X5 Retail Group. Годовой отчет за 2022 год (на английском)

Labelling rules for bottled
water

The requirement for sellers, manufacturers and importers to submit information on retail sales of bottled

water to the labelling system was postponed until 1 March 2023.

30 March 2022

For more details, see Resolution of the Russian Government No. 477 dated 26 March 2022

For more details, see Resolution of the Russian Chief Sanitary Doctor No. 18 dated 20 June 2022

The production of alcoholic products; the production and sale of tobacco products that partially do not comply with labelling

and other information requirements

The sale of alcoholic and tobacco products without mandatory labelling or other information

Lifting COVID-19 restrictions

Russia lifted its previously introduced COVID-19 restrictions, such as the following:

2 July 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

The production of alcoholic products; the production and sale of tobacco products that partially do not comply with labelling

and other information requirements

The sale of alcoholic and tobacco products without mandatory labelling or other information

Mandatory face coverings in public places

Mandatory social distancing

Movement restrictions, including lockdown measures

A ban on mass gatherings

Sick notes for people self-isolating

A mandatory 14-day quarantine for foreign nationals and stateless persons arriving in Russia for work

Labelling rules for alcoholic
and tobacco products

Administrative liability was increased for the following:

8 February 2022

For more details, see Federal Law No. 2-FZ dated 28 January 2022

The EAEU technical
regulations on alcoholic
products

The expiry date for the transitional provisions of the EAEU technical regulations on alcoholic products was postponed.

The conformity assessment documents on alcoholic products adopted before the technical regulations come into force (1 January
2024) are effective until the end of their expiry period but no later than 1 January 2027. Should such documents be adopted,
alcoholic products may be manufactured and sold until that date.

During this period, the CIS countries may also manufacture and sell products that are not subject to mandatory conformity

assessment before the technical regulations come in effect, without such documents and national conformity marks.

19 August 2022

For more details, see Resolution of the Board of the Eurasian Economic Commission No. 99 dated 13 July 2022

For more details, see Federal Law No. 266-FZ dated 14 July 2022

Changes in the Law On
Personal Data

Data consent requirements were expanded.

Requirements for providing biometric data were changed.

Service may no longer be denied if a data subject refuses to provide biometric personal data and/or give consent to data
processing, unless, in line with the Federal Law, the data controller must obtain consent to personal data processing.

Data controllers and processors now bear joint liability for personal data processing by foreign individuals and legal entities.

Data controllers must now immediately report incidents involving their own databases containing personal data to the authorities
and ensure data is continuously exchanged with GosSOPKA.

1 September 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

Requirements for submitting advertising
data to the Federal Service for Supervision of
Communications, Information Technology
and Mass Media (Roskomnadzor)

The data should be submitted to Roskomnadzor via an advertising data operator.

The adopted provisions expanded the requirements for advertising market participants to submit information to the single
internet advertising information system introduced on 1 September 2022 (Article 18.1 of the Law On Advertising).

14 July 2022

For more details, see Federal Law No. 286-FZ dated 14 July 2022

1 GosSOPKA is the state system of detecting, preventing and responding to cyberattacks.

Labelling alcoholic products
imported into Russia

From 1 June 2021 to 31 May 2024, the city of Moscow, as well as the Bryansk and Vladimir Regions are trialling the labelling

procedure for alcoholic products imported into Russia and stored in bonded warehouses.

14 September 2022

For more details, see Resolution of the Russian Government No. 1567 dated 6 September 2022

Requirements for the storage of alcoholic
and alcohol-containing products in
warehouses were softened

Alcoholic products may now be stored together with any other goods (except for perishables), subject to zoning requirements.

These requirements include keeping aisles between zones and having warehouse plans that reﬂect the zones approved by the

head of the organisation.

11 October 2022

For more details, see Order of the Russian Ministry of Finance No. 133n dated 1 September 2022

Amendments to dairy
labelling rules

Until 31 May 2025 (inclusive), dairy supply chain participants must report the delivery (acceptance) of products subject to
labelling by preparing a UTD, signed with advanced electronic signatures by both supplier and customer; within three business

days of the acceptance date, a relevant notiﬁcation will appear in the system.

