RRaattiiffiieedd bbyy tthhee rreessoolluuttiioonn
ooff tthhee BBooaarrdd ooff DDiirreeccttoorrss
ooff PPJJSSCC ““MMaaggnniitt”” ooff AApprriill 77,, 22001166,,
mmiinnuutteess ww//oo NNoo.. ooff AApprriill 77,, 22001166
RRaattiiffiieedd bbyy tthhee rreessoolluuttiioonn
ooff tthhee aannnnuuaall sshhaarreehhoollddeerrss mmeeeettiinngg
ooff PPJJSSCC ““MMaaggnniitt”” ooff JJuunnee 22,, 22001166,,
mmiinnuutteess ww//oo №№ ooff JJuunnee 33,, 22001166
22001155 AANNNNUUAALL RREEPPOORRTT
PPUUBBLLIICC JJOOIINNTT--SSTTOOCCKK CCOOMMPPAANNYY
““MMAAGGNNIITT””
1155//55 SSoollnneecchhnnaayyaa ssttrreeeett,, KKrraassnnooddaarr,, RRuussssiiaann FFeeddeerraattiioonn
CChhiieeff EExxeeccuuttiivvee OOffffiicceerr
__________________________________________ SS.. GGaalliittsskkiiyy
sseeaall
KKRRAASSNNOODDAARR 22001166
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)) ...................................................................................................... 9
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS MMEEMMBBEERRSS ............................. 16
66.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001155 OOPPEERRAATTIIOONNSS ..................... 25
77.. MMAAIINN 22001155 CCOORRPPOORRAATTEE EEVVEENNTTSS .................................................................................. 32
88.. PPOOSSIITTIIOONN OOFF TTHHEE CCOOMMPPAANNYY IINN IINNDDUUSSTTRRYY ........................................................... 34
99.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS OOPPEERRAATTIIOONNSS ..................................................... 49
1100.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS DDEEVVEELLOOPPMMEENNTT .............................................. 52
1111.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS ............................................................ 55
1122.. SSEECCUURRIITTIIEESS ......................................................................................................................... 57
1133.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001155 CCOONNSSIIDDEERREEDD MMAAJJOORR
TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW ““OONN JJOOIINNTT SSTTOOCCKK
CCOOMMPPAANNIIEESS”” ............................................................................................................................ 80
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001155 CCOONNSSIIDDEERREEDD
RREELLAATTEEDD PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW OONN
““JJOOIINNTT SSTTOOCCKK CCOOMMPPAANNIIEESS”” ............................................................................................. 81
1155.. MMAAIINN RRIISSKK FFAACCTTOORRSS IINNHHEERREENNTT IINN TTHHEE ССOOMMPPAANNYY OOPPEERRAATTIIOONN ............... 82
1166.. KKEEYY AASSPPEECCTTSS OOFF TTHHEE SSOOCCIIAALL AANNDD EENNVVIIRROONNMMEENNTTAALL PPOOLLIICCYY OOFF TTHHEE
CCOOMMPPAANNYY ............................................................................................................................... 111
1177.. CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE ...................................................................................... 116
1188.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY ............................................................................................................................... 126
1199..
IINNFFOORRMMAATTIIOONN OONN TTHHEE VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY
RREESSOOUURRCCEESS WWIITTHHIINN 22001155 .................................................................................................. 128
2200.. MMAANNAAGGEEMMEENNTT RREESSPPOONNSSIIBBIILLIITTYY SSTTAATTEEMMEENNTT ................................................. 129
AANNNNEEXXEESS TTOO FFYY 22001155 AANNNNUUAALL RREEPPOORRTT OOFF PPJJSSCC ““MMAAGGNNIITT””
ANNEX No. 1: Consolidated financial statements of PJSC “Magnit” for the year ended on
December 31, 2015.
ANNEX No. 2: Consolidated financial statements of PJSC "Magnit" for the year 2015
prepared in accordance with the Federal law N 208-FZ "On consolidated financial
statements".
ANNEX No. 3: Accounting report of JSC “Tander” for the year 2015 prepared in accordance
with RAS.
ANNEX No. 4: Accounting report of PJSC “Magnit” for the year 2015 prepared in accordance
with RAS.
ANNEX No. 5: Transactions executed within the year 2015 considered related party
transactions according to the Federal law on “Joint Stock Companies”.
ANNEX No. 6: Report on the compliance with the principles and recommendations of the
corporate governance code for the year 2015.
2
11.. PPEERRFFOORRMMAANNCCEE HHIIGGHHLLIIGGHHTTSS
2015 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
2,378
1,250
29
58
1,041
12,089
9,594
219
155
2,121
4,413.72
3,119.56
639.14
170.18
484.84
3,376.86
2,874.00
263.05
100.30
139.51
LFL Results:
Formats
FY 2015 - FY 20142
# of Stores
Average ticket
Traffic
Convenience Stores
7,287
Hypermarkets
Magnit Family
Cosmetics Stores
Total
179
76
910
8,452
8.14%
5.53%
4.33%
13.24%
7.23%
(0.79)%
(3.80)%
(3.55)%
5.62%
(0.96)%
Sales
7.29%
1.51%
0.62%
19.61%
6.21%
2 LFL calculation base includes stores (all formats), which have been opened 12 months prior to the last
month of the reporting period. i.e. by December 1, 2014
4
Convenience stores4
Hypermarkets4
Magnit Family4
Drogerie stores4
Wholesale4
Convenience stores4
Hypermarkets4
Magnit Family4
Drogerie stores4
Wholesale4
2015 Key Financial Results3:
Net sales, mn RUR
Net sales, mn US$5
Gross profit, mn RUR
Gross profit, mn US$
Gross margin, %
EBITDAR4, mn RUR
EBITDAR4, mn US$
EBITDAR4 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$
Net profit margin, %
Market capitalization, mn RUR6
Market capitalization, mn USD7
3 Audited financial statements prepared in accordance with IFRS
4 Management accounts
5 Based on the average exchange rate for 2015 of 60.9579 RUR per USD 1
6 CJSC «MICEX Stock Exchange» as of December 30, 2015
7 Based on the exchange rate for December 30, 2015 of 72,5066 RUR per USD
5
950,613.34
701,274.95
161,578.67
44,825.31
40,122.06
2,812.35
15,594.59
11,504.25
2,650.66
735.35
658.19
46.14
270,820.81
4,442.75
28.49%
134,149.92
2,200.70
14.11%
103,972.93
1,705.65
10.94%
82,856.21
1,359.24
8.72%
59,061.20
968.89
6.21%
1,052,089.64
14,510.26
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 6, 2015 the Board of Directors (Minutes w/o № of
06.04.2015) decided to reappoint the Chief Executive Officer.
Biographical information on the person in the position of a sole executive body:
Surname and first 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 over the last five years, including
secondary employment:
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 employment);
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 “Futball Club “Krasnodar”
Position: President (secondary employment);
6) Period: 25.06.2015 – present day
Organization: PJSC Bank VTB
Position: member of the Supervisory Board.
Stockholding of CEO in the Company’s share capital: 38.6659% (as of 31.12.2015).
Ordinary shares, owned by CEO: 38.6659% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made by
the person in the position of the sole executive body within the reporting period:
№№
DDaattee ooff
ttrraannssaaccttiioonn
11
2222..0011..22001155
22
0033..0022..22001155
33
1144..1122..22001155
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
AAccqquuiissiittiioonn
ooff sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
DDeessccrriippttiioonn ooff sseeccuurriittiieess
550000,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
553300,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
22,,005544,,997799
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
7
PPRRIINNCCIIPPAALL PPRROOVVIISSIIOONNSS OOFF CCOOMMPPEENNSSAATTIIOONN PPOOLLIICCYY OOFF TTHHEE CCOOMMPPAANNYY
AANNDD ((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF AA PPEERRSSOONN IINN TTHHEE PPOOSSIITTIIOONN OOFF TTHHEE
SSOOLLEE EEXXEECCUUTTIIVVEE BBOODDYY OOFF TTHHEE CCOOMMPPAANNYY
Under the Clause 6 of the Regulations “On the Sole Executive Body of PJSC “Magnit”,
ratified by the resolution of the annual General Shareholders Meeting of 24.06.2010 (minutes of
28.06.2010 and in previous editions), the wage rate and other payments charged to the CEO
shall be determined by the labor contract executed with the CEO.
8
44..
IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOLLLLEEGGIIAALL EEXXEECCUUTTIIVVEE BBOODDYY MMEEMMBBEERRSS
((MMAANNAAGGEEMMEENNTT BBOOAARRDD))
as of December 31, 2015
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 over the last five years, including
secondary employment:
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 employment);
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 “Futball Club “Krasnodar”
Position: President (secondary employment);
6) Period: 25.06.2015 – present day
Organization: PJSC Bank VTB
Position: member of the Supervisory Board.
Stockholding of CEO in the Company’s share capital: 38.6659% (as of 31.12.2015).
Ordinary shares, owned by CEO: 38.6659% (as of 31.12.2015).
Information on the 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
2222..0011..22001155
22
0033..0022..22001155
33
1144..1122..22001155
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
AAccqquuiissiittiioonn
ooff sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
DDeessccrriippttiioonn ooff sseeccuurriittiieess
550000,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
553300,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
22,,005544,,997799
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd 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.
9
Positions held in the Company and other companies over the last five years, including
secondary employment:
1) Period: 16.07.2008 – 19.12.2012
Organization: JSC “Tander”
Position: Hypermarkets Sales Director;
2) Period: 15.07.2010 – present day
Organization: PJSC “Magnit”
Position: Member of the Management Board;
3) Period: 20.12.2012 – 31.08.2015
Organization: JSC “Tander”
Position: Director of Hypermarkets Sales Department;
4) Period: 01.09.2015 – 30.11.2015
Organization: JSC “Tander”
Position: Deputy General Director of Sales and Marketing;
5) Period: 01.12.2015 – 11.01.2016
Organization: JSC “Tander”
Position: Deputy General Director of Sales;
5) Period: 12.01.2016 – present day
Organization: JSC “Tander”
Position: General Director.
Stockholding of the person in the Company’s share capital: 0.000888% (as of 31.12.2015).
Ordinary shares owned by the person: 0.000888% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made
by the person in the position of the member of the Management Board within the reporting
period:
№
Date of
transaction
1
2
3
4
5
6
7
8
9
16.01.2015
23.01.2015
01.04.2015
06.04.2015
01.07.2015
07.07.2015
08.07.2015
01.10.2015
06.10.2015
Type of
transaction
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Quantity of
securities
45
400
840
840
840
640
200
840
440
10
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
10
20.10.2015
11
21.10.2015
12
14.12.2015
13
21.12.2015
14
22.12.2015
15
24.12.2015
16
25.12.2015
17
28.12.2015
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Disposal of
securities
Disposal of
securities
200
200
840
1,000
200
300
300
200
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
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 over the last five years, including
secondary employment:
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: 0.001058% (as of 31.12.2015).
Ordinary shares, owned by the person: 0.001058% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made
by the person in the position of the member of the Management Board within the reporting
period:
№
Date of
transaction
1
2
3
4
16.01.2015
20.01.2015
26.03.2015
01.04.2015
Type of
transaction
Disposal of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
Quantity of
securities
1,000
236
1,250
840
11
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
5
6
7
8
9
28.05.2015
01.07.2015
22.07.2015
07.08.2015
02.09.2015
10
01.10.2015
11
09.10.2015
12
11.12.2015
13
14.12.2015
14
15.12.2015
15
21.12.2015
16
28.12.2015
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
110
840
1,000
794
18
840
854
880
840
900
1,300
1,364
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 over the last five years, including
secondary employment:
1) Period: 02.07.2007 – 07.12.2010
Organization: Commercial Joint-Stock Bank “Societe Generale Vostok Bank”, Closed Joint-
Stock Company
Position: CEO (JSC “SGVB” Krasnodar Branch);
2) Period: 08.12.2010 – 31.01.2011
Organization: JSC “Tander”
Position: Director of Assets Acquisition and Management (Head Office);
3) Period: 01.02.2011 – 31.07.2011
Organization: JSC “Tander”
Position: Director of Transport (Transport Department);
4) Period: 01.08.2011 – 14.06.2015
Organization: JSC “Tander”
Position: Deputy General Director of Logistics (Head Office);
5) Period: 12.10.2012 – present day
Organization: PJSC “Magnit"
12
Position: Member of the Management Board;
6) Period: 15.06.2015 – present day
Organization: JSC “Tander”
Position: Deputy General Director of Logistics and HR (Head Office).
Stockholding of the person in the Company’s share capital: 0.002957% (as of 31.12.2015).
Ordinary shares, owned by the person: 0.002957% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made
by the person in the position of the member of the Management Board within the reporting
period:
№
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Date of
transaction
01.04.2015
01.07.2015
30.07.2015
31.07.2015
31.07.2015
03.08.2015
03.08.2015
01.09.2015
02.09.2015
02.09.2015
03.09.2015
03.09.2015
08.09.2015
09.09.2015
09.09.2015
10.09.2015
10.09.2015
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
Quantity of
securities
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
840
840
1
1
1
1
1,681
1
1
1
1
500
1
1
1
1
250
13
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
23.09.2015
24.09.2015
24.09.2015
25.09.2015
25.09.2015
01.10.2015
12.10.2015
13.10.2015
13.10.2015
14.10.2015
14.10.2015
15.10.2015
15.10.2015
16.10.2015
16.10.2015
23.11.2015
24.11.2015
24.11.2015
25.11.2015
25.11.2015
09.12.2015
10.12.2015
10.12.2015
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
1
1
1
1
630
840
1
1
1
1
301
1
1
1
340
1
1
1
1
578
1
1
1
14
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
41
42
43
44
45
46
47
48
49
11.12.2015
11.12.2015
14.12.2015
15.12.2015
16.12.2015
16.12.2015
17.12.2015
17.12.2015
21.12.2015
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
1
200
840
1
1
1
1
600
1,300
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd
uunncceerrttiiffiieedd sshhaarreess
PPRRIINNCCIIPPAALL PPRROOVVIISSIIOONNSS OOFF CCOOMMPPEENNSSAATTIIOONN PPOOLLIICCYY OOFF TTHHEE CCOOMMPPAANNYY
((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF TTHHEE MMEEMMBBEERRSS OOFF TTHHEE
AANNDD
MMAANNAAGGEEMMEENNTT BBOOAARRDD OOFF TTHHEE CCOOMMPPAANNYY AANNDD TTHHEE AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN
((RREEIINNBBEERRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS)) PPAAIIDD DDUURRIINNGG TTHHEE RREEPPOORRTTIINNGG YYEEAARR
According to the Regulations “On the Collegial Executive Body (the Management
Board) of PJSC “Magnit” the remuneration of the Management Board’s member consists of the
remuneration under a labor contract or an additional agreement to it. The remuneration from
the net profit of the Company according to the data of the annual accounting report can be
annually paid to the members of the Management Board. The terms and procedure of payment
of remuneration to the Management Board’s members shall be determined by the Board of
Directors. According to a labor contract the wage rate for the participation in the operation of
the Management Board constitutes 50,000 rubles per month.
On June 4, 2015 the General Shareholders Meeting adopted a decision not to pay the
remuneration following the results of the year (Minutes w/o № of 05.06.2015).
The amount of the remuneration for the participation in the operation of the
Management Board paid in 2015 constitutes 156,220,267.86 rubles.
The compensation policy of the Company shall not provide the reimbursement of the
expenses of the Management Board’s members related to the exercise of their functions.
Within the 2015 year the expenses to the Management Board’s members related to the
participation in the operation of the Management Board have not been reimbursed.
15
55.. IINNFFOORRMMAATTIIOONN OONN TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS MMEEMMBBEERRSS
as of December 31, 2015
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 Company and other companies over the last five years, including
secondary employment:
1) Period: 19.06.2008 – 17.05.2012
Organization: LLC “Magnit Finance”
Position: General Director;
2) Period: 25.06.2008 – 23.06.2010
Organization: PJSC “Magnit”
Position: Member of the Board of Directors;
3) Period: 01.07.2008 – present day
Organization: JSC “Tander”
Position: Financial Director;
4) Period: 01.07.2008 – present day
Organization: PJSC “Magnit”
Position: Financial Executive Officer;
5) Period: 24.06.2010 – present day
Organization: PJSC “Magnit”
Position: Chairman of the Board of Directors.
Stockholding of the person in the Company’s share capital: no share (as of 31.12.2015).
Ordinary shares, owned by the person: no share (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made
by the Chairman of the Board of Directors within the reporting period:
№
Date of
transaction
1
2
3
4
5
6
22.01.2015
16.02.2015
20.03.2015
23.03.2015
01.04.2015
22.04.2015
Type of
transaction
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
35
2,545
55
1
840
25
16
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
7
8
9
21.05.2015
22.06.2015
01.07.2015
10
22.07.2015
11
20.08.2015
12
09.09.2015
13
23.09.2015
14
01.10.2015
15
06.10.2015
16
23.10.2015
17
14.12.2015
18
17.12.2015
19
21.12.2015
20
28.12.2015
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
29
25
840
25
25
1,800
25
840
2,430
50
840
890
1,850
1,850
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
Andrey Arutyunyan
Date of birth: 12.01.1969.
Education: higher – in 1993 graduated from Kuban State University with a degree in Economics.
Positions held in the Company and other companies over the last five years, including
secondary employment:
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 of Directors;
3) Period: 01.07.2009 – present day
Organization: JSC “Tander”.
Position: Deputy General Director in Charge of Development.
Shareholding of the person in the issuer’s charter capital: 0.215686% (as of 31.12.2015).
Ordinary shares owned by the person: 0.215686% (as of 31.12.2015).
