MGNT.L Regulatory News (MGNT)

Magnit Kicks Off Digital Transformation Powered by SAP

Krasnodar, Russia (25 February, 2020): Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, announces that JSC "Tander" and SAP (LLC SAP CIS) signed a number of agreements on comprehensive integration of IT solutions. The digital transformation will affect over 20,000 Magnit stores and around 300,000 employees throughout the country. The majority of information systems will be deployed at SAP's Russian data center using SAP HANA Enterprise Cloud (HEC). Magnit's transformation program is set to become the largest digital initiative in the history of Russian retail.

Magnit's Transformation Program (hereinafter "the Program") is aimed at two global objectives-ensuring stable growth of the Company and increasing shareholder value.

As the digital core uniting all of the Company's business processes, Magnit will use SAP S/4HANA RETAIL, a high-performance system that will enable it to maintain end-to-end stock and financial accounts. Over the course of the Program, the chain plans to incorporate over 40 SAP S/4HANA modules; during the first stage, the system will be used to automate finance, stock movement, human resources, and reporting. SAP Central Finance will allow consolidating financial administration for Magnit's main enterprises. Digitization of personnel management, based on SAP HCM, will affect HR records, organizational structure, as well as payroll calculations and related processes.

In addition to that, the Company will establish a repository for POS data using SAP CAR, which will allow it to monitor remaining stocks in real time, create more accurate demand forecasts, and develop solutions for assortment management and auto-ordering. Matters of regulatory compliance-Chestny Znak, USAIS, and Mercury-will be handled by SAP Advanced Track and Trace.

To develop corporate analytics and standardize management reporting, the chain will use SAP Business Objects, and will also be granted access to SAP Analytics Cloud.

To implement the Program, the Company is going to partner with Accenture. The firm will help Magnit with planning and run quality assurance throughout the entire duration of the project. In the spring, the retailer plans to pick an integrator for the program.

Magnit's SAP-powered digital transformation project will be implemented in several stages and is intended to be completed in three years. Modules will be tested on a limited number of stores and, if proven stable, subsequently rolled out across the chain based on a schedule. Incremental adoption of new technologies will allow the Company to minimize its operational risks.

"We're focused on increasing the performance of the Company. This involves improving not just our stores and customer offering, but our business processes as well. Integration of a portfolio of modern solutions from SAP, which will address almost every single business process in the Company, is going to become the key tool for elevating Magnit's operational performance. Considering our scale, this may well become the largest digital transformation program in the history of Russian retail. We expect the impact from the Program's implementation over several years to reach billions of rubles. SAP modules will be introduced incrementally and after rigorous testing, so we consider operational risks from their integration to be minimal,"- noted Jan Dunning, President and CEO of Magnit.

"Today, we're talking about the beginnings of a partnership that will serve as an example not only for the Russian retail market, but for the global community as a whole. Large-scale integration of a "digital core" solution from SAP will enable Magnit to overtake the competition in terms of both level of technology and operational performance. IT systems powered by a full-feature HANA Enterprise Edition platform will help the retailer increase transparency, manageability, and performance of its business, and thus become even better for its shareholders, partners, employees, and customers,"- commented Andrey Filatov, CEO of SAP CIS.

For further information, please contact:

Dmitry Kovalenko

Director for Investor Relations

Email: dmitry_kovalenko@magnit.ru

Office: +7 (861) 210-48-80

Dina Chistyak

Director for Investor Relations

Email: dina_chistyak@magnit.ru

Office: +7 (861) 210-9810 x 15101

Media Inquiries

Media Relations Department

Email: press@magnit.ru

"Magnit" Company description:

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 December 31, 2019, Magnit operated 38 distribution centres and 20,725 stores (14,622 convenience, 473 supermarkets and 5,630 drogerie stores) in 3,742 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the unaudited IFRS management accounts for FY 2019, Magnit had revenues of RUB 1,369 billion and an EBITDA of RUB 83 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.

SAP Company description:

SAP is the global market leader in enterprise application software. Over 413 000 customers in 180 countries all over the world use SAP solutions and services. In 1992, a representative office of SAP SE was opened in Moscow. During the following 27 years, the company added offices in Saint Petersburg and Yekaterinburg. Today, SAP CIS employs around 1300 people and is present in every member country of the CIS. In 2012, it opened its SAP Labs R&D center in Moscow, adding a Saint Petersburg branch later on.

SAP is the only international software developer that has a data center in Russia, which is constantly being upgraded and improved by the company. For over 27 years, SAP has been helping Russian companies transform and optimize their businesses using its innovative solutions. In July 2018 in Moscow, the company opened the SAP Digital Leadership Center-a cutting edge technology hub designed to host events and showcase new technologies and solutions developed jointly with its customers and partners.

The company is actively investing in education to develop competencies and nurture the expertise within the ecosystem. Over 135 higher education institutions in Russia and CIS get free access to SAP software for educational purposes. As of 2017, the company has opened 16 SAP Next-Gen Labs to serve as centers of innovation for students and young IT specialists.

Details available at www.sap.com and www.sap.ru.

All questions regarding SAP's business in Russia should be addressed to Tatiana Zvereva (tatiana.zvereva@sap.com), and for CIS-related questions, please contact Daria Gerasimova (daria.gerasimova@sap.com).

Forward-looking statements:

This document contains forward-looking statements that may or may not prove accurate. For example, statements regarding expected sales growth rate and store openings are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Magnit as of the date of the statement. All written or oral forward-looking statements attributable to Magnit are qualified by this caution. Magnit does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.