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Magnit Reports Audited FY 2020 Results -2-

03/15/2021 | 02:01am EDT

Net finance costs in 2020 decreased by 10.6% y-o-y (or 23 bps) to RUB 13.5 billion due to the lower cost of debt and total amount of borrowings. As a result of continued focus on financial efficiencies, the cost of debt reduced to 6.1% (102 bps y-o-y).

In 2020 the Company reported FX loss in the amount of RUB 1.3 billion related to direct import operations.

Income tax in 2020 was RUB 10.9 billion with effective tax rate of 22.4%.

As a result, net income in 2020 more than doubled y-o-y and stood at RUB 37.8 billion. Net income margin increased to 2.4%.

Balance Sheet and Cash Flows

Financial Position Highlights as of 31.12.2020 (IFRS 16)

Million RUB                                                          31.12.2020 31.12.2019 
Non-current assets                                                   678,461    697,347 
Inventories                                                          205,949    218,874 
Trade and other receivables                                          8,564      13,993 
Cash and cash equivalents                                            44,700     8,901 
Other current assets                                                 7,718      9,574 
Assets                                                               945,392    948,689 
Equity                                                               182,889    188,533 
Long-term borrowings                                                 147,695    119,632 
Other long-term liabilities                                          330,535    340,125 
Trade and other payables                                             161,072    161,631 
Short-term borrowings and short-term portion of long-term borrowings 18,392     64,578 
Other short-term liabilities                                         104,809    74,189 
Equity and liabilities                                               945,392    948,689 

Despite ongoing improvement to on-shelf availability, the increased share of drogerie format by 66 bps as a percent of net retail sales, supplier inflation and total sales growth of 13.5%, inventories decreased by RUB 12.9 billion vs December 31, 2019 and stood at RUB 205.9 billion. This was driven by a number of projects launched in 2020 including a reduction of slow-moving items, assortment harmonization and IT solutions aimed at better on-shelf availability and promo forecasting.

Trade and other payables remained flat y-o-y and stood at RUB 161.1 billion. RUB 4.7 billion increase in trade payables driven by improvement of payment days was offset by RUB 5.2 billion decrease of other payables related to high pace of expansion in 2019. Accounts receivables decreased by RUB 5.4 billion or 38.8% to RUB 8.6 billion as a results of ongoing optimisation initiatives including weekly tracking of overdue debts and clearing activities as well as launch of electronic document flow with suppliers.

Debt Composition and Leverage as of 31.12.2020

billion RUB        2020  Share, % 1H 2020 Share, % 2019  Share, % 
IAS 17 
Gross debt         166.1          208.6            184.2 
Long term debt     147.7 88.9%    117.4   56.3%    119.6 64.9% 
Short term debt    18.4  11.1%    91.2    43.7%    64.6  35.1% 
Net debt           121.4          187.4            175.3 
Net debt / EBITDA  1.1x           2.0x             2.1x 
IFRS 16 
Net debt           479.0          538.8            532.5 
Net debt / EBITDA  2.7x           3.3x             3.6x 

As a results of repayment activities gross Debt decreased by RUB 18.1 billion or 9.8% compared to December 31, 2019 and stood at RUB 166.1 billion as of December 31, 2020 with cash position of RUB 44.7 billion. As a result, Net Debt reduced by RUB 53.9 billion compared to December 31, 2019 and stood at RUB 121.4 billion. The Company's debt is fully RUB denominated matching revenue structure, 99% of debt portfolio was long-term with 22 months maturity. The Net Debt to EBITDA ratio was 1.1x as at 31 December 2020 vs 2.1x as at 31 December 2019.

Cash Flow Statement for FY 2020

                                                           IAS 17                  IFRS 16 
million RUB                                                2020    2019    Change  2020    2019    Change 
Operating cash flows before working capital changes        109,798 86,183  27.4%   175,408 148,492 18.1% 
Changes in working capital                                 30,349  -13,385 -326.7% 30,712  -11,501 -367.0% 
Net Interest and income tax paid                           -25,738 -16,968 51.7%   -56,509 -49,377 14.4% 
Net cash from operating activities                         114,409 55,830  104.9%  149,611 87,614  70.8% 
Net cash used in investing activities                      -29,533 -57,167 -48.3%  -29,020 -55,709 -47.9% 
Net cash generated / (used) from/(in) financing activities -49,077 -16,510 197.3%  -84,793 -49,752 -70.4% 
Net cash increase / (decrease)                             35,798  -17,846 -300.6% 35,798  -17,846 -300.6% 

The Company's cash flows from operating activities before changes in working capital for 2020 equalled to RUB 109.8 billion, which was RUB 23.6 billion or 27.4% higher y-o-y. The change in working capital improved to RUB 30.3 billion from RUB -13.4 billion in 2019 as a result of a decrease in inventory, receivables, higher accrued expenses and taxes payable.