17
Information on the transactions of acquisition/disposal of the Company’s shares, made
by the Board of Directors’ member during the reporting period:
№
1
2
3
4
5
Date of
transaction
01.04.2015
01.07.2015
01.10.2015
14.12.2015
21.12.2015
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
840
840
840
840
1,300
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
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 health and fitness activities 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 Company and other companies over the last five years, including
secondary employment:
1)Period: 01.02.2010 - present day
Organization: Limited Liability Company “Bazis”
Position: Director (secondary employment);
2) Period: 01.02.2010 – present day
Organization: Limited Liability Company “Yunior”
Position: Director (secondary employment);
3) Period: 01.01.2004 - present day
Organization: Limited Liability Company “Sports goods retail chain “Visshaya LIGA””
Position: Director (secondary employment);
4) Period: 13.12.2012 – present day
Organization: Limited Liability Company “Sport Plyus”
Position: Director (secondary employment);
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 the transactions of acquisition/disposal of the Company’s shares made
by the Board of Directors’ member within the reporting period: within the reporting period no
transactions on acquisition/disposal of the Company’s shares were made.
18
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 over the last five years, including
secondary employment:
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 employment);
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 “Futball Club “Krasnodar”
Position: President (secondary employment);
6) Period: 25.06.2015 – present day
Organization: PJSC Bank VTB
Position: member of the Supervisory Board.
Stockholding of CEO in the Company’s share capital: 38.6659% (as of 31.12.2015).
Ordinary shares, owned by CEO: 38.6659% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares, made by
the person in the position of the sole executive body within the reporting period:
№№
DDaattee ooff
ttrraannssaaccttiioonn
11
2222..0011..22001155
22
0033..0022..22001155
33
1144..1122..22001155
TTyyppee ooff
ttrraannssaaccttiioonn
DDiissppoossaall ooff
sseeccuurriittiieess
DDiissppoossaall ooff
sseeccuurriittiieess
AAccqquuiissiittiioonn
ooff sseeccuurriittiieess
QQuuaannttiittyy ooff
sseeccuurriittiieess
DDeessccrriippttiioonn ooff sseeccuurriittiieess
550000,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
553300,,000000
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd sshhaarreess
22,,005544,,997799
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd 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 over the last five years, including
secondary employment:
1) Period: 09.01.2008 – present day
Organization: LLC "Domashniy Interier"
Position: General Director;
19
2) Period: 01.12.2009 – September 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 “EDELVEIS” (secondary employment)
Position: General Director.
Shareholding of the person in the Company’s charter capital: no share.
Ordinary shares owned by the person: no share.
Information on the transactions of acquisition/disposal of the Company’s shares made
by the Board of Directors’ member within the reporting period: within the reporting period no
transactions of acquisition/disposal of the Company’s shares were made.
Aleksandr Aleksandrov
Date of birth: 22.11.1975
Education: higher - graduated from Institute of International Law, Economics, Liberal Arts and
Management n.a. K.V.Rossinskigo with a degree in Law.
Positions held in the Company and other companies over the last five years, including
secondary employment:
1) Period: 09.04.2004– present day
Organization: Limited Liability Company “Yuzhnaya Torgovaya Companiya”
Position: General Director (secondary employment);
2) Period: 05.01.2005 – present day
Organization: Limited Liability Company “YUTKO-REGION”
Position: Director (secondary employment);
3) Period: 04.06.2015 – present day
Organization: PJSC "Magnit"
Position: Member of the Board of Directors.
Shareholding of the person in the issuer’s charter capital: no share.
Ordinary shares owned by the person: no share.
Information on transactions of acquisition/disposal of the Company’s shares made by
the Board of Directors’ member within the reporting period: within the reporting period no
transactions of acquisition/disposal of the Company’s shares were made.
Aslan Shkhachemukov
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 held in the Company and other companies over the last five years, including
secondary employment:
1) Period: 01.10.2007 – 10.03.2012
Organization: JSC “Tander”
20
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 – 31.05.2015
Organization: JSC “Tander”
Position: Deputy General Director of Economic Security and Organizational Issues.
4) Period: 01.06.2015– 10.01.2016
Organization: JSC “Tander”
Position: Deputy General Director of Economic Security and Organizational Issues, GR and
PR.
5) Period: 11.01.2016– present day
Organization: JSC “Tander”
Position: Deputy General Director of Security, Legal Assistance, GR and PR.
Shareholding of the person in the issuer’s charter capital: 0.009165% (as of 31.12.2015).
Ordinary shares owned by the person: 0.009165% (as of 31.12.2015).
Information on the transactions of acquisition/disposal of the Company’s shares made
by the Board of Directors’ member within the reporting period:
№
1
2
3
4
5
6
7
8
9
10
11
12
Date of
transaction
01.04.2015
01.07.2015
03.07.2015
03.07.2015
06.07.2015
06.07.2015
07.07.2015
08.07.2015
08.07.2015
09.07.2015
10.07.2015
13.07.2015
Type of
transaction
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
Quantity of
securities
840
840
20
1,000
160
160
270
100
720
110
100
322
21
Description of securities
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
13.07.2015
14.07.2015
17.07.2015
27.08.2015
28.08.2015
31.08.2015
31.08.2015
01.09.2015
02.09.2015
03.09.2015
03.09.2015
04.09.2015
04.09.2015
07.09.2015
07.09.2015
08.09.2015
08.09.2015
09.09.2015
09.09.2015
10.09.2015
10.09.2015
11.09.2015
11.09.2015
Disposal of
securities
Disposal of
securities
Disposal of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Disposal of
securities
320
310
860
5,865
158
150
308
5,689
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
22
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
36
37
38
39
40
14.09.2015
14.09.2015
01.10.2015
14.12.2015
21.12.2015
Acquisition of
securities
Disposal of
securities
Acquisition of
securities
Acquisition of
securities
Acquisition of
securities
2
2
840
840
1,300
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
OOrrddiinnaarryy rreeggiisstteerreedd uunncceerrttiiffiieedd
sshhaarreess
PPRRIINNCCIIPPAALL PPRROOVVIISSIIOONNSS OOFF CCOOMMPPEENNSSAATTIIOONN PPOOLLIICCYY OOFF TTHHEE CCOOMMPPAANNYY
AANNDD ((OORR)) RREEIIMMBBUURRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS’’
MMEEMMBBEERRSS OOFF TTHHEE CCOOMMPPAANNYY AANNDD TTHHEE AAMMOOUUNNTT OOFF RREEMMUUNNEERRAATTIIOONN
((RREEIINNBBEERRSSEEMMEENNTT OOFF EEXXPPEENNSSEESS)) PPAAIIDD DDUURRIINNGG 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 04.06.2015 (minutes of 05.06.2015),
remuneration of the Board of Directors’ members shall be paid upon the resolution of the
General Shareholders Meeting in the form of remuneration for participation in the operation of
the Board of Directors and remuneration for the achieved results.
The remuneration for the participation in the Board of Directors’ operation amounts to
120,000 (one hundred and twenty thousand) rubles per month.
The 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 means of personal presence in
each meeting of the Board of Directors, held in the form of physical presence,
- 500 (five hundred) US dollars for participation, by means of directing the written
opinion, in each meeting of the Board of Directors held in the form of physical presence, or for
participation in each meeting of the Board of Directors held in absentia form.
Year-end bonus may be additionally paid to the remuneration of the Board of Directors’
members. The fixed amount of year-end bonus shall be paid to the members of the Board of
Directors after the approval of corresponding annual financial statements by the decision of the
General Shareholders Meeting of the Company.
In case of absence of net profit (profit for the distribution) in the Company the
remuneration to the members of the Board of Directors (remuneration for the participation in
the operation of the Board of Directors, year-end bonus) shall not be paid.
The members of the Board of Directors shall not be entitled to receive remuneration and
(or) reimbursement of expenses for the performance of their duties in any way and form, for the
adoption of decisions by the Board of Directors or by other authorities of the Company, as well
as for the exercise of their rights and duties as a member of the Board of Directors, for the
except of remuneration and (or) reimbursement of expenses, received upon the decision of the
General Shareholders Meeting.
On June 4, 2015 the General Shareholders Meeting made a decision not to pay year-end
bonus (minutes of 05.06.2015)
23
In 2015 the remuneration for the participation in the operation of the Board of Directors
within 2014 year in the amount of 13,762,005.30 rubles (upon the resolution of the General
Shareholders Meeting of 04.06.2015 (minutes w/o № of 05.06.2015) was paid to the members of
the Board of Directors and salary to the members of the Board of Directors, who are employed
in the Company, as well as who work in secondary employment, in the amount of 96,048.67
rubles (the amount doesn’t include the remuneration to Sergey Galitskiy as the CEO and the
Chairman of the Management Board of the Company).
According to the Regulations “On the Board of Directors of PJSC “Magnit”, ratified by
the resolution of the annual General Shareholders Meeting of 04.06.2015 (minutes w/o № of
05.06.2015), the Company shall reimburse the expenses of the members of the Board of
Directors which are directly related to the exercise of their duties, including:
- Expenses related to traveling to the place of the meeting of the Board of Directors;
- Expenses related to accommodation during the period of holding of the meeting of
the Board of Directors;
- Representational expenses;
- Expenses related to the expert consultation on the issues considered at the Board of
Directors’ meetings, as well as on translation of the documents/materials presented
to the members of the Board of Directors.
The amount of such expenses should be preliminarily agreed with the Chairman of the
Board of Directors, Chairman of the Revision Committee. The reimbursement of expenses shall
be made via cash register of the Company based on the application on reimbursement of
expenses made by the member of the Board of Directors. The original documents confirming
actual incurred expenses (tickets, bills, receipts, etc.) shall be necessarily attached to the
application. The Board of Directors may adopt a decision on refusal of reimbursement of
expenses incurred by the Board of Directors’ member at its meeting by majority of votes of
elected members, if it is established that this member of the Board of Directors acted against the
interests of the Company.
During 2015 year the expenses related to the exercise of duties of the members of the
Board of Directors of PJSC “Magnit” have not been reimbursed.
24
66.. RREEPPOORRTT OOFF TTHHEE BBOOAARRDD OOFF DDIIRREECCTTOORRSS OONN 22001155 OOPPEERRAATTIIOONNSS
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
1
2
3
4
5
6
7
Andrey Arutyunyan
Alexey Pshenichnyi
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 structure of the Board of Directors, elected by the annual General Shareholders
Meeting on June 4, 2015 (minutes of 05.06.2015):
№
Full name of a member of the Board of Directors
Date of birth
1
2
3
4
5
6
7
Andrey Arutyunyan
Alexey Pshenichniy
Sergey Galitskiy
Alexander Zayonts
Aleksandr Aleksandrov
Khachatur Pombukhchan
Aslan Shkhachemukov
12.01.1969
23.02.1967
14.08.1967
10.01.1967
22.11.1975
16.03.1974
22.08.1962
The current structure of the Board of Directors includes three independent directors -
Alexey Pshenichniy, Alexander Zayonts, Aleksandr Aleksandrov.
Khachatur Pombukhchan was elected as a Chairman of the Board of Directors by the
unanimous resolution at the first Board of Directors’ meeting as of June 17, 2015, 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, the Regulations on the Board of Directors of PJSC
“Magnit” and the Regulations on the Committees of the Board of Directors.
According to the provisions of the corporate documents the committees of the Board of
Directors were formed to provide its operating efficiency and to prepare the most important
issues.
25
According to the resolution of the Board of Directors as of June 17, 2015 the membership
of the committees are formed as follows:
HR and Remuneration Committee of the Board of Directors:
Full name of a member of the Board of
Directors
Position in the committee
Aleksandr Aleksandrov
member of the committee
Alexey Pshenichniy
Alexander Zayonts
chairman of the committee
member of the committee
№
1
2
3
Audit Committee of the Board of Directors:
Full name of a member of the Board of
Directors
№
Position in the committee
1
2
3
Alexander Zayonts
chairman of the committee
Aleksandr Aleksandrov
member of the committee
Alexey Pshenichniy
member of the committee
The meetings of the committees are held as and when required, but not less than 1 (One)
time per year.
All the members of the correspondent committees participated in all the meetings of the
Board of Directors’ committees, which had been held within the reporting period.
Within 2015 year the Board of Directors held 14 meetings and considered 81 issues. All
the meetings of the Board of Directors were held in the form of joint presence.
Information on the presence of directors in the meetings of the Board of Directors in
2015:
Full name of a member of
the Board of Directors
Andrey Arutyunyan
Alexey Pshenichniy
Sergey Galitskiy
Alexander Zayonts
Alexey Makhnev
Khachatur
Pombukhchan
Aslan Shkhachemukov
Aleksandr Aleksandrov
Status
Participation in the meeting
Independent
Executive
-
+
-
+
+
-
-
+
+
-
+
-
-
+
-
-
26
Total
number*
14 of 14
14 of 14
13 of 13
14 of 14
5 of 5
14 of 14
14 of 14
9 of 9
Physical
presence
In
absentia
14
14
13
14
5
14
14
9
-
-
-
-
-
-
-
-
*in this context the indication (5 of 4) will signify that the director may participate (may adopt
decisions on the issues raised for voting) in 5 meetings and participated in 4 of them.
Main issues considered by the Board of Directors in 2015:
Date of the
meeting
04.02.2015
04.02.2015
04.02.2015
06.04.2015
06.04.2015
06.04.2015
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 to the position of auditor were considered and enrolled on a
voter list for election at the annual General Shareholders Meeting.
Business priorities of PJSC “Magnit” for 2015 year and the first quarter of 2015
year 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 loss of the Company following the results of
2014 financial year were approved.
The annual report of PJSC “Magnit” for 2014 financial year was preliminarily
approved and submitted for consideration of the General Shareholders
Meeting.
06.04.2015
The amount of remuneration for the auditor’s services was determined.
06.04.2015
06.04.2015
06.04.2015
06.04.2015
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 the extension of the powers of the Chief Executive Officer of
PJSC “Magnit” for another term was adopted.
Business priorities of PJSC “Magnit” for the second quarter of 2015 were
determined.
28.05.2015
The Regulations on the Internal Audit of PJSC “Magnit” were ratified.
17.06.2015
17.06.2015
17.06.2015
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.
17.06.2015
The members of the Management Board of PJSC “Magnit” were elected.
07.07.2015
07.07.2015
Business priorities of PJSC “Magnit” for the third quarter of 2015 year were
determined.
The holding by the Chief Executive Officer (the Chairman of the Management
Board) of PJSC “Magnit” of other offices in the management bodies of other
companies was approved.
27
30.07.2015
30.07.2015
30.07.2015
28.09.2015
28.09.2015
29.10.2015
29.10.2015
29.10.2015
29.10.2015
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 2015 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.
Business priorities of PJSC “Magnit” for the fourth quarter of 2015 year were
determined.
The Program of exchange-traded bonds of PJSC “Magnit” and the Prospectus
of exchange-traded bonds of PJSC “Magnit” were approved.
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 2015 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.
06.11.2015
The amount of remuneration for the auditor’s services was determined.
16.12.2015
The Code of Business Ethics of PJSC “Magnit” was ratified.
16.12.2015
The head of the Internal Audit Department of PJSC “Magnit” was appointed.
16.12.2015
The business plan of the Internal Audit Department of PJSC “Magnit” for 2016
year was approved.
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 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 JSC “Tander”, stock in Retail import LLC, LLC “Tandem”,
LLC “Alcotrading” were held in February, March, April, May, June, July, September, October,
and December of 2015 year.
The performance evaluation of the Board of Directors
Within the reporting period the HR and Remuneration Committee of the Board of
Directors in accordance with its competence evaluated the performance of the Board of
Directors.
The committee evaluated: the professional skills of the members of the Board of
Director, their experience and knowledge, the presence/absence of interest conflicts during the
participation in the operation of the Board of Directors, the correspondence of numeral
composition of the Board of Directors to the needs of the Company and interests of the
28
shareholders, the attendance in the meetings of the board and contribution of time for the
shareholders, the attendance in the meetings of the board and contribution of time for the
shareholders, the attendance in the meetings of the board and contribution of time for the
rticipation in the meetings, the operating efficiency of the chairman of the
rticipation in the meetings, the operating efficiency of the chairman of the
preparation to the participation in the meetings, the operating efficiency of the chairman of the
Board of Directors, the effectiveness of incentive system of the Board of Directors’ members.
Board of Directors, the effectiveness of incentive system of the Board of Directors’ members.
Board of Directors, the effectiveness of incentive system of the Board of Directors’ members.
The committee evaluated the correspondence of the members of the Board of Directors t
The committee evaluated the correspondence of the members of the Board of Directors to the
The committee evaluated the correspondence of the members of the Board of Directors t
independence criteria, determined by the Listing Rules of CJSC “MICEX Stock Exchange” and
independence criteria, determined by the Listing Rules of CJSC “MICEX Stock Exchange” and
independence criteria, determined by the Listing Rules of CJSC “MICEX Stock Exchange” and
stock companies by the Letter of
Corporate Governance Code, recommended to the joint-stock companies by the Letter of
еру Corporate Governance Code, recommended to the joint
the Bank of Russia as of 10.04.2014 №06-52/2463.
the Bank of Russia as of 10.04.2014 №06
ed that operating efficiency of the current membership of the
The committee determined that operating efficiency of the current membership of the
The committee determin
Board of Directors corresponds to the nature and range of activity of the Company, needs of the
Board of Directors corresponds to the nature and range of activity of the Company, needs of the
Board of Directors corresponds to the nature and range of activity of the Company, needs of the
Company and interests of the shareholders.
Company and interests of the shareholders.
results in 2015:
The management of the Company achieved the following results in 2015:
The management of the Company achieved the following
increased by 24.50% from 763,527.25 million rubles in 2014
1. Revenue of the Company8 increased by 24.50% from 763,527.25 million rubles in 2014
1. Revenue of the Company
to 950,613.34 million rubles in 2015. Top line growth was due to an increase in selling space as
to 950,613.34 million rubles in 2015. Top line growth was due to an increase in selling space as
to 950,613.34 million rubles in 2015. Top line growth was due to an increase in selling space as
well as to a 6.21% increase of like-for-like sales (including VAT).
well as to a 6.21% increase of like
In 2015 "Magnit" remained the leader of the Russian food retail in terms of revenue as
In 2015 "Magnit" remained the leader of the Russian food retail in terms of revenue as
In 2015 "Magnit" remained the leader of the Russian food retail in terms of revenue as
well as number of stores, selling space and capitalization.
well as number of stores, selling space and capitalization.
