XXL

Investor Presentation • Oct 23, 2019

XXL ASA – Q3 2019

Disclaimer

Important notice

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the XXL Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the XXL Group's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the XXL Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although XXL believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

XXL is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither XXL nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared for the interim results presentation for the third quarter 2019, held on 23 October 2019. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

Highlights third quarter 2019

• Disappointing results negative like for like growth of 3.6%**
• Particularly September proved to be a challenging month
• Weak development in Norway
• Solid performance in Finland
• EBITDA* of NOK 132 million
• Leverage ratio of 4.2x NIBD/EBITDA*
• Liquidity reserve of NOK 0.6 billion up NOK 0.2 billion from last year
• Obtained commitments for NOK 500 million in new equity

Overall sluggish market growth in the Nordics

Market data

• Norway disappointing sales trend continued
• Negative like for like growth of 9.8%** in the quarter
• Sweden regaining some momentum in a volatile market XXL is now the number 2 player
• Finland driving market growth and gaining market shares

Status Q3 2019 – LFL and EBITDA

Key focus areas

• More exiting and inspiring stores
• New E-commerce front-end
• Broadened assortment online
• Utilize omni-channel opportunities

• Sold out situations

• Mandate changed to CFO

• Inventory per store down towards NOK 25 million medium term

Top line Inventory Reputation

• Ongoing investigation
• Strengthen leadership, control and routines

Building an Omni-Channel Champion

• E-com platform with
• High volume traffic
• Scaled for growth
• Full integration with store network

Same dynamics in-store and online

Financial review

Key Figures

	Q3 2019		YTD 2019
(Amounts NOK million) in	(ex IFRS 16)	Q3 2018	(ex IFRS 16)	YTD 2018
GROUP
Operating revenue	2 473	2 504	6 673	6 905
Growth (%)	-1 2 % ,	3 6 % ,	-3 4 % ,	11 % 7 ,
Gross profit	922	924	2 599	2 606
Gross margin (%)	37 3 % ,	36 9 % ,	38 9 % ,	37 7 % ,
OPEX %	31 9 % ,	29 3 % ,	34 0 % ,	31 6 % ,
EBITDA	132	190	329	426
EBITDA margin (%)	5 3 % ,	7 6 % ,	4 9 % ,	6 2 % ,
EBIT	81	143	182	288
Net Income	42	105	95	192

• Disappointing sales development in Q3 vs. LY: 1.2%
• Negative growth in Norway, Sweden and Denmark
• Strong growth in Finland

Gross margins at marginally higher levels than 2018. YTD 2019, gross margins are still at high levels compared to 2018, despite lower supplier volume bonuses

• Opex % hampered by lower sales, compensated by release of NOK 19 mill related to option program
• EBITDA* in Q3 19 ending at NOK 132 mill, down NOK 58 mill vs. LY

Strengthening the balance sheet

Capital Raise of NOK 500 mill New bank agreement

• Conditional private placement of NOK 400 mill directed at key share holders
• Proposal of NOK 100 mill subsequent offering to shareholders not part of the private placement as recorded in VPS on 17th of Oct. 2019
• The Board of Directors has considered the capital raise in light of the equal treatment obligations

• Both the private placement and the subsequent offering are subject to approval by the EGM to be held on 6th of Nov. 2019

• Agreed on new covenants for 2020 - NIBD*/EBITDA**: 4.0x

• Potential impact from liquidation/sale of inventory outside of existing distribution channels and main markets will not be part of the covenant calculation
• No distribution of dividends nor share buy back in 2020
• Subject to completion of the private placement and subsequent offering

Gross margin development

• Continued margin improvement gross margin was 37.3% in Q3 2019 vs. 36.9% in Q3 2018
• All segments negatively affected by lower supplier volume bonuses

OPEX development (ex IFRS16)

