuneration
is
policy by the Company and
necessary, review and amend it.
4.1.3. The Company’s remuneration policy
shall provide for transparent mechanisms
of determination of
the amount of
remuneration of members of the Board of
Directors, the executive bodies and other
key managers of the Company, as well as
to regulate all types of payments, benefits
and privileges provided to any of the above
individuals.
4.1.4. It is recommended to the Company to
develop a policy of reimbursement of
expenses (compensations) which would
contain a list of reimbursable expenses and
specify service
levels provided to the
members of the Board of Directors, the
executive bodies and other key managers
of the Company. Such policy can form an
integral part of the Company’s policy of
compensations.
if
it
2
2
2
4.2. The system of remuneration of the Board of
Directors members shall ensure harmonization
of financial interests of the directors with long-
term financial interests of the shareholders.
Complied
131
its committees. It
4.2.1. A fixed annual fee shall be a
preferred form of monetary remuneration
of the Board of Directors members. It is not
advisable to pay a fee for participation in
the Board of
individual meetings of
Directors or
is not
advisable to use any form of short-term
incentives or additional financial incentives
the Board of Directors
in respect of
members.
4.2.2. Long-term ownership of shares in the
Company contributes to contingence of
financial interests of the Board of Directors
members with long-term interests of the
Company’s shareholders. However, it is
not recommended to make the right to
dispose of shares dependent on
the
achievement by the Company of certain
performance results; nor shall the Board of
Directors members
the
Company’s option plans.
4.2.3. It is not recommended to provide for
any additional payments or compensation
in case of early dismissal of the Board of
Directors members in connection with a
change of control over the Company or
other circumstances.
take part
in
2
0
2
A number of the Board of
Directors members are the
Company’s shareholders,
however, the Company does
not practice the
remuneration of the BOD’s
members with the
Company’s shares.
4.3. The system of remuneration of
the
executive bodies and other key managers of the
Company shall provide that their remuneration
is dependent on the Company’s performance
results and their personal contributions to the
achievement thereof.
Complied
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that
is dependent on
results
4.3.1. Remuneration of the executive bodies
and other key managers of the Company
shall be determined in such a way as to
procure a reasonable and justified ratio
between its fixed portion and its variable
the
portion
Company’s performance
and
employees’
(individual)
personal
contributions to the achievement thereof.
4.3.2. Companies whose
shares are
admitted to trading at organized markets
are recommended to put in place a long-
term incentive program for the Company’s
executive bodies and other key managers
involving the Company's shares (or options
132
2
0
and
some
Members of the executive
bodies
key
managers of the Company
are
Company’s
shareholders, however, the
Company does not practice
the
or other derivative financial instruments
the underlying assets for which are the
Company’s shares).
4.3.3. The amount of compensation (so-
called "golden parachute") paid by the
Company in the case of early dismissal of
an executive body or other key manager at
the initiative of the Company, provided
that there have been no bad faith actions on
the part of such person, shall not exceed
two times the fixed portion of his/her
annual remuneration.
2
5.1. The company shall have an efficient risk
management and
internal control system
designed to provide reasonable confidence in
the achievement of the Company’s goals.
Complied
5.1.1. The board of directors should
determine the principles of and approaches
to creation of the risk management and
internal control system in the Company.
1
2
2
0
a
i
r
e
t
i
r
C
in
the
ensure
system
establishment
internal control
5.1.2. The Company’s executive bodies
shall
and
operation of the efficient risk management
the
and
Company.
5.1.3. The Company’s risk management
and internal control system shall provide
an objective, fair and clear view of the
current condition and prospects of the
Company, integrity and transparency of its
accounts and reports, rationality and
acceptability of the Company’s risks
board
5.1.4. The
is
required and
to
recommended
sufficient measures to ensure that the
existing risk management and internal
control system of the Company complies
with the principles of and approaches to its
creation determined by
the board of
directors and operates efficiently.
of directors
take
133
the remuneration of these
the
individuals
Company’s shares.
with
of
It is planned to formalize
in the Company’s internal
documents the roles and
priorities
the
Company’s management
the
bodies as well as
their
procedure
to
collaboration
organize the system of the
risk management and the
internal control
and
of
In the Company’s internal
frequency of
documents
consideration of the issues
related to the establishment,
operation and efficiency of
the risk management and
system
internal
control
the
recommended
by
5.2 To independently evaluate, on a regular
basis, reliability and efficiency of the risk
management and internal control system and
corporate governance practices, the Company
shall conduct the internal audits.
