8 June 2017

Х5 to provide targeted social assistance in Ulyanovsk region

Moscow, 8 June 2017 – X5 Retail Group ("X5" or the "Company"), a leading Russian food retailer (LSE ticker: FIVE), announces the signing of a letter of intent with the government of the Ulyanovsk region. The document was signed by Ulyanovsk region Governor Sergey Morozov and Х5 Retail Group Government Relations Director Stanislav Naumov.

Pursuant to the letter, the parties will cooperate on a programme to provide assistance for socially disadvantaged parts of the population as part of the Social Cards for Ulyanovsk Region Residents project. The parties have agreed to develop and implement electronic social certificates (ESCs) that could be used to pay for food products at the more than 90 Pyaterochka stores in the region. X5’s expertise and experience with a similar project in Moscow will be helpful for the successful launch of the Social Certificates for Ulyanovsk Region Residents project.

The Moscow government launched a project to provide social assistance to pensioners and multi-child families using ESCs in October 2013, and X5 was the first retailer to start accepting the certificates at its stores. In 2016, 250,000 Muscovites used ESCs to buy 480,000 items worth over RUB 260 million. An ESC can be obtained by submitting an application to the Moscow Department of Labour and Social Protection. If a decision is made to issue a certificate worth RUB 1,000, this information will appear on the Moscow resident’s social card. The cardholder can then use the certificate to pay for goods (excluding tobacco and alcohol) by scanning it at the checkout.

Moscow is the only Russian city currently offering ESCs, which are a cost-effective and convenient alternative to food baskets, the traditional method of providing food aid. The certificates give Muscovites an opportunity to choose when and what to buy using social subsidies. According to the Russian Public Opinion Research Centre (VCIOM), most of the Russian population approves of substituting food baskets with ESCs.​