Europris — Earnings Release 2015

Nov 12, 2015

Presentation of results for third quarter 2015

CEO Pål Wibe

CFO Espen Eldal 12 November 2015

Norway's leading discount variety retailer

Highlights in the third quarter

• Like-for-like sales increased 2.9%, outperforming market growth of 1.9%
• Improved gross margin
• Adjusted EBITDA* up 8.1%
• Close to doubling of net profit in the quarter
• Successful category developments
• Two new store openings
• Significantly lower interest expenses due to successful refinancing
• Nominated to Retailer of The Year Award
• Adjusted for nonrecurring expenses of NOK 3.7 milllion in 2014.

Continues to outperform the market

Overall growth performance

x Europris growth relative to market growth in the period

•Market includes a large number of shopping centres throughout Norway (e.g. 230 in 2014) •Source: Kvarud Analyse, Europris

Strong performance in oil region

Growth performance in Rogaland

Market Europris

x Europris growth relative to market growth in the period

•Market includes a large number of shopping centres in Rogaland. Europris has 23 LFL stores in Rogaland •Source: Kvarud Analyse, Europris

Nonstop growth focus: Concept and category development

Two core drivers of the Europris growth plan:

Europris generetion 5.0 is introduced

BEFORE (Pre 2013/2014)

TODAY (2014/2015)

Realizing the potential in concept development

• We are testing an upgrade to 5.01!
• Improved "shop-in-shop" categorisation
• Brands more prominently displayed
• "Value for money" visualisation one step up
• The best of all…
• Same investment as previous version
• Limited cost for roll-out of main elements to existing stores

Successful test pilot 5.01

Successful test pilot 5.01

Category development - yarn

A very promising start

• Successful yarn pilot since May
• Roll-out in early September to app. 150 stores
• Improved sales display
• Increased shelf space
• Investment covered by supplier
• Results: 37.5% growth on yarn last two weeks of September

Pet food "A" brand to be launched

• Pet food is an important traffic driver
• Purina is a quality brand and dog food test winner
• On sale in Europris from Q1 2016

More modern stores than ever

• Expect 75-80% of own stores to be in latest format at year end 2015
• Six projects planned for Q4 of which three are relocations
• Several franchise stores in the pipeline for modernisation in 2016
• Relocation/extension pipeline for 2016 very strong with 11 projects confirmed
• Positive sales results in modernised stores
• Basket increased from day 1
• Traffic growth expected to come over time

Nonstop growth focus: New stores

Two core drivers of the Europris growth plan:

Extensive plan for store rollout

• Seven new stores opened so far in 2015 of which two opened in Q3 - Giske and Begby
• Two store openings planned in Q4 Bodø and Grorud
• One store was cancelled due to disagreement on commercial terms
• Solid pipeline of new stores with 9 approved by the Board and several in negotiations:
• 6 confirmed for 2016
• 1 confirmed for 2016/2017
• 2 waiting for municipal approval
• Wide range of prospects and good opportunity flow
• No closures planned for 2016

Financial review

Gross margin development

• Positive impact from sourcing initiatives and takeover of franchise stores
• Gross margin positively impacted by annual stocktaking:
• During the year calculated gross margin is reported and any calculation differences are adjusted at stocktaking
• Q3 accounts include NOK 20.9 million for calculation differences of which app. 15 million relates to previous periods
• Excluding calculation differences from previous periods the gross margin was up 1.3%
• Q4 last year includes a positive result from stocktaking of NOK 25.4 million.

• Adjusted for nonrecurring expenses of NOK 3.7 milllion in 2014.

OPEX development

• OPEX* in % of revenue was 32.9% in Q3 2015 vs. 30.4% in Q3 2014
• Growth driven by volume increase, new store openings and takeover of franchise stores
• Q3 includes NOK 15.3 million in special costs
• Stocktaking
• Opening of a new warehouse
• Timing differences of marketing costs
• Excluding the special cost the OPEX in % of revenue was 31.6%

Adjusted EBITDA development

• Adjusted EBITDA* margin of 10.7% in Q3 2015 vs. 10.7% in Q3 2014
• Takeover of franchise stores dilutes EBITDA margin initially, but contributes positively to EBITDA
• Four takeovers last twelve months
• OPEX increased, but overall good cost control

Profit and loss account

• Q3 2015

• Revenue growth of 7.6%
• Improved gross margin
• Interest costs reduced by app. NOK 15 million after the refinancing
• Unrealised gain on currency hedging contracts and accounts payable of NOK 10.6 million
• Adjusted profit before tax up 59.4%
• EPS was NOK 0.45 in the quarter
• YTD 2015
• Revenue growth of 8.7%, key driver is LFL of 5.0% for the Chain
• IPO related costs of NOK 30 million and refinancing costs of NOK 57 million in 2015
• Depreciation of contractual rights included in 2014 with NOK 47 million, fully written down at year end 2014
• Adjusted profit before tax increased by NOK 83 million (+64.3%)

Amounts in NOK million	Q3 2015	Q3 2014	YTD 2015	YTD 2014
Total operating income	1,135	1,054	3,220	2,961
Operating profit	104	77	267	195
Net financial income (exp.)	-1	-26	-149	-118
Profit before tax	102	51	118	78
Income tax expense	28	14	28	21
Profit for the period	74	37	91	57
Nonrecurring items
IPO cost and refinancing	0	0	87	0
Other nonrecurring items	0	13	7	51
Total nonrecurring items	0	13	94	51
Profit before tax, adjusted	102	64	212	129

Cash flow and working capital

• Cash flow subject to normal seasonality
• Inventory increased due to
• Opening of net eleven new stores and takeover of four franchise stores
• Value of goods purchased in foreign currencies increased
• Working capital impacted by a delay in supplier payments in 2014
• No repayment of loans in 2015
• Voluntary repayment of NOK 100 million in June 2014 in addition to scheduled repayment

Cash flow, NOK million	YTD 2015	YTD 2014	FY 2014
Cash from operating activities	0	118	304
Cash used in investing activities	-87	-86	-122
Cash (used in)/from financing activities	15	-167	-230
Net change in cash and cash equivalents	-72	-135	-48
Cash and cash equivalents at 1 January	245	293	293
Cash and cash equivalents at end of period	173	158	245

Change in working capital, NOK million	YTD 2015	YTD 2014	FY 2014
Inventory	-250	-187	-105
Accounts receivables and other short-term receivables	77	-19	-28
Accounts payable and other short-term liabilities	48	165	74
Change in working capital	-125	-40	-59

22

Summary and outlook

• Europris continues to outperform the market despite unfavourable weather conditions
• Resilient business model in a slowing Norwegian economy
• Europris shows relative strength in Rogaland
• Discount retailing is expected to gain market share in Norway
• Truly mixed assortment
• Large market
• Competitive flexibility
• Nonstop growth focus
• Strong focus on concept and category development
• Strong pipeline of new stores, relocations and extensions

Norway's leading discount variety retailer

Presentation of results for fourth quarter 2015

12 February 2016