Complied
Corporate Governance Code
is not specified
a
i
r
e
t
i
r
C
division
(internal
To
the
ensure
internal
functional
5.2.1. It is recommended that internal
audits shall be conducted by a separate
structural
audit
department) or involving an independent
the
entity.
external
audit
independence of
its
department,
and
shall be
subordination
administrative
separated. Functionally, the internal audit
department shall report to the board of
directors, while from the administrative
standpoint it shall report directly to the
Company’s chief executive office.
5.2.2. Conducting the internal audit, it is
recommended to evaluate the efficiency of
the
risk
management system, as well as to evaluate
corporate governance and apply generally
accepted standards of internal audit.
6.1. The Company and its activity shall be
transparent to its shareholders, investors and
other interested parties.
internal
control
and
the
a
i
r
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t
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C
its
6.1.1. The Company shall develop and
implement the information policy enabling
to efficiently exchange
the company
information with
shareholders,
investors and other interested parties.
shall disclose
6.1.2. The Company
information on its corporate governance
system and practices, including detailed
information on compliance with
the
principles and recommendations of this
Code.
6.2. The Company shall timely disclose full,
updated and reliable information to provide its
shareholders
the
investors with
opportunity to make justified decisions.
and
a
i
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C
6.2.1. The Company
in accordance with
shall disclose
information
the
principles of regularity, consistency and
accessibility,
timeliness,
134
as well
as
2
1
Complied
2
1
Complied
2
The Company has no
information
on
availability of the bodies
controlling the Company.
the
reliability, completeness and comparability
of the disclosed data.
6.2.2. The Company is recommended to
approach
avoid
in
formalized
and disclose
information disclosure
material information on its operations,
even if disclosure of such information is
not required by law.
6.2.3 The Company’s annual report, as one
of
its
important
information exchange with its shareholders
and other interested parties, shall contain
the information allowing to evaluate the
Company’s results for the year.
the most
tools of
2
2
6.3. The Company shall provide information
and documents requested by its shareholders in
accordance with the principle of equal and
unhindered accessibility.
Complied
6.3.1. Shareholders’ exercise of their right to
access
the company’s documents and
information shall not be unreasonably
burdensome.
6.3.2. Providing the information to the
shareholders, the Company shall maintain
the
reasonable balance between
the
interests of the specific shareholders and its
own
in keeping confidential
sensitive business information that might
its
a
have
competitiveness.
significant
interests
impact
on
a
i
r
e
t
i
r
C
2
0
to establish
The Company fully meets
the legislative and Bank of
Russia requirements on
the
information
disclosure. The Company
the
plans
procedure of delivery of
considered
information
official
or
commercial
(including
secret
notification
the
of
information
confidentiality and non-
disclosure behavior) to the
to
shareholders
specify in the Company’s
internal documents
the
the executive
right of
bodies and the Board of
Directors of the Company
to object to fulfillment of
the
shareholder’s
requirements.
and
7.1. Any actions which will or may materially Complied
135
of
its
affect the company’s share capital structure and
its financial position and, consequently, the
position
(“material
corporate actions”) shall be taken on fair terms
and conditions which guarantee the observance
of the rights and interests of the shareholders
and other interested parties.
shareholders
In compliance with the
internal documents
the
Board of Directors shall
not consider the issues of
delisting of
shares or
acquisition of 30 or more
percent of the Company’s
voting shares (takeover).
