MGNT.L Regulatory News (MGNT)

Press-Release | Krasnodar | October 26, 2020

Magnit started ERP Transformation Program

Krasnodar, Russia (October 26, 2020): Magnit PJSC, one of Russia's leading retailers, has finalized the planning phase of its SAP-based ERP Transformation Program and chose the key partners to realize the four underlying projects:

Novardis became the general contractor for the project of Goods movement and Logistics. Technoserv Consulting was chosen as the general contractor for Finance, Non-commercial procurement and Real Estate. Vitte Consulting will be operating as the general integrator for the HR project. All partners are leading Integrators delivering SAP solutions successfully within the Russian market.

The fourth project, which is focused on the implementation of the necessary middleware as well as the creation of an internal SAP Center of Excellence, will be led by Magnit's internal team.

Accenture will proceed working as the Delivery Partner for Magnit and as such will share world's best practices and control the quality of the integration process and results.

«Our ERP Transformation Program based on SAP solutions will be the largest project of its kind in the Russian retail. We are going to lean on not only our partners' expertise, but we will also create appropriate and qualified expertise inside our company. Thus, when our partners complete their work, we will be capable to continue developing our SAP solutions independently», - says Svetlana Medvedeva, Magnit's ERP Transformation Program Director.

The entire ERP Transformation Program will take up to five years. By end of 2022, Magnit will complete piloting all planned solutions, and will have about 3 years to roll them out across the company and geography.

The following SAP solutions are part of Magnit's ERP Transformation Program:

* SAP S/4HANA for Retail - high-performance system will allow to perform end to end financial and logistics accounting and will become the digital core for many business processes of the company;

* SAP Central Finance will enable consolidation of finances of the main Magnit's entities;

* SAP CAR will be the base for creation of a modern data storage for transactional data;

* SAP Advanced Track and Trace will allow compliant goods traceability as per legislation requirements (EGAIS, Mercury, etc.);

* SAP Business Objects and SAP Analytics Cloud will support the development of the corporate analytics and the unification of the management reporting.

The estimated net economic benefit of the ERP Transformation Program may reach ten billion RUB within next couple of years. Magnit expects the major economic benefits to come from the area of Goods Movement and Logistics through the reduction of inventory and write-offs, etc. The ERP-driven Supply Chain effects are expected to be amplified by successful delivery of other core modernization projects such as Forecasting & Replenishment or WMS relaunch. Besides, Magnit expects increased efficiency in finance, non-commercial procurement and human resource processes as well.

«We appreciate this opportunity to take part in such a large-scale business transformation of building a single digital platform in Magnit. Accenture will engage Russian and international professionals in retail and S/4HANA to deliver efficiency and high quality in Program realization that will help business to develop necessary competence in modern IT know-how», - comments Maria Grigorieva, Managing Director, Accenture Russia.

«NOVARDIS team and I are very proud that we are taking part in the most outstanding digital transformation project in the Russian retail market. We identify it as recognition of our deep expertise and broad experience in goods movement management systems implementation. We are sure that together with Magnit team we will be capable to realize all the ambitious goals that are set in ERP Transformation Program applying the best practice and leading methods of logistic processes management», - says Mark Roitenberg, Managing Partner, Novardis.

«Modern ERP-system allows to store and process a majority of crucial data. It increases decision-making speed and decreases human-factor risks. Scaling flexibility and simplicity provide customer with a number of business benefits in a short period of time and targeted prioritization. All of the above makes the Company a strong competitor. We are sure that Magnit made timely decision to implement ERP system given the current phase of its business development. From our side we will provide Magnit with complete support in realization of this project. Our confidence is based on our great experience in IT-systems implementation and high quality project management, its methodological and functional assistance», - says Kirill Bulgakov, Managing Director, Technoserv Consulting.

«We run into this large scale, significant for the sector project with great enthusiasm and desire to contribute the best practices, high quality expertise in HR area and relevant experience of Vitte Consulting team in SAP HCM projects realization. We appreciate Magnit Leadership loyalty and are very grateful for the opportunity to get truly superb experience in retail. We are glad to contribute into the ERP Transformation Program to increase efficiency of the HR function and hope to serve as a reliable partner», - says Andrey Li, HR Systems Department Director, Vitte Consulting.

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

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, 2020, Magnit operated 38 distribution centres and 20,894 stores (14,581 convenience, 472 supermarkets and 5,841 drogerie stores) in 3,710 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the reviewed IFRS 16 management accounts results for 1H 2020, Magnit had revenues of RUB 763.4 billion and an EBITDA of RUB 86.9 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.

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.