2. During 2015 the Company added 2,378 stores (1,250 convenience stores, 29
2. During 2015 the Company added 2,378 stores (1,250 convenience stores, 29
2. During 2015 the Company added 2,378 stores (1,250 convenience stores, 29
“Magnit Family” stores and 1,041 drogerie stores). The total store base as of
“Magnit Family” stores and 1,041 drogerie stores). The total store base as of
hypermarkets, 58 “Magnit Family” stores and 1,041 drogerie stores). The total store base as of
December 31, 2015 reached 12,089 stores (9,594 convenience stores, 219 hypermarkets, 155
December 31, 2015 reached 12,089 stores (9,594 convenience stores, 219 hypermarkets, 155
December 31, 2015 reached 12,089 stores (9,594 convenience stores, 219 hypermarkets, 155
“Magnit Family” stores and 2,121 drogerie stores). Total selling space of the stores increased by
“Magnit Family” stores and 2,121 drogerie stores). Total selling space of the stores incr
“Magnit Family” stores and 2,121 drogerie stores). Total selling space of the stores incr
22.92% from 3,590.64 thousand sq. m. to 4,413.72 thousand sq. m.
22.92% from 3,590.64 thousand sq. m. to 4,413.72 thousand sq. m.
3. Number of customers increased by 14.70% from 2,944.12 million in 2014 to 3,376.86
3. Number of customers increased by 14.70% from 2,944.12 million in 2014 to 3,376.86
3. Number of customers increased by 14.70% from 2,944.12 million in 2014 to 3,376.86
million in 2015.
“Magnit” Group of companies or “the Company”
The information is provided with regard to PJSC “Magnit” and its subsidiaries (hereinafter – “Magnit” Group of companies or “the Company”
8 The information is provided with regard to PJSC “Magnit”
or “Magnit”)
29
4. Sales of private label products as a % of sales in 2015 amounted to 10.99%, the number
4. Sales of private label products as a % of sales in 2015 amounted to
4. Sales of private label products as a % of sales in 2015 amounted to
of private label SKUs in 2015 amounted to 596. The Company will continue to increase the sales
of private label SKUs in 2015 amounted to 596. The Company will continue to increase the sales
of private label SKUs in 2015 amounted to 596. The Company will continue to increase the sales
of private label products primarily through their expansion in hypermarkets.
of private label products primarily through their expansion in hypermarkets.
of private label products primarily through their expansion in hypermarkets.
5. In 2015 the Company opened six distribution centers: Astrakhan, Krasnodar, Penza,
5. In 2015 the Company opened six distribution centers: Astra
5. In 2015 the Company opened six distribution centers: Astra
Perm, Smolensk and Tyumen. The launch of the new distribution centers improved the quality
Perm, Smolensk and Tyumen. The launch of the new distribution centers improved the quality
Perm, Smolensk and Tyumen. The launch of the new distribution centers improved the quality
of service in the Southern, Volga, Central and Urals regions. Total space of 33 distribution
of service in the Southern, Volga, Central and Urals regions. Total space of 33 distribution
of service in the Southern, Volga, Central and Urals regions. Total space of 33 distribution
centers as of December 31, 2015 stood at about 1,300 thousand sq. m.
centers as of December 31, 2015 stood at about 1
6. During the reporting year the fleet of the Company’s vehicles decreased by 56 trucks,
6. During the reporting year the fleet of the Company’s vehicles decreased by 56 trucks,
6. During the reporting year the fleet of the Company’s vehicles decreased by 56 trucks,
total number of vehicles amounted to 5,882. Magnit continued to make efficiency improvements
total number of vehicles amounted to 5,882. Magnit continued to make efficiency improvements
total number of vehicles amounted to 5,882. Magnit continued to make efficiency improvements
to its logistics network.
creased the share of products processed via its distribution
7. In 2015 the Company increased the share of products processed via its distribution
7. In 2015 the Company in
centers from 86% in 2014 to 87%, which is also one of the gross margin drivers.
centers from 86% in 2014 to 87%, which is also one of the gross margin drivers.
centers from 86% in 2014 to 87%, which is also one of the gross margin drivers.
8. The Company was actively working with its employees increasing their loyalty and
8. The Company was actively working with its employees increasing their loyalty and
8. The Company was actively working with its employees increasing their loyalty and
As of December 31, 2015 the total number of the Company’s
developing corporate culture.
developing corporate culture. As of December 31, 2015 the total number of the Company’s
store personnel; 40,369 people
employees exceeded 265 thousand, out of which 194,723 are in-store personnel; 40,369 people
employees exceeded 265 thousand, out of which 194,723 are in
engaged in distribution; 19,108 people in regional branches, 9,342 are employees of the head
engaged in distribution; 19,108 people in regional branches, 9,342 are employees of the head
engaged in distribution; 19,108 people in regional branches, 9,342 are employees of the head
other personnel. Average monthly salary in the Company in 2015 amounted
other personnel. Average monthly salary in the Company in 2015 amounted
office and 2,440 – other personnel. Average monthly salary in the Company in 2015 amounted
to 29 636 rubles.
In 2015 the average number of employees of "Magnit" group of companies amounted to
In 2015 the average number of employees of "Magnit" group of companies amounted to
In 2015 the average number of employees of "Magnit" group of companies amounted to
232,159 people. Based on the publicly available information the management of the Company
232,159 people. Based on the publicly available information the management
232,159 people. Based on the publicly available information the management
assumes that PJSC “Magnit” is the largest private employer in Russia.
assumes that PJSC “Magnit” is the largest private employer in Russia.
9. LFL revenue growth in 2015 vs. 2014 in ruble terms amounted to 6.21%, LFL average
9. LFL revenue growth in 2015 vs. 2014 in ruble terms amounted to 6.21%, LFL average
9. LFL revenue growth in 2015 vs. 2014 in ruble terms amounted to 6.21%, LFL average
ticket increased by 7.23% and LFL traffic decreased by 0.96%.
ticket increased by 7.23% and LFL traffic decreased by 0.96%.
30
ased from 28.88% in 2014 to 28.49% in 2015 primarily due to the
10. Gross margin decreased from 28.88% in 2014 to 28.49% in 2015 primarily due to the
10. Gross margin decre
price investments and consumer trading down. Gross profit in rubles increased by 22.81% from
price investments and consumer trading down. Gross profit in rubles increased by 22.81% from
price investments and consumer trading down. Gross profit in rubles increased by 22.81% from
220,520.56 million RUR (US$ 5,739.49 million) to 270,820.81 million RUR (US$ 4,442.75 million).
220,520.56 million RUR (US$ 5,739.49 million) to 270,820.81 million RUR (US$ 4,442.75 million).
220,520.56 million RUR (US$ 5,739.49 million) to 270,820.81 million RUR (US$ 4,442.75 million).
11. EBITDA increased by 21.03% from 85,909.67 million RUR (US$ 2,235.97 million) in
. EBITDA increased by 21.03% from 85,909.67 million RUR (US$ 2,235.97 million) in
. EBITDA increased by 21.03% from 85,909.67 million RUR (US$ 2,235.97 million) in
2014 to 103,972.93 million RUR (US$ 1,705.65 million) in 2015. EBITDA margin in 2015
2014 to 103,972.93 million RUR (US$ 1,705.65 million) in 2015. EBITDA margin in 2015
2014 to 103,972.93 million RUR (US$ 1,705.65 million) in 2015. EBITDA margin in 2015
amounted to 10.94%. Net debt/EBITDA ratio (in ruble terms) at the end of 2015 amounted to
amounted to 10.94%. Net debt/EBITDA ratio (in ruble terms) at the end of 2015 amounted to
amounted to 10.94%. Net debt/EBITDA ratio (in ruble terms) at the end of 2015 amounted to
0.92.
12. Net income in 2015 increased by 23.85% and amounted to 59,061.20 million RUR
12. Net income in 2015 increased by 23.85% and amounted to 59,061.20 million RUR
12. Net income in 2015 increased by 23.85% and amounted to 59,061.20 million RUR
(US$ 968.89 million) vs. 47,685.84 million RUR (US$ 1,241.12 million) in 2014. Net income
(US$ 968.89 million) vs. 47,685.84 million RUR (US$ 1,241.12 million) in 2014. Net income
(US$ 968.89 million) vs. 47,685.84 million RUR (US$ 1,241.12 million) in 2014. Net income
margin in 2015 amounted to 6.21%.
margin in 2015 amounted to 6.21%.
income in dividends for the 9 months 2015.
13. The Company paid 59% of its net income in dividends for the 9 months 2015.
13. The Company paid 59% of its net
Dividend per share amounted to 268.17 rubles (accumulatively, including 88.4 rubles for the
Dividend per share amounted to 268.17 rubles (accumulatively, including 88.4 rubles for the
Dividend per share amounted to 268.17 rubles (accumulatively, including 88.4 rubles for the
first half of 2015 and 179.77 rubles for the third quarter 2015).
first half of 2015 and 179.77 rubles for the third quarter 2015).
rs the achieved financial and
Overall, the Board of Directors of the Company considers the achieved financial and
Overall, the Board of Directors of the Company conside
economic results positive and in line with 2015 targets.
economic results positive and in line with 2015 targets.
Following the results of the conducted work the Board of the Company’s directors
Following the results of the conducted work the Board of the Company’s directors
Following the results of the conducted work the Board of the Company’s directors
recommends the annual general shareholders’ meeting to approve the performance of the
recommends the annual general shareholders’ meeting to approve the performance of the
recommends the annual general shareholders’ meeting to approve the performance of the
Company’s management bodies during 2015 and to ratify 2015 annual report submitted for
Company’s management bodies during 2015 and to ratify 2015 annual report submitted for
Company’s management bodies during 2015 and to ratify 2015 annual report submitted for
the meeting agenda.
31
77.. MMAAIINN 22001155 CCOORRPPOORRAATTEE EEVVEENNTTSS
April
Credit Rating Service Standard & Poor’s raised long-term credit rating of
PJSC “Magnit” from “BB” to “BB+”, “Negative” outlook.
The annual General Shareholders Meeting was held.
June
The membership of the Management Board of PJSC “Magnit” was formed
by the Board of Directors.
The Board of Directors formed the committees of the Board of Directors,
appointed the chairman, the deputy chairman and the secretary of the Board
of Directors.
August
“Magnit” ranked the 23rd place in the top list of 100 of the most innovative
companies according to the American magazine “Forbs” and became the
only Russian representative in the list.
Sergei Galitskiy, the Chief Executive Officer of PJSC “Magnit”, entered the
list of business leaders of the XVI top list “TOP-1000 of Russian managers”
for 2015 year prepared by the Association of Russian Managers and
“Komersant” publishing house.
September
“Magnit” ranked the 3rd place in the annual top list of “200 of the biggest
private companies of Russia” according to the amount of profit by “Forbs”
magazine.
The extraordinary General Shareholders Meeting of PJSC “Magnit” was
held.
October
PJSC “Magnit” topped annual list “INFOLine Retail Russia Top-100”.
December
The Code of Business Ethics of PJSC “Magnit” was ratified by the Board of
Directors.
The extraordinary General Shareholders Meeting of PJSC “Magnit” was
held.
3 (Three) General Shareholders Meetings were held in 2015.
At the annual General Shareholders Meeting, held on June 4, 2015 in the form of joint
presence, the positive decisions on all the agenda items were made.
The annual report of PJSC “Magnit” following the 2014 year results; annual accounting
(financial) reports of PJSC “Magnit”, including statements on financial results; the procedure of
distribution of profit (including payment (declaration) of dividends) and loss of PJSC “Magnit”
following the 2014 financial year results; the auditor of PJSC “Magnit” according to the Russian
Accounting Standards and the International Financial Reporting Standards; Charter of PJSC
“Magnit” in a new edition; Regulations on the Board of Directors of PJSC “Magnit” in a new
edition were approved.
The members of the Board of Directors of PJSC “Magnit” and the Revision Commission
of PJSC “Magnit” were elected.
The related party transactions and major related party transactions were approved.
32
At the extraordinary General Shareholders Meeting of PJSC “Magnit” held on
September 24, 2015 in the form of absentee voting the positive decisions on the agenda items
were adopted.
The decision on the payment of dividends on the shares of PJSC “Magnit” following the
6 months of 2015 reporting year was made.
The major related party transactions were approved.
At the extraordinary General Shareholders Meeting of PJSC “Magnit” held on December
22, 2015 in the form of absentee voting the positive decisions on the agenda items were adopted.
The decision on the payment of dividends on the shares of PJSC “Magnit” following the
9 months of 2015 reporting year was made.
The related party transactions and major related party transactions were approved.
33
88.. PPOOSSIITTIIOONN OOFF TTHHEE CCOOMMPPAANNYY IINN IINNDDUUSSTTRRYY
RUSSIAN MARKET
This section was prepared with the use of the following materials: IA Infoline, public
sources of companies.
Retail turnover amounted to 27,575.7 billion RUR in 2015 and decreased by 10% in terms
of mass of commodities compared to 2014 (in 2014 it increased by 2.7%). In 2015 food retail
turnover decreased by 9.2%, non-food retail turnover decreased by 10.7% compared to 2014.
In December 2015 retail turnover amounted to 2,865 billion RUR and decreased by 15.3%
in terms of mass of commodities compared to December 2014. Food retail turnover in December
2015 decreased by 11.4% compared to December 2014, non-food – by 18.5%.
In the fourth quarter of 2015 retail turnover amounted to 7,610 billion RUR and
decreased by 13.5% in terms of mass of commodities compared to the fourth quarter of 2014 (in
the fourth quarter of 2014 it increased by 3.1%). Food retail turnover in in the fourth quarter of
2015 decreased by 11.2%, non-food – by 15.5% compared to the fourth quarter of 2014.
Quarterly dynamics of the retail turnover in Russia in 2007-2015, INFOLine guidance for the
year 2015 and the guidance of the Ministry of Economic development and Trade for 2016-2018
are provided in the diagram.
Dynamics of the key figures of the consumer market in 2007-2015 and guidance for 2016-
2018, % Y-o-Y
25
20
15
10
5
0
-5
-10
-15
-20
-25
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
2
1
Q
4
4
1
Q
1
4
1
Q
2
4
1
Q
3
4
1
Q
4
5
1
Q
1
5
1
Q
2
Growth rate of retail turnover
5
1
H
1
5
1
0
2
5
1
Q
3
5
1
Q
4
5
1
t
c
O
5
1
v
o
N
Growth rate of food turnover
5
)
e
1
c
Growth rate of non-food turnover
c
n
e
a
D
d
i
u
g
(
7
1
0
2
)
e
c
n
a
d
i
u
g
(
6
1
0
2
)
e
c
n
a
d
i
u
g
(
8
1
0
2
The monetary base (broad definition) characterizing money supply by the monetary
regulation agencies increased for December 2015 by 1,156.6 bn RUR compared to
November 2015 (growth for December 2014 amounted to 1,381.1 bn RUR).
Source: IA Infoline
34
3400
2900
2400
1900
1400
900
400
Dynamics of retail turnover and monetary base in 2007-2015, bn RUR
Retail turnover (in current prices), bn RUR
Monetary base (in broad definition), bn RUR
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
5
1
n
a
J
5
1
y
a
M
5
1
p
e
S
Source: IA Infoline
Dynamics of retail turnover in Russia in 2006-2015
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
1Q 2014
2Q 2014
1H 2014
3Q 2014
4Q 2014
FY 2014
January 2015
February 2015
March 2015
1Q 2015
April 2015
May 2015
June 2015
2Q 2015
1H 2015
July 2015
August 2015
September 2015
3Q 2015
9M 2015
October 2015
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
5792,9
6256,7
12049,6
6697,3
7609,3
26356,2
2063,7
2031,9
2206,8
6302,4
2166,5
2228,3
2235,4
6630,2
12932,6
2312,7
2387,0
2333,4
7033,1
19965,7
2378,1
Dynamics, to the corresponding period
In comparable prices, %
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
103,9
102,1
103,0
101,6
103,1
102,7
96,4
93,0
91,5
93,6
90,4
91,1
90,8
90,8
92,1
90,8
90,8
89,5
90,4
91,5
88,3
35
In current prices, %
122,6
123,7
128,8
105,4
113,0
115,7
112,1
111,8
111,0
111,4
110,0
110,0
110,7
110,5
109,9
110,2
110,7
113,6
111,3
110,5
108,6
107,4
108,8
106,1
106,4
105,5
106,0
107,3
105,5
105,2
104,1
105,0
106,5
102,9
Period
Turnover, bn RUR
November 2015
December 2015
4Q 2015
FY 2015
2366,9
2865,0
7610,0
27575,7
Dynamics, to the corresponding period
In comparable prices, %
86,9
84,7
86,5
90,0
In current prices, %
101,0
97,0
100,0
104,6
Source: data of the Federal State Statistics Service and the Ministry of Economic Development and Trade
STRUCTURE OF RETAIL TURNOVER BY TYPES OF PRODUCTS
Retail turnover in 2015 decreased by 10% in terms of mass of commodities compared to
2014 and amounted to 27,575.7 billion RUR, at that consumption of food products decreased by
9.2%, non-food – by 10.7%.
In 2015 consumption of alcohol products decreased by 5.6% compared to 2014 and
amounted to 104.4 mln dL., at that the growth of consumption was demonstrated by the other
alcohol products (cider, mead, etc.) – 17.4%. Consumption of wine has not changed. Decrease of
consumption in 2015 was demonstrated by low-alcohol beverages – by 23.1%, vodka and
distilled products – by 7.7%, champagne and sparkling wine – by 5.5%, beer-based beverages
(except beer) – by 5.3%, cognac and cognac beverages – by 4.9%, beer – by 3.5%, wine products
excluding champagne and sparkling wine – by 3.2%.
