Europris — Investor Presentation 2018

Dec 5, 2018

Capital markets day

5 December 2018

Disclaimer

This presentation has been produced by Europris ASA (the "Company") exclusively for information purposes. This Presentation has not been approved, reviewed or registered with any public authority or stock exchange. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in accessible format. This Presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are several other facts and circumstances relevant to the Company and its present and future financial condition that not been included in this Presentation. This Presentation may not be disclosed, in whole or in part, or summarized or otherwise reproduced, distributed or referred to, in whole or in part, without prior written consent of the Company.

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Agenda

09:00 – 10:00	Retail is changing, discount variety is thriving - Pål Wibe, Europris
	Strengthening price and cost position - Pål Wibe, Espen Eldal, Pål Chr. Andersen, Europris
	Continued concept development - Pål Wibe, Europris
10:00 – 10:10	Coffee break
10:10 – 11:10	Drive customer growth - Pål Wibe, Espen Eldal, Europris
	Creating shareholder value - Espen Eldal, Europris
	Introduction to ÖoB - Mikael Demitz-Helin, Meta Persdotter, ÖoB
11:10 – 11:30	Summary and Q&A

Pål Wibe CEO

Espen Eldal CFO

Pål Chr. Andersen Logistics Director

Mikael Demitz-Helin Chief Procurment & Logistics Officer

Meta Persdotter Chief Commercial Officer

Retail is changing

In a world of winners and losers, variety retail is thriving

Online share of retail sales

While online is challenging bricks-and-mortar… Variety retail has grown ~twice the speed of all retail

In the USA, discount continues to prosper Alongside the online giant's growth Total retail Grocery Discount segment Total Online Amazon Total Online ² 3.3% 15.0% 31.0% 8.1% 8.2% 2.7% 16.9% 11.3% Historic growth: average CAGR 2012-17, constant 1

¹Numbers for Amazon as a 3rd party grosser, excluding wholefoods

² Dollar Tree stores, not Dollar Tree Inc.

Source: Euromonitor International; see appendix for full presentation

¹ Total for Amazon 1st and 3rd party sales

² B&M Bargains changed parent company in 2014

Source: Euromonitor International; see appendix for full presentation

Similar patterns observed in the UK

Customers fully embrace online…

2017

of all Norwegian consumers shopped online

Online retail in Norway grew

4/10

online purchases in Norway were mobile

13.5%

Variety discount and grocery less exposed to e-commerce so far

Several factors affecting pace of adaptation for online sales

Challenging economics

In discount variety retail owning to smaller basket size

Customer convenience

Access to extensive store network and broad range maintains convenience factor vs. online

Last mile is complex

Logistics, handling and delivery costs are complex in Norway, and in variety discount in particular

Customer omnichannel experience

60% of customers in Norway have done research online before making a purchase in a physical store

Private

Global retail trends

Degree of relevance¹

First choice for anyone who wants to shop convenient, smart, big and at low price

Europris – a growth story

Q3 2018

13

Norway's #1 discount variety retailer

• 30 million customer transactions in 2017 •Widely recognised brand and price position¹

Stores

•Over 1 million leaflets in distribution • Close to 300 000 subscribers to digital newsletter

• Cost-efficient locations and operations
• 212 of 228 like-for-like (LFL) stores profitable in 2017

• •Track-record of 15 new or relocated stores p.a.

• More than 40 years of wholesaler experience •Efficient set-up and nationwide reach

• New modern central warehouse from Q2 2019

• •From more than 30 countries

• •Pan-Nordic agreement with ÖoB and Tokmanni

With a strong brand

We exist to give our customers more time and money to buy what they need and want

for everyday life to make it nice at home to enjoy time with family and friends at the seasonal holidays and special occasions

Mer til overs Pay less – Save more

Leveraging a strong business culture

The dedicated people of Europris

Our loyal and dedicated employees are our most important asset

With well-being and job satisfaction at an all time high, we are proud to say that…

…Europris is a great place to work¹

Our values

• Positive attitude
• Proactive
• Clear
• Business acumen
• Simple

Europris Evje Europris Leknes Europris Ågotnes

Sustainability is an integrated part of the strategy

Palm-oil-free products

Supporting plastic waste

Selected initiatives

reduction with a plastic bag fee Increased share of sourcing to >85% from certified factories (BSCI, Sedex, ICTI)

Energy consumption reduced by 23% since 2014

65% waste sorting, moving towards target of 80%

Energy efficient and environment-friendly new warehouse

Well-being and job satisfaction at all-time high

Interactive training of all employees

Guidelines and training for ethical businesses conduct, anticorruption and whistleblowing routines

In-house testing and control to improve product safety

Customer satisfaction increased 18% since 2014¹

Support for Church City Mission, work training and sponsorships

Track record of above-market growth

Revenue and EBITDA margin¹ Total growth for Europris and market2,3

Growth driven by customers and basket value

¹ Change in basket value is a combination of changes in price per item, number of items and range

Significant market potential for multi-category retailers

Sources: Statistics Norway (SSB), 2017; Statistics Sweden (SCB), 2018 LTM; Statistics Finland (Stat), 2016 ¹Total addressable market for packaged food, non-alcoholic beverage, clothing and shoes, furnishing, household equipment and routine house maintenance

