MGNT.L Regulatory News (MGNT)

Magnit HAS STARTED TO INTRODUCE SAP INTO COMMERCIAL OPERATION

Krasnodar, Russia (October 19, 2021): Magnit PJSC (MOEX and LSE: MGNT; the Company, Magnit), one of Russia's leading retailers, announced the start of the key stage of implementation of its SAP-based digital transformation. In October, the Company commenced operation of several SAP solutions as well as a new store back office system developed in-house.

The new solutions are implemented within the so-called "pilot scope" for now. After the pilot stage, they will be rolled out across the entire chain, provided that they demonstrate stable performance. The roll-out will be split into several stages, which will enable the Company to minimize its operational risks and make the massive transition to SAP as easy and simple as possible. Pilot launches will continue till the end of 2022, with the roll-out planned for completion in 2025. The Company expects that the impact from the Program's implementation may amount to billions rubles over a number of years. The Company plans to begin assessing the actual impacts in 2023, when half of its stores will use the solutions.

At the present time three pilot business units and two Magnit Cosmetic stores in Krasnodar use the new solutions. As of today, the Company has launched SAP S/4HANA (end-to-end inventory and financial accounting solution, a digital core combining all corporate business processes), SAP CAR (state-of-the-art transactional data storage), SAP ATT (solution for ensuring operations' compliance with product traceability laws), SAP Process Orchestration (tools for rapid business processes automation, integration and optimization).

Starting this October, SAP is used by employees from the Shared Services Center (SSC), Accounting Department, Budgeting & Controlling Directorate, and other units of the Company. The new system is used to keep records for the purposes of corporate accounting, tax management, treasury management, and IFRS-compliant accounting, as well as real estate, procurement of goods and services, sale of non-commercial assets, inventory accounting.

For the two pilot stores, employees from the SSC and the Department for Control & Audit started performing accounting and controlling procedures for product distribution and retail sales using SAP S/4HANA and SAP CAR. Now, logistics managers, specialists from the Commercial Procurement and Category Management Support Directorate, and IT staff can all use SAP to monitor consistency and accuracy of product distribution, master data transfer, and the solution's integration with other systems. Today, over 450 users are already working in SAP.

The two pilot Magnit Cosmetic stores in Krasnodar also employ a new in-house back office system, which is aligned with SAP's document flow structure and objects and has built-in integration mechanisms. A modern store back office system will provide a number of advantages to store employees by optimizing and simplifying data entry, automating routine manual operations, creating a transparent system for keeping records, and enabling the store to view data in sync with the central accounting system. In addition to that, the transition to the new tool will facilitate seamless integration and establishment of a unified structure of back office documents and SAP solutions, provide a clear and simple user interface, and increase the speed and quality of development. The new back office system is being developed using the Agile methodology.