Dynamics of retail turnover by types of products in 2000-2015, %
15,1
15,1
19,1
16,8
15,1
13,9
10,5
8,6
9,7
10,7
8,6
7,6
5
5,1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1Q15 2Q15 1H15Aug15Sep153Q15 Oct15Nov15Dec154Q15 2015
-8,2
-6,6
-8,2
-8,3
-9,6
-9,5
-10,9
-10,7
-12,5
-14,6
-15,5
-18,5
Total retail turnover
Food products
Alcohol drinks
Non-food
Source: IA Infoline
Dynamics of share of food products in retail turnover in 2007-2015
25
20
15
10
5
0
-5
-10
-15
-20
-25
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
5
1
n
a
J
5
1
y
a
M
5
1
t
c
O
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), %
36
Source: IA Infoline
In 2015 the share of food products increased by 1.6 pp vs. 2014. In December 2015 the
share of food products increased by 2.7 pp vs. December 2014.
Structure of retail turnover by groups of products in 2008-20159
Figures
2008
2009 2010 2011
2012
2013
2014
2015
Dec
2014
Dec 2015 4Q 2014 4Q 2015
Retail turnover
food products
non-food products
share of food products, %
share of non-food products, %
13915 14599 16499 19083 21394,5 23685,9 26356,2 27575,7 2954,8
2865,0
7609,3 7610,0
6510
7095 8035 9122 9961,4 11143,0 12380,9 13410,0 1362,4
1397,0
3544,9 3690,5
7405
7504 8464 9961 11433,1 12542,9 13975,3 14165,7 1592,4
1468,0
4064,4 3919,5
46,8
53,2
48,6 48,7 47,8
46,6
47,0
47,0
48,6
46,1
48,8
46,6
48,5
51,4 51,3 52,2
53,4
53,0
53,0
53,9
Source: data of the Federal State Statistics Service
53,4
51,5
51,2
51,4
Dynamics of retail turnover by groups of products in 2011-2015 (monthly), bn RUR
1468,0
1397,0
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
II-15 IV-15 VI-15 VIII-
15
X-15 XII-
15
food products
non-food products
Source: IA Infoline
In December 2015 the share of food products amounted to 48.8%, while the share of non-
food products in the retail turnover in Russia amounted to 51.2% (in December 2014 – 46.1%
and 53.9% correspondingly).
Structure of retail turnover by groups of products in 2011-2015 (monthly), %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
51,2
48,8
II-11 IV-11VI-11 VIII-
11
X-11 XII-
11
II-12 IV-12VI-12 VIII-
12
X-12 XII-
12
II-13 IV-
013
VI-13 VIII-
13
X-13 XII-
13
II-14 IV-14VI-14 VIII-
14
X-14 XII-
14
II-15 IV-15VI-15 VIII-
15
X-15 XII-
15
share of food products, %
share of non-food products, %
Source: IA Infoline
STRUCTURE OF RETAIL TURNOVER BY TYPES OF ORGANIZATIONS
Following the results of the nine months of 2015 in terms of structure of retail turnover
by types of organizations the trend of decrease of the share of marketplaces (by 0.1 pp
compared to the nine months of 2014) continued. The share of small enterprises and micro-sized
9 For comparison with 2009-2015 data on the turnover and the share of food products in 2002-2008 are adjusted for tobacco products
37
enterprises also decreased by 1.3 pp and the share of medium-sized organizations – by 0.4 pp
compared to the nine months of 2014. The share of large organizations (mostly these are retail
networks) increased by 1.4 pp compared to the nine months of 2014. The share of individual
entrepreneurs increased by 0.4 pp in the nine months of 2014and amounted to 24.7%.
Structure of formation of retail turnover in 2007-2015 by types of organizations, %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
37,3
35,2
34,5
36,2
38,2
40,2
41,3
43,2
43,4
44,2
43,4
44,2
43,1
44,1
22,2
26,3
25,8
25,2
25,5
25,0
24,6
23,8
23,7
22,5
23,9
22,6
25,9
22,6
25,2
25,2
26,1
25,9
24,7
24,2
24,7
24,4
23,9
24,5
24,0
24,6
24,3
24,7
15,3
13,3
13,6
12,7
11,6
10,6
9,4
8,6
9,0
8,8
8,7
8,6
8,7
8,6
2007
2008
2009
2010
2011
2012
2013
2014
1Q2014 1Q2015 1H2014 1H2015 9M2014 9M2015
Open markets
Individual entrepreneurs
Small enterprises
Large and mid enterprises (incl. chains)
Source: IA Infoline
In December 2015 91.5% 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 8.5% (in December 2014 – 91.3% and 8.7% correspondingly).
Turnover of trading organizations and marketplaces in 2008-2015, bn RUR
Figure
2008
2009
2010
2011
2012
2013
2014 2015 Dec 2014 Dec 2015 4Q 2014 4Q 2015
Retail turnover
13853,2 14599,2 16499 19082,6 21394,5 23685,9 26356,227575,7 2954,8
2865,0
7609,3
7610,0
turnover of trading
organizations
12015,9 12613,7 14403,616697,3 19126,7 24089,6 23880,425242,9 2704,0
2637,9
6929,7
6987,2
sales of open markets
1837,3 1985,5 2095,4 2385,3 2267,8 2266,6 2238,5 2332,8
250,8
227,1
679,6
622,8
share of trading
organizations, %
share of open markets, %
86,7
86,4
87,3
88,5
89,4
90,6
91,4
91,5
91,5
92,1
91,1
91,8
13,3
13,6
12,7
11,5
10,6
9,4
8,6
8,5
8,5
7,9
8,9
8,2
Source: data of the Federal State Statistics Service
Compared to December 2014 the turnover of trading organizations decreased by 14.8%,
while sales of the marketplaces decreased by 20.4%. In 2015 the turnover of trading
organizations dropped off by 9.7% compared to 2014, sales of the marketplaces decreased by
12.7%.
38
Dynamics of turnover of trading organizations and marketplaces in 2011-2015 (monthly), trn
RUR
3
2,5
2
1,5
1
0,5
0
II-11
V-11 VIII-11 XI-11
0,2
2,6
II-14
V-14 VIII-14 XI-14
II-15
V-15 VII-15 XI-15
Продажа товаров на рынках, трлн. руб.
Source: IA Infoline
V-12 VIII-12 XI-12
II-12
Оборот торгующих организаций, трлн. руб.
II-13
V-13 VIII-13 XI-13
In December 2015 compared to November 2015 the turnover of trading organizations
increased by 20.7%, while the sales of the marketplaces grew by 13.7%.
Structure of retail turnover in 2011-2015 (monthly), %
100%
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
I-11 III-11 V-11 VII-
11
IX-
11
XI-
11
7,9
92,1
VIII-
14
X-14 XII-
14
II-15 IV-
15
VI-
15
VIII-
15
X-15 XII-
12
Source: IA Infoline
VIII-
13
X-13 XII-
13
VI-
14
share of open markets, %
II-14 IV-
14
I-12 III-12 V-12 VII-
12
share of trading organizations, %
IV-
13
IX-
12
XI-
12
III
кв.
I-13
VI-
13
As of January 1, 2016 there were 1,308 retail markets functioning on the territory of the
Russian Federation. 34 markets were closed and converted to fairs, shopping centers,
nonpermanent trading objects compared to October 1, 2015. The number of market slots as of
January 1, 2016 amounted to 352.4 thousand. Compared to October 1, 2015 their number
decreased by 11.3 thousand. The breakdown of the retail markets by types has changed in the
fourth quarter of 2015 towards the increase of the share of multipurpose markets, specialized
merchandise markets and other specialized markets on the back of decrease of share of
specialized food markets, specialized construction materials markets, agricultural and
agricultural cooperative market. The level of actual use of the market slots as of January 1, 2016
amounted to 70.0% on average through the Russian Federation, which is lower compared to
October 1, 2015 but higher compared to October 1, 2014. Individual entrepreneurs still remain
the principal economic entities on the marketplaces. As of January 1, 2016 151.7 thousand
individual entrepreneurs operated at retail markets (as of October 1, 2015 – 158.0 thousand). In
the fourth quarter of 2015 8.7 thousand fairs were held. Individual entrepreneurs were the
principal economic entities on the fairs (66.7% from all market slots were allocated for them).
39
Dynamics of the number of open markets in the Russian Federation and their share in the retail
turnover in 2003-2015
7000
6000
5000
4000
3000
2000
1000
0
23,8%
21,0%
22,1%
19,6%
15,3%
13,3% 13,6%
12,7%
11,6%
10,6%
9,5%
8,6% 8,5% 8,4% 8,8% 8,6% 8,7% 8,5% 8,6%
10%
25%
20%
15%
6016
6444
5831
5892
4771
3728
3497
3427
3159
2162
1589
1447
1308
1520
1369
1508
1370
1477
1342
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1Q
2014
1Q
2015
1H
2014
1H
2015
9M
2014
9M
2015
Number of markets in the russian Federation e-o-p
Share of markets in retail turnover in the Russian Federation (right scale)
5%
0%
Source: IA Infoline
REGIONAL STRUCTURE OF RETAIL TURNOVER
Regional structure of retail turnover in Russia is uneven: 11 constituent territories
generated 49.93% of retail turnover in 2015 (Moscow, Moscow region, Saint-Petersburg,
Sverdlovsk region, Krasnodar region, Samara region, Republics of Tatarstan and Bashkortostan,
Tyumen region, Chelyabinsk and Rostov regions).
Dynamics of share of 69 regions of the Russian Federation (apart from 11 largest) in
retail turnover in 2003-2015, %
47,8%
47,4%
48,2%
47,1%
46,6%
48,8%
48,9%
48,9%
50,1%
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
2015
Source: IA Infoline
In 2015 the share of Moscow region increased by 0.2 pp, Krasnodar region – by 0.1 pp in
the retail turnover by regions in the Russian Federation; the shares of Samara region,
Chelyabinsk region, Republic of Bashkortostan, as well as Republic of Tatarstan and Moscow
decreased; the shares of Saint-Petersburg, Tyumen region and Sverdlovsk region remained
unchanged.
40
Structure of retail turnover by subjects of the Russian
Structure of retail turnover by subjects of the Russian
Federation in 2014, %
Federation in 2014, %
Structure of retail turnover by subjects of the Russian
Structure of retail turnover by subjects of the Russian
Federation in 2015, %
Federation in 2015, %
Republic of
Tatarstan
3,0%
Samara region
2,4%
Republic of
Bashkortostan
3,0%
Sverdlov
region
3,8%
Chelyabinsk
Chelyabinsk
region
region
2,1%
2,1%
Tyumen region
3,0%
Rostov region
2,9%
Krasnodar
region
4,1%
Saint-
Petersburg
3,8%
Moscow
17,0%
Republic of
Tatarstan
2,8%
Samara region
2,1%
Tyumen
Tyumen
region
region
3,0%
3,0%
Sverdlov
region
3,8%
Chelyabinsk
region
1,9%
Republic of
Bashkortostan
2,8%
Rostov region
3,0%
Krasnodar
region
4,2%
Saint-
Petersburg
3,8%
Moscow
16,2%
Other
48,9%
Moscow region
6,1%
Other
50,1%
Moscow
region
6,3%
Source: IA Infoline
Volga federal district decreased by 0.7 pp, Siberian – by 0.3 pp, Urals
In 2015 (excluding
the Crimean federal district which has started to be considered only
the Crimean federal district which has started to be considered only
Eastern federal district continued grew by 0.4 pp, North-
from 2015) the share of the Far-Eastern federal district continued grew by 0.4 pp, North
from 2015) the share of the Far
by 0.2 pp, while the share of
by 0.4 pp, Southern – by 0.3 pp and North-Western – by 0.2 pp, while the share of
Caucasian – by 0.4 pp, Southern
the Volga federal district decreased by 0.7 pp, Siberian
by 0.3 pp, Urals – by 0.2 pp. The share
of the Central federal district did not change. In 2015 the most dynamic growth of share in the
of the Central federal district did not change. In 2015 the most dynamic growth of share in the
of the Central federal district did not change. In 2015 the most dynamic growth of share in the
eral district (by 0.44 pp), Far-
total retail turnover was demonstrated by the North-Caucasian federal district (by 0.44 pp), Far
total retail turnover was demonstrated by the North
by 0.21 pp, Moscow region – by
Eastern federal district – by 0.43 pp, Southern federal district
-Petersburg – by 0.02 pp),
0.15 pp, North-Caucasian federal district
tail turnover in 2015 was demonstrated by the Volga federal district
while the decline in the retail turnover in 2015 was demonstrated by the Volga federal district
while the decline in the re
(by 0.95 pp), Siberian federal district (by 0.4 pp), Urals federal district (by 0.35 pp) and Central
(by 0.95 pp), Siberian federal district (by 0.4 pp), Urals federal district (by 0.35 pp) and Central
(by 0.95 pp), Siberian federal district (by 0.4 pp), Urals federal district (by 0.35 pp) and Central
federal district (by 0.34 pp, including Moscow (by 0.65 pp)).
federal district (by 0.34 pp, including Moscow (by 0.65 pp)).
by 0.43 pp, Southern federal district – by 0.21 pp, Moscow region
Caucasian federal district – by 0.12 pp, (including Saint-
Structure of retail turnover by federal districts of the
turnover by federal districts of the
Russian Federation in 2014, %
Russian Federation in 2014, %
Structure of retail turnover by federal districts of the
Structure of retail turnover by federal districts of the
Russian Federation in 2015, %
Russian Federation in 2015, %
North-
Caucasian
5,1%
Southern
9,1%
Volga
18,4%
Urals
9,2%
North-
Caucasian
5,5%
Southern
9,4%
Volga
17,7%
Urals
9,0%
North-Western
8,9%
Central
34,2%
Crimean
0,9%
Siberian
10,2%
Far-Eastern
3,9%
North-Western
9,1%
Siberian
9,9%
Central
34,2%
Crimean
0,8%
Far-Eastern
4,3%
In 2015 the decrease by more than 5% of retail turnover vs. 2014 among largest subjects
In 2015 the decrease by more than 5% of retail turnover vs. 2014 among largest subjects
In 2015 the decrease by more than 5% of retail turnover vs. 2014 among largest subjects
of the Russian Federation (share in retail turnover of the Russian Federation is above 1%) was
of the Russian Federation (share in retail turnover of the Russian Federation is above 1%) was
of the Russian Federation (share in retail turnover of the Russian Federation is above 1%) was
41
Source: IA Infoline
demonstrated by Samara region (–19.1%), Chelyabinsk region (–17.3%), Omsk region (–16.8%),
Novosibirsk region (–16.5%), Nizhniy Novgorod region (–14.6%), Stavropol region (–14.2%),
Moscow (–14%), Perm region (–13.3%), Kemerovo region (–13 %), Republic of Tatarstan (–
12.8%), Krasnodar region (–12.8%), Saint-Petersburg (–12.2%), Republic of Bashkortostan (–
12%), Sverdlovsk region (–11%), Orenburg region (-10.1%), Irkutsk region (–9.9%), Altai region
(–9.4%), Tyumen region (–9.2%), Volgograd region (–9%), Saratov region (–8.8%), Voronezh
region (–7%), Krasnodar region (-7%), Leningrad region (–6.8%), Rostov region (–6.5%),
Moscow region (-6.3%). The growth was demonstrated only by the Republic of Dagestan (3.5%),
Voronezh region (7.2%), Republic of Dagestan (7%), Primorsky krai (0.8%) and Khabarovsk krai
(0%).
Regional structure of retail turnover of the Russian Federation in 2006-2015, %
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
Crimean federal district
6,1
6,4
5,90
5,66
6,10
6,12 6,16 6,33
9,4
4,1
8,5
3,8
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
35,8 34,4 33,4 33,83 34,21 34,57 34,15 33,89 34,51 34,17
5,7
6,25
20,9 18,8 17,0 17,31 17,47 17,41 17,07 16,97 16,88 16,23
9,13
9,4
3,84
4,1
9,42
8,0
5,45
3,6
17,5 17,9 18,4 18,27 18,20 18,18 18,33 18,46 18,66 17,71
10,0 10,4 10,8 10,14 9,69 9,52
9,00
11,7 11,7 11,6 10,95 10,72 10,82 10,83 10,78 10,34 9,94
4,34
4,1
0,84
0
9,35 9,36 9,14
4,15 4,15 3,89
8,73 8,99 8,92
4,66 4,85 4,97
4,07 3,98 3,89
0
9,13
4,00
9,02
5,13
9,17
3,96
9,01
5,14
9,01
3,82
9,21
5,01
9,3
4,2
8,8
4,0
3,87
0
3,84
0
3,91
0
3,8
0
3,9
0
9,54
9,35
9,71
0
0
Dynamics of retail turnover by federal districts in 2009-2015, % Y-o-Y, in comparable
Source: data of the Federal State Statistics Service
prices
10,3
9,3
7,6
6,3
8,9
8,7
6,7
4,9
4,2
5,2
4
7,6
6,6
5,9
5,5
3,2
8,3
7,4
4,8
3,9
3,4
7
6,2
4,5
3,8
1,2
2009 год
2013 год
7
5,1
5,3
1,6
2010 год
2014 год
8,3
6,1
4,7
3,2
2011 год
2015 год
2012 год
5,3
4,9
4,9
3,8
3,7
0,7
Central
North-Western
Southern
North-Caucasian
Volga
Urals
-1
Siberian
-1,3
Far-Eastern
-0,9
Crimean
-4,1
-5,6
-5,2
-4,5
-4,9
-10,8
-10,3
-7,6
-10
-12,8
-10,6
-11,9
-11,6
-8,6
Source: IA Infoline
15
10
5
0
-5
-10
-15
In a y-o-y decline in retail turnover was demonstrated by all regions, except Chelyabinsk
region (all regions except for 8)10, while in 2014 the decline was demonstrated only in 14 subjects
of the Russian Federation, in 2013– in 4 subjects, in 2012 – in 8 subjects, in 2011 – in 7 regions,
and in 2010 – in 7 subjects.
10 82 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).
42
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
y
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
5
1
n
a
J
5
1
r
a
M
5
1
y
a
M
5
1
l
u
J
5
1
p
e
S
5
1
v
o
N
Source: IA Infoline
GOVERNMENT REGULATION OF RETAIL
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.