With substantial room for growth

Strong growth for discount variety in Norway Unpenetrated market in Norway Market share² 3.8% 3.9% 4.1% 4.4% 4.5% 2013 2014 2015 2016 2017 0% 10% 20% 30% 40% Other peers Rusta Nille Jula Clas Ohlson Biltema Europris 14.2 14.9 16.4 17.9 18.8 2013 2014 2015 2016 2017 Discount variety market in NOK billion Discount variety penetration of total retail market¹ in Norway 2017 market share discount variety players in Norway

CAGR discount variety retail: 7.3% CAGR all retail: 2.6%

² Source: Virke, Proff.no

Be the best discount variety retailer in Europe

On the quest to be the best

The goal is to be the best in all four areas below

Price	Number 1 in price perception in Norway, the fight for lower prices continues
Concept	Continuous development, focus on customer need-based flow and distinct shop-in-shop
Value chain and cost efficiency	Nordic sourcing, new warehouse and automation of operations to improve further
Execution and culture	Continue to build on our strong company culture and dedicated employees

Current position

Many trends favour discount variety retail and Europris in particular

Online and omnichannel

• Omnichannel and eCRM provide consistent, seamless physical and digital customer journeys

Retail polarisation

• Distinct low-price value proposition, large assortment and efficient low-cost network
• Fuelled by efficient marketing in digital and physical channels

Experience and convenience

• Extensive store network with a broad one-stop-shop range and increasing footprint
• Improved access to attractive locations and lower rental prices

Private label

• • Unique and broad range of own quality-brand products

• Strengthen customer's "value for money" perception

• New automated warehouse and lower supply chain costs to drive profitability

• Unique Nordic sourcing power with Tokmanni and ÖoB to lower COGS
• Strengthened cross-border competitiveness with potential removal of Norwegian toll-free limit

Strategic focus areas

Strategic focus areas – key actions

Strengthen price and cost position Improve customer experience	• Strengthen price position • Develop Europris private label • Secure low cost through sourcing agreements with ÖoB and Tokmanni • International scale and integration through cooperation with ÖoB • From five to one warehouse with high degree of automation • Reduce cost and increase efficiency from factory to store • Collect and utilise data across the value chain • Continuous concept development • Category and product development • Strengthen position as the seasonal champion • Europris private label offering
	Omnichannel and 360o • experience
Drive customer growth	• Strict store evaluation and reallocations • Store refurbishments • e-CRM and increased customer insights • Digital marketing and increased customer reach • Leveraging e-commerce and omnichannel opportunities	Physical Digital

Long-term financial and operational ambitions

Growth	Continue to deliver like-for-like growth above the market over time
Number of new stores	Target to open on average 5 new stores net per year, depending on availability of locations which meet strict return requirements, potential for relocations, expansion and refurbishment activities
EBITDA	Increased EBITDA margin over time from improved sourcing and more cost-effective value chain
Dividend	Dividend policy of 50%-60% pay-out of net profit while maintaining an efficient balance sheet

Strengthen price and cost position

A relentless search for efficiencies

Boost established price position

Statement: Europris has generally low prices

Threat of competition from international discount retail

New entrants in the discount variety retail segment

E-commerce and digitalisation increase price transparency

Status Challenges Success factors

• Develop and improve private label (PL) offering
• Build scale, reduce cost and increase efficiency

No compromise on low prices

Private label driving variety and lower prices

Strategy for private label (PL) Where we are heading

• Build "umbrella private label brands" in selected categories
• Nordic private label brands to share cost and best practice
• Nordic sourcing agreements
• Design to cost (profile products)
• Improve competence on and follow-up of design and quality
• Continue using category toolbox in more private label areas
• In-store spacing optimisation
• Marketing creating "brands" through 360^o plans

Launching the first Nordic private label

Today

• Strong position in Norway within Washing & Cleaning
• Annual sales above NOK 100m across multiple categories
• Driver for gross margin

In the future

• Pan-Nordic brand
• ÖoB set to launch in 2019
• Scale and best practice to improve margins

Value to customers

• Increased offering of price points (good, better, best)
• Top level quality product at significant lower price points than A-brands

Significant economics of scale from Nordic sourcing

Securing lower costs through sourcing agreements with Tokmanni and ÖoB

Sourcing power from a solid Nordic base

Size matters

Unique scale among discount variety retailers in the Nordic region

Inventory best practice and cost sharing

NOK 17.1bn

Private label synergies though sharing, cost and best practice

Joint Nordic campaigns a new value driver for suppliers

ÖoB – a perfect partner

90% category overlap

Mutual value best practice: ÖoB: living in a lower price market environment Europris: seasons and inspiration

Strong cultural fit

Europris version 5.1 ÖoB new concept store

A low-risk synergistic partnership today

Potential for true European scale tomorrow

A promising start to the partnership

But a lot of hard work ahead Case: local suppliers

• More than 115 joint opportunities identified
• Early meetings with 16 major, local suppliers – identified 14 with significant joint sourcing potential
• Joint supplier visits and sourcing initiatives in Far-East just started
• Significant long-term potential from sharing best practice in range and category development

Together, Europris and ÖoB can benefit from increased negotiating power. We focus on:

Harmonising contractual terms (e.g., discounts, market support, terms of payment)

Comparing prices for products sourced and demanding the lowest for both Europris and ÖoB

