KRASNODAR, 17 July, 2006: OJSC “Magnit” (the “Company”; RTS: MGNT), Russia’s leading retail chain in terms of both number of stores and customers, is pleased to release its 1Q06 unaudited financial results prepared by the management in accordance with IFRS.

During 1Q06 Magnit opened 74 stores and increased its selling space by 46% YoY, from 282 th. sq. metres at the end of 1Q05 to 411 th. sq. metres at the end of 1Q06.

Net revenue of the company in rouble terms increased by 57% YoY, from 8.8 bn roubles in 1Q05 to 13.9 bn roubles in 1Q06. The net revenue increase was due to both an increase in selling space and a 15% increase in like-for-like sales in rouble terms.

The like-for-like sales increase was in turn driven by both a traffic inflow (+4%) and the increase in the average ticket (+11%). Net revenue in USD terms increased by 56% YoY, from $316.6 mln in 1Q05 to $493.8 mln in 1Q06. The gross margin improved from 15.3% in 1Q05 to 17.5% in 1Q06 due to better purchasing terms, as well as a reduction in logistics costs.

The EBITDA margin improved considerably, from 3.7% in 1Q05 to 5.2% in 1Q06, due to an expansion in the gross margin, while offset by higher wages and rent costs. EBITDA more than doubled, from $11.8 mln in 1Q05 to $25.5 mln in 1Q06. In 1Q06 the company achieved $13.2 mln in net income vs. $2.2 mn in 1Q05.

Company CFO Alexander Prisyazhniuk said, commenting on the results: “In addition to the revenue growth, which is above our initial expectations for the quarter, Magnit has considerably improved its operating margins and we expect this trend to continue throughout the year”.

1Q2006 unaudited financial and operating results