X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Day (October 2020)
72 slides from X5 Corporate Center's investor day presentation, Oct 27, 2020
Slide 1: X5 Capital Markets Day, 27 October 2020
Wy | | Lo a It | WV] | | New retail | | starts now | Day X5 Capital inn Markets Day | 27 OCTOBER 2020 || Hayy
Slide 2: Disclaimer
DXB carrrarnanners nav 2020 Disclaimer This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or
Slide 3: Agenda
DXB carrmar manners vay 2020 Agenda a 02 03 04 05 Strategy 2023 Performance update Q3 and 9M 2020 results Overview by format: 6 Pyaterochka Se Perekrestok Online businesses
Slide 4: Igor Shekhterman, Chief Executive Officer
)X5 RETAILGROUP X5 Capital Markets Day 27 October 2020 Igor Shekhterman . Chief Executive Officer
Slide 5: Strategy 2018-2020 implementing and adapting
DXB corrtar manners vay 2020 Strategy 2018-2020 implementing and adapting Updated CVPs of retail chains, rolling out new store concept for proximity and supermarkets Increased share of private labels in sales Increased share of direct import Reduced shrinkage level Reduced employee turnover Launched
Slide 6: Pandemic: finding opportunities in a crisis
DXB carrrar manners oav 2020 Pandemic— Finding opportunities in a crisis Transitioning to a digital world Increasing importance of health and safety Decreasing purchasing power of customers Changing competitive environment XS RESPONSE Strengthening leadership driven by proximity format Achieving top
Slide 7: Key consumer trends in Russia
DXB carta manners vay 2020 Key consumer trends in Russia Consumer seeking convenience— “here and now” 06 Consumer searching for impressions Ageing consumer Conscientious consumer Health-conscious consumer Technological consumer 04 Consumer looking for simplicity < @ kb — p Sea 09 Media-savvy consume
Slide 8: Target: be at every stage of the customer journey
XB. corra nannersay 2020 y.. f 2 Target: coma PRIVILEGE SERVICE be at every stage of the customer _ RSs rane journey ONLINE & OFFLINE GROCERY, WITH READY-TO-EAT FOOD DELIVERY AGGREGATOR PRICE COMPARISON Ean SERVICE PLATFORM ABOUT FOOD
Slide 9: X5 strategy highlights
XB. cara nanversoay 2020 y.. £ X5 strategy highlights As we expand to address all key We are implementing a new customer missions in the food market, management model that our core business remains our top combines traditional priority. We continuously update our competitive advantages with value pr
Slide 10: Strategy 2023
Strategy 2023 Our goal is to increase value for both X5 Ff shareholders and the broader society by advancing and evolving our technology and competitive of) strategies to further cement our position as Leadership in food market 15x 20: XS share XS share of grocery of e-grocery market market in 2023
Slide 11: Vladimir Salakhutdinov, Director of Strategy
)X5 RETAILGROUP X5 Capital Markets Day 27 October 2020 Vladimir Salakhutdinov y Director of Strategy
Slide 12: Leadership in food market
DXB ceria nanvers ony 2020 74 2 Leadership in food market Best customer 02 — Services at all stages Qo WHAT WE DO © — Leader in key customer missions Digital transformation helping achieve significant improvement in assortment and price Best in market ready-to-eat food assortment, with our own produ
Slide 13: X5 multi-format offer
XB. corr nannersoay 2020 y. £ X5 multi-format offer ° ce) 6 Pyaterochka Perekrestok Chizhik Perekrestok Vprok Format Proximity store Supermarket Hard discounter FMCG marketplace Price segment [Low]—IMid] [Mid]—[Mid+] [Low]—[Mid-] [Mid-]—[Mid] Medium choice of food Wide choice of food Primary food of