From re-negotiations with six local partners, so far we have managed to save costs of about NOK ~13 million in all

Great strategic fit creating value for shareholders

Sourcing synergies	• Significant synergy potential in sourcing from product overlap • Initial synergies expected late 2019, with full effect thereafter
Concept overlap	• Extensive concept alignment – exploiting best practice and knowledge sharing across regions
Strong management	• Competent and committed ÖoB management team in place to complement well-established Europris management • Full alignment with Europris in key focus areas
Economies of scale	• Economies of scale (e.g. e-CRM, e-commerce, automation, AI solutions, etc.)
Significant structural options	• Low-risk international scalability • Strategic control for limited financial exposure

NOK 30-40m Initial savings

estimates for Europris¹

Futureproofing distribution

Moving from five warehouses to one

• New, modern and purpose-built facility
• Enables efficient personnel and system operations
• Single-site logistics
• Fully automated high-bay storage
• Automated order-picking stations
• 15-year lease with extension right¹
• Open book principle based on agreed project yield (subject to cap on annual rent)²
• Lease with Fabritius Gruppen AS
• Prepared for future expansions to support long-term growth ambitions
• Partly operational from 2019, fully from 2020
• Øra warehouse to provide backup capacity

¹ Extension rights of five, five and ten years consecutively

² Changes in construction costs will only be subject to yield when calculating rent. No further charges/margins

Unique dry port to boost efficiency and reduce risk

First of its kind in Norway. Moss Port relocating major part of its activities, becoming next-door neighbour!

• Reduces operational risk and potential for bottlenecks at the harbour
• Easy access to containers increases effective handling and flexibility
• Reduces lead times

Ensuring seamless transition to new warehouse

• Comprehensive LEAN programme introduced to ensure a fresh, efficient start at the new warehouse
• Key part of preparing for a seamless transition from five warehouses to one
• Automation is the main driver for efficiency and LEAN will facilitate realisation of the full potential

LEAN method 5S¹ : before and after

Blackboard meetings

¹5S is a workplace organization methodology originating from Japan. The 5S are: Seiri (Sort), Seiton (Straighten, Set), Seiso (Shine, Sweep), Seiketsu (Standardize), Shitsuke (Sustain)

High-bay storage automation

A first step to increasing efficiency

• 35 metres high, very space-efficient storage
• Capacity of 65 000 pallets
• Automated control of inbound goods
• Automated labelling of pallets
• Conveyors mounted on the roof ensure effective flow of goods throughout the storage area without forklifts

Warehouse automation in low bay storage

Taking it one step further

• Main production sites

• Buffer storage

• 3PL handling

From inefficiency To efficiency To Nordic retail best practice

High automation potential in low-bay picking area

• Picking area selected for automation owing to high potential for reducing manual labour
• New, innovative solutions have been considered for all areas
• Lessons learned from picking may lead to automation of further areas

Areas in picking which lack automation identified

Automation is needed for products with mid-frequent picks per day

Items of non-standardised size and low frequency

Evaluated innovative new solutions to cover the "white spot"

Item category

Shuttle system evaluated as the best fit

Pallets with high frequency

Full benefit of new warehouse from 2021

• 70% of stock-keeping units (SKUs) covered by the solution
• Scaled for growth, with 2026 as the design year
• Picking efficiency to increase more than 300%
• Shuttle-solution to develop in parallel with high-bay automation project (step one), and expected to finish late 2020
• Europris to operate two warehouses in the 2019/2020 transition period
• Øra warehouse on lease until March 2022, sublease-potential from late 2020

Øra warehouse and the new warehouse at Moss will serve Europris' jointly most of 2019/2020

Fit-for-purpose equipment financing

• Warehouse automation part 1, logistics fixtures and fittings financed through 10-year lease agreement
• Represents investment value of NOK 115m
• Automated high-bay storage system by Swisslog
• Automated order-picking stations
• Conventional racking in low-rise area
• Conveyors, etc
• Capex requirements office equipment, IT and probably automation part 2¹
• Automation part 2 Capex estimate of about NOK 115 million during 2019 and 2020, financing undecided
• IT and equipment estimated at bout NOK 20 million mainly in 2019

Further Opex reductions from low-bay automation

Opex in % of group revenue

Opex in % of group revenue

• Automation part 2 expected to reduce Opex/group revenue ratio by 0.25 percentage-point
• Total reduction in Opex/group revenue ratio from new warehouse expected between 0.75 to 1.25 percentage points
• Equivalent to between NOK 40–70 million of Opex, assuming 2017 volumes
• Savings gradually realised from 2021 to full effect in 2023, offset by nonrecurring expenses in transition period
• Several drivers for increased efficiency
• Lower lease expenses
• Reduction in transport costs location closer to "the average store" and main infrastructure
• General savings from more efficient operations
• Automation parts 1 and 2, personnel, maintenance and no intrawarehouse logistics

Continued development and strengthening of concept

Understanding our customers' needs and wants

Who are our customers?

Families

…and some special, loyal customers…

Adults over 40

What do they like?

