X5 SUPERVISORY BOARD APPROVES DIVIDEND POLICY

X5 SUPERVISORY BOARD APPROVES DIVIDEND POLICY

Moscow, 22 September 2017 - The Supervisory Board of X5 Retail Group ("X5" or "the Company"), a leading Russian food retailer (LSE: FIVE), has approved a dividend policy for the Company.

The dividend policy sets a target payout ratio of at least 25% of X5 Retail Group's consolidated IFRS net profit, provided that the Company's financial position allows for it. When considering a dividend proposal to the General Meeting of Shareholders, the Supervisory Board will be guided by a target consolidated net debt/EBITDA ratio of below 2.0x, in line with the Company's financing strategy.

X5 Retail Group Supervisory Board Chairman Stephan DuCharme said:

"I am very pleased that X5 Retail Group can in the near future start providing cash returns to investors in the form of regular annual dividends. The Supervisory Board has been carefully monitoring the Company's successful implementation of its strategy, combined with strong operating and financial performance, and we believe that X5 has reached the stage where it may begin to pay dividends while continuing to meet its strategic targets.

"The decision to begin paying dividends does not reflect any change in our long-term strategic priorities. In the years ahead, X5 will seek to further strengthen its position as Russia's leading food retailer through store base expansion, with a continued focus on its customers and on innovative solutions that support sustainable and efficient growth.

"The Supervisory Board intends to consider a dividend proposal for FY 2017 in accordance with the new dividend policy."

Note to Editors:

X5 Retail Group N.V. (LSE: FIVE, Fitch - 'BB', Moody's - 'Ba2', S&P - 'BB') is a leading Russian food retailer. The Company operates several retail formats: the chain of proximity stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand and Express convenience stores under various brands.

As of 30 June 2017, X5 had 10,506 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 9,688 Pyaterochka proximity stores, 557 Perekrestok supermarkets, 90 Karusel hypermarkets and 171 convenience stores. The Company operates 36 DCs and 2,425 Company-owned trucks across the Russian Federation.

For the full year 2016, revenue totalled RUB 1,033,667 mln (USD 15,420 mln), Adjusted EBITDA reached RUB 79,519 mln (USD 1,186 mln), and net profit for the period amounted to RUB 22,291 mln (USD 333 mln). In H1 2017, revenue totalled RUB 613,879 mln (USD 10,587 mln), EBITDA reached RUB 50,000 mln (USD 862 mln), and net profit amounted to RUB 18,698 mln (USD 322 mln).

X5's Shareholder structure is as follows: Alfa Group - 47.86%, Intertrust Trustees Ltd (Axon Trust) - 11.43%, X5 Directors - 0.06%, treasury shares - 0.01%, Shareholders with less than 3% - 40.63%.

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 Retail 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 Retail Group N.V. speak only as of the date of this announcement. Save as required by any applicable laws or regulations, X5 Retail 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.

Elements of this press release contain or may contain inside information about X5 Retail Group N.V. within the meaning of Article 7(1) of the Market Abuse Regulation (596/2014/EU).