Introduction of these issues
to the Board of Directors’
under
competence
consideration.
is
1
2
2
a
i
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t
i
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C
increasing
transactions,
7.1.1. Material corporate actions are the
following: reorganization of the company,
acquisition of 30 or more percent of its
voting shares (takeover), execution of the
or
material
decreasing of the charter capital, listing and
delisting of its shares, as well as other
actions which might result in significant
changes in rights of its shareholders or
violation of their interests. The Company’s
Charter recommends to create a list of
(criteria) transactions or other actions,
which are the material corporate actions,
and provide therein that the Board of
Directors shall be responsible for their
consideration.
7.1.2. The Board of Directors shall play a
key role in passing resolutions or making
recommendations
to material
corporate actions; for that purpose, it shall
rely on opinions of
the Company’s
independent directors.
7.1.3. When taking any material corporate
actions which would affect rights or
the Company’s
legitimate
shareholders, it is recommended to ensure
equal
for all
shareholders of the Company; if statutory
mechanisms designed
the
shareholders rights prove to be insufficient
for that purpose, additional measures shall
be taken with a view to protecting the
rights and
the
Company’s shareholders. In such instances,
the Company shall not only seek to comply
with
the
legislation but shall also be guided by the
principles of corporate governance set out
in the Corporate Governance Code.
formal requirements of
interests of
interests of
terms and
to protect
conditions
legitimate
relating
the
7.2. The company should have in place such a
procedure for taking any material corporate
Complied
136
actions that would enable its shareholders to
receive full information about such actions in
due time and influence them, and that would
also guarantee that the shareholder rights are
observed and duly protected in the course of
taking such actions.
a
i
r
e
t
i
r
C
to
give
actions,
corporate
7.2.1. When disclosing information about
material
is
it
explanations
recommended
concerning reasons for, conditions and
consequences of such actions.
7.2.2. It is recommended to specify rules
and procedures
to material
corporate actions taken by the Company in
its internal documents.
related
The Company does not
disclose consequences of
material corporate actions.
1
2
* - in order to evaluate the compliance with principles and recommendations of the Corporate
Governance Code the following system was used:
I. Evaluation method of criteria of compliance with the principles of the Corporate Governance Code:
1. Each criterion corresponds to points from 0-2 depending on the level of compliance of the model and
practice of the corporate governance of PJSC “Magnit” with the recommendations of the Corporate
Governance Code:
Criterion Evaluation
0
1
2
Evaluation Definition
Recommendations of the Corporate Governance Code on the corresponding
criterion are not applied by the Company in its corporate governance practice.
Recommendations of the Corporate Governance Code on the corresponding
criterion are partially applied by the Company.
Corporate governance practice of the Company for the most part complies
with the recommendations of the Corporate Governance Code on the
corresponding criterion.
2. It is determined that for the evaluation purposes all criteria have equal weight.
3. The maximum allowable number of points is 2.
II. Evaluation method of compliance with the principles of the Corporate Governance Code:
1. The conclusion on compliance/partial compliance/non-compliance with each principle of the Corporate
Governance Code is based on the number of points for all criteria of the corresponding principle.
2. For the evaluation purposes of principle compliance the following correlation of points with the
maximum allowable number of points for these criteria has been determined:
Percentage orrelation of pointes
assigned to all criteria of each
principle and the maximum
allowable number of points for
these criteria, %
Evaluation Definition
50-100
0-50
The corporate governance practice of the Company complies with the
principle of the Corporate Governance Code. The principle is
complied with.
The corporate governance practice of the Company partially complies
with the principle of the Corporate Governance Code. The principle is
137
0
partially complied with.
The corporate governance practice of the Company does not comply
with the principle of the Corporate Governance Code. The principle is
not complied with.
IIMMPPRROOVVEEMMEENNTT OOFF MMOODDEELL AANNDD PPRRAACCTTIICCEE OOFF CCOORRPPOORRAATTEE
GGOOVVEERRNNAANNCCEE
The governance of PJSC “Magnit” is performed in accordance with the current
legislation of the Russian Federation and the Charter of the Company in compliance with the
rules and traditions of the corporate governance, which correspond to the best Russian and
international standards and contribute to the creation of a positive image of the Company in the
eyes of investors, clients and employees. PJSC “Magnit” constantly masters new methods and
approaches and rejects from the practice, which doesn’t meet current requirements.