Value for money - "Mer til overs"

Access to an extensive store network and a broad range

Spending time shopping and bargain hunting

Go-to store for seasonal products

Using customer feedback to improve offering

Customer survey questions		Perception development 2014-2018 (indexed)
1	Has generally low prices	+10%		#1
2	Has a wide selection of products	+34%		#4
3	Has good products to reasonable prices	+33%		#4
4	Has products of good quality		+63%	#8
5	A place where one can make a bargain	+35%		#1
6	Has a good seasonal assortment		+64%	#2
7	A place I shop often		+50%	#1
8	A nice place to shop		+61%	#4

Source: Mediacom annual market survey Ranking among wide variety retailers (Biltema, Clas Ohlson, Coop OBS, Europris, Jernia, Jula, Jysk, Nille, Plantasjen, Rusta)

New concepts improve the customer experience

From Today In future

Europris 6.0 concept focus

More distinct shops-in-shops

Customer need-based flow

Improved lay-out of dedicated seasonal area

Simplification of in-store communication

Concept development matters

Growth in like-for-like revenue for stores¹by concept version

LFL growth 2017 (%)

Bringing new distinct seasonal offerings to market

Category development affects growth and margins

Focus on branded goods and campaigns has increased share of groceries over the past few years

Future focus is on growing general merchandise through category development and Europris private labels

Constant category evaluation and refining

Pets – a successful category journey

The strategy is paying off

Sales development Pets Gross profit development Pets - 50 100 150 200 250 2014 2015 2016 2017 LTM Q3 2018 12.7% CAGR NOK million NOK million

MaxDog Premium Selected from Q1 2019

Digital strategies to drive physical sales

Bridging digital opportunities and physical stores

Europris' 360⁰ customer vision

• Digital channels are an increasingly important supplement to the physical store
• Reach new and younger customer groups
• Be relevant and build loyalty
• Take ownership of the customer's purchase process
• Stepwise roll-out of cost-effective digital platform and shift towards omnichannel strategy
• Online is increasingly driving the whole purchase process from discovery to delivery
• Price, selection, delivery, payment, support and service

Strategic priorities for integrating online and physical stores

• 360⁰ mindset, optimising channel mix, digital visibility and interest
• Develop integral content strategy
• Build execution capacity and provide seamless customer communication
• Deliver relevant personalised content which satisfies and inspires customers

Digital marketing eCRM and loyalty program e-commerce

• Build customer base and effective communication channel
• Increase loyalty and purchasing frequency – customer lifetime value
• Basis for personalised offers
• Create and monitor customer value added

• Manage and measure effectiveness of customer activities

• All platforms, mobile first

• Click & collect
• Relevant products available in all stores
• Wider range online
• Leveraging unique store network
• Expand categories with high e-commerce potential

Strengthen the Europris brand, drive traffic to stores and increase online sales

Leverage big data for relevance, personalisation and build loyalty

Data

Track customer behavior and integrate with internal/external data sources

Intelligence

Apply machine learning to create customer segments and individual profiles

Communication

Personalised and automated marketing and offerings

Customer data will be used over time to improve and optimise customer offering

30 million sales slips per year

Identified and unidentified customers

Data used to:

• Improve campaign mix
• Strengthen and develop seasonal offering
• Understand and develop category strategies

Examples of use:

• Campaign mix
• Which products create the most added margin?
• What products are the most profitable customers buying?
• Which front pages reach the widest audience and/or most new vs old customers?
• Seasonal offering
• Which seasonal categories are bought by our most profitable customers, which are bought by bargain hunters?
• Who are our most/least profitable seasonal customers?
• Category plans
• What are the "hero" products of our most profitable customers vs. the least profitable?
• What is the sub-category mix of the same?
• How can we motivate customers to increase their category footprint?

Online enables range expansion and new direct channel to customers

• All stores can offer the same range via e-commerce
• Click & collect and home delivery
• Leverage e-commerce platform to sell partner products
• Offer a widened range of high-value products without supply chain and warehousing
• Examples; garden furniture, generators and snow-blowers
• Potential to widen the overall range significantly
• Drive store traffic via click & collect
• Direct home delivery from partner with no Europris logistics involvement
• Add to customer experience and convenience

The e-commerce growth experience so far

• Key growth levers
• Increased sales through click & collect for higher-priced items
• Increased online assortment
• Further opportunities identified in verticals where Europris has strong category expertise and purchasing power
• Seamless and simple offering the key success factor
• Products available online and in store
• Leverage unique category position to grow online
• Expand online offering through partnerships

A complementary source for revenue growth

2018 2025E >0.5% 5-10%

• Strong growth expected in e-commerce
• Complementary to the store offering
• Driver for traffic to stores and add-on sales

Share of group revenue from digital channels¹ 2025E revenue from digital channels by source¹

• Click & collect is the main revenue driver
• Leveraging Europris' unique store network
• Wider range available in all stores

Drive customer growth by utilising physical opportunities alongside digital presence

Robust pipeline of new stores

• New store openings on track
• Two new stores and one store closure scheduled for the rest of the year, eight net new stores in total for 2018
• Maura, Akershus was closed in October
• Nannestad , Akershus opened in October
• Rjukan, Telemark is set to open in December
• 12 stores in pipeline for 2019 and beyond
• Three of the stores are subject to local authority planning processes
• Eight new stores expected in 2019

Begby opening, September 2015

Strict return requirements for new stores

Criteria 01	EBITDA Group year 1 > 0 EBITDA Group year 1+2 > NOK 1m
Criteria 02	IRR over 15-25 % after 5 years
Criteria 03	Payback on investment (excl. inventory) < 3 years
Criteria 04	Payback on total investment (incl. inventory) < 5 years