In accordance with the Resolution No. 1191 of November 3, 2015 of the Government of
the Russian Federation "On some issues related to charging of a fare against compensation for
damage caused to federal general purpose motorways by transport vehicles with the permitted
maximum weight of over 12 tons", since November 15, 2015 a fare for heavyweight cargo trucks
weighing over 12 tons on federal roads has been introduced in Russia. The fare per 1 km will
amount to 1.53 rubles until February 29, 2016. From March 1, 2016 to December 31, 2018 the fare
per 1 km will amount to 3.06 rubles, from January 1, 2019 – 3.73 rubles per 1 km.
On June 30, 2015 the Federal Law No. 182-FZ of June 29, 2015 “On the amendments to
43
the Federal Law “On the state regulation of the production and circulation of ethyl alcohol,
alcoholic and alcohol-containing products and on the restriction of consumption (drinking) of
alcoholic products” came into effect. In accordance with the law, starting from January 1, 2016
all retailers selling alcohol products, including food service companies, shall provide the
information, confirming the fact of purchasing of alcohol products, to the USAIS (Unified State
Automated Information System for the government control over the volume of production and
circulation of ethyl alcohol, alcoholic and alcohol-containing products). By the middle of 2016
the majority of cash registers in stores selling alcohol (one-year deferral – until September 2017
– is specified for small locations) shall be connected to the system. Starting from July 1, 2016
retailers selling alcohol products in cities and towns shall record in the USAIS the facts of retail
sale of every bottle with a special federal stamp or excise stamp. Stores of retail sale of alcohol
products and food service companies located in towns with the population of less than 3,000
people are released from the USAIS.
MAIN COMPETITORS1111
The concentration level of the Russian food retail market is quite low – the share of 3
largest players is little over 15% of the market, which is considerably inferior to comparable
figures in Eastern and Western European countries.
Such a low capital concentration creates conditions for competition intensification
among retail chains in the nearest future. Currently, development of competition is expressed in
capturing extra markets due to growth of the chain itself including franchising schemes as well
as M&A deals. As a result, chains operating in the Russian market actively increase their
presence in Moscow and regions which leads to the record rates of business growth.
X5 Retail Group
X5 Retail Group N.V. is a leading Russian food retailer. The Company operates several
retail formats: the soft discounter chain under the Pyaterochka brand, the supermarket chain
under the Perekrestok brand, the hypermarket chain under the Karusel brand and Express
convenience stores under various brands.
As of December 31, 2015, X5 operates 7,020 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 6,265 Pyaterochka soft discounter stores, 478 Perekrestok supermarkets, 90
Karusel hypermarkets and 187 Express stores. As of December 31, 2015 the total selling space of
the company amounted to 3,333.17 thousand sq. m.
The Company operates 35 DCs and 1,561 Company-owned trucks across the Russian
Federation.
In 2015 sales of X5 Retail Group stood at 808,818 mln RUR.
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, 2015 "Metro Cash & Carry" LLC operates 85 trading centers in 45
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, a real,-, with the total space of 8.39 thousand sq. m. managed by "Metro Cash &
11 Source: IA Infoline, public sources of companies.
44
Carry" as a result of the transaction with “Real-Hypermarket” LLC (Metro Group), as well as 2
METRO trading centers in the Republic of Crimea with the total space of 12.6 thousand sq. m.
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 October 1, 2015 the company
operates 75 franchised “Fasol” stores, out of which 61 are located in Moscow and Moscow
region, 7 in Saint-Petersburg, 4 in Rostov-on-Don, 1 in Kaluga, 1 in Kaluga region (Obninsk), 1
in Kazan.
In 2015 METRO Cash & Carry opened 7 trading centers: in Moscow and Moscow region
(Lobnya), Orel, Rostov-on-Don, Surgut, Sverdlovsk region (Nizhniy Tagil), Republic of
Bashkortostan (Sterlitamak). Total selling space of the company as of December 31, 2015
amounted to 660.8 thousand sq. m.
Sales of METRO Cash & Carry, Russia for 2014 amounted to 209,5 bn rubles (which
represents 14.3% growth vs. 2013).
Auchan
Auchan is a large hypermarket chain operating on the Russian market since 2002. As of
January 1, 2016 “Auchan” in Russia operates 92 trading outlets with the total selling space of
832.18 thousand sq. m. 63 “Auchan” hypermarkets were opened in 29 regions (21 – in Moscow
and Moscow region, 6 – in Saint-Petersburg and Leningrad region, 4 – in Samara and Nizhniy
Novgorod regions, 3 – in 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, Barnaul. Besides, Auchan operates 23 “Auchan-city” mini-
hypermarkets in Moscow (8 stores), Yekaterinburg (1), Moscow region (3), Novosibirsk (2),
Nizhniy Novgorod (1), Saint-Petersburg (3), Saratov (2), Togliatti (1), Rostov-on-Don (1), Ufa
(1), as well as 7 “Nasha Raduga” hypermarkets in Penza region (Kuznetsk and Penza), Nizhniy
Novgorod region (Arzamas), Yaroslavl, Kaluga, Kostroma. Moreover, as of January 1, 2016
Auchan Group operates 4 "Kazhdy Den" convenience stores with the total space of about 400 sq.
m.
In 2015 the company opened 8 hypermarkets: “Auchan” hypermarkets in Moscow (2),
Perm, Nizhniy Novgorod, Barnaul, Chelyabinsk region (Magnitogorsk), “Auchan-city” in
Saratov, “Nasha Raduga” in Saratov region (Balashov).
Total selling space as of December 31, 2015 amounted to 835.6 thousand sq. m.
In 2014 Auchan Group net sales in accordance with the Russian Accounting Standards
amounted to 314.8 bn rubles.
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, 2015 the company operated 2,708 stores, including: 2,563 “Dixy”
neighbourhood stores, 108 “Victoria” stores, 1 “CASH” store and 36 “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, 2015 amounted to 907,6 sq. m.
45
In 2015 total sales of “Dixy” Group of Companies increased by 18.9% in ruble terms
compared to the same period last year and stood at 272.35 billion rubles.
Lenta
“Lenta”, the company which operates the hypermarket chain under the same brand, was
founded in 1993. As of December 31, 2015 "Lenta" operates 140 hypermarkets located in 69 cities
across Russia and 32 supermarkets in Moscow and Saint-Petersburg.
Total selling space of the chain as of December 31, 2015 amounted to 882.4 thousand sq.
m.
The number of the company’s employees amounted to more than 38,400 employees. 8.4
million people throughout Russia are the active loyalty cards holders of the chain.
In 2015 net sales of “Lenta” retail chain increased by 30.3% compared to 2014 and
amounted to 252.76 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, 2015 "O'KEY" operated 146 stores across Russia: 71 hypermarkets, 40
supermarkets and 35 discounters in 32 cities of Russia. As of December 31, 2015 total selling
space of the Company amounted to about 593 thousand sq. m.
In 2015 “O’KEY” retail chain opened 4 hypermarkets: in Moscow, Irkutsk and
Tyumen, Nizhniy Novgorod, 3 supermarkets in Saint-Petersburg, Lipetsk and Moscow region
and closed 2 hypermarkets in Krasnoyarsk and Moscow and 2 supermarkets in Tambov and
Barnaul.
In 2015 “О'KEY” sales amounted to 162.51 billion rubles, increasing by 6.9% compared
to 151.98 billion rubles in 2014.
Number of stores of the largest FMCG retailers in 2007-2015, eop.
Legal name
Brand
Pyaterochka
Perekrestok
Karusel, Perekrestok
Hyper
Perekrestok Express,
Kopeyka
All formats
Magnit
Magnit Hypermarket
Magnit Kosmetik
Magnit Family
All formats
Auchan, Auchan-City,
Nasha Raduga,
Kazhdy Den
Metro C&C, Metro
Punct, real,-
О'Кей, О'Кей-
экспресс, DA!
Lenta
Megamart, Minimart,
Dixy
X5 Retail Group
N.V.
”Magnit”, PJSC
“Auchan”, LLC
“МЕТRО Cash
and Carry”,
LLC
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”,
PJSC
Main formats1
D
S
H
CS
all formats
CS
H
МК
MF
all formats
2007 2008 2009 2010 2011 2012
1039 1392 1918 3220
674
370
275
194
848
207
301
321
2013
3882
390
2014
4789
403
2015
6265
478
22
46
58
71
77
78
83
82
90
0
0
0
45
70
134
189
209
187
890
1101 1372 1809 2386 3802
2194 2568 3204 4004 5006 6046
126
692
20
2197 2582 3228 4055 5309 6884
93
210
-
51
2
-
24
-
-
14
-
-
3
-
-
4544
7200
161
686
46
8093
7020
5483
9594
8344
219
190
155
1080
97
2121
9711 12089
H
18
33
38
44
49
57
79
85
96
S, H
39
48
52
57
62
68
72
80
87
S, H
H, S
24
26
37
34
46
36
57
39
71
42
83
56
94
87
108
146
132
172
D, S, H
388
481
537
646
894 1422
1712
2100
2599
1 Key: D - Discounter, H - Hypermarket, S - Supermarket, CS - Convenience Store, МК – Drogerie Store, MF – Magnit Family
46
Legal name
Brand
Victoria, Cash,
Deshevo, Kvartal,
Semeynaya Kopilka
All formats
Main formats1
2007 2008 2009 2010 2011 2012
2013
2014
2015
CS, S, H
194
215
208
257
225
77
87
95
109
all formats
388
493
537
646 1119 1499
1799
2195
2708
Total selling space of FMCG retailers in Russia in 2007-2015, eop, thousand sq. m.
Legal name
Brand
X5 Retail Group
N.V.
”Magnit”, PJSC
“Auchan”, LLC
Pyaterochka
Perekrestok
Karusel, Perekrestok
Hyper
Perekrestok Express,
Kopeyka
All formats
Magnit
Magnit Hypermarket
Magnit Kosmetik
Magnit Family
All formats
Auchan, Auchan-City,
Nasha Raduga, Kazhdy
Den
“МЕТRО Cash and
Carry”,
LLC
Metro C&C, Metro Punct,
real,-
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”, PJSC
О'Кей, О'Кей-экспресс,
DA!
Lenta
Megamart, Minimart,
Dixy
Victoria, Cash, Deshevo,
Kvartal, Semeynaya
Kopilka
All formats
Main
formats
D
S
H
CS
2007
2008
2009
2010
2011
2012
2013
2014
2015
357,5
251,7
419,2 493,0
222,4 284,4
586,3
313,0
735,2 1191,4 1414,1 1754,3 2422,6
484,0
333,9 383,5 397,8
415,8
126,0
232,5 285,6
351,8
371,3 368,2 375,8
358,6
390,1
-
-
-
9,2
12,7
26,7
35,2
43,6
36,4
all formats
CS
H
МК
MF
all formats
735,2
640,1
11,6
-
-
651,7
874,1
1063
767,1 978,5
81,4
56,4
-
-
-
-
1260,3 1453,1 1969,7 2222,9 2572,2 3333,2
1256,8 1637,8 1977,5 2312,2 2673,3 3119,6
639,1
165,1
170,2
0,4
484,8
-
823,5 1059,9 1422,3 1970,2 2549,3 3011,4 3590,6 4413,7
282,2 387,6 482,9
159,8 163,0
50,1
53,3
24,4
-
559,1
249,2
109,1
H
250,6
340,1 386,6
452,3 493,8 565,4 731,3 779,9
835,6
S, H
326,3
394,5 427,4
464,5
499,5 538,1 566,5
619,2
660,8
S, H
H, S
149,2
191,7 232,7
287,4
346,0 428,0 489,0
552,0
593,0
186,7
244,7 260,9
281,7
306,0 413,1 508,0
701,2
882,4
D, S, H
149,1
189,8 206,0
227,9
286,7 447,3 541,3
663,6
811,6
CS, S, H
99,7
109,6 104,6
123,5
118,4
67,6
75,9
82,9
96,1
all formats
149,1
191,0 206,0
227,9
405,1 514,9 617,2
746,5
907,6
Dynamics of net sales (excluding VAT) of the largest FMCG retailers in 2007-2015,
billion RUR
2008
Main formats Data
2012 2013 2014 2015
2010 2011
2009
2007
Legal name
CS, D, S, H
IFRS
136,1
207,2
275,08 342,58 452,48 490,09 532,7 633,87 808,82
”Magnit”, PJSC Magnit
CS, H, МК,
MF
IFRS
94,04
132,4
169,86 236,19 335,7 448,66 579,7 763,53 950,61
H
RAS
90,6
128,1
158,36 178,1 205,1 232,6 281,7 314,8
S, H
IFRS
89,2
111,2
114,3 117,99 139,96 164,6 183,2 209,5
-
-
S, H
H, S
IFRS
30,53
51,14
67,88 82,67 92,21 115,92 139,5 151,98 162,51
IFRS
32,9
50,8
55,6
70,6
89,8
109,9 144,3 194,0 252,76
All formats
CS, D, S, H
IFRS
36,65
48,3
54,26
64,8 102,23 147,05 180,5 229,0 272,35
47
X5 Retail Group
N.V.
Brand
Pyaterochka,
Perekrestok,
Karusel, E5.RU
Auchan, Auchan-
City, Nasha
Raduga
Metro C&C, Metro
Punct
O'key, O'key-
express
Lenta
“Auchan”, LLC
“МЕТRО Cash and
Carry”, LLC
“O'key”, LLC
“Lenta”, LLC
“Dixy Group”,
PJSC
COMPETITIVE ADVANTAGES OF “MAGNIT”
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 – 2015 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.
48
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, 2015 the chain consisted of 12,089 stores: 9,594 convenience stores, 219
hypermarkets, 155 “Magnit Family” stores and 2,121 drogerie stores in 2,361 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.
As of the end of 2015 the number of stores located in the Southern Federal region
accounted for 2,196, in the Volga region – 3,580, North-Caucasian – 451, Central – 3,163, North-
Western – 1,166, the number of stores in the Urals and Siberian regions amounted to 1,105 and
428 correspondingly.
As of December 31, 2015 the Company operates an in-house logistics system consisting
of 33 modern distribution centers (DCs): eight of them are located in the Southern Federal
region (Bataysk, Kropotkin, Slavyansk-On-Kuban, Erzovka, Shakhty and Novorossiysk,
Astrakhan, Krasnodar), eight are in the Volga Federal region (Engels, Togliatti, Dzerzhinsk,
Izhevsk, Sterlitamak, Zelenodolsk, Penza, Perm), another nine DCs are based in the Central
Federal region (Ivanovo, Oryol, Tambov, Tver, Tula, Yaroslavl, Voronezh, Kolomna, Smolensk),
49
three in the Urals Federal region (Chelyabinsk, Yekaterinburg, Tyumen), two in the North-
Western Federal region (Veliky Novgorod and Kolpino), two 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 Astrakhan
8 Krasnodar
9
Engels
10 Togliatti
11 Dzerzhinsk
12
Izhevsk
13 Sterlitamak
14 Zelenodolsk
15 Penza
16 Perm
17
Ivanovo
18 Oryol
19 Tambov
20 Tver
21 Tula
22 Yaroslavl
23 Voronezh
24 Kolomna
25 Smolensk
Southern
Southern
Southern
Southern
Volga
Volga
Volga
Volga
Volga
Volga
Volga
Volga
Central
Central
Central
Central
Central
Central
Central
Central
Central
26 Veliky Novgorod
North-Western
27 Kolpino
North-Western
28 Chelyabinsk
29 Yekaterinburg
Urals
Urals
50
22,203
31,516
27,052
42,121
58,982
25,321
36,485
66,707
20,040
22,380
30,523
34,141
42,360
23,747
62,635
48,045
52,929
18,244
26,875
15,726
51,205
58,904
53,523
84,160
43,436
21,060
52,541
19,198
75,159
297
337
258
454
728
-
111
211
314
365
296
468
573
578
265
242
764
298
204
172
802
410
471
532
110
176
493
334
1,007
2.49%
3.47%
4.56%
4.85%
4.79%
3.56%
0.06%
0.14%
2.53%
3.30%
2.99%
3.36%
4.92%
5.05%
0.27%
1.01%
4.52%
2.73%
2.68%
1.56%
6.74%
3.42%
3.61%
4.77%
1.75%
1.56%
4.75%
3.09%
5.96%
30 Tyumen
31 Omsk
32 Novosibirsk
33 Lermontov
Urals
Siberian
Siberian
North-
Caucasian
48,176
16,488
18,950
40,799
87
175
191
366
Total
1,291,631
12,089
0.11%
1.26%
0.90%
3.27%
100%
The Company operates automated stock replenishment system and a fleet of 5,882
vehicles.
51
1100.. PPRRIIOORRIITTIIEESS OOFF TTHHEE CCOOMMPPAANNYY’’SS DDEEVVEELLOOPPMMEENNTT
The Company outlines 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 900 – 950 convenience stores, 80 hypermarkets (including “Magnit Family”
stores) and 1,200 drogerie stores in 2016. 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 9 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.
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 neighborhood store oriented at all customers
living within 500 meters radius. The assortment of a convenience store consists of more than
3,700 food and non-food essential items offered at reasonable prices. Average total space of a
store is 455 sq. m., average selling space is 325 sq. m.
As of December 31, 2015 “Magnit” retail chain operates 9,594 convenience stores, out of
which 1,250 were opened in 2015.
Since 2007 the Company has been opening hypermarkets. As of December 31, 2015
“Magnit” retail chain operates 219 stores of this format, out of which 29 were opened in 2015.
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 the 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).
52
Strategic development of the hypermarket format enables to conduct deeper
segmentation of the existing markets and consider population with different income as
potential customers while achieving the high turnover per store and the average ticket as well
as the 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 – “a 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, 2015 the chain of
drogerie stores comprises 2,121 outlets out of which 1,041 were opened in 2015.