From 1 June 2025, dairy supply chain participants must report products subject to labelling by preparing a UTD, signed with
advanced electronic signatures from both supplier and customer; within three business days of the acceptance date but no

later than the transfer of products to third parties, a relevant notiﬁcation will appear in the system.

31 October 2022

For more details, see Resolution of the Russian Government No. 1733 dated 30 September 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Main legislative amendments

Effective data

The production of alcoholic products; the production and sale of tobacco products that partially do not comply with labelling

and other information requirements

The sale of alcoholic and tobacco products without mandatory labelling or other information

Amendments to the Labour Code of the
Russian Federation regarding electronic
document management

The Russian Public Services Portal can now be used to exchange documents between employers and employees.

On the Portal, job seekers and employees will be able to ﬁll in, electronically sign and send personnel record forms.

All electronic personnel records can be found both in the employee’s personal account on the Portal and in the organisation’s
information system.

1 September 2022

For more details, see Resolution of the Russian Government No. 1192 dated 1 July 2022

1 Universal Transfer Document.

Labelling requirements for
e-cigarettes and e-liquids

E-cigarettes and e-liquids are subject to mandatory labelling. The rules apply to disposable e-cigarettes and e-liquids
contained in capsules or cartridges.

On 15 December 2022, the mandatory registration of manufacturers and importers in the Chestny ZNAK track and trace system
began.

From 25 December 2022, labelling became mandatory for manufacturers and importers.

On 1 March 2023, the registration of wholesalers and retailers in the Chestny ZNAK system will commence.

From 1 April 2023, retailers and wholesalers will be required to submit labelled e-cigarettes sales data to Chestny ZNAK.

From 1 December 2023, sales of unlabelled goods will be prohibited.

15 December 2022

For more details, see Directive of the Russian Government No. 3680-r dated 30 November 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

The trademark holder is the same in Russia and the country where the product was ﬁrst marketed

The product was ﬁrst marketed by or with the consent of the trademark holder and is original (not counterfeit)

The supply contract provides for a penalty (ﬁne) and indemniﬁcation of losses in the event the supplier’s guarantees about the
legal ﬁrst marketing of the product by the trademark holder – or with their consent – or the originality of the product imported to
Russia are found to be invalid

Alcoholic products from certain brands
were added to the list of goods allowed
for parallel import into Russia

The Russian Ministry of Industry and Trade expanded the list of goods allowed for parallel import into Russia to include
alcoholic products from certain brands.

legal, subject

Imports of such products into Russia are now

to the following conditions being met:

3 November 2022

For more details, see Order of the Russian Ministry of Industry and Trade No. 4456 dated 20 October 2022

Tax arrears over RUB 3,000 as at the ﬁrst day of the month of application that were still outstanding by the date the information
from the tax authority was received

Fines related to alcohol sales discrepancies according to SIS SMP that were still outstanding as at the ﬁrst day of the month of
application

An incomplete set of documents or misleading information

No information about the applicant in the Uniﬁed State Register of Legal Entities

Clarification of the procedure for
licensing alcoholic products

The law stipulates that in the event of any breaches, the licensing authority will send the licence applicant a notice requiring
them to correct the breaches within 30 days. Such breaches include the following:

The licence applicant may request another inspection by the licensing authority after correcting any breaches within a
speciﬁed period.

1 March 2023

For more details, see Federal Law No. 329-FZ dated 14 July 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

Cancelling certain display
requirements for retail sale of
wine, cognac and brandy

Retailers no longer have to separately display wines produced or registered in the EGAIS (the state track and trace system for
alcoholic products) before or after 26 June 2020. The same applies to cognac and brandy produced before or after 2 July
2021.

1 January 2023

For more details, see Federal Law No. 633-FZ dated 29 December 2022

The State Information System of Government and Municipal Payments.