Nannestad opening, October 2018

New stores are delivering on strict requirements

N/A

Rapid growth in the first few years after opening

Growth revenue like-for-like (LFL) by opening year (vintage)

LFL growth 2017 (%)

Existing store portfolio another source of growth

Competition can be positive

Like-for-like (LFL) growth in revenue by proximity to other retail outlets

LFL growth 2017 (%)

Strong profitability across the store base

Top 10	31.0	1 030
Bottom 10	15.7	1 309

• Top 10 stores are characterised by well-established stores with relatively small sales area
• Bottom 10 stores are characterised by shops with low turnover compared to sales area

Creating shareholder value

Long-term financial and operational ambitions

Growth	Continue to deliver like-for-like growth above the market over time
Number of new stores	Target to open on average 5 new stores net per year, depending on availability of locations which meet strict return requirements, potential for relocations, expansion and refurbishment activities
EBITDA	Increased EBITDA margin over time from improved sourcing and more cost-effective value chain
Dividend	Dividend policy of 50%-60% pay-out of net profit while maintaining an efficient balance sheet

Long-term growth ambition, above market

Like-for-like growth above market1

4.3% 3.1% 1.7% 2.2% 2014 2015 2016 2017

• Concept development

• Expand seasonal leadership
• Category management
• Leverage digital opportunities
• Continue to deliver like-for-like growth above the market over time

Store development adds to growth potential

• Strict return requirement
• Comprehensive store development plan
• Relocation
• Upgrade
• Expansion
• New stores
• Long-term targets
• Net 5 new stores annually
• About 10 relocations annually
• About 10 refurbishments/modernisations annually

Historical store development

Sourcing and value chain initiatives to improve profitability

• Gross margin effect from improved sourcing
• Initial long-term synergies of NOK 30-40 million identified from ÖoB partnership
• Synergies will partly be re-invested to ensure competitive market position and fulfill price strategy
• Additional potential scaling benefits from joint concept development, e-CRM, e-commerce, etc.
• Savings from new, automated and highly efficient warehouse
• Equivalent to NOK 40–70m in Opex, assuming 2017 volumes
• Opex discipline throughout the organisation

EBITDA margin development

Committed to creating shareholder returns

• Dividend pay-out ratio of 50-60% of group net profit

• Provide a competitive return on invested capital, taking into account the group's risk profile
• Considered against new investment or repayment of debt
• Dividend target not affected by the share buy-back programmes
• Europris targets a moderate leverage and maintaining an efficient balance sheet

Dividend NOK/share and pay-out ratio¹

Maintaining an efficient balance sheet

• Available liquidity of NOK 520 million as of Q3 2018
• Interest bearing debt of NOK 1 646 million
• NOK 1 641 million term loan (amortised cost)
• NOK 5.2 million leasing
• NOK 23 million drawn of NOK 450 million revolving credit facility (RCF)
• Refinancing initiated for term loan and RCF maturing in May 2020
• Pragmatic approach focused on optimising terms
• Implementation of IFRS 16 Leasing from 2019 will have a significant impact on P&L and balance sheet¹

Available liquidity

Capital Market Day Taking ÖoB to market leadership

2018.12.05

Runsvengruppen / History

1948 – The beginning

24-year-old Rune Svensson decided to acquire his own country store in Mariedamm.

Large quantities of merchandise were purchased directly from the factories and sold in the store and via mail.

1977 – Management Changes

Rune Svensson handed over management to the next generation.

He nevertheless continued to play an active role in the company.

1993-2008 Överskottsbolaget

The acquired store chains Storcks and Storckens were converted to ÖoB Överskottsbolaget stores or closed down.

Project Go': refurbishment, reorganization and operational improvement of the whole store network was done in 2007.Large investments in IT and logistics infrastructure in 2006 and 2007.

June 2018

Runsvengruppen initiates a merger with Europris

.

2009-2017 - Modern group

In 2009 Överskottsbolaget was renamed to ÖoB.

Improvement and restructuring of ÖoB's product handling and management. In addition, store layout and product range of every shop were further centralized.

The group today consists of approx. 100 stores and generates revenues of approx. SEK 4bn with approx. 1,600 employees

1958-1961 – A new Era in Skänninge

Relocation to the new property in Skänninge in 1958.

First wholesale operations established. First purchasing trip to Asia in 1959. First department store opened 1961 in Linköping.

1978-1992 – Growth by acquisitions

The department store chains Storcks, Storckens and Engelbrektsboden were acquired.

Runsven's own chain Bonusvaruhusen rapidly expanded.

In 1992 ÖoB Överskottsbolaget with nine stores was acquired.

Runsvengruppen / Facts

• Target customer: Woman 30-49 years old
• Customers shop at ÖoB for quality brands at hard discount prices
• Base of over 5 million customers which in total generates over 25 million cash receipts annually

Competitors

• Category competition with hypermarkets
• Price competition with other discount players in specific categories e.g. Dollarstore, Clas Ohlson, Biltema, Jula, Rusta, Normal and Willys.