Net interest and income tax paid in 2020 increased by RUB 8.8 billion or 51.7% to RUB 25.7 billion. Net interest expenses decreased by 10.1% y-o-y to RUB 12.6 billion in 2020 due to lower cost of debt and lower amount of borrowings. Income tax paid for 2020 increased to RUB 13.1 billion.

With this net cash flow from operating activities in 2020 increased by 104.9% to RUB 114.4 billion as a result of positive movement of working capital and lower interest paid.

Net cash used in investing activities predominantly composed of capital expenditures decreased by 48.3% to RUB 29.5 billion in 2020. The dynamics was attributable to a slowdown of expansion program (1,292 store openings on gross basis in 2020 vs 2,841 in 2019) and decelerated redesign program (385 stores in 2020 vs 2,341 stores in 2019). Capex in 2020 came below the Company's guidance on lower than expected expansion given pandemic restrictions and management's intention to expand selectively following strict return requirements.

In 2020 net cash used from financing activities was RUB 49.1 billion vs RUB 16.5 billion used in 2019. In 2020 the Company paid dividends in the amount of RUB 29.9 billion[4] The rest was driven by dynamics of proceeds from borrowings and repayment of loans.

As a result of factors mentioned above net cash position in 2020 increased by RUB 35.8 billion to RUB 44.7 billion as of December 31, 2020.

Note: 1. This announcement contains inside information disclosed in accordance with the Market Abuse Regulation effective

from July 3, 2016. 2. Please note that there may be small variations in calculation of totals, subtotals and/ or percentage change due to

rounding of decimals. 3. Please follow the link to view 2020 financial report - www.magnit.com/en/shareholders-and-investors/

results-and-reports/ or https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

For further information, please contact:

Dmitry Kovalenko Dina Chistyak

Director for Investor Relations Director for Investor Relations

Email: dmitry_kovalenko@magnit.ru Email: dina_chistyak@magnit.ru

Office: +7 (861) 210-48-80 Office: +7 (861) 210-9810 x 15101

Media Inquiries Twitter:

Media Relations Department @MagnitIR

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 December 31, 2020, Magnit operated 38 distribution centres and 21,564 stores (14,911 convenience, 470 supermarkets and 6,183 drogerie stores) in 3,752 cities and towns throughout 7 federal regions of the Russian Federation.

In accordance with the audited IFRS 16 results for FY 2020, Magnit had revenues of RUB 1,553.8 billion and an EBITDA of RUB 178.2 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. -----------------------------------------------------------------------------------------------------------------------

[1] EBITDA and LFL metrics are calculated by the Company and are not audited

[2] Selling, general and administrative expenses excluding depreciation and amortization

[3] Long-Term Incentive Program

[4] Excluding intercompany transactions between PJSC Magnit and JSC Tander -----------------------------------------------------------------------------------------------------------------------

ISIN:           US55953Q2021 
Category Code:  MSCU 
TIDM:           MGNT 
LEI Code:       2534009KKPTVL99W2Y12 
OAM Categories: 2.2. Inside information 
Sequence No.:   95472 
EQS News ID:    1175442 
End of Announcement  EQS News Service 

(END) Dow Jones Newswires

March 15, 2021 03:00 ET (07:00 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
0X (ZRX/USD) -2.38% 0.83012 Real-time Quote.132.00%
LONDON STOCK EXCHANGE PLC -1.09% 7418 Delayed Quote.-17.67%
PUBLIC JOINT STOCK COMPANY MAGNIT 0.65% 5395 End-of-day quote.-4.82%
RTS INDEX -0.34% 1630.39 Real-time Quote.17.53%
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