In May 2012 a new format – “Magnit Family” was launched. One of the reasons to
expand into this format was to meet the needs of customers in wider assortment and aggressive
pricing in the premises not suitable for a standard hypermarket due to space limitations.
Key features of the 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 the upside sales potential.
In 2015 the Group opened 58 “Magnit Family” stores. As of December 31, 2015 “Magnit”
retail chain operates 155 “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 continues to expand its footprint into areas with the low penetration and
continues to adjust its assortment to meet the needs of consumers.
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.
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.
53
Minimization of expenses
The main drivers of successful development in the above direction are further
improvements 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 the
Company’s profitability.
The status of Russia’s absolute leader in terms of sales, number of stores and customers
supports the Company’s efficient cooperation with suppliers and achievement of most
favorable purchasing terms.
Development of direct import, first of all direct import of fresh fruit and vegetables, also
contributes to the minimization of logistics costs.
54
1111.. IINNFFOORRMMAATTIIOONN OONN TTHHEE PPAAIIDD DDIIVVIIDDEENNDDSS
The dividend policy of the Company oriented to the social welfare of the shareholders
and securing of growth of capitalization of the Company.
The Company considers the growth of capitalization as the primary way of serving of
financial interests of the shareholders on the deriving revenue from the shares of the Company.
The dividend policy consists in the optimization of ratios between the expendable and
capitalized parts of realized profit of the Company in order to increase the market value of the
shares.
The dividend policy of the Company is based on the following principles:
-
the principle of transparency implies the identification and disclosure of information
about the obligations and responsibilities of the parties, participating in the
implementation of dividend policy, including the procedure and terms and
conditions of making decisions on the dividends payment;
the principle of timeliness implies the establishment of time limits during the
payment of dividends;
the principle of reasonableness implies that the decisions on the payment and on the
amount of dividends can be adopted only in case of achievement of positive
financial result by the Company, taking into consideration the development plan
and its investment programs;
the principle of justice implies the guarantee of equal rights of the shareholders for
reception of information about made decisions on dividends payment, their amount
and the procedure of their payment;
the principle of sequence implies the strict performance of procedures and principles
of the dividend policy;
the principle of development implies continual amendment of dividend policy
within the framework of improvement of the procedures of corporative governance
and revision of its provisions due to the change of strategic aims of the Company;
the principle of stability implies the intention of the Company to the stable dividends
payment.
-
-
-
-
-
-
On June 4, 2015 (minutes of 05.06.2015) the annual General Shareholders Meeting made
a decision to pay dividends on ordinary registered shares of PJSC “Magnit” following the
results of 2014 financial year.
On September 24, 2015 (minutes of 29.09.2015) the extraordinary General Shareholders
Meeting made a decision to pay dividends on ordinary registered shares of PJSC “Magnit”
following the results of the 6 months of 2015 financial year.
On December 22, 2015 (minutes of 24.12.2015) the extraordinary General Shareholders
Meeting decided to pay dividends on ordinary registered shares of PJSC “Magnit” following
the results of the 9 months of 2015 financial year.
Information on the paid dividends:
Dividend period: 2014 year.
The amount of declared (accrued) dividends on shares of this category (type) per one
share, RUB:
-the amount of dividend accrued per one ordinary registered uncertified share following
the results of 2014 financial year – 132.57 rubles.
55
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 2014 financial year – 12,535,998,832.35 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 12,535,983,454.23.
Dividend period: the 6 months of 2015 year.
The amount of declared (accrued) dividends on shares of this category (type) per one
share, RUB:
-the amount of dividends accrued per one ordinary registered uncertified share following
the results of the 6 months of 2015 financial year – 88.40 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 the 6 months of 2015 financial year – 8,359,223,782.00 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 8,359,213,527.60.
Dividend period: the 9 months of 2015 year.
The amount of declared (accrued) dividends on shares of this category (type) per one
share, RUB:
-the amount of dividends accrued per one ordinary registered uncertified share following
the results of the 9 months of 2015 financial year – 179.77 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 9 months of 2015 financial year – 16,999,294,788.35 rubles.
The total amount of dividends paid on all shares of the issuer of one category (type),
RUB: 16,999,273,935.03.
56
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, 2015 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 31.12.2015:
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 31.12.2015:
Number of registered
entities
Name
Share in the charter
capital, %
Legal entities
including nominal holders
Individuals
Total:
4
2
16
20
58.24
58.24
41.76
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, 12th 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:
57
- 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.
BONDS
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:
Identification number of the issue and the date
of its assignment
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
№ 4B02-01-60525-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 %
58
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
8.25 %
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.
59
Parameters of the bond issue of PJSC “Magnit” of BO-02 series:
Identification number of the issue and the date
of its assignment
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
№ 4B02-02-60525-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
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.
60
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-
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:
Identification number of the issue and the date
of its assignment
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.
61
The fourth coupon yield of BO-03 series Exchange-traded bond issue was paid on
September 10, 2012. The total amount of yield paid on the fourth coupon amounted to 61.71
million rubles, the amount of yield of the fourth coupon paid per one bond amounted to 41.14
rubles.
The fifth coupon yield of BO-03 series Exchange-traded bond issue was paid on March
11, 2013. The total amount of yield paid on the fifth coupon amounted to 61.71 million rubles,
the amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-03 series Exchange-traded bond issue was paid on
September 9, 2013. The total amount of yield paid on the sixth coupon amounted to 67.71
million rubles, the amount of yield of the sixth coupon paid per one bond amounted to 41.14
rubles.
On September 9, 2013 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:
Identification number of the issue and the date
of its assignment
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
№ 4B02-04-60525-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 %
62
5 coupon interest rate
6 coupon interest rate
8.25 %
8.25 %
The first coupon yield of BO-04 series Exchange-traded bond issue was paid on March
14, 2011. The total amount of yield paid on the first coupon amounted to 82.28 million rubles,
the amount of yield of the first coupon paid per one bond amounted to 41.14 rubles.
The second coupon yield of BO-04 series Exchange-traded bond issue was paid on
September 12, 2011. The total amount of yield paid on the second coupon amounted to 82.28
million rubles, the amount of yield of the second coupon paid per one bond amounted to 41.14
rubles.
The third coupon yield of BO-04 series Exchange-traded bond issue was paid on March
12, 2012. The total amount of yield paid on the third coupon amounted to 82.28 million rubles,
the amount of yield of the third coupon paid per one bond amounted to 41.14 rubles.
The fourth coupon yield of BO-04 series Exchange-traded bond issue was paid on
September 10, 2012. The total amount of yield paid on the fourth coupon amounted to 82.28
million rubles, the amount of yield of the fourth coupon paid per one bond amounted to 41.14
rubles.
The fifth coupon yield of BO-04 series Exchange-traded bond issue was paid on March
11, 2013. The total amount of yield paid on the fifth coupon amounted to 82.28 million rubles,
the amount of yield of the fifth coupon paid per one bond amounted to 41.14 rubles.
The sixth coupon yield of BO-04 series Exchange-traded bond issue was paid on
September 9, 2013. The total amount of yield paid on the sixth coupon amounted to 82.28
million rubles, the amount of yield of the sixth coupon paid per one bond amounted to 41.14
rubles.
On September 9, 2013 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:
Identification number of the issue and the date
of its assignment
Volume of the issue
Number of securities
Nominal value of each security
63
№ 4B02-05-60525-P of February 16, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
100% of nominal value
04.03.2011
open subscription
1,092nd day from the date of placement
(28.02.2014)
6
RU000A0JR9N3
RU000A0JR9N3
8.00 %
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.
On February 28, 2014 PJSC “Magnit” fulfilled its obligations to bond holders on time and
in full and redeemed the nominal value of bonds of BO-05 series.
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.
64
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.
Parameters of the bond issue of PJSC “Magnit” of BO-06 series:
Identification number of the issue and the date
of its assignment
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.
65
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.
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:
Identification number of the issue and the date
of its assignment
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.
66
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.
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.
The fifth coupon yield of BO-07 series Exchange-traded bond issue was paid on March
23, 2015. The total amount of yield paid on the fifth coupon amounted to 221.9 million rubles,
the amount of yield of the fifth coupon paid per one bond amounted to 44.38 rubles.
The sixth coupon yield of BO-07 series Exchange-traded bond issue was paid on
September 21, 2015. The total amount of yield paid on the fifth coupon amounted to 221.9
million rubles, the amount of yield of the fifth coupon paid per one bond amounted to 44.38
rubles.
On September 21, 2015 PJSC “Magnit” fulfilled its obligations to bond holders on time
and in full and redeemed the nominal value of bonds of BO-07 series.
Based on trading for the period from 05.01.2015 to 21.09.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-07 series varied from min 94.32%
(27.01.2015) to max 100.00% (19.06.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 95.12% (25.03.2015) to max 99.98% (09.09.2015, 10.09.2015,
11.09.2015, 14.09.2015).
Bond issue of PJSC “Magnit” of 01 series:
In 2013 the Company offered its investors the issue of non-convertible certified interest-
bearing 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 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 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
№ 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)
67
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
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 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 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.
The fourth coupon yield of 01 series bond issue was paid on February 24, 2015. The total
amount of yield paid on the fourth coupon amounted to 211.9 million rubles, the amount of
yield of the fourth coupon paid per one bond amounted to 42.38 rubles.
The fifth coupon yield of 01 series bond issue was paid on August 25, 2015. The total
amount of yield paid on the fifth coupon amounted to 211.9 million rubles, the amount of yield
of the fifth coupon paid per one bond amounted to 42.38 rubles.
Based on trading for the period from 05.01.2015 to 30.12.2015 the weighted average price
of transactions with bonds of 01 series varied from min 89.01% (05.01.2015) to max 99.72%
(28.12.2015 and 30.12.2015) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 89.12% (12.01.2015) to max 99.63% (28.12.2015, 29.12.2015, 30.12.2015).
Bond issue of PJSC “Magnit” of BO-08 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-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:
68
Identification number of the issue and the date
of its assignment
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4B02-08-60525-P of August 10, 2011
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
02.04.2013
open subscription
1,092nd day from the date of placement
(29.03.2016)
6
RU000A0JTT21
RU000A0JTT21
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
8.40 %
The first coupon yield of BO-08 series Exchange-traded bond issue was paid on October
1, 2013. The total amount of yield paid on the first coupon amounted to 209.4 million rubles, the
amount of yield of the first coupon paid per one bond amounted to 41.88 rubles.
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.
The fourth coupon yield of BO-08 series Exchange-traded bond issue was paid on March
31, 2015. The total amount of yield paid on the fourth coupon amounted to 209.4 million rubles,
the amount of yield of the fourth coupon paid per one bond amounted to 41.88 rubles.
The fifth coupon yield of BO-08 series Exchange-traded bond issue was paid on
September 29, 2015. The total amount of yield paid on the fifth coupon amounted to 209.4
million rubles, the amount of yield of the fifth coupon paid per one bond amounted to 41.88
rubles.
Based on trading for the period from 05.01.2015 to 30.12.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-08 series varied from min 87.00%
(12.01.2015) to max 99.98% (30.01.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 87.00% (from 12.01.2015 to 16.01.2015, from 19.01.2015 to
23.01.2015) to max 96.89% (from 16.06.2015 to 19.06.2015, 22.06.2015).
69
Bond issue of PJSC “Magnit” of BO-09 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-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:
Identification number of the issue and the date
of its assignment
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
№ 4B02-09-60525-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
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.
70
The fourth coupon yield of BO-09 series Exchange-traded bond issue was paid on March
31, 2015. The total amount of yield paid on the fourth coupon amounted to 209.4 million rubles,
the amount of yield of the fourth coupon paid per one bond amounted to 41.88 rubles.
The fifth coupon yield of BO-09 series Exchange-traded bond issue was paid on
September 29, 2015. The total amount of yield paid on the fifth coupon amounted to 209.4
million rubles, the amount of yield of the fifth coupon paid per one bond amounted to 41.88
rubles.
Based on trading for the period from 05.01.2015 to 30.12.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-09 series varied from min 87.00%
(12.01.2015) to max 101.00% (11.03.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 87.00% (from 12.01.2015 to 16.01.2015, from 19.01.2015 to
22.01.2015) to max 96.89% (from 16.06.2015 to 19.06.2015, 22.06.2015).
Bond issue of PJSC “Magnit” of 02 series:
In 2015 the Company offered its investors the issue of non-convertible certified interest-
bearing bonds to the bearer with the obligatory centralized custody of 02 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 bonds of 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 non-convertible certified interest-bearing bonds payable to the bearer
of 02 series with the obligatory centralized custody of PJSC “Magnit” on the MICEX stock
exchange commenced on May 15, 2015. 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 02 series:
Date and the number of state registration
Volume of the issue
Number of securities
Nominal value of each security
Placement price
Date of placement
Method of placement
Redemption date
Number of coupons
Trading code
ISIN code
Interest rate on the basis of the auction results
1 coupon interest rate
2 coupon interest rate
3 coupon interest rate
4 coupon interest rate
5 coupon interest rate
6 coupon interest rate
№ 4-02-60525-P of December 27, 2012
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
15.05.2015
open subscription
1,092nd day from the date of placement
(11.05.2018)
6
RU000A0JVE99
RU000A0JVE99
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
71
The first coupon yield of 02 series bond issue was paid on November 13, 2015. The total
amount of yield paid on the first coupon amounted to 301.65 million rubles, the amount of yield
of the first coupon paid per one bond amounted to 60.33 rubles.
Based on trading for the period from 15.05.2015 to 30.12.2015 the weighted average price
of transactions with bonds of 02 series varied from min 100.99% (30.09.2015, 21.12.2015) to max
101.01% (15.12.2015) of the nominal value. Acknowledgeable quote within this period
fluctuated from min 100.99% (30.09.2015, 01.10.2015, 02.10.2015, from 05.10.2015 to 09.10.2015,
12.10.2015, 13.10.2015) to max 101.00% (from 02.06.2015 to 05.06.2015, from 08.06.2015 to
11.06.2015, from 15.06.2015 to 19.06.2015, 22.06.2015).
Bond issue of PJSC “Magnit” of 03 series:
In 2015 the Company offered its investors the issue of non-convertible certified interest-
bearing bonds to the bearer with the obligatory centralized custody of 03 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 bonds of 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.
Placement of the non-convertible certified interest-bearing bonds payable to the bearer
of 03 series with the obligatory centralized custody of PJSC “Magnit” on the MICEX stock
exchange commenced on May 15, 2015. 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 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
№ 4-03-60525-P of December 27, 2012
5,000,000,000 rubles
5,000,000 bonds
1,000 rubles
100% of nominal value
15.05.2015
open subscription
1,092nd day from the date of placement
(11.05.2018)
6
RU000A0JVE81
RU000A0JVE81
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
12.10 %
72
The first coupon yield of 03 series bond issue was paid on November 13, 2015. The total
amount of yield paid on the first coupon amounted to 301.65 million rubles, the amount of yield
of the first coupon paid per one bond amounted to 60.33 rubles.
Based on trading for the period from 15.05.2015 to 30.12.2015 the weighted average price
of transactions with bonds of 03 series varied from min 100.90% (12.10.2015) to max 101.99%
(25.11.2015) of the nominal value. Acknowledgeable quote within this period fluctuated from
min 100.99% (29.05.2015, 01.06.2015, 30.09.2015, 01.10.2015, 02.10.2015, 05.10.2015, 06.10.2015,
07.10.2015, 08.10.2015, 09.10.2015, 12.10.2015, 13.10.2015) to max 101.00% (from 25.05.2015 to
28.05.2015, from 02.06.2015 to 05.06.2015, from 08.06.2015 to 11.06.2015, 15.06.2015).
Bond issue of PJSC “Magnit” of BO-10 series:
In 2015 the Company offered its investors the tenth Exchange-traded bond issue.
Issue comprised 10 million securities with the nominal value of 1 thousand rubles.
Maturity of the issue is 1 year. The purpose of the issue of the exchange-traded bonds of BO-10
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-10 series with the obligatory centralized custody of PJSC “Magnit” on
the MICEX stock exchange commenced on July 23, 2015. The number of the placed securities
amounted to 10 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-10 series:
Identification number of the issue and the date
of its assignment
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
№ 4B02-10-60525-P of July 30, 2013
10,000,000,000 rubles
10,000,000 bonds
1,000 rubles
100% of nominal value
23.07.2015
open subscription
364th day from the date of placement
(21.07.2016)
2
RU000A0JVMV2
RU000A0JVMV2
11.60 %
11.60 %
11.60 %
Based on trading for the period from 23.07.2015 to 30.12.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-10 series varied from min 98.01%
(07.09.2015) to max 100.60% (13.10.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 99.82% (20.08.2015, 21.08.2015) to max 100.39% (30.11.2015).
73
Bond issue of PJSC “Magnit” of BO-11 series:
In 2015 the Company offered its investors the eleventh Exchange-traded bond issue.
Issue comprised 10 million securities with the nominal value of 1 thousand rubles.
Maturity of the issue is 1 year and a half. The purpose of the issue of the exchange-traded bonds
of BO-11 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-11 series with the obligatory centralized custody of PJSC “Magnit” on
the MICEX stock exchange commenced on October 20, 2015. The number of the placed
securities amounted to 10 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-11 series:
Identification number of the issue and the date
of its assignment
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
№ 4B02-11-60525-P of July 30, 2013
10,000,000,000 rubles
10,000,000 bonds
1,000 rubles
100% of nominal value
20.10.2015
open subscription
546th day from the date of placement
(18.04.2017)
3
RU000A0JVUZ6
RU000A0JVUZ6
11.70 %
11.70 %
11.70 %
11.70 %
Based on trading for the period from 20.10.2015 to 30.12.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-11 series varied from min 100.17%
(20.10.2015) to max 100.99% (22.12.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 100.20% (20.10.2015) to max 100.89% (30.10.2015, 02.11.2015,
05.11.2015, 12.11.2015).
Bond issue of PJSC “Magnit” of BO-001P-01 series:
In 2015 the Company offered its investors the Exchange-traded bond issue of BO-001P-
01 series.
Issue comprised 10 million securities with the nominal value of 1 thousand rubles.