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

15 January 2024 – for data on the partial sale of products in kegs when sold by the measure

1 June 2024 – for data on drinks sold in consumer packaging

Mandatory beer labelling

From 1 April 2023, labelling will be mandatory for products in kegs; this will extend to drinks in glass or plastic consumer
packaging from 1 October 2023 and to goods in other types of consumer packaging from 15 January 2024.

Manufacturers and importers may submit information, in particular about marking goods, from 1 March 2023, and must do it
starting from the date mandatory registration is launched.

Retailers may submit data on sold drinks to the system from 1 March 2023 and must do it starting from the following dates:

1 March 2023

For more details, see Resolution of the Russian Government No. 2173 dated 30 November 2022

New rules for filling in a vehicle
trip ticket

In line with the new rules, the format of a vehicle trip ticket may now be electronic. The paper format remains acceptable.

The new vehicle trip ticket will contain information about its validity period, the person who issued it, vehicle, driver(s), mode of
transport, and destination type.

All notes in electronic trip tickets require a qualiﬁed or non-qualiﬁed advanced electronic signature. If an electronic trip ticket is
used when accepting cargo, the carrier (driver) must send the shipper conﬁrmation that the vehicle trip ticket is electronic, as

well as its details, through the operator of the electronic shipping document system.

1 March 2023

For more details, see Order of the Russian Ministry of Transport No. 390 dated 28 September 2022

Labelling of organic
products

Importers may only use the word “organic” or derivatives thereof on a product label if they have a relevant certiﬁcate of
conformity – a document conﬁrming that production was compliant with national and international organic standards. The
certiﬁcate is issued after veriﬁcation by dedicated certiﬁcation bodies accredited by the Federal Service for Accreditation
(RusAccreditation), such as the Russian System of Quality (RusQuality), among others. Organic producers must mark their
products with the standard organic label logo approved by the Russian Ministry of Agriculture.

1 September 2023

For more details, see Federal Law No. 630-FZ dated 29 December 2022

Legislative changes

STRATEGIC REPORT

OVERVIEW

RUSSIA’S FOOD RETAIL MARKET

Regulations

Relevant changes in legislation

Effective data

Alcoholic products containing over 0.5% alcohol by volume; grape-, fruit-, honey-, grain-, and other must- and wort-based drinks;
and fermented fruit juices and kvass containing less than 1.2% of alcohol

Food products state-certiﬁed to Eurasian Economic Union standards, except for tonic drinks and carbonated beverages

Juice, mors, syrup, milk and milk products, kissel, or other plant-based drinks made from cereals, grains, pulses, oil plants,
coconuts, nuts, or products thereof, except for tonic drinks and carbonated beverages

New excise tax on sugar-
containing drinks

A new excise tax was set at RUB 7 per litre of sugar-containing drinks.

Sugar-containing drinks in consumer packaging that contain sugar (glucose, fructose, etc.), sugar syrup and honey became
liable for excise. The carbohydrate content in the nutritional value of such drinks must exceed 5 g per 100 ml, but the volume
percent of ethanol must be 1.2% or lower.

The following drinks are not categorised as sugar-containing drinks:

1 July 2023

For more details, see Federal Law No. 443-FZ dated 21 November 2022

CEO and President’s statement

STRATEGIC REPORT

STRATEGIC REVIEW

CEO AND PRESIDENT’S STATEMENT

That is why the importance of our commitment to
communities cannot be underestimated. X5 provides a
reliable supply of food to the regions where we operate – in
2022, we undertook tremendous efforts to ensure that all
products remained available for our customers despite a
number of external challenges. In the reporting year, we also
launched a pilot food-sharing project, working with
Foodsharing and Foodbank Rus to donate food to people in
need. We plan to roll out this initiative across the Russian
regions and expand the range of food products donated. In
everything we do, we strive to meet the highest standards of
corporate citizenship and continue to integrate ESG targets
into our business processes while committing to regular, GRI-
compliant reporting.