Slide 14: Leadership in customer missions: target CVP positioning by 2023
DXB carrrar manners vay 2020 Leadership in customer missions: X5’s target CVP positioning by 2023 CUSTOMER VALUE PROPOSITION MANY ARE BETTER THAN US WE ARE LIKE EVERYONE ELSE WE ARE BETTER THAN MANY Price °. ITIS BENEFICIAL FOR ME xy (Convenience 7° ("| IIS CONVENIENT FOR ME <> Assortment ~, | Atmos
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Slide 16: Hard discounter new format
DXB carrrar manners nav 2020 Hard discounter new format With declining household incomes, development of the hard discounter format will strengthen our market position and facilitate the flow of customers from key competitors HARD DISCOUNTER CVP Social responsibility Atmosphere Category leaders Bett
Slide 17: Competitive advantage in ready-to-eat food
DXB carrrar manners vay 2020 B : Com petitive advantage in X5 retail chains have gained a competitive advantage in RTE thanks to the taste, quality and freshness of ready- ready- to =-@Ga t food ( RTE ) to-eat food, the assortment and our express delivery services DEFINITION OF RTE FOR X5 CUSTOMERS
Slide 18: Services at every stage of the customer journey
XB carr. manners pay 2020 Services at every stage of the customer journey PLAN Core business: retail chains and X5 ready-to-eat @ Digital services at all stages of customer journey FIND / SELECT RETAIL EXPERIENCE : COMPLEMENTARY SERVICES Payment service Media platform Subscription service FMCG marke
Slide 19: X5 strategy is largely driven by digital transformation
XB. cara nanversoay 2020 y.. f 1 X5 strategy is largely driven by digital transformation WHAT WE DO EXPECTED RESULTS 2023 50.. Digitalisation index 2 @) bn Transition to new IT architecture with a new level of speed and flexibility erect or aga lalla on rom ¢ & Industry leader in digitalisation Best
Slide 20: Best mobile interfaces and services in retail
DXB corrar manners oxy 2020 y.. 2 Best mobile interfaces and services in retail 6 Namépouxa *} Mepexpéctox Oy Single sign-on in all apps with seamless transition between them while switching between consumer missions a : Oy HYKHOrO, 9 MEHbIE TMMWHETO. Omnichannel services, incl express delivery and
Slide 21: Industry leader in digitalisation
DXB carta manners vay 2020 Industry leader in digitalisation Implementation of digital transformation programme will enable X5 to maintain profitability in the highly competitive retail market KEY ELEMENTS OF DIGITAL TRANSFORMATION @ Assortment, prices, promo <% Supply chain % {Supporting functions
Slide 22: Sustainable development performance targets
DXB ceria nanvers oxy 2020 y.. 2 Sustainable development performance targets STRATEGIC TARGETS BY 2023 30x30—STRATEGIC GOALS BY 2030 +100x up to 30% COMMUNITIES families receiving Basket increase of the growth rate of number of families of Kindness help by 2023 receiving Basket of Kindness per year
Slide 23: Svetlana Demyashkevich, Chief Financial Officer
)X5 RETAILGROUP X5 Capital Markets Day 27 October 2020 Svetlana Demyashkevich Chief Financial Officer
Slide 24: Attractive market
XE carrrar manners oav 2020 Attractive market Russian food retail market X5 Retail Group's position 216.7 in Total market size #1 Player in Russian food retail 13x Market share in 9M 2020 29x Share of top 5 players 33% Share of top 10 players 50-60. Of new openings are replacements of existing playe
Slide 25: Committed to major food retail formats
DXB corrrar manners vay 2020 Committed to major food retail formats 2023: 6,4 tn Substantial mid-term growth potential for proximity and supermarkets 2023: 3.7 tn ® Market growth, ? @ 2020E market size, P PROXIMITY / DISCOUNTERS SUPERMARKETS 216.7 in Total market size 2020E 20238: 1.6 tn -03tn 20236