Maturity of the issue is 1 year and a half. The purpose of the issue of the exchange-traded bonds
74
of BO-001P-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-001P-01 series with the obligatory centralized custody of PJSC
“Magnit” on the MICEX stock exchange commenced on November 11, 2015. The number of the
placed securities amounted to 10 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-001P-01 series:
Identification number of the issue and the date
of its assignment
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
№ 4B02-01-60525-P-001P of November 5,
2015
10,000,000,000 rubles
10,000,000 bonds
1,000 rubles
100% of nominal value
11.11.2015
open subscription
546th day from the date of placement
(10.05.2017)
3
RU000A0JVXM8
RU000A0JVXM8
11.20 %
11.20 %
11.20 %
11.20 %
Based on trading for the period from 11.11.2015 to 30.12.2015 the weighted average price
of transactions with Exchange-traded bonds of BO-001P-01 series varied from min 99.61%
(30.12.2015) to max 100.15% (17.12.2015) of the nominal value. Acknowledgeable quote within
this period fluctuated from min 99.79% (30.12.2015) to max 100.00% (12.11.2015, 13.11.2015,
from 16.11.2015 to 20.11.2015, from 23.11.2015 to 25.11.2015).
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
75
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.
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 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”.
76
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.
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 05.01.2015 to 30.12.2015 on MICEX Stock Exchange the
average weighted price of transactions with shares varied from min 9,936.00 rubles (05.01.2015)
to max 12,773.00 (05.08.2015).
77
According to the trading held from 02.01.2015 to 31.12.2015 on the London Stock
According to the trading held from 02.01.2015 to 31.12.2015 on the London Stock
According to the trading held from 02.01.2015 to 31.12.2015 on the London Stock
transactions with the global depositary receipts as of closing varied from
Exchange the price of transactions with the global depositary receipts as of closing varied from
transactions with the global depositary receipts as of closing varied from
min $37.44 (28.01.2015) to max $60.2 (16.04.2015).
min $37.44 (28.01.2015) to max $60.2 (16.04.2015).
78
Market capitalization of PJSC “Magnit” as of December 31, 2015 amounted to
1,052,089,635,730.00 rubles according to JSC “MICEX SE”.
79
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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
29.12.2015
Change of terms and conditions of the
guarantee provision under the General
Agreement №42-0-10/2-2015 on the
procedure of conclusion of credit
transactions executed between Joint-Stock
Company “Russian Agricultural Bank”
and JSC “Tander”, according to the
additional agreement to the guarantee
agreement №42-0-10/3-2015.
The Creditor: JSC “Russian Agricultural
Bank”
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, %
28,801,369.86
25.71
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)
The term not less than the term of
validity of the Credit Agreement
increased by 180 calendar days.
JSC “Tander” timely and in full fulfils its
obligation to the Creditor. There are no
cases when a Creditor makes demands to
the Guarantor to fulfill of unperformed
obligations of JSC “Tander”.
The transaction was approved by the
General Shareholders Meeting on
December 22, 2015 (Minutes w/o № of
24.12. 2015).
Other information on transaction indicated at the
issuer’s discretion
none
80
1144.. TTRRAANNSSAACCTTIIOONNSS EEXXEECCUUTTEEDD WWIITTHHIINN TTHHEE YYEEAARR 22001155 CCOONNSSIIDDEERREEDD
RREELLAATTEEDD PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS AACCCCOORRDDIINNGG TTOO TTHHEE FFEEDDEERRAALL LLAAWW OONN ““JJOOIINNTT
SSTTOOCCKK CCOOMMPPAANNIIEESS””
Information on the transactions executed in 2015 year and considered as related party
transactions according to the Federal Law “On Joint Stock Companies” is represented in the
annex to the Annual Report (ref. Annex №5).
81
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.
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
82
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.
INDUSTRY RISKS
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 continued to decrease in 2015 (from $59 per
barrel of oil as of January 2, 2015 to $37 per barrel as of December 31, 2015), which affected
adversely the growth rate of the Gross Domestic Product (GDP) in the Russian Federation in
2015. Further decrease of oil prices or their fixing at the current level, as well as decrease of
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 economic sanctions against the Russian
Federation by the United States of America, European Union and other countries due to the
developments in Ukraine was and continues to be detrimental to the state of the economy.
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
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As of December 31, 2015 the Group operates in 7 federal districts in 2,361 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.
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, 2015 the stores operating under “Magnit” brand are located in the
Southern federal region (2,196), Central federal region (3,163), Volga federal region (3,580),
North-Caucasian federal region (451), North-Western federal region (1,166), Urals federal
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region (1,105) and Siberian federal region (428).
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
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
85
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 changed 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.
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’
86
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
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
87
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.
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
88
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
“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
89
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
reliable partners, counteragents and contractors, which enables
further risk
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.
COUNTRY AND REGIONAL RISKS
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, 2015 the Group
operates in 7 federal regions in 2,361 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
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.
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
90
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.
Political instability may lead to deterioration of the macroeconomic situation, including
flight of capital, decrease of investments and business activity.
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 creates a threat that at least some of those companies and banks with significant debt in
91
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
the elimination of violence, particularly by imposing emergency rule in certain territorial
92
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.
Any instability in the social sphere may negatively impact the confidence in Russian
economy 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
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
continued to decrease in 2015 (from $59 per barrel of oil as of January 2, 2015 to $37 per barrel as
of December 31, 2015), which affected adversely the growth rate of the Gross Domestic Product
93
(GDP) in the Russian Federation in 2015. Further decrease of oil prices or their fixing at the
current level, as well as decrease of 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.
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
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.
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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.
SOCIAL RISKS
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
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
95
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 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
96
including natural disasters (hurricanes, floods, earthquakes, etc)
risks,
geographical feature of the Southern Federal District.
is distinctive
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
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, 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.
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 dollar-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 purchases 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
97
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
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 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
98
Federation regarding loan criteria, credit quality, loan loss provision, risks’ diversification and
other requirements. Application of more severe regulations or interpretations may result into
insufficient equity capital or insolvency of some banks.
As a rule the Group supports relations and keeps its accounts only with a limited
joint-stock company
number of reliable creditworthy Russian banks, including public
“Sberbank of Russia” (PJSC “Sberbank of Russia”), joint-stock company “ALFA-BANK” (JSC
“ALFA-BANK”), public joint-stock company VTB Bank (PJSC “VTB Bank”), “Gazprombank”
(joint-stock company) and public joint-stock company “ROSBANK”. Bankruptcy of one or
several of the specified 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
99
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 programs of capital investments and loans;
•
increase the receivables turnover;
• additional measures to reduce costs;
•
revision of the financing structure.
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.
LEGAL RISKS
The Company and the Group operate only on the Russian domestic market. The
100
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.
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
101
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
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
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Russian investor protection legislation may be less favorable than the legislation of the
other countries with the developed market economy. Besides, there is a risk of changes of the
applicable legislation in future which may be unfavourable for investors. Income of the foreign
investors from the investments into the Company’s shares may be taxed in accordance with the
Russian legislation. Deterioration of the general economic and political situation in the country
may result in tightening of the currency regulation and control and in limitation of the
performance of transactions with the Company’s shares.
Risks inherent in the tax legislation
Tax legislation of the Russian Federation is exposed to frequent changes. In the
Company’s opinion these risks influence it as is the case with the other market participants. 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.
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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
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.
Risks related to the change of the judicial practice on issues related to the Issuer’s
operation (including licensing issues) which adversely affect the results of its operation, as
well as the results of the current legal proceedings in which the Issuer is involved
While carrying out commercial activity and making business decisions, the Issuer takes into
consideration the law enforcement practice in order to estimate and forecast possible scenarios and to foresee
the risks.
The Issuer regularly monitors decisions made by the high courts and estimates the trends
of the law enforcement practice, formed at the level of district arbitration courts, actively
implementing and using it not only for the protection of its rights and legitimate interests
through legal proceedings but also for the resolution of legal issues arising in the course of the
104
Company’s operation. Therefore, the risks related to the change of the judicial practice are
considered to be insignificant.
Risk of loss of business reputation (reputational risk)
Risks related to the sale of private label products
As a way of attracting customers and strengthening the consumer loyalty for private
label, the Group plans to continue the sale of private label products. Therefore, there exists the
probability of potential customer claims to the quality of the Group’s private label products.
High product quality is of the utmost importance for the private label, and chain operators are
exposed to serious risks while promoting poor quality products under private label. Claims to
the quality or other characteristics of such products may dramatically damage the image of the
Company on the whole, the brand attractiveness for the Company customers and lead to
considerable financial losses.
Risks related to the quality of products for sale
There is a risk related to the Group’s responsibility for the quality of products sold at the
Group’s stores as well as the risk of filing a claim due to the harm to life and health. According
to the agreements entered into with the majority of suppliers, the producer takes the material
liability for the quality of sold products, provided that the Group observes the necessary
storage conditions.
Such claims may also be addressed to the seller of the products at the discretion of a
complainant. Any similar situation may damage the Company’s image and reputation, reduce
the market share of the Group and negatively affect its financial position. Moreover, there is a
risk related to the careless attitude of the Group personnel to the storage conditions of the
products, which may lead to legal material liability of the Group under such claims.
The “Magnit” trade mark is used by other participants of the sales turnover as a
component of the company name, which may have material effect on the operation of the
Group.
The Group invested substantial funds in promotion of its “Magnit” brand on the
Russian market, which is also the part of the company name for the private label products of
the Group. Due to “Magnit” brand the Group achieved great success in its operation.
Meanwhile, the trademark “Magnet” in Latin letters in the certain classes is registered in
the name of the third party. Today, the scope of legal protection for trademarks rights for
trading organizations, provided by the Russian law, is not completely clear. A certain risk of
interests’ conflict between the owners of the trademark “Magnit” (or ‘’Magnet”) definitely
exists, the Group might be forced to re-brand its stores. The expenses for such re-branding may
negatively affect the operation results of the Group.
Moreover, due to the fact that Russian legislation provides limited protection for the
company names on the market, there exist a number of other organizations using “Magnit” in
their names. Business activity of some of them has partially similar features to the operation of
the Group. The Group cannot prevent these organizations from using such names, and this may
result in negative effect of these companies’ activity on the business activity and reputation of
the Group.
Strategy risk
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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
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
106
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.
Risks related to the Company’s operation
The Issuer is involved in a number of legal proceedings which arise in the ordinary course
of business and do not pose any material risk to the financial and operating performance of the
Issuer.
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
of the Issuer within the provided guarantee accounts for 36,391,747,359.60 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
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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.
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, Aslan Shkhachemukov, Ilya
Sattarov, Alexander Kazakov and Alexander Barsukov. According to the labor contracts entered
between the Group’s companies and the bodies indicated above, they have the right to resign
office by filing the notification 1 month prior to the dismissal. The Group is not insured from
the harm which can be caused to the Group by the loss (discharge) of its leading specialists and
top managers.
The Company strives to hire the most qualified and experienced personnel, and adjust
its compensation policy to the changing standards of the Russian labor market.
The loss of one or more managers or failure to attract and motivate extra highly skilled
employees required for effective management of a large-scale business may have material
negative effect on the business activity, operating results and financial position of the Group.
Risks related to the accounting and control system
The system of the Group’s financial and management reporting currently operating is
based on the volume of operations exercised by the Group within the certain period of time. In
case of substantial business expansion of the Group, the technical level of the accounting and
control system may fail to meet the requirements of the information processing efficiency and
lead to the delays in receiving the adequate data for making tactic and strategic management
decisions and thus damage the effective operation of the Group.
The risks related to the computer network failure
Managing and processing of operational and financial information in the Group is
carried out via electronic devices of information transmission and processing including the
network of the personal computers, access to Internet and system of financial accounting and
automated system of stock management. As a result, 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
108
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 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.
Risks related to the Company’s plans to increase the sales of the products under
“Magnit” brand and the development of new brands
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The expansion strategy of the Group presupposes the growth of sales of private label
products (“for “Magnit” stores”). As of December 31, 2015 the sales share of such products
amounted to 10.99%. However it should be noted that together with the increasing number of
hypermarkets, the sales share of “private label” represented by 596 items in all formats may
reduce as the total assortment of a hypermarket amounts to more than 17,900 SKUs on average,
while the product mix of a convenience store amounts to more than 3,700.
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.
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CCOOMMPPAANNYY
SOCIAL RESPONSIBILITY
“Magnit” retail chain is Russia’s largest non-governmental employer. As of December
31, 2015 the company’s total headcount comprised 265,989 employees, out of which:
194,723 – in-store personnel,
40,369 – people engaged in distribution,
19,108 – people in regional branches,
9,349 – Head Office employees,
2,440 – other personnel (own production, “Magnit Energo”, “Green Line” greenhouse
complex).
Each week Magnit opens several hundred job vacancies. The company offers a decent
salary and the extended number of the employee benefits including seniority bonuses,
corporate pension programs in the company’s own pension fund, corporate mobile
communications plans, corporate taxi services, corporate educational programs, free and
discount tours for the company’s employees and their children, special offers on the services of
the company’s partners, gym for the Head Office employees etc.
The company operates in accordance with the Labor Code of the Russian Federation
and the company’s internal regulations on staff relations.
Magnit is strongly committed to the principle of equal opportunities, fairness and
tactful attitude towards its employees. In accordance with the “Code of business ethics of PJSC
“Magnit” the company’s high level of business culture is based on the transparency of all
personnel-related procedures, accounting and payment policies, incentives and social measures
taken to ensure the comfortable working conditions of the employees across the company. The
staff business relations are based on the principles of justice, trust, honesty and ethics.
New employees are selected on a competitive basis if their professional knowledge,
skills and experience correspond to the required skills and company’s values.
The company’s hiring process is effectuated in accordance with the “Recruitment
regulations”, which reflect overall rules of the hiring procedure, determination of the hiring
needs, steps to be taken through the recruitment process, procedure of collaboration with the
divisions participating in the hiring process, vacancies closing dates.
All Magnit’s vacancies are publicly available on its official website www.magnit-
info.ru as well as on other job search websites.
Magnit collaborates with the leading universities in the regions with the demand for
students or graduates.
The company regularly participates in career fairs, career and faculty days, organizes
specific courses and provides the students with the opportunity to do internships.
According to the “Code of business ethics”, all preferences including nationality,
gender, age, religion etc. are prohibited in the company. If an employee experiences any aspects
of biased attitude or discrimination, they may address the special complaints processing
commission, which has an obligation to thoroughly examine the issue.
The salary and incentives of all employees are determined for the specific positions and
do not depend on gender, nationality or age of an employee but only on their performance.
The company’s turnover is one of the lowest in the Russian food retail sector. One of
the company’s priorities is to take consistent steps in order to decrease the turnover rates. That
111
is why their level has been constantly slowing down and for the last several years almost
halved.
The company’s labor relations fully conform to the provisions of the Russian Labor
Code. Moreover, the company has internal Standards and Regulations based on the legislation,
which stipulate all HR management procedures, payroll calculation, benefits and compensation
schemes, internal labor policies and procedures etc.
All workplaces comply with the legislation and the company’s standards. According to
the latter all workplaces shall be ergonomic, safe and aesthetic.
The company’s Health and safety department closely monitors and assesses the
existing working conditions, elaborates and implements the procedures of their enhancement.
Magnit conducts projects related to health and safety culture development, labor
protection and the development of the occupational risk management system and practice.
Under these projects Magnit implements the following priorities of its labor protection policy:
• health and safety protection of the company’s employees,
• compliance with the requirements of the applicable Russian legislation and other labor
protection regulations;
• employees’ engagement in active participation in all labor protection measures and
events;
• constant improvement of the company’s labor protection management system.
The measures taken to ensure that employees are provided with the decent working conditions
are the following:
• All equipment and raw materials are tested and thoroughly examined before their actual
use by the employees;
• Workplaces come under close scrutiny and assessment;
• Organization of health and safety courses, trainings and tests of the employees’
knowledge and understanding of the topic;
• Purchases of the safety clothing, footwear and equipment;
• Mandatory medical examination of the employees;
• Compliance of all buildings, construction and production sites, facilities etc. with the
applicable Russian legislation.
The company keeps the statistics of accidents. As a result of measures taken to reduce
the number of occupational injuries, the total accident frequency rate of the company (number
of accidents per 1,000 employees) in 2015 decreased by 23%, the number of injuries fell by 8%.
In 2015 the company worked hard and took the following steps to reduce the number
of accidents:
•
safety culture campaign. Information on the labor protection measures taken by
the company is systematically published in "Nash Magnit" corporate newspaper;
•
•
improvement of provision of the personal protection equipment;
planned introduction of the new labor safety practices in all business divisions in
compliance with the employment legislation and work safety regulations;
•
regular notification of employees of the occupational safety rules: allocation of
visual materials, such as instruction sheets and occupational safety stands, demonstration of
videos about safe working methods in all business divisions of the company;
•
development of the "Regulations on the safety management system" in the
company including the procedure of the special assessment of the working conditions in
accordance with the legislation;
112
•
development and introduction of labor protection regulations by professions and
types or work;
•
holding of regular daily briefings together with the heads of the structural
divisions of the company concerning the safety provision, labor protection and reduction of the
accident frequency rate.
The company has developed and implemented the "Standard on the financial
assistance to employees in difficult straits", according to which in case of a serious disease or
injury the company provides financial help to the employee.
If an employee gets a serious occupational injury, the company takes care of this
person by organizing a special commission in order to monitor the condition of the injured and
to provide a timely financial assistance.
The company has the “Employees and applicants claims commission” which is
authorized to conduct official investigations of claims related to labor and social disputes. The
commission considers objectively each claim from employees and applicants received by the
company’s hotline.
Following the results of claims consideration, the Commission makes decisions on
administrative actions against those responsible, as well as on the change of the company’s
technologies, rules and work standards to settle conflicts, reduce social strain of the personnel
and develop the culture of respect for employees.
As a result of work of the “Employees claims commission” the company can see a
significant decrease in the number of claims to the external labor inspections.