Among the measures, which are planned to be taken in order to improve the quality of
corporate governance, the following can be emphasized as the most important and essential:
-
-
introduction of the position of the Corporate Secretary (a separate structural division
headed by the Corporate Secretary), which is recommended by the Corporate
Governance Code, to effectively collaborate with the shareholders, coordinate the
Company’s operations to protect the shareholders’ rights and interests and to ensure the
efficient work of the Board of Directors;
formalization of the evaluation system of effectiveness of corporate governance, internal
control, risk management, etc. in the Company’s internal documents to maintain the
efficiently functioning system of risk management and internal control aimed at
provision of reasonable confidence in achievement of the goals established before the
Company.
138
1177.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY
Under the resolution of the annual General Shareholders Meeting of May 29, 2014
(minutes of 30.05.2014) the auditing firm LLC AF “Faber Lex” was appointed as the Company’s
auditor in accordance with RAS for the year 2014.
Among the factors which were taken into account to choose the auditing firm are:
duration of auditing company, 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 2014 in accordance with the Russian Accounting
Standards:
The auditor of the Company in 2014 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 a member of the Moscow Chamber of Auditors and was
included in the register of auditors and audit firms of self-regulatory organization of auditors
on November 26, 2009 under the Principle Number of Registration Entry 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 2014 in accordance with the International Financial
Reporting Standards:
2014 year statements in accordance with the International Financial Reporting Standards
were audited by Limited Liability Company ”Ernst&Young” , address: 77 Sadovnicheskaya
naberezhnaya, bldg. 1, Moscow, 115035, Russian Federation.
LLC “Ernst&Young” is the member of Noncommercial Partnership “Russian Chamber
of Auditors” in accordance with the Decision of the Board of NP RCA of December 21, 2009,
certificate №3028 of December 28, 2009, Principle Number of Registration Entry 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
Address
Phone number (including city code)
Open Joint-Stock Company «Federal Fund
Corporation»
OJSC «FFC»
25 Ostozhenka Str., Moscow, Russian
Federation
+7 (495) 737-86-30
Fax number (including city code)
+7 (495) 737-86-32
139
Website of the financial consultant to disclose
the information about the Issuer according to
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
www.fscorp.ru
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 Commission for Securities Market
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.
140
1188.. IINNFFOORRMMAATTIIOONN OONN TTHHEE VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY
RREESSOOUURRCCEESS WWIITTHHIINN 22001144
Type of energy resources
Utilization
volume terms
capacity
in
Utilization capacity in money
terms, thousand rubles
Electrical energy
Thermal energy
Gas
1,387,564 kWh
The quantitative accounting is
not kept
The quantitative accounting is
not kept
5,686.33
863.79
168.66
141
1199.. MMAANNAAGGEEMMEENNTT RREESSPPOONNSSIIBBIILLIITTYY SSTTAATTEEMMEENNTT
I confirm that:
-
-
the financial statements prepared in accordance with International Financial
Reporting Standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and its consolidated subsidiaries
taken as a whole; and
the management report includes a fair review of the development and
performance of the business and the position of the Company and its
consolidated subsidiaries taken as a whole, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Management Board,
Sergey Galitskiy
CEO, Chairman of the Management Board
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ANNEX № 1: Consolidated financial statements of PJSC “Magnit” for
the year ended on December 31, 2014.
ANNEX № 2: Consolidated financial statements of PJSC "Magnit" for the
year 2014 prepared in accordance with the Federal law N 208-FZ "On
consolidated financial statements".
ANNEX № 3: Accounting report of JSC “Tander” for the year 2014
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 2014
Accounting reports of JSC “Tander” for the year 2014
Explanations to the accounting reports of JSC "Tander" for the year 2014
ANNEX № 4: Accounting report of PJSC “Magnit” for the year 2014
prepared in accordance with RAS:
Auditor’s report of “Faber Leks” Audit Limited Liability Company of the annual
accounting report of PJSC “Magnit” for the financial year 2014
Accounting reports of PJSC “Magnit” for the year 2014
Explanations to the balance sheet and income statement of PJSC "Magnit" for the
year 2014
143