• Group OPEX% up by 2.6 points to 31.9% YoY
• Driven by negative like for like growth of 4.0%
• Negative like for like growth in the stores impacting the cost leverage
• Decreased costs in HQ and Logistics segment, partly explained by release of provisions related to share option program of NOK 19 mill
• Austria showing improvements

EBITDA development (ex IFRS16)

7.6 16.1 10.4 8.4 -16.4 -8.8 5.3 13.1 6.9 9.2 -9.8 GROUP NORWAY SWEDEN FINLAND AUSTRIA DENMARK -25.3 Q3 18 Q3 19 EBITDA Margins%*

• EBITDA decline of NOK 58 million vs. LY
• negative revenue growth
• lower supplier volume bonuses of NOK 13 mill
• compensated by release of provisions related share option program of NOK 19 mill
• Significant decline in Norway and Sweden
• Solid improvement in Finland
• EBITDA improvement in Austria of NOK 4 million
• Denmark structural changes ongoing

Net debt development (ex IFRS16)

Liquidity reserves ending at NOK 0.6 billion

Q3 Operational cash flow* Liquidity reserves Net interest bearing debt MNOK 4.2 Net debt /EBITDA* 2.7 163 MNOK -93 MNOK vs. Q3 2018 BNOK BNOK 0.4 0.6 Q3 18 Q3 19 2.1 1.9 Q3 18 Q3 19

* Excluding effects of IFRS 16

Summary

Q3 19 takeaways	• Disappointing results – negative like for like growth of 3.6%* • Weak performance in Norway • Solid development in Finland • EBITDA decline of NOK 58 million • Leverage ratio of 4.2x (NIBD/EBITDA) – below covenant of 4.25x • Obtained commitments for NOK 500 million in new equity + new covenant for 2020
Priorities	• Regain sales momentum • Reduction of inventory • Reputation - Strengthen routines and control
Outlook	• New updated outlook to be presented at the Q4 2019 presentation as well as a revised strategy plan

Negative like for like growth of 10.2% – 9.8% adjusted for cannibalization effects

Norway

• Impacting the cost leverage negatively
• Higher gross margins up 0.4%p to 39.3%

Disappointing sales development, especially September proved to be a challenging month

EBITDA-margin* down 3.0 points to 13.1%

Sweden

• Volatile and price focused market Like for like growth down 1.8% in local currency – Affecting the cost leverage negatively
• Negative development in gross margin of 0.2%p to 36.5%
• EBITDA* of NOK 51 million and a margin of 6.9%

Amounts in MNOK

Finland

• XXL still the winner in the market and gaining market shares
• Increasing revenues YoY with one more store
• Positive like for like growth of 5.4% when adjusting for cannibalization effects
• EBITDA* of NOK 45 million (NOK 37 million)

Austria

• Revenue growth of 21.2% in local currency driven by new stores and E-commerce
• Constantly working on improving the offering
• Gross margin up 2.8%p to 31.7%
• OPEX%* down from 45.2% to 41.4% YoY
• Negative EBITDA* of NOK 12 million
• still lagging scale on HQ (around 4% YTD) and marketing costs (around 14% YTD)

Denmark

• Revenues declined 48.8% in local currency
• Gross margins improved from 16.9% to 20.0% YoY
• Negative effect on sales volumes as well
• EBITDA loss of NOK 2 million
• OPEX% increase due to negative growth
• Slightly offset by gross margin improvement
• Adjustments to reach break-even on a significant lower cost base

HQ and Logistics

• Cost reductions mainly explained by lower provision related to share option program for key employees
• Reorganized marketing organization
• Several new recruitments
• More efficient operation in the years to come
• OPEX* of NOK 95 million to 3.8% of Group sales
• Partly driven by lower bonus estimates

IFRS 16 Q3 – Significant effects on the classification of the P&L

IFRS 16 YTD – Significant effects on the classification of the P&L

Market data – online traffic

Growth split by markets

XXL ASA – Q3 2019