In order to provide employees with additional social guarantees the company
implements a number of social programs, which can be used by any employee regardless of the
length of employment, professional achievements and position occupied.
The company carries out the following social programs:
•
financial assistance of employees in difficult straits;
•
free health resort tours for employees who have the need of health resort
treatment including the company’s assistance in payment of transfer to the health resort and
back for those employees who work far from the Black Sea coast of Krasnodar region;
•
financial assistance of employees who raise children in one-parent or multiple
children families, as well as disabled children, in payment of recreation, rehabilitation and
treatment;
•
provision of employees with an opportunity to buy tours to health resorts, hotels,
recreation facilities and children’s camps at corporate discount prices;
•
provision of employees with an opportunity to buy products and use services of
organizations of different business areas on special favorable terms and/or at discounts
provided only to the company’s employees;
corporate pension programs of the company’s own pension fund;
bus service, corporate taxi service;
blood donor assistance for seriously ill employees and their close family
•
•
•
members;
•
•
In 2015 more than 200 thousand employees used the above mentioned social programs.
Apart from various social programs, the company holds different regular corporate
events and motivation programs which are an important and essential part of the corporate
culture of the company and are aimed at:
New Year gifts for children of employees;
free corporate gym to the Head Office employees.
•
development of corporate culture and team spirit,
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recognition of personal and professional achievements,
promotion of sport and attracting employees to a healthy lifestyle.
• motivation of employees and increase of loyalty to the company,
•
•
These measures develop, unite and engage employees into participation in the
company’s life. They are aimed at encouragement and recognition of employees and give them
the opportunity of self-fulfillment at and outside work (sport, teambuilding, professional,
creativity competitions).
The company attaches great importance to provision of its employees with the timely
and correct information about its mission, values, culture, development priorities, innovations,
etc.
For these purposes the company uses different tools, such as: portal of internal
communications, corporate newspaper, weekly electronic digest of retail market news, internal
newsletters to the company’s employees, informational stands in different divisions of the
company, various training programs for new employees, holding of regular meetings and daily
briefings, as well as corporate events and teambuildings.
ENVIRONMENTAL RESPONSIBILITY
The Company pays significant attention to the issues of environmental responsibility,
protection of the environment and sustainable use of natural resources.
The Company’s policy on the environmental protection and ecological safety of its
business reflects the nature of the business, the scale and the types of influence the Company’s
operations, production and services may have on the environment.
The Company’s liabilities on protection of the environment and health and safety of the
personnel, customers and population are as follows:
• To improve the Company’s ecological activity on a regular basis, to provide
conditions to set and review the targets and tasks;
• To reduce its influence on the environment working constantly on the
implementation of the environmental measures;
• To effectively manage ecological risks and enhance the level of the on-site
ecological safety;
• To engage employees into the Company’s environmental activities by encouraging
them to make managerial, technological and other decisions taking into account
the ecological issues;
• To comply with the requirements of the current environmental legislation;
• Top management is obliged to ensure that the Company’s ecological policy is fully
implemented.
The Company’s principles of ecological safety:
• All accidents and injuries can be prevented;
• All-level executives shall ensure the ecological safety of all business divisions of
the Company;
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• All employees shall act in accordance with the Company’s ecological
requirements;
• To support and encourage the environment-friendly behavior of employees,
counterparties and suppliers;
• To communicate with the related parties on the environmental issues, to
collaborate with the local environmental bodies to protect the environment and
ensure the sustainable use of natural resources;
• To comply with the applicable legislative and other requirements;
• To increase the level of awareness and competence of the Company’s
employees in terms of ecological safety.
The Company’s purposes and tasks on the environmental protection:
1. To implement the system of the environmental protection and sustainable use of
natural resources in the Company’s operations.
In order to achieve this purpose the following steps should be taken:
• Protection of the Company’s environmental interests;
•
Implementation of unified ecological standards in all divisions across the Company;
• Control over compliance with the legislative requirements and the Company’s corporate
standards;
• Control over efficient use of equipment and the Company’s resources provided to
protect the environment.
2. To implement the system of on-site ecological control.
In order to achieve this purpose the following steps should be taken:
• To control that all business divisions comply with the requirements of the
environmental legislation and other regulatory documents;
• To control that all business divisions of the Company meet environmental impact
standards, maximum allowed waste limits, standards of use of natural resources;
To implement measures to eliminate reasons and circumstances having caused the
violations of environmental protection and safety requirements.
115
1177.. CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE
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 (hereinafter – the Corporate Governance Code).
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”
116
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 to ensure the Company’s effective
operation. The Revision Commission monitors the Company’s compliance with the regulations
and the legality of its operations.
The Internal Control and Risk Management Department of the Company was formed for
the purpose of effective organization and functioning of the internal control and risk
management system.
To inspect and verify the Company’s financial statements PJSC “Magnit” invites 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.
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).
117
BBOOAARRDD OOFF DDIIRREECCTTOORRSS
The Company’s Board of Directors is a core element of the PJSC “Magnit” corporate
governance system.
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, in compliance with the
recommendations of the Corporate Governance Code and requirements of the Listing Rules of
JSC “MIXES Stock Exchange”, 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 the
Board of Directors in 2015 year, report on the operation of the Board of Directors and other
information are represented in the previous sections of the present Annual Report.
118
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.
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 Board of Directors’
meeting held after the annual General Shareholders Meeting.
The Chief Executive Officer forms a part of the Management Board and performs
functions of 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
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 Board of Directors of PJSC “Magnit”;
•
•
Internal Audit Department;
Internal Control and Risk Management Department
119
• External Auditor.
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
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 June 4, 2015 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 Board of
Directors’ powers.
•
•
•
•
•
•
•
The exclusive powers of the audit committee are as follows:
to examine the consolidated financial reports 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 associated
companies, to prepare recommendations to the Board of Directors regarding the choice
of the Company’s auditor and its subsidiaries and associated companies;
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 amount of work on the audit of financial statements of the
Company with the external auditor;
to supervise the amount and the results of the audit procedures (including preparation
of the auditor’s report) 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 financial statements;
to examine jointly with the external auditor the results of annual and interim audits of
the Company and its subsidiaries and associated companies (including management
response following the results of these audits) before submission of the specified issues
for consideration to the Board of Directors;
120
•
•
•
•
•
•
•
•
•
•
•
•
•
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;
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 associated
companies;
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 3, 2014 at the meeting of the Board of Directors was made a 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.
On June 17, 2015 at the meeting of the Board of Directors was made a decision to elect the
following 3 (three) candidates to the audit committee of the PJSC “Magnit” Board of Directors:
Alexander Zayonts, Aleksandr Aleksandrov and Alexey Pshenichniy.
IINNTTEERRNNAALL AAUUDDIITT DDEEPPAARRTTMMEENNTT OOFF PPJJSSCC ““MMAAGGNNIITT””
On May 28, 2015 the Board of Directors ratified the Regulation on the internal audit of
PJSC “Magnit” defining objectives and aims of internal audit and powers of the Internal Audit
Department.
According to the PJSC “Magnit” Regulations on the internal audit for the achievement
of the stated objectives the Internal Audit Department performs the tasks on the following main
directions:
121
1) assistance to the executive bodies of the Company and employees of the Company
in the development and monitoring of performance of procedures and actions on
the improvement of the systems of risk management and internal control and
corporate governance of the Company;
2) coordination of activities with the external auditor of the Company as well as with
the persons providing consulting services in the sphere of risk management,
internal control and corporate governance;
3) the conduction of the internal audit of subsidiaries of the Company under the
established procedure;
4) preparation and provision to the Company’s Board of Directors and executive
bodies of reports on the Internal Audit Department’s operation results (including
information on existing risks, problems, results and effectiveness of corrective
actions of revealed problems, the results of performance of operating plan of
internal audit, results of evaluation of actual condition, reliability and effectiveness
of the risk management, internal control and corporate governance system);
5) check of compliance with the legislation and policies of the Company, concerning
inside information and anticorruption efforts, by the members of executive bodies
of the Company and its employees.
For the purpose of solution of stated problems and achievement of objectives the Internal Audit
Department performs the following functions:
1. evaluation of adequacy and effectiveness of the internal control system;
2. evaluation of the effectiveness of risk management system;
3. evaluation of corporate governance;
4. auditing in accordance with the approved performance plan of internal audit;
5.
conduction of other verifications, performance of other tasks on request/ by order of
the Board of Directors (Audit Committee of the Board of Directors and/or executive
bodies of the Company) within their competence;
consultation of executive bodies of the Company on the issues of risk management,
internal control and corporate governance (under the condition of securing of
independence and objectiveness of internal audit activity);
6.
7. development of internal control operation plan;
8. preparation and provision to the Board of Directors (Audit Committee of the Board
of Directors) and the sole executive body of the Company the report following the
operating results of internal audit;
cooperation with the divisions of the Company regarding to the internal audit
activity;
9.
10. control of rectification of violations detected following the verifications and
employee investigations;
11. analyses of audit results of
the Company, control of development and
implementation of plans and procedures of rectification of violations detected
during the auditing;
12. preparation of proposals on the improvement of internal control procedures;
13. development of documents regulating the activities of Internal Audit Department.
122
IINNTTEERRNNAALL CCOONNTTRROOLL AANNDD RRIISSKK MMAANNAAGGEEMMEENNTT DDEEPPAARRTTMMEENNTT OOFF
PPJJSSCC ““MMAAGGNNIITT
The Internal Control and Risk Management Department was formed for the purpose of
effective organization and functioning of internal control and risk management system in the
Company.
For the achievement of specified goals the Internal Control and Risk Management
Department performs the following tasks:
- building of corporate system of internal control and risk management of the
Company;
- general coordination of internal control and risk management processes;
- development of methodological documents in the field of securing of the internal
control and risk management process;
- organization of procedures regarding to the identification, classification, analysis,
-
managing and monitoring of risks in the sphere of Company’s activities;
assuring of the process of development and realization of risk management
activities;
- preparation of recommendations on the determination of the risk appetite of the
Company and estimation of the level of acceptable risk of the Company (the level of
risk tolerance of the Company);
analysis of risk portfolio of the Company and generation of proposals on the order of
response to the correspondent risks;
-
- monitoring and control of risk management procedures of the Company, as well as
satisfying the requirements of internal regulations in the sphere of internal control
and risk management;
- making recommendations focused on improvement of effectiveness of control
procedures, reduction of influence of realized and potential risks of realization of
business processes;
formation of consolidated reporting on the risks of the Company;
efficient verification of internal control and risk management process by the
divisions of the Company and in the established procedure by subsidiary companies;
- organization of consulting of Company’s employees in the sphere of internal control
-
-
-
and risk management;
informing of the Company’s Board of Directors and executive bodies of the
organization of internal control and risk management processes, as well as of other
issues, required by the Policy.
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 reports of the Company prepared in accordance with the
International Financial Reporting Standards by the annual General Shareholders Meeting on
June 4, 2015. 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.
123
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 2015.
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 Lex” LLC, located at 144/2 Krasnykh Partisan Street, Krasnodar,
was approved as the auditor of the accounting (financial) statement of the Company for 2015
year prepared in accordance with the Russian Accounting Standards by the annual General
Shareholders Meetings on June 4, 2015.
AF “Faber Lex” 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.
IINNFFOORRMMAATTIIOONN OONN TTHHEE CCOOMMPPLLIIAANNCCEE WWIITTHH TTHHEE PPRRIINNCCIIPPLLEESS AANNDD
RREECCOOMMMMEENNDDAATTIIOONNSS OOFF TTHHEE CCOORRPPOORRAATTEE GGOOVVEERRNNAANNCCEE CCOODDEE
Within the preparation of the report on the compliance of PJSC “Magnit” with the
principles and recommendations of the Corporate Governance Code the evaluation method and
prospective form of the report recommended by the Letter of the Bank of Russia №ИН-06-52/8
as of 17.02.2016 were used.
The report is an integral part of the present Annual Report and contains in the annex
hereto (ref. Annex №6).
EENNHHAANNCCEEMMEENNTT OOFF MMOODDEELL AANNDD PPRRAACCTTIICCEE OOFF CCOORRPPOORRAATTEE
GGOOVVEERRNNAANNCCEE
The corporate 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 basic 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.
In 2015 the Company extensively introduced the standards recommended by the
Corporate Governance Code, in particular:
I.
On June 4, 2015 the General Shareholders Meeting of PJSC “Magnit” ratifies the Charter
of the Company in a new edition. For the purpose of effective and instant cooperation with the
shareholders, coordination of the Company’s operations to protect the shareholders’ rights and
interests, assurance of efficient work of the Board of Directors the Charter stipulates the position
of the Corporate Secretary (a separate structural division headed by the Corporate Secretary) in
124
the Company, determines the general functions, procedure of appointment and reporting
relationship.
The requirements to the candidacy for the Corporate Secretary, the procedure of
appointment of the Corporate Secretary and termination of his/her powers, the functions and
authorities of Corporate Secretary, the terms and procedures of payment of remuneration to the
Corporate Secretary, the responsibility of the Corporate Secretary, as well as the procedure of
cooperation with other management bodies and structural divisions of the Company will be
determined in the Regulations on the Corporate Secretary of PJSC “Magnit”.
It is planned to accomplish the preparation and ratification of the Regulations on the
Corporate Secretary, determination of the candidate to the position of the Corporate Secretary
and his appointment before the end of the second quarter of 2016 year.
II.
On October 1, 2015 for the purpose of effective organization and functioning of the
internal control and risk management system the Internal Control and Risk Management
Department was formed in the Company. Further it is planned to ratify the Internal Control
and Risk Management Policy of the Company, directed to the forming of PJSC “Magnit”
internal control and risk management system focused on securing of reasonable assurance in
the achievement of goals of the Company, as well as objective, fair, and clear idea of the present
state of the company and its perspectives, integrity and transparency of Company’s reporting,
rationality and acceptability of assumed risks of the Company. It is planned to accomplish the
preparation and ratification of specified Policy before the end of the first quarter of 2016 year12
III.
Also before the end of the third quarter of 2016 year it is planned to bring some internal
documents of the Company into compliance with the recommendations of the Corporate
Governance Code, particularly:
-
The Regulation on the committees of the Board of Directors;
- The Regulation on the dividend policy of the Company.
12 As of the date of approval of the present Annual Report the Board of Directors approved the Policy of risk management and internal control of
PJSC “Magnit”.
125
1188.. IINNFFOORRMMAATTIIOONN OONN TTHHEE AAUUDDIITTOORR AANNDD TTHHEE CCOONNSSUULLTTAANNTT OOFF TTHHEE
CCOOMMPPAANNYY
Under the resolution of the annual General Shareholders Meeting of June 4, 2015
(minutes of 05.06.2015) the auditing firm AF “Faber Lex” LLC was appointed as the Company’s
auditor in accordance with Russian Accounting Standards for the year 2015.
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 of the
statements of the Company for the year 2015 in accordance with the Russian Accounting
Standards:
The auditor of the Company in 2015 was Limited Liability Company Auditing Firm
“Faber Lex”, address: 144/2 Krasnykh Partizan Street, Krasnodar.
AF “Faber Lex” LLC 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 of the
statements of the Company for the year 2015 in accordance with the International Financial
Reporting Standards:
The 2014 year statements in accordance with the International Financial Reporting
, address: 77
Standards were audited by Limited Liability Company ”Ernst&Young”
Sadovnicheskaya embankment, bldg. 1, Moscow, 115035, Russian Federation.
“Ernst&Young” LLC 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
Open Joint-Stock Company «Federal Fund
Corporation»
OJSC «FFC»
Address
25 Ostozhenka street, Moscow, Russia
Phone number (including city code)
+7 (495) 737-86-30
Fax number (including city code)
+7 (495) 737-86-32
Website of the financial consultant to disclose
the information about the Issuer according to
www.fscorp.ru
126
the requirements of the Regulation on the
information disclosure by the issuer of
securities, approved by FFMS
The number of license of the professional on
the securities market
Date of issue
Period of validity
Issuing authority
License of the professional participant of
the securities market for brokerage activity
№ 077-06174-100000, License of the
professional participant of the securities
market for dealer activity № 077-06178-
010000
August 29, 2003
Without restriction on the period of validity
Federal 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;
- Consulting on securities issue, including information disclosure on the securities
market according to the requirements of the legislation.
127
1199.. IINNFFOORRMMAATTIIOONN OONN TTHHEE VVOOLLUUMMEESS OOFF TTHHEE UUTTIILLIIZZEEDD EENNEERRGGYY RREESSOOUURRCCEESS
WWIITTHHIINN 22001155
Type of energy
resources
Nuclear energy
Heating energy
Electrical energy
Electromagnetic
energy
Oil
Petrol
Diesel oil
Furnace oil
Natural gas
Coal
Shale oil
Peat
Other:
Unite of measure
Utilization capacity in
volume terms
Utilization capacity in
money terms,
thousand rubles
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The quantitative
accounting is not
maintained
The quantitative
accounting is not
maintained
-
-
-
-
-
The quantitative
accounting is not
maintained
-
-
-
-
-
802.6
2,213.4
-
-
-
-
-
414.9
-
-
-
-
128
2200.. 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 No. 1: Consolidated financial statements of PJSC “Magnit” for the year ended on
December 31, 2015.
ANNEX No. 2: Consolidated financial statements of PJSC "Magnit" for the year 2015
prepared in accordance with the Federal law N 208-FZ "On consolidated financial
statements".
ANNEX No. 3: Accounting report of JSC “Tander” for the year 2015 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 2015
Accounting reports of JSC “Tander” for the year 2015
Explanations to the accounting reports of JSC "Tander" for the year 2015
ANNEX No. 4: Accounting report of PJSC “Magnit” for the year 2015 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 2015
Accounting reports of PJSC “Magnit” for the year 2015
Explanations to the balance sheet and income statement of PJSC "Magnit" for the year 2015
ANNEX No. 5: Transactions executed within the year 2015 considered related party
transactions according to the Federal law on “Joint Stock Companies”.
ANNEX No. 6: Report on the compliance with the principles and recommendations of the
corporate governance code for the year 2015.
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