Quick facts

• Established 1948
• 2017 sales of ~SEK 4.0bn
• ~1,600 employees

Customers Locations & Format

• 95 stores in Sweden, from Ystad in the south to Kiruna in the north
• 1 concept 2 format
• Hypermarket ~1300-2300 square meter
• City ~600-1000 square meter

Categories

• Wide range of food an non food
• Destination categories: Health & Beauty and Wash & Clean, Pets, Season.

• Large amount of well-known brands.

• Significant lower prices than hypermarkets on comparable products

• Well developed and flexible sourcing model ensures permanently competitive prices

Price Brand Owner

• Founded 1948 by Rune Svensson

• Private owned by family Svensson - 2 nd and 3rd generation

• ÖoB brand ranked no 14 in Markets yearly survey

• Brand associated with large varity of products and low prices compared to discounter peer group

Management team

Runsvengruppen / Customer promise

"The price is the difference"

Runsvengruppen / The price is the difference

1) www.market.se – Share of the consumers that associates the brand with low price/strong price perception 2) Runsvengruppen - Market survey, November 2018, 1 024 interviewed consumers

Runsvengruppen / Focus areas

• Overview of business turnaround
• New management team onboard
• New organization
• Lowering our cost base
• Closing down 16 stores
• Headcount reduction at HQ
• Warehouse costs down

• 90 000 working hour in stores

• Assortment development

• Refurbishing our store network ÖoB 2.0
• Pilot of ÖoB City
• Potential to future growth
• Operations in stores
• Marketing focus on our price position
• Partnership with Europris

2017 2018 2019 - 2020

• Strengthen our position in key category's and general merchandise
• Increase our gross margin joint purchasing with Europris
• Refurbishing our stores and establishment of ÖoB City
• Launch our loyalty program
• Continue to lowering our cost base

Group revenue & Gross margin

• Group revenues reached 2 853 MSEK (2 813), an increase of 1.4% compared with the same period last year
• Like-for-like retail sales increased by 0.9%

▪ Gross margin rose by 0.8% points up to 34.1% (33.3%)

OPEX & EBITDA development

• OPEX in % of revenue was 32.7% (33.6%), a decrease of 0.9% points compared with YTD Q3 2017

• OPEX decrease mainly due to lower personnel costs

• EBITDA amounted to 47 MSEK (-1)

• Adjusted EBITDA was 51 MSEK (21)

Agenda

Company overview

• Assortment and focus area
• Stores and marketing
• Runsvengruppen and Europris

Sum-up

The price is the difference!

Assortment and category Groceries

Candy/Soft drink	Wash & Cleaning	Groceries
Health & Beauty	Pet	Personal Care
General Merchandise
Play & Storage	Season Out Door	Season Christmas
Kitchen	Home	Do it yourself
Electronics			Groceries General merchandise
Tobacco	Newspaper/ Magazine

Private Label

Asia imports Stands for 20 % of our total sales

Focus areas 2019-2020

Pilot 2019 - 2020

Asia sourcing, Office location

• Key functions Sourcing, QC and CSR
• Reach suppliers within 2-3 hours
• Travel buy car or train
• Visit suppliers more frequently
• Find new products faster

Membership in Amfori BSCI

Kruidvat •	547 INTERMARCHE	Dansk Supermarked A/S	(H) SBB CFF FFS	GCAN papers
GLOBUS REWE	PJYSK	TUKO LOGISTICS	身	VINTERSPORT	DEICHMANN
ICI PARIS XL	$\bf{coop}$	E.LECLERC		SIMBA - DICKIE - GROUP
KESKO	Œ TOM TAILOR	Prénatal Will of new		K E
O Bring IJORNBORG.COM	00 Ahold	Plo San Phi Bis alle origin alla 6.0 alle or for AnyBody LINDEX	strellson	hoss	ALD!
CALIDA BELLEVILLE AND RESEARCH	otto group	MIGROS	JYSK	NBC	GROUP
celio*	WE	STOCKMANN	M&S	$CD$ EI
Vögele		NCCA	PKZ	Wehkamp	Lidi
	ESPRIT	scaring	Etam	Superdrug	ושרא
COOO	IC COMPANYS	JC	promss	The Co
EURETCO	maxeda	BRAX FEEL GOOD	EV&D I	HEMA	Sligro
Peek.Cloppenburg xo	TERRA	Firmeta m. sport sooo	ВÉ COLLECTION Benefician	KARSTADT	claudia striiter

Cooperation with Europris / A good start

• Common supplier negotiations started
• Common Kick off all category managers
• Asia sourcing cooperation started

Agenda

Company overview

• Assortment and focus area
• Stores and marketing
• Runsvengruppen and Europris

Sum-up

The price is the difference!

Our goal - Grand opening every day!

New customer flow through our stores helps us achieve our goal.

110

Meta Persdotter Commercial Director, ÖoB

A growing brand The price is the difference!

ÖoB has a strong low price position!

Low prices Good bargains Easy to shop

Quantitative study. 1000 respondents. 2018

A popular brand - Customers loves us!

One ÖoB in all channels - Brand builders and traffic drivers!

116

New loyalty program - Even more ÖoB lovers!

The Swedes have made their choice - ÖoB is growing!

118

Agenda

Company overview

• Assortment and focus area
• Stores and marketing
• Runsvengruppen and Europris

Sum-up

Runsvengruppen and Europris/ a business with great logic

"Bringing the segment's two strong players in Norway and Sweden together, leveraging a significantly overlapping range, deep retail know-how and a common strategic agenda to create a robust Nordic constellation in discount variety retail !"

