XXL

Earnings Release • Jul 23, 2015

XXL ASA – Q2 2015

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 second quarter 2015 and first half year 2015, held on 23 July 2015. 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 Q2 2015

• Revenue growth of 23%
• Like for Like growth of 5.4%
• E-commerce growth of 68%
• Compensating with sales from other categories due to cold weather
• Driving volume increases market position
• EBITDA-margin of 13.1%
• Establishment in Finland
• High growth in Sweden
• More digital marketing activities in Norway
• Opened 2 new stores
• Lielahti (Tampere Finland) on 14 April
• Gävle (Sweden) on 13 May
• Awarded Retailer of the Year and ranked number one customer friendly sports retail chain in Norway

Reopening the very first XXL store – downtown Oslo 2 July 2015

Growth drivers in the quarter

Share of growth

Growth split by markets

7% 29% 158% 68% 23% NOR SWE FIN ECOM* Group Growth by segments

Share of growth by geography

Gross margin development

Gross margin development

• Significantly lower supplier bonuses compared to last year
• Adjusted gross margin of 40.7% in Q2 15 vs. 41.0% in Q2 14
• Geographical mix effects

OPEX development

OPEX%*

• Higher share of growth coming outside Norway
• More digital marketing and higher personnel bonuses in Norway
• Cost improvements in Sweden
• Finland still in an early phase intention to double the store base in 2015
• OPEX% in 1H 15 of 0.2 pp lower than 1H 14*

EBITDA development

EBITDA-margins

• More digital marketing and higher personnel bonuses in Norway
• Cost focus improves EBITDA-margins in Sweden and Finland
• Significantly lower supplier bonuses compared to last year in Norway
• Adjusted EBITDA-margin of 12.5% in Q2 15 vs. 13.7% in Q2 14*

Norway – Increasing marketing activities

7% revenue growth YoY

• 4.8% Like for Like growth
• Reopening the very first XXL store on 2 July
• Isolated NOK 10 million negative sales effects
• 8 000 visitors and around NOK 6 million gross sales on the opening day
• Gross margin increase when adjusting for supplier bonuses
• Increasing digital marketing and personnel bonuses
• OPEX/Sales increase of 0.8 pp to 20.6% YoY…
• …but down 0.2 pp 1H 15 vs. 1H 14
• EBITDA-margin adjusted for supplier bonuses of 22.8% in Q2 15 vs. 23.1% in Q2 14

Amounts in MNOK

Revenues EBITDA

22.07.2015 Page | 10

Sweden – Continuing positive Like for Like

• Revenue growth of 28% in local currency
• Still a volatile retail market good demand for sporting goods
• Sporting goods sales up 3.9% in April and 3.2% in May (Figures from HUI Research)
• Like for Like growth of 5.3% in local currency
• Decreasing cannibalization effects in Stockholm, but…
• …still 24% growth in Stockholm YoY
• One new store opening
• Gävle on 13 May
• Aggressive pricing to drive volume
• Gross margin down from 40.6% to 40.1% YoY
• EBITDA margin of 11.4% up 1.7 pp YoY
• OPEX/Sales down from 30.9% to 28.7% YoY
• Better store operations and increased cost focus

Revenues EBITDA

Finland – XXL culture coming through

Still challenging macro environment

• According to TMA XXL gained a market share of above 10% in May
• One new store opening now 6 stores in total
• Lielahti (Tampere) on 14 April
• Large volumes and low price offerings affecting gross margin
• Focused operations with XXL cost culture delivering positive EBITDA
• OPEX/Sales of 29.9%

Amounts in MNOK

Revenues EBITDA

E-commerce – Improving the online experience

68% revenue growth

• 7.9% of Group sales compared to 5.8% last year
• All three markets contributing with high growth

New initiatives

• Pick-up at store in all Norwegian stores
• On-going rollout of pick-up at store in Sweden and Finland
• Evaluating new delivery services
• Recruitment of new competence
• Improving user experience and retargeting
• And more to come

HQ and logistics – Expanding capacity

• OPEX of NOK 58 million to 3.8% of Group sales
• Cost focus throughout the organization
• Well-functioning value chain
• Central warehouses with high overall utilization
• Expanding the central warehouse in Örebro from 20,000 to 40,000 sqm
• Innovative robotics and cost efficient solutions
• CAPEX this year of around NOK 35 million

Priorities going forward

• Improving the omni-channel experience
• Opening of new stores
• Continuing to drive LfL growth
• Always focusing on cost improvements

Financial review

Income statement

• Revenue growth of 23%
• Sweden and Finland growing more than Norway
• EBITDA-margin of 13.1%
• Negative Y-O-Y effects from supplier bonuses
• Sweden up 1.7 %-points
• Net financials positive due to currency effects
• Positive currency effect of NOK 20 million
• Interest expenses of NOK 7 million
• Re-financed at IPO
• Effective tax rate estimated to 23%

Amounts in MNOK	Q2 15	Q2 14	1H 15	1H 14
Total operating revenue	1 535	1 246	2 903	2 280
Operating income	179	166	254	222
Net financials	7	-59	-23	-124
Profit before income tax	186	108	231	98
Income tax expense	43	27	53	27
Net profit	144	80	178	71

Cash flow

• Inventory level increased due to growth
• Periodical changes in accounts payables
• Drawn down on existing facility in late June – NOK 100 million related to the dividend payment in early July
• Equity ratio of 56%
• Accrual for dividend of NOK 277 million
• Net interest bearing debt of NOK 963 million
• Liquidity reserve of NOK 441 million
• NIBD / EBITDA of 1.5x

Cash flow

(Amounts in MNOK)	1H 2015	1H 2014
Cash provided by operating activities	4	33
Cash used by investing activities	-67	-49
Cash provided by financing activities	83	-110
Net change in cash and cash equivalents	19	-126
Cash and cash equivalents beginning of year	222	170
Cash and cash equivalents end of period	241	44

Changes in working capital

(Amounts in MNOK)	1H 2015	1H 2014
Changes in inventory	-268	-241
Changes in receivables	68	50
Changes in payables	-22	25
Prepayments of financial leases	-5	-5
Changes in other assets and liabilities	-21	-29
Change in working capital	-248	-200

Outlook

XXL has signed 8 new lease agreements for new store openings in 2015

• One store might be postponed to spring 2016 due to local regulations
• Three stores opened this year one in Sweden and two in Finland
• An achievement if Finland delivers positive EBITDA in 2015
• Sweden had a good improvement in margin in 2014 due to the new central warehouse and better operations. Margin improvement going forward will not be in the same pace as in 2014
• The Group maintains the following long term objectives (as compared to 2013 figures):
• Like-for-like growth of mid-single digits over time
• E-commerce share of total revenues of low double digits
• Gross margins to be stable. For Norway maintained at the same level, increasing to high 30's in Sweden and Finland
• EBITDA-margin stable as a result of stable gross margins and operating expenses. In Norway at low 20's, in Sweden low double digits and in Finland high single digits

– E-commerce growth of 68% Sweden and Finland with good performance

– Growth and cost control

– Strong Like for Like growth of 5.4%

• EBITDA-margin of 13.1%
• Continued expansion and growth in 2015

23% revenue growth Summary

XXL ASA – Q2 2015