Turning to our business, we delivered excellent operating and
financial results in 2022. Notably, we achieved 18.2% revenue
growth, 10.8% like-for-like sales growth and maintained a
7.2% EBITDA margin. X5 continues to focus on the largest
and fastest-growing market segments – convenience stores
and hard discounters – while making further improvements to
our customer value proposition, as well as unlocking
operational and capex efficiencies to adapt to changes in the
market environment and stay ahead of consumer trends.
We pay close attention to boosting our sales density, growing
our LFL sales above inflation and exploring opportunities for
both organic and non-organic market share growth.

Our recently launched hard discounter network, Chizhik,
made remarkable progress in expanding its footprint and has
performed well above our initial targets. The network’s net
sales grew 12x year-on-year in 2022 on the back of a 7x
increase in the number of stores. The hard discounter format
has proven attractive among customers looking for the best
price offer, and we plan to accelerate store openings for
Chizhik in 2023.

X5 completed a series of notable M&A deals in the reporting
period. In St Petersburg, we integrated 15 PRISMA
supermarkets previously owned by a Finnish retail group,
welcoming those stores under our Perekrestok banner. The
Group also acquired a 70% share in Slata and Krasny Yar, two
major food retail chains in Eastern Siberia. The deal has
paved the way for our expansion into Russia’s Far East in
2023, a move that will significantly grow X5’s footprint and
create new opportunities for customers and suppliers in the
region.

Our digital businesses remained a core component of the
customer journey in 2022. As we enter the new year, we are
well-positioned to lead the industry through our express
delivery services from Pyaterochka and Perekrestok stores
and the online hypermarket Vprok.ru, which have been
consolidated into a newly created entity called X5 Digital. We
also secured partnerships with the three major grocery and
ready-to-eat meal delivery aggregators, in a bid to unlock the
greater convenience that the omnichannel shopping
experience has to offer. At the same time, we are focused
on achieving strong unit economics by improving express
delivery from stores and dark stores, which accounts for the
largest and fastest-growing segment in e-grocery.

We additionally completed a full-scale overhaul of our loyalty
programme, X5 Club, which numbered nearly 70 million active
loyal customers at year-end.

In 2022, X5 continued to bolster its management team with
new high-level appointments. We have appointed Vladislav
Kurbatov, who previously headed the Perekrestok
supermarket network, to the position of General Director of
Pyaterochka and appointed Andrey Kalmykov, ex-CEO of
Pobeda Airlines, as General Director of Perekrestok. As part
of this team-building effort, the Supervisory Board has
decided to reshuffle the management structure and create
the position of X5 Group President, who acts as the head of
the Russian holding company.

On behalf of the entire management team, we would like to
thank our employees, business partners and customers for
their loyalty and commitment to X5 Group during 2022. We
will do all our best to continue to earn this support moving
forward.

Igor Shekhterman

X5 GROUP CHIEF EXECUTIVE OFFICER

Ekaterina Lobacheva

X5 GROUP PRESIDENT

Our strategy

Strategic priorities

X5 aims to strengthen its presence across three segments: the
proximity store, supermarket and hard discounter

On the back of a massive expansion drive, X5’s hard discounter
format is growing aggressively, targeting consumers’ needs for
low prices and great quality

Pyaterochka continues to expand its presence, including the
launch of operations in its eighth federal district (FD) of Russia,
the Far Eastern FD, and demonstrate strong LFL performance,
thanks to adaptation of its CVP

Perekrestok seeks to consolidate the audience of supermarket
shoppers and strengthens its presence in large metropolitan
areas

Online business growth is mainly driven by express delivery from
stores and dark stores, leveraging the Group’s existing in-house
platform and partnerships with aggregators

X5 continues to expand its presence at each step of the
customer journey and both retains and attracts traffic to its
various businesses by building a joint loyalty programme

by growth of market share in food retail

by revenue in the e-grocery segment

by ESG perception among Russian food retail customers

Financial services
(implemented through
co-branding with partner
bank)

Dark kitchens and coffee
points — Mnogo Lososya

Last-mile e-commerce
platform

Subscription and privilege
service — X5 Paket

X5 retail chains and

alliances with X5 control

X5 Digital

(express delivery, Vprok.ru) —

online food retail with

a wide assortment

Digital media platform

about food — FOOD.RU

POSITION

by 2025

Joint loyalty
programme

customer retention and
acquisition tool for LFL growth

Strategic vision for X5’s presence in the customer journey

We focus our efforts on building X5’s presence at each and every step of the customer journey which brings long-term competitive
advantages. Our unique value proposition is designed to meet consumers’ needs across all our formats and online businesses, creating
a tailored and seamless shopping experience underpinned by a superior service offering.

STRATEGIC REPORT

STRATEGIC REVIEW

OUR STRATEGY

Geography of operations

Our extensive geographical footprint plays

a crucial role in enabling X5 Group’s leadership
in the Russian food market, delivering proﬁtable
and efﬁcient growth both ofﬂine and online,
while constantly improving existing operations.
At the end of 2022, X5 was operating
21,323 retail stores, three large dark stores,
44 express delivery dark stores, and
53 distribution centres in 70 Russian regions.

STRATEGIC REPORT

STRATEGIC REVIEW

GEOGRAPHY OF OPERATIONS

NUMBER OF STORES BY FEDERAL DISTRICT

NET RETAIL SALES BY FEDERAL DISTRICT IN 2022,

as at 31 December

2018

2019

2020

2021

2022

Central FD

5,822

6,301

6,703

7,181

7,703

North-Western FD

1,668

1,836

1,910

1,998

2,081

Central and North-Western FD

7,490

8,137

8,613

9,179

9,784

Volga FD

3,820

4,306

4,621

4,895

5,256

Ural FD

1,168

1,358

1,535

1,672

1,885

Southern FD

1,222

1,501

1,718

1,951

2,211

North Caucasus FD

252

293

334

388

433

Siberian FD

479

702

886

1,036

1,696

Far Eastern FD

Total

14,431

16,297

17,707

19,121

21,323

Rapid rollout of digital businesses

We continue to expand our digital businesses,
leveraging a robust IT infrastructure and widespread
retail operations to deliver agile services – without
losing our focus on the bottom line. In 2022, X5
partnered with three major grocery and ready-to-eat
meal delivery aggregators to expand its online
delivery offering.

As at 31 December 2022, our express delivery service
was available from 4,480 stores and 44 dark stores
across 64 Russian regions, as compared to
1,611 stores and 50 regions last year. Our last-mile
e-commerce delivery service – 5Post – had nearly
24 thousand pickup points in operation, including
over 5 thousand multi-parcel lockers at 2022-end,
as well as 56 Mnogo Lososya dark kitchens.

Federal district

Share of net retail

sales, %

% of Russian

population

RUB mln per

1,000 people

Central FD

47.1%

27.4%

30.3

Volga FD

18.6%

19.6%

16.7

North-Western FD

13.4%

9.5%

25.0

Ural FD

7.5%

8.4%

15.9

Southern FD

7.7%

11.4%

12.0

North Caucasus FD

1.3%

6.9%

3.2

Siberian FD

4.4%

11.4%

6.9

Far Eastern FD

0.04%

5.4%

0.1

1 Krasny Yar and Slata.

21,323

Retail stores

as at 31 December 2022

Express delivery dark stores

as at 31 December 2022

Large dark stores

as at 31 December 2022

Distribution centres

as at 31 December 2022

STRATEGIC REPORT

STRATEGIC REVIEW

GEOGRAPHY OF OPERATIONS

Multi-format

presence

in 8 federal

districts

19,164

Pyaterochka stores

971

Perekrestok supermarkets

Mnogo Lososya dark kitchens

Express delivery dark stores

21,323

Total stores

Express delivery services
available from 4,480 stores
and 44 dark stores spanning

64 regions

517

Chizhik hard discounters

Karusel hypermarkets

Large Vprok.ru dark stores

Almost 24 thousand 5Post pickup
points, including 5,688 parcel lockers,
available from 18,387 stores across

