Press-Release | Krasnodar | July 28, 2020
Magnit Plans to Save about 600 Million Rubles Annually thanks to Centralization of Financial Function
Krasnodar, July 28, 2020: Magnit PJSC (MOEX and LSE: MGNT; the Company), one of Russia's leading retailers, successfully completed migration of its financial function from all 65 regions of its presence to the Shared Service Center (SSC). Now, Magnit's SSC will keep centralized accounts of all transactions and perform payroll calculations for over 300 thousand employees from all of branches, districts, distribution centers, and motor transport enterprises.
Centralization of the financial function (accounting and payroll calculations) in the SSC will enable Magnit to save around 27% of its cost before migration, or around 470 million rubles, annually. Thanks to implementation of an electronic document flow system and robotic automation of business processes in the SSC, the target level of labor savings will reach 40% by the end of 2020.
The migration of the financial and HR functions to the SSC took a little over a year-a record-breaking time, considering the fact that, internationally, this process usually takes 2 to 3 years on average. Such a quick transition was possible due to rapid deployment of the electronic document flow system and digital archives in all of the Magnit's offices, branches, and stores.
The Company is actively working on implementing robotic automation for SSC business processes-it already has in place the respective framework (RPA) and has established an RPA Competencies Center. To expedite routine procedures, Magnit has launched two pilot robots. These virtual assistants, built using the Blue Prism platform, prepare salary certificates and 2-NDFL income tax statements and monitor the movement of the Company's property between its responsible business units. By the end of the year, Magnit plans to launch a total of 11 robots to optimize, among other things, revenue reconciliation, shipping manifest processing, cash collection, and other procedures.
"The Shared Service Center enables us to standardize, automate, and significantly improve efficiency of key business processes, which were previously handled by regional teams. Thanks to the centralization of the financial function and payroll calculations, we've achieved continuity in terms of transfer of requests from the client to the responsible party, made document processing as transparent and fast as possible, and integrated modern IT solutions aimed at increasing the level of service. Next, we plan to take over all financial functions for Magnit's subsidiaries. We'll also continue to look for possibilities to increase the efficiency of centralization of auxiliary functions,"-said Sergey Stafeyev, Magnit's Deputy CFO.
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Director for Investor Relations
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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 unaudited 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.
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.