Slide 26: Key macro indicators
DXB carrrar manners oav 2020 Key macro indicators Average USD/RUB rate 73 ral ” 65 ' 65 | 2019 2020-202 +: 9M2019 9M 2020 Food retail market growth 71% 71% 5.3% 3.2% 1.2% : = 2019 © 2020E-««201E_ | -9M2019 9! 2020 Real disposable income growth 1.0% 05% 0.9% — = 15% 4.3% 2019 2020E-«=«2021E +=: «9M20
Slide 27: Shareholder $-based returns above sector average
XB. cama nannersoay 2020 y.. £ z Shareholder $-based returns ax @ RTS Consumer & Retail above sector average @ ers X5 share price vs market $-denominated, rebased to Jan-2019 60% L24M TSR 50% 471% 90.6% 40% oo 28.5% 34.1% 20% 10% 9.6% 15.9% 0% 10% -20% -30% JAN19 MARI9 MAY 19 JUL19 SEP 19 NOV19 JAN
Slide 28: Strong 9M 2020 results
Strong 9M 2020 results Revenue Gross Inventory LFL sales EBITDA EV / EBITDA NTM margin turnover margin 1,449 24.9% 32 5.6% 7.8% 6.5x RUB bn days
Slide 29: Growing share of most profitable businesses
DXB carrmar manners nav 2020 Growing share of most profitable businesses X5 revenue breakdown EBITDA margin H1 2020 15% 15% Perekrestok om 2018 om 2020 @ Discontinued Operations 79% 81% ® New businesses XS revenue 2Y evolution, +57 +1 +300 —— 23 -6 1,110 WV WW B - Revenue Pyaterochka Perekrestok Kar
Slide 30: Quality of new openings
DXB corrrar manners vay 2020 Quality of new openings Cash return on new store opened Share of stores in “clinic” *@ Share of stores in “EBITDA clinic” ®@ Number of stores, EOP Source: X’ B - >30% +1.9 p.p. y-o-y WG 17,352 16297 16,658 enna 15,752 aa 5.8% 64% 6.3% 53% — 41% =, Q3 2019 Q42019 Q12020 Q
Slide 31: Larger market share drives higher profitability
DXB carrmar manners nav 2020 Larger market share drives higher profitability EBITDA margin, % above 10: 7-Nx 7% or less Sales density, above 350 200-250 220 or less Pthsd /sqm >25% 16% 16% = — 3% Market — 10% 10% share, % 6% 4% St Petersburg Moscow Central Volga North-Western Ural Southern Siberia a
Slide 32: CAPEX structure dynamics
DXB carrrar manners oav 2020 CAPEX structure dynamics X5 CAPEX breakdown CAPEX, RUB mn 9M 2019 9M 2020 Change, % 9% 10% @® New store openings 31,213 30,677 2% Refurbishments 3,702 2,619 241% n% 7% a 9m 2020 9M 2020 Maintenance 5,172 6,943 34% 7% 55.2 1% 61.9 [ 3,973 4,475 13% RUB bn RUB bn 9% @ Logi
Slide 33: 2021 guidance
DXB caviar manners oav 2020 2021 guidance A New openings not Maintaining level Increase dividend more than in 2020 of profitability and payments by returns in line with not less than 50% 2019-2020
Slide 34: Financial goals for strategy 2021-2023
XB ceria nanvers ony 2020 y.. £ 3 Financial goals for strategy 2021—2023 IAS 17 basis 2 _ gy 10% & ~7: b Dividend Annual revenue EBITDA margin in absolute terms growthineachyear = ————ss—<—sSSCin a h year , kot & 2.0 PX 50x From current Net financial debt / of dividends level EBITDA covered by FCF
Slide 35: Sergei Goncharov, General Director of Pyaterochka
)X5 RETAIL GROUP X5 Capital Markets Day 27 October 2020 Sergei Goncharov General Director of Pyaterochka ¢ 8 e ee
Slide 36: Pyaterochka new concept: earning the trust of our guests
DXB carrras manvers pay 2020 Pyaterocka new concept— earning the trust of our guests Guests © fe) 83 Leader Freshness Care for the in convenience and quality community Employees Partners Efficient operations Low prices
Slide 37: Pyaterochka today: the neighborhood store
XB corrra manners vay 2020 Pyaterochka today: the neighborhood store for your daily shopping needs $ Customers +9, increase in trust among customers in 2020 vs 2018 6 MN MAU in September 2020, 3x growth y-o-y a : 5 Employees 2x decrease in staff turnover in 2020 vs 2018 +8.2~ increase in labour prod
