MGNT.L Regulatory News (MGNT)

Press Release

Krasnodar

July 26, 2018

Magnit Announces the Key Decisions of the BOD.

Krasnodar, July 26, 2018: PJSC "Magnit", one of Russia's leading retailers (the "Company", MOEX and LSE: MGNT), announces the key decisions of the Board of Directors of the Company taken at the meeting held on July 25, 2018.

The Board has decided to form the Capital Markets Committee, comprised of Paul Michael Foley (Chairman of the Committee), Alexey Makhnev, and Charles Emmitt Ryan. The Committee will have the following key functions and responsibilities: further development and strengthening of the Company's corporate governance systems; formation, development and implementation of the Company's investor relations strategy; and assessment and recommendation to the Board of Directors on the Company's dividend policy.

The Board of Directors has approved the new version of the Regulations on Committees of the Board of Directors of PJSC "Magnit" that implies the formation of the Capital Markets Committee and specifies its purposes.

The Board has considered the logistics development strategy for drogerie stores and pharmacies and the potential acquisition of the pharmaceutical distributor "SIA Group". The Board was not comfortable with the indicative transaction terms. However, the Board and management agree on the strategic logic of deploying capital to improve the supply chain and logistics infrastructure in order to improve customer value proposition and LFLs.  The Board recommended that in addition to the ongoing work with Boston Consulting Group, management should engage an investment bank to examine the optimal strategy for improving logistics infrastructure to find the right asset and terms and to revert to the Board.

The Board has considered and approved the key terms of the Short-Term Incentive Program of PJSC "Magnit" Group of Companies which is based on the higher share of performance bonuses in total compensation, with the size of bonuses directly linked to meeting key performance targets including revenue, LFL sales and EBITDA as a corporate part of the senior management KPIs as well as to specific KPIs of each person depending on the area of their responsibility.

The Board has considered and approved the key terms of the Long-Term Incentive Program (LTIP) of PJSC "Magnit" Group of Companies. The LTIP is introduced to ensure the growth of PJSC "Magnit" share price within five years and retention of key employees of the PJSC "Magnit" Group of Companies. The LTIP involves key managers at the levels of CEO-1, 2 and 3, whose work has the greatest impact on the results of the PJSC "Magnit" Group of Companies. It is assumed that the total number of participants of the LTIP will not exceed 50 individuals. The amount of payments to the LTIP participants depends on the financial performance of the PJSC "Magnit" Group of Companies, time worked during the LTIP as well as level of participant's responsibility for achievement of the result.

The Board considered the financial and operating results of PJSC "Magnit" Group of Companies for the 1H 2018 as well as the budget of PJSC "Magnit" Group of Companies for the 2H 2018 and recommended to submit the updated budget for the 2H 2018 for approval at the next Board meeting.

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Note to editors:

Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of June 30, 2018, Magnit operated 37 distribution centers and 16,960 stores (12,503 convenience, 244 hypermarkets, 213 supermarkets and 4,000 drogerie stores) in 2,808 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the unaudited IFRS management accounts for 1H 2018, Magnit had revenues of RUB 595 billion and an EBITDA of RUB 44 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB.