X5 Retail Regulatory News (FIVE)

X5 reports 18.2% revenue growth in 2022, 7.3% adj. EBITDA margin pre-IFRS 16

+18.2 % y-o-y Revenue growth in 2022driven by solid like-for-like (LFL)1 sales and selling space expansion

+46.6 % y-o-y Digital business (express delivery, Vprok.ru, 5Post and Mnogo Lososya) net sales growth in 2022Digital business net sales amounted to RUB 70.4 billion, which comprised 2.7% of consolidated FY 2022 revenue.

24.4 % -108 b.p. Gross margin under IFRS 16 in 2022(-104 b.p. to 24.1% pre-IFRS 162)driven predominantly by price investments

11.7 % -56 b.p. Adjusted EBITDA3 margin under IFRS 16 in 2022(-17 b.p. to 7.3% pre-IFRS 16)

1.7% -20 b.p. Net profit margin under IFRS 16 in 2022(-19 b.p. to 2.0% pre-IFRS 16)

2.58x Net debt/EBITDA ratio under IFRS 16 as of 31 December 2022(1.02x pre-IFRS 16)

Amsterdam, 17 March 2023 - X5 Retail Group N.V. ("X5" or the "Company", LSE and MOEX ticker: FIVE), a leading Russian food retailer that operates the Pyaterochka, Perekrestok and Chizhik retail chains, today released its audited financial statements for the year ended 31 December 2022 prepared in accordance with International Financial Reporting Standards, as adopted in the European Union.

Igor Shekhterman, X5 Chief Executive Officer, commented:

"Amid a turbulent 2022, X5 delivered on its core commitments as the country's leading food retailer to ensure product availability and affordable prices, all the while continuing to expand our market presence and customer offering. Despite significant external factors that continue to impact the Company as we enter 2023, including ongoing inflation and supply chain instability, we are confident that X5's strategy of regional expansion, investment in retail formats with more accessible pricing and continued development of our online businesses has created a solid foundation for maintaining our strong performance and high growth level in the year to come.

Despite the challenging external environment, X5 demonstrated solid performance in 2022. Revenue growth accelerated to 18.2% year-on-year in 2022 and we maintained a 7.3% adjusted EBITDA margin pre-IFRS 16. Meanwhile, net sales from our digital businesses - including e-grocery, the 5Post delivery service and the Mnogo Lososya ready-meal delivery service - rose 46.6% year-on-year to RUB 70.4 billion and accounted for 2.7% of our consolidated revenue for 2022.

A notable move that contributed to our success was the decision to spin off our e-grocery businesses into a separate entity within X5 Group, called X5 Digital, in summer 2022. This has enabled us to develop our online businesses with maximum speed and flexibility by relying on our own infrastructure and commercial capabilities.

The active expansion of our Chizhik hard discounter format continued to pay off, as customers increasingly sought the best value offer for their money. Revenue from Chizhik grew 12-fold year-on-year to nearly RUB 36 billion in 2022, with X5 opening hundreds of new stores and six distribution centres for the retail chain during this period. We remain committed to meeting the needs of society and tailoring our customer value proposition to changing demands, even as this continues to impact our commercial margin. Given the current macroeconomic situation and real disposable income dynamics in Russia, the development of Chizhik, along with our Pyaterochka proximity store network, will remain key priorities for the Company in 2023.

The past year saw X5 expand to new regions and diversify our supplier base, as well as broaden our presence across the customer journey to offer a superior shopping experience. In 2022 we reached a strategic partnership with two leading retailers in Eastern Siberia, which will enable X5 to significantly grow our footprint in the region, and signed an agreement to begin developing the food market of the Russian Far East. We also partnered with more than 1,100 new suppliers across Russia and brought the total share of SMEs in our supplier base to around 70% in 2022, as part of our ongoing effort to diversify our product offering and use our extensive network to empower local businesses throughout the country. And we took a milestone step towards providing a seamless shopping experience by introducing the unified X5 Club loyalty programme, which currently serves customers of Pyaterochka and Perekrestok and is planned to integrate other Group businesses and services in the future.

Perhaps the proudest aspect of our work in 2022 is X5's commitment to social wellbeing among the customers and communities we serve. In 2022, we donated over 518 tonnes of food through our Basket of Kindness project and helped more than 5,800 people in need through our pilot food-sharing project, among a number of other initiatives. X5 also contributes to economic development in existing and new regions where the Company operates: in 2022, we created 12,000 new jobs, including through our entry into Eastern Siberia. Our social work continues alongside our extensive environmental initiatives, which are focused on reducing X5's negative impact on the environment, boosting the use of recycled and sustainable materials, and transitioning to renewable energy use.

Finally, I would like to thank all X5 Group employees for their exemplary work and dedication during a particularly challenging time. Over the past year, our team members not only continued to put in their best effort at the workplace but also made the time to invest in their professional development and help the communities around them. One of the ways X5 has given back to employees is through our recently launched "Director - Store Partner" programme, which offers store directors in our Pyaterochka and Perekrestok networks the opportunity to manage their stores with more freedom and flexibility under a unique entrepreneurial model. We plan to expand this motivational programme to more X5 stores in the future as part of our broader vision of empowering employees to become a driver of growth.

Looking ahead, I am confident that our ongoing focus on supporting customers, suppliers and employees in today's difficult market conditions will ultimately reinforce X5's standing as a reliable and socially responsible partner, ensuring our reputation as the domestic industry leader for years to come."

Profit and loss statement highlights4

Revenue

Revenue growth reached 16.1% year-on-year in Q4 2022. Net retail sales increased by 16.3%, driven by a combination of 8.3% selling space growth and 7.9% LFL sales growth, while X5's digital business sales grew by 35.8% y-o-y.

Selling space by format, square metres (sqm)

Q4 and FY 2022 LFL store performance by format, % change y-o-y

In Q4 2022, LFL sales increased by 7.9%, supported by solid LFL sales growth at Pyaterochka and Perekrestok at 8.4% and 5.3%, respectively. LFL traffic was the main driver of LFL sales in Q4 2022, with the LFL basket in positive territory at 3.5% year-on-year.

For more details on net retail sales performance, please refer to X5's Q4 2022 Trading Update.

Gross profit margin

Gross profit margin under IFRS 16 decreased by 187 b.p. year-on-year to 22.7% (by 186 b.p. year-on-year to 22.4% pre-IFRS 16) in Q4 2022. This was driven by a decreasing commercial margin on the back of price investments as well as the aggressive expansion of the Chizhik hard discounter network.

Gross profit margin for the full year 2022 declined by 108 b.p. under IFRS 16 (declined by 104 b.p pre-IFRS 16), driven by a decreasing commercial margin on the back of price investments and the aggressive expansion of the Chizhik retail chain.

Selling, general and administrative (SG&A) expenses (excl. D&A&I and the impact of the Karusel transformation)

In Q4 2022, SG&A expenses excluding D&A&I, LTI, share-based payments and the impact of the Karusel transformation under IFRS 16 as a percentage of revenue decreased by 49 b.p. to 14.1% (decreased by 67 b.p. to 18.0% pre-IFRS 16), primarily driven by decreased staff costs, other store costs, third party services and other expenses as a percentage of revenue.

Staff costs (excluding LTI and share-based payments) as a percentage of revenue decreased by 7 b.p. year-on-year in Q4 2022 to 8.1%, mainly due to the operating leverage effect as well as a balanced approach to targeted salary increases.

LTI and share-based payment expenses amounted to RUB 729 million in Q4 2022. The Company finished recognition of expense related to the LTI programme for 2018-2020 and Chizhik and continued accruing liability for the new LTI programme for 2021-2023 and the new LTI programme for new businesses (Mnogo Lososya and 5Post).

Lease expenses under IFRS 16 as a percentage of revenue in Q4 2022 increased by 6 b.p. year-on-year to 0.8% mainly due to a higher number of revenue-linked leases and reverse franchising agency fees. The decrease in pre-IFRS 16 lease expenses by 19 b.p. to 4.3% was caused by a positive operating leverage effect and measures taken to reduce lease expenses, partially compensated by a higher number of revenue-linked leases.

Other store costs under IFRS 16 as a percentage of revenue in Q4 2022 decreased by 10 b.p. year-on-year (falling by 10 b.p. pre-IFRS 16), mainly due to a positive operating leverage effect.

Third-party service expenses under IFRS 16 as a percentage of revenue in Q4 2022 decreased by 23 b.p. year-on-year to 1.1% (down 23 b.p. to 1.1% pre-IFRS 16), mainly due to lower marketing expenses.

Other expenses under IFRS 16 as a percentage of revenue in Q4 2022 decreased by 12 b.p. year-on-year to 1.2% (down 5 b.p. to 1.5% pre-IFRS 16), mainly due to a positive operating leverage effect and measures taken to reduce expenses.

In 2022, SG&A expenses excluding D&A&I, LTI, share-based payments and the impact of the Karusel transformation under IFRS 16 as a percentage of revenue decreased by 72 b.p. to 13.5% (decreased by 104 b.p. to 17.6% pre-IFRS 16), driven primarily by lower staff costs, utilities, other store costs and third-party services as a percentage of revenue.

Lease/sublease and other income9

As a percentage of revenue, the Company's income from leases, subleases and other operations under IFRS 16 totalled 0.8%, a decrease of 23 b.p. year-on-year in Q4 2022 (a decrease of 27 b.p. to 0.7% pre-IFRS 16), driven by lower income from sales of recyclables, lower fixed/sublease fees as percentage of revenue and the absence of depositary service fee income under the GDR programme.

EBITDA and EBITDA margin

D&A&I

Depreciation, amortisation and impairment costs under IFRS 16 decreased as a percentage of revenue by 50 b.p. year-on-year to 5.9% (down 35 b.p. year-on-year to 3.1% pre-IFRS 16) in Q4 2022, totalling RUB 41,737 million (RUB 22,013 million pre-IFRS 16). This was mainly driven by higher impairment accrual y-o-y in Q3 2022 on the back of macroeconomic situation and lower additional impairment in Q4 2022. In 2022, depreciation, amortisation and impairment costs under IFRS 16 a s a percentage of revenue decreased by 49 b.p. year-on-year to 6.3% (decreased by 5 b.p. year-on-year to 3.4% pre-IFRS 16), totalling RUB 164,731 million (RUB 89,156 million pre-IFRS 16).

Non-operating gains and losses

Net finance costs under IFRS 16 in Q4 2022 increased by 12.3% year-on-year to RUB 16,798 million (down 22.2% year-on-year to RUB 3,204 million pre-IFRS 16), driven by increasing interest on lease liabilities partially compensated by lower finance costs on the back of decreased total debt and higher interest income on short-term financial investment. Under pre-IFRS 16, the decrease is driven by lower finance costs on the back of decreased total debt and higher interest income on short-term financial investment.

The negative net FX result totalled RUB 3,457 million (RUB 1,795 million under pre-IFRS 16) in Q4 2022, compared with negative RUB 299 million (RUB 41 million under pre-IFRS 16) in Q4 2021, due to rouble volatility.

In FY 2022, the effective tax rate under IFRS 16 was 33.2% (31.7% under pre-IFRS 16), up from 29.6% in 2021 (28.6% under pre-IFRS 16) due to one-off effects.

Consolidated cash flow statement highlights

In Q4 2022, the Company's net cash from operating activities before changes in working capital under IFRS 16 decreased by RUB 1,402 million (down RUB 4,358 million under pre-IFRS 16) and totalled RUB 64,872 million (RUB 35,270 million under pre-IFRS 16). The lower positive change in working capital under IFRS 16 of RUB 7,702 million in Q4 2022 was driven by: a higher increase in inventories on the back of business growth; a lower increase in accounts payable due to earlier stockpiling and payments to ensure shelf availability during the New Year season.

Working capital highlights

Net interest and income tax paid under IFRS 16 in Q4 2022 decreased by 16.5% year-on-year (down 49.8% year-on-year pre-IFRS 16) and totalled RUB 20,420 million (RUB 6,850 million pre-IFRS 16), driven by offset tax prepayments available from the previous periods and lower withholding taxes.

As a result, net cash flow generated from operating activities under IFRS 16 totalled RUB 52,154 million in Q4 2022, down from RUB 73,245 million in Q4 2021 (RUB 35,655 million, down from RUB 57,578 million in Q4 2021 pre-IFRS 16).

In 2022, net cash flows generated from operating activities under IFRS 16 totalled RUB 220,924 million, down 2.9% from RUB 227,462 million in 2021 (and totalled RUB 155,227 million, down 5.2% from RUB 163,712 million in 2021 pre-IFRS 16).

In Q4 2022, adj. net cash used in investing activities, which generally consists of payments for property, plant and equipment, under IFRS 16 increased immaterially and totalled RUB 25,935 million (totalled RUB 26,062 million under pre-IFRS 16). For 2022, net cash used in investing activities under IFRS 16 decreased to RUB 75,978 million (RUB 76,295 million under pre-IFRS 16) from RUB 89,435 million (RUB 90,295 million under pre-IFRS 16) in 2021.

Net cash generated from financing activities under IFRS 16 totalled RUB 7,200 million (RUB 23,824 million pre-IFRS 16) in Q4 2022, compared with RUB 15,540 million (RUB 31,389 million pre-IFRS 16) in Q4 2021. In 2022, net cash used in financing activities under IFRS 16 increased to RUB 127,655 million from RUB 81,890 million (and increased to RUB 61,641 million from RUB 17,280 million pre-IFRS 16) in 2021.

Liquidity update

The Company's net debt/EBITDA ratio under IFRS 16 was 2.58x (1.02x pre-IFRS 16) as of 31 December 2022.

The Company's debt pre-IFRS 16 is 100% denominated in Russian roubles.

As of 31 December 2022, the Company had access to RUB 475,020 million in available credit limits with major banks.

Dividends

In view of the current market conditions, ongoing regulatory constraints, and consistent with last year's profit allocation, the Supervisory Board will recommend to X5's General Meeting of shareholders not to distribute a dividend for 2022. This recommendation is based on various factors, including the need to strengthen the Company's focus on supporting customers and suppliers to maintain a stable supply chain and keep store shelves sufficiently stocked. The Supervisory Board believes that meeting these priorities will require financial resources, and that all Company stakeholders will benefit in the long term from X5 strengthening its reputation as a reliable partner for both customers and suppliers. While the Company remains committed to its long-term goal of returning company profits to shareholders, the Supervisory Board believes it would be in the Company's best interest to temporarily deviate from its dividend policy as long as current uncertainties and regulatory conditions prevail.

Related party transactions

For a description of the related party transactions entered into by the Company, please refer to note 8 of the consolidated financial statements.

Issuance of audited 2022 Annual Report

The Group expects to separately publish its full 2022 Annual Report prepared in compliance with Dutch requirements at a later date, together with the audit report issued by its Dutch external auditor, who was only engaged at the beginning of 2023.

Notes

1. LFL comparisons of retail sales between two periods are comparisons of retail sales in local currency (including VAT) generated by the relevant stores. The stores that are included in LFL comparisons are those that have operated for at least 12 full months. Their sales are included in the LFL calculation starting from the day of the store's opening. We include all stores that fit our LFL criteria in each reporting period.

2. The pre-IFRS 16 financial measures are calculated by adjusting the applicable IFRS measures to include fixed lease expenses and fixed non-lease components of lease contracts and to exclude any gain on derecognition of right-of-use assets and lease liabilities, depreciation of right-of-use assets and interest on lease liabilities and gain/loss from sale of asset under sale and leaseback operations for the proportion of the rights retained recognised under IFRS 16.

3. Adjusted EBITDA is EBITDA before costs related to the LTI programme, share-based payments, other one-off remuneration payment expenses and the impact of the Karusel transformation.

4. Please note that, in this and other tables and in the text of this press release, immaterial deviations in the calculation of % changes, subtotals and totals are due to rounding.

5. Net retail sales represent revenue from the operations of X5-managed stores net of VAT. This number differs from revenue, which includes proceeds from wholesale operations, direct franchisees (royalty payments) and other revenue. Including Mnogo Lososya, Vprok.ru, Krasny Yar and Slata

6. Including Mnogo Lososya, Vprok.ru, Krasny Yar and Slata.

7. Including Vprok.ru dark stores, Mnogo Lososya dark kitchens, Karsny Yar and Slata stores and joint dark stores.

8. Including Chizhik and Karusel.

9. Mainly consists of lease/sublease income, income from the sale of recyclable materials and other one-off gains

10. Adjusted for cash used for short-term financial investments

Note to Editors

X5 Retail Group N.V. (LSE and MOEX: FIVE; Expert RA - ruAAA; ACRA - AAA(RU)) is a leading Russian food retailer. The Company operates proximity stores under the Pyaterochka brand, Perekrestok supermarkets and Chizhik hard discounters. X5 provides an omnichannel experience to its customers, integrating retail stores and e-commerce through its businesses Vprok.ru, 5Post and Mnogo Lososya.

As of 31 December 2022, X5 had 21,323 Company-operated stores. It has the leading market position in both Moscow and St. Petersburg and a significant presence in the European part of Russia. Its store base includes 19,164 Pyaterochka proximity stores, 971 Perekrestok supermarkets, 517 Chizhik hard discounters and 595 Krasny Yar and Slata stores. The Company operates 53 DCs and 4,386 Company-owned trucks across the Russian Federation.

X5 is one of the largest employers in Russia. The Company employs over 353 thousand people.

For the full year 2022, revenue totalled RUB 2,605,232 million (USD 38,005 million*), EBITDA pre-IFRS 16 reached RUB 186,788 million (USD 2,725 million*), and net profit pre-IFRS 16 for the period amounted to RUB 52,248 million (USD 762 million*).

Forward-looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "expected", "plan", "goal", "believe", or other words of similar meaning.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Group N.V.'s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements.

Any forward-looking statements made by or on behalf of X5 Group N.V. speak only as of the date of this announcement. Save as required by any applicable laws or regulations, X5 Group N.V. undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.

* FX rate: 68.5494 USD/RUB For further details, please contact:

Polina Ugryumova

Head of Corporate Finance and IR

Tel.: +7 (495) 662-88-88 ext. 27-300

e-mail: Polina.Ugryumova@x5.ruMaria Yazeva

Investor Relations Officer

Tel.: +7 (495) 662-88-88 ext. 13-147

e-mail: Maria.Yazeva@x5.ru