Slide 38: Pyaterochka: improvement in key perception categories
XB corrra manners oxy 2020 y.. £ 38 Pyaterochka: improvement in key perception categories PYATEROCHKA POSITION AMONG FOOD RETAILERS, 2020 VS 2018 Ny [oe] > repy NI ul WW o e N N ; a 9 a 60 ~ 16 17 70 80 90 TRUST CUSTOMER SAVES AVAILABILITY SHELF QUALITY AND SOCIAL PLEASANT POLITE PRICE/ FEEDBACK TIM
Slide 39: #1 Russian brand across all categories during COVID-19
XB corrra manners vay 2020 #1 Russian brand across all categories during the COVID-19 pandemic CHOICE OF TOP-5 FAVOURITE BRANDS DURING THE COVID-19 PANDEMIC, % OF RESPONSES 5 4 MH FEO PYATEROCHKA ™“D 3 MCDONALDS » DELIVERY CLUB (SB)
Slide 40: New concept
>x: (CAPITAL MARKETS DAY 2020 New concept NEW CONCEPT TARGETS Roll-out of new concept: 100% of new openings and refurbishments Increase in NPS Higher sales growth Increase in cash Flow / EBITDA Control and ROIC NEW VS OLD CONCEPT: INCREASING LEVEL OF CUSTOMER SATISFACTION & ® & H +44,, +33. +32 +31x
Slide 41: Leader in convenience
DXB corrrar manners ony 2020 ® Leader in convenience Convenience in stores Number of customers in queues decreased by 26% y-o-y in September Over 1,200 stores have self checkouts c. 10,000 lockers and pick-up points in stores Convenient delivery Express delivery service in 10 cities >1.5 mn orders d
Slide 42: Freshness and quality
XB cara manvers nay 2020 ® Freshness and quality KEY FRESHNESS PROGRAMME INITIATIVES Improve store operations BQ Implement unified quality standards Store staff training Store performance monitoring and control Strengthening control within supply chain id | Strengthening entry quality control Streng
Slide 43: Care for the community
XB cara nancers vay 220 7. 4 2 *& Care for the community IL Supporting local communities “Basket of Kindness” Assistance to lost people (“Islands of safety”) Collection of food for homeless animals Charity contribution From sales of private label goods promeurg healthy lifestyles Expanding healthy a
Slide 44: Low prices
CAPITAL MARKETS DAY 2020 “ Low prices ADVANTAGES OF AUTOMATED PRICING Al Increase in margins n while maintaining sales and traffic Flexibility of pricing management through the implementation of indexes Systemic process Pa with minimal risk of errors by reducing the human factor Pilot project in 773
Slide 45: Strategic priorities
XB corrra manners vay 2020 Strategic priorities Leadership in NPS and service level Increase in personnel engagement Creation of customer trust and loyalty & Further improvement in operational efficiency, incl shrinkage B : Further adaptation and rollout of CVP Leverage big data tools and omni-chann
Slide 46: Vladislav Kurbatov, General Director of Perekrestok
)X5 RETAILGROUP X5 Capital Markets Day 27 October 2020 Vladislav Kurbatov General Director of Perekrestok 2 e ra ~_
Slide 47: Perekrestok today: largest national supermarket chain
XS cera raners pay 2020 Perekrestok today: largest national supermarket chain ® > & Fg 900+ 5+ +44 pp supermarkets consecutive years growth in NPS over of positive LFL sales the last 5 years, +7 p.p. y-o-y = -20 pp decrease in 9M staff turnover over the last two years
Slide 48: Perekrestok CVP: the store I trust
XB cera ranvers ny 2020 Ly Perekrestok CVP: the store | trust & S| ws Assortment, Personnel Atmosphere Freshness and service and convenience and quality Dp ” ( Fair price Sustainable development
Slide 49: New store concept driving higher results
‘CAPITAL MARKETS DAY 2020 New store concept driving higher results NEW CONCEPT GOALS Roll-out of new concept: 100% of new openings and refurbishments Increase in NPS Higher sales growth Increase in cash Flow / EBITDA Control of capex growth INCREASED LEVEL OF CUSTOMER SATISFACTION e 6 (NEW VS, PEREK
Slide 50: Ready-to-eat: a differentiator vs competitors
DXB cavrarrasuers onv 2020 7. £ 2 Ready-to-eat— a differentiator vs competitors DIFFERENTIATION POINTS. KEY INITIATIVES High Medium Low > Share of Smart Kitchen in Central region's income level income level income level sales increased by 18% in 2020 and number of SKUs by 38% to over 300 Meeting the
Slide 51: Healthy lifestyle and private label assortment
XB corrrar earners ony 2020 BS - Healthy lifestyle and private label assortment as differentiation factor HEALTHY LIFESTYLE Differentiator: teaching customers how to lead healthy lifestyle with Perekrestok through communications Key priorities 2020-2021 Expanding healthy assortment Special assortmen
Slide 52: Gaining trust
XB corr nasners ay 220 Gaining trust One of Perekrestok’s key goals is to earn trust and loyalty of customers, employees and partners 6 be) aie Customers Employees +44 pp. -20 pe. growth in NPS over decrease in 9M staff turnover the last 5 years over the last 2 years +7 pp. 2.8x growth in NPS y-o-y
Slide 53: Gaining customers' trust
XB cera nancers pay 2020 Gaining customers’ trust Key initiatives > Over 1,000 improvements in the quality of products implemented in 2020 based on feedback >» More than 20 channels for feedback > Digital transformation and automation of feedback >» Time to resolve issues declined From 24 hours to 3
Slide 54: Positive response from employees
XB corrar naners ony 2030 Positive response From employees KEY HIGHLIGHTS > Developed new concept for personnel Facilities with Focus on comfort and safety of store employees >» Automation of key HR processes >» Launched mobile app for employees— single point of access to information and services fo
Slide 55: Increasing operational efficiency
XB cera rarwers ony 220 Increasing operational efficiency DIGITALISATION SHRINKAGE Key initiatives > > > 9M 2019 > RETAIL OPEX, % OF NET RETAIL Source: XS data 9M 2019 Digitalisation of key commercial processes In-store process digitalisation CVM project Improvement and automation of forecasting and
Slide 56: Strategic priorities
XB cera tasers pay 2020 Strategic priorities Pay fs we Further implementation of customer feedback into decision-making processes. Growth of NPS and eNPS Becoming #1 in ready- to-eat, healthy assortment and private labels Continue grow business and market share <> ) Focus on operational efficiency a
Slide 57: Leonid Dovladbegyan, Director of Perekrestok Vprok
)X5 RETAIL GROUP X5 Capital Markets Day 27 October 2020 Leonid Dovladbegyan Director of Perekrestok Vprok Ep __ Ditector of Perekrestok Vpro
Slide 58: E-grocery market 2019-2023
DXB carrrarnanners ony 2020 E-grocery market 2019-2023 RUSSIA E-GROCERY MARKET STRUCTURE Fact Forecast Market volume, ? tn 43 45 605 36% 41% 54% Online hypermarkets as Express delivery @ Delivery services Online marketplaces @ Other channels 2019 20208 Infoline 20236 SHARE OF E-GROCERY IN FOOD RETAI
Slide 59: Current market environment
DXB caviar manners nav 2020 Current 4 Slunexc Mapket = g OZON 2) z 2 ay ‘Anexc SlaeKa Source: Companies data, Infoline market environment DELIVERY SPEED Next day Next day Next day Same day Same day Same day Same day 3 hours 3 hours 2 hours Thour Thour 30-60 min 15-30 min 30 min 15 min STOCK-UP ADDIT
Slide 60: Perekrestok Vprok business model overview
XB. corm nanversoay 2020 y.. o Perekrestok Vprok business model overview KEY COMPETITIVE ADVANTAGES = joraenmade by peong and well-known brand in food retail “= proprietary app orwetsie Wide and growing assortment of circa 42,000 SKUs gz Order received at the \* nearest X5 dark store Own logistics i
Slide 61: Perekrestok Vprok: key results
DXB carta manners vay 2020 Perekrestok Vprok—key results KEY OPERATING METRICS Darkstores Employees Trucks Orders per day Average ticket SKUs per order Assortment Profitability Delivery charge Source: X5 data 5 (3 in Moscow, 1in St Petersburg, 1in Nizhniy Novgorod) <.3,000 ©. 280 >12,000 c. RUB 4,00
Slide 62: New brand and mobile app
XB ceria nanvers ony 2020 B - New brand and mobile app NEW MOBILE APP. NEW WEB ADRESS Nepexpéctok Rebranding BNpoK https://www.vprok.ru 09224 “o- < Hasan, Epa n warwnan Ton-uapTb! 1. Mepexpecrox Y Hac HOBbIA appec npox = Aocra..O1Ki6 Ap PEREKRESTOK VPROK CVP — 2 Mareposna ——— 3 C6epMaprer: Rocrasxa
Slide 63: Development of FMCG marketplace strategy
DXB ceria narvers oxy 2020 y.. o Development of FMCG marketplace strategy a Perekrestok Vprok CVP: online hypermarket ee oan eI entaty ated oes (small kitchen appliances, with wide assortment in categories with low involvement triste lejos ely et Susie yess rate, low prices and next-day delivery @ P
Slide 64: Vitaly Dyrdasov, Director of 5Post
)X5 RETAILGROUP X5 Capital Markets Day 27 October 2020 Vitaly Dyrdasov > Director of 5Post
Slide 65: 5Post's business model: logistics platform
XB corm nanversoay 2020 y.. s 5Post’s business model: logistics platform for X5 marketplace and partners Parcel acceptance for delivery euCtSs ee ans <? From marketplaces— Domestic/Cross border re | Low shipping costs = . due to leveraging X5 operations and own BS areal celivery to hub logistics cap
Slide 66: Our partners
DXB corrtar manners vay 2020 Our partners +1 OD eo AliExpress . TMALL iHerb Prev OZON DNS BIN eeBH Slupexc Mapket TunpKodd Bank Q2cno oS JOOM ORIFLAME And over 50 more...
Slide 67: Key indicators
DXB corrtar manners vay 2020 Key indicators Goal: to become one of the leaders in e-commerce delivery In 2019, X5 Retail Group created its subsidiary 5Post to deliver shipments from legal entities to individuals in a network of pickup points located at Pyaterochka stores. By 2020, 5Post has become a
Slide 68: Vladimir Kholyaznikov, FoodTech Director
)X5 RETAIL GROUP X5 Capital Markets Day 27 October 2020 Vladimir Kholyaznikov pp © FoodTech Director
Slide 69: X5 express delivery business model overview
XB. corr nanversoay 220 LY © X5 express delivery business model overview KEY COMPETITIVE ADVANTAGES, . Order made _ Available infrastructure of more than 17,000 <| by customer via stores allows coverage of ~76% of Russian mobile app households within 1 km from an X5 store . Wide assortment of 4,000
Slide 70: Express delivery: key results year-to-date
DXB corrtar manners vay 2020 Express delivery— B - key results year-to-date KEY OPERATING INDICATORS Orders per day Average ticket, RUB Stores Click-to-deliver SKUs per order Stores assortment Delivery charge Cities of presence: 10 Source: X5 data c. 16,000 .1,500-1,700 >500 Thour 14-15 >5,000 SKUs
Slide 71: Food delivery aggregator: attractive platform
DXB carta manners oav 2020 Food delivery aggregator—attractive platform with positive impact on core business Goal: A platform for cross-format interaction with customers in food segment and other most common daily needs via X5 proprietary app offering a hyperlocal model for online consumption of FM
Slide 72: Thank you
Thank you For your attention! )X5 RETAIL GROUP