• The European market is moving
• Size will make sense
• Purchasing power 1 + 1 = 3
• Benchmark and learning

Summing up

• Strong management on-board
• •New organisation is working well
• Stable sales development
• Costs under control a new cost base implemented
• Earnings improving
• •At the end of our turnaround period
• Cooperation with Europris will make sense over time

Be the best discount variety retailer in Europe

Strategic focus areas

Strategic focus areas – key actions

Strengthen price and cost position	• Strengthen price position • Develop Europris private label • Secure low cost through sourcing agreements with ÖoB and Tokmanni • International scale and integration through cooperation with ÖoB • From five to one warehouse with high degree of automation • Reduce cost and increase efficiency from factory to store • Collect and utilise data across the value chain
Improve customer experience	• Continuous concept development • Category and product development • Strengthen position as the seasonal champion • Europris private label offering Omnichannel and 360o • experience
Drive customer growth	• Strict store evaluation and reallocations • Store refurbishments • e-CRM and increased customer insights • Digital marketing and increased customer reach • Leveraging e-commerce and omnichannel opportunities	Physical Digital

Why invest in Europris

1	Significant untapped market potential in thriving discount variety retail segment
2	Norway's #1 discount variety retailer with unrivalled store network, brand recognition and price perception
3	More than two decades of consecutive growth and high profitability fuelled by continuous concept development
4	Clearly defined strategic priorities: strengthening price and cost position, improve customer experience and driving customer growth by bridging the physical and online stores
5	Target above-market growth over time and increased EBITDA margin from pan-Nordic sourcing, automated warehouse and lower supply chain costs
6	Committed to returning excess cash to shareholders

Retail is changing, discount variety is thriving

Next event: Q4 presentation 31 January

Appendix

Appendix

Management and board of directors

Top 20 shareholders

Analytical information

Insights for Europris and other Nordic Discount Variety Retailers – learnings from the UK and US

Management team

Pål Wibe Chief executive officer

Pål Christian Andersen Logistics director

Maria Borge Andreassen Strategy and business development director

Jon Boye Borgersen Marketing and concept director

Espen Eldal Chief financial officer

Kristine Frøberg HR and organisational director

Øyvind Haakerud Store network director

Ole Petter Harv IT director

Knut Spæren Product director

Petter Christian Wilskow Legal and CSR director

Board of directors

Tom Vidar Rygh Chairman

Hege Bømark Board member

Claus Juel-Jensen Board member

Sverre R. Kjær Board member

Tone Fintland Board member

Bente Sollid Storehaug Board member

Top 20 shareholders

Holder	No of shares	Holding
ARCTIC FUNDS PLC	5,126,610	3.07%
FOLKETRYGDFONDET	4,678,488	2.80%
EUROPRIS ASA	4,090,000	2.45%
KLP AKSJENORGE	3,805,052	2.28%
HOLBERG NORGE VERDIPAPIRFONDET	3,800,000	2.28%
VERDIPAPIRFONDET PARETO INVESTMENT	3,786,504	2.27%
STOREBRAND NORGE I VERDIPAPIRFOND	3,591,453	2.15%
EUROCLEAR BANK S.A/N.V	3,406,128	2.04%
BNP PARIBAS SECURITIES SERVICES	2,896,855	1.73%
SEB SEB PRIME SOLUTIONS SISSENER CANOPUS	2,800,000	1.68%
CITIBANK, N.A.	2,657,000	1.59%
STATE STREET BANK AND TRUST COMP.	2,490,002	1.49%
THE BANK OF NEW YORK MELLON SA/NV	2,486,161	1.49%
DANSKE INVEST NORSKE INSTIT. II	2,376,950	1.42%
FONDITA NORDIC MICO CAP INVESTMENT	2,350,000	1.41%
HOLBERG NORDEN VERDIPAPIRFONDET	2,325,000	1.39%
VARMA MUTUAL PENSION INSURANCE CO.	2,185,431	1.31%
KOMMUNAL LANDSPENSJONPENSJONKASSE	2,172,767	1.30%
NORDKRONEN II AS	2,008,572	1.20%
VPF NORDEA NORGE VERDI	1,900,000	1.14%
TOTAL 20 LARGEST SHAREHOLDERS	60,812,973	36.42%
TOTAL NUMBER OF SHARES	166,968,888

¹ All figures are approximations and subject to change without further notice 134

Seasonality	• As rule-of-thumb, the Easter impact is approximately NOK 50 million in revenue and NOK 10 million of EBITDA
Quarterly OPEX	• As rule-of-thumb, OPEX in year ago quarter + inflation + NOK 1.5 – 1.6 million per extra directly operated store (DOS)
CAPEX	• New store – NOK 2.3 million per store (5 per year) • Relocation – NOK 1.5 million per store (10 per year) • Modernisation – NOK 1.0 million per store (10 per year) • Category development – NOK 10 million per year • IT & Maintenance – NOK 35 million per year
Estimated one-time CAPEX items 2019	• New warehouse and new head office of approximately NOK 30 million (IT, system integration, fixtures and fittings)