58 regions

X5 today

Format

North

Caucasus FD

Southern

Central FD

Volga FD

North-

Western FD

Ural FD

Siberian

Far

Eastern FD

Pyaterochka

424

2,149

6,797

4,993

1,913

1,729

1,159

–

Perekrestok

538

135

161

–

Chizhik

–

302

127

–

Karusel

–

Krasny Yar
and Slata

–

537

Number of DCs

–

Number of
dark stores

–

Number of
dark kitchens

–

Number of
pickup points/
parcel lockers

494

2,618

9,467

6,255

2,704

2,363

–

as at 31 December 2022¹

Number of stores and distribution centres (DCs)

595

Krasny Yar and Slata stores

1 Including 7 joint dark stores.

Leadership team

STRATEGIC REPORT

STRATEGIC REVIEW

LEADERSHIP TEAM

Our C-level team consists of best-in-class professionals who
are in charge of carrying out routine operations as well as
executing the long-term Company strategy. The
management team reports to the Supervisory Board, which
oversees the management’s accountability for delivering on

the Company’s strategic, ﬁnancial and operating targets.

Dmitry
Agureev

Head of Corporate

Security

Svetlana
Volikova

Director for Business
Support, Member of the

Executive Board

Larisa
Romanovskaya

General Director of

X5 Digital

Ilya
Yakubson

Director of Chizhik

Vladimir
Salakhutdinov

Director for Strategy and
Business Development,
Member of the Executive

Board

Igor
Shekhterman

Chief Executive Ofﬁcer,

Chairman and Member of
the Management Board,
Chairman and Member of

the Executive Board

Ekaterina
Lobacheva

President, Member of the
Management Board,
Member of the Executive

Board

Vsevolod
Starukhin

Chief Financial Ofﬁcer,

Member of the Executive

Board

Vladislav
Kurbatov

General Director of
Pyaterochka, Member of

the Executive Board

Andrey
Kalmykov

General Director of

Perekrestok

Anton
Mironenkov

Managing Director of

X5 Technologies, Member
of the Executive Board

Tatiana
Krasnoperova

Director for Human
Resources and
Organisational
Development, Member of

the Executive Board

Elena
Konnova

Director for Corporate
Communications and
Sustainable Development

WOMEN

TOP MANAGEMENT TEAM

GENDER BREAKDOWN

as at 31 December 2022

MEN

1 Vsevolod Starukhin resigned as CFO at the end of April 2023. The Company

is looking for a new candidate.

Key 2022 highlights

Key operating results

Net sales by region,

2021

44.5

21.1

13.0

7.9

4.3 1.3

2022

43.8

20.7

12.8

8.5

8.0

4.8 1.4

Central FD

Volga FD

North-Western FD

Southern FD

North Caucasus FD

Ural FD

Siberian FD

STRATEGIC REPORT

REVIEW BY FORMATS

PYATEROCHKA

5.5

BLN

Customer visits

+9.9%, 2021/22

441

RUB

Average ticket

+7.9%, 2021/22

40.1

MLN

Active loyalty card users

−0.2%, 2021/22

17.8

NPS

+3.7, 2021/22

Loyalty card penetration
in sales

CUSTOMER METRICS

19,164

Stores in operation

+6.6%, 2021/22

11.7

LFL sales growth

7,497

THS

SQM

Selling space

+6.4%, 2021/22

2,125

RUB

BLN

Revenue

+18.4%, 2021/22

8.0

EBITDA margin

pre-IFRS 16

OPERATIONAL METRICS

FINANCIAL METRICS

CAGR

2021

2020

2019

2018

Number of stores, eop

Net retail sales, RUB bln

Selling space, ths sqm, eop

Customer visits, mln

9.1%

15.4%

9.1%

9.0%

17,972

1,794

7,048

5,029

16,709

1,597

6,542

4,662

15,354

1,367

5,975

4,460

13,522

1,198

5,291

3,913

2022

19,164

2,123

7,497

5,524

1 At least one purchase made in

December 2022.

X5 Retail Group. Годовой отчет за 2022 год (на английском) - часть 2