Analytical info¹

Analytical info: New warehouse

NOK million	2019	2020	2021	2022
Investments
IT, office equipment and other (CAPEX)	~15	~5
Automation, part 1 (lease)	~85	~30
Automation, part 21 (CAPEX)	~25	~90
Non-recurring OPEX items

Moving costs	5-10	5-10
Redundant warehouse capacity in 2019 and Øra lease from H2 2020 (sublet potential to lease ends March 2022)	~6	0-13	0-26	0-10

IFRS 16 implementation - preliminary estimates¹

	Implementation effect 01.01.2019	2019 estimate
Assets
Total fixed assets	+1.93bn	+165m
Total assets	+1.93bn	+165m
Equity and liabilities
Equity		-30m
Long term financial liabilities	+1.57bn	+210m
Current liabilities	+360m
Other short term liabilities		Net -15m
Total equity and liabilities	+1.93bn	+165m

• Implementation comes before new warehouse and head office
• 2019 estimate includes new warehouse, head office and other additions net of depreciation for the year
• Potential franchise take-over and adjustments to current lease portfolio are not included in 2019 estimate
• Loan facilities are not affected by reduction of equity ratio related to IFRS 16 implementation

Preliminary effect on group balance sheet Preliminary effect on group P&L statement

	Estimated 2019 P&L effects
Group revenue
COGS
Opex	Reduced by 430-450m
Depreciation	Increased by 400-420m
Net finance cost	Increased 70m-80m
Tax cost	Reduced by some 10m
Net income	Reduced by some 30m

• Significantly reduced rental cost to increase EBITDA
• More than offset by higher depreciation and finance costs
• Net negative impact expected on reported net income
• IFRS 16 implementation has no cash effects

¹ Includes all rented and leased properties, vehicles, trucks, machinery and equipment. Shorter and immaterial leases have been excluded. All numbers are estimates and will be subject to change owing to group operations and interest rate levels at the time of implementation

Alternative performance measures (APMs)

APMs are used by Europris for annual and periodic financial reporting in order to provide a better understanding of Europris' financial performance and are also used by management to measure operating performance. APMs are adjusted IFRS figures defined, calculated and used in a consistent and transparent manner.

Gross profit represents group revenue less the cost of goods sold excluding unrealised foreign currency effects.	Working capital is the sum of inventories, trade receivables and other receivables less the sum of accounts payable and other current liabilities
Opex is the sum of employee benefits expense and other operating expenses.	Capital expenditure is the sum of purchases of fixed assets and intangible assets
EBITDA (earnings before interest, tax, depreciation and amortisation) represents gross profit less Opex.	Net debt is the sum of term loans and financial leases less bank deposits and cash
Adjusted EBITDA is EBITDA adjusted for nonrecurring expenses.	Directly operated store means a store owned and operated by the group
Adjusted profit before tax is net profit before tax adjusted for non-recurring items	Franchise store means a store operated by a franchisee under a franchise agreement with the group
Adjusted net profit is net profit adjusted for non-recurring items	Chain means the sum of directly operated stores and franchise stores
Adjusted earnings per share is adjusted net profit divided by the current number of shares	Like-for-like are stores which have been open for every month of the current calendar year and for every month of the previous calendar year

Insights for Europris and other Nordic Discount Variety Retailers – learnings from the UK and US

5 December 2018

Retail is changing, not dying

Global retail trends Degree of

relevance¹

Consumers are fully embracing online and omnichannel sales driven by globalization and cross-border competition

Shopper spend has polarized, shifting away from mass market towards discounters and premium retailers

Retailers redesign customer journeys (e.g., checkout-free stores) as convenience and experience increasingly drive purchasing decisions

Consumer trust in private label increases, while retailers are more strategic about their private label portfolio

Increasing raw material costs, tariffs, price pressure and online threats drive focus on cost, digitization and automation of core processes

In a world of winners and losers, variety retail keeps growing

While online is challenging brick-and-mortar …

Percent 10 0 2 12 6 4 14 8 16 2007 2012 2017 +3.9 p.p. +5.4 p.p. +5.0 p.p. +10.8 p.p. +7.5 p.p.

… variety retail has grown ~twice the speed of retail overall

1 General retailers with wide discount assortment

Online share of retail sales

SOURCE: Euromonitor International

While many traditional retailers struggle next to online and Amazon, discount continues to thrive

Historic growth; average CAGR 2012-17 current

Discount segment

Discounters lead on price but are also not far off on remaining areas of value proposition

Big 4 Performance of "Big 4" Performance of Lidl Performance of Aldi

1 Based on Customer Importance survey results from Nielsen

2 Range and quality metrics score highly in Nielsen customer importance surveys, behind only price and value

3 "Store is clean and tidy" and "Helpful staff" are, respectively, the second least and least important drivers of customer choice according to Nielsen

SOURCE: Which; Verdict; Nielsen customer importance survey

Similar patterns can be observed in the US

Historic growth; average CAGR 2012-17 current

1 Numbers for Amazon as a 3rd party grosser, excluding Wholefoods

2 Dollar Tree stores, not Dollar Tree Inc.

SOURCE: Euromonitor International

Discounters and dollar stores outpacing overall 'brickand-mortar' grocery market growth by 2x in the US

U.S. grocery market¹ growth; USD billions

1 Only includes store-based grocery retailing; does not count internet sales 2 Constant FX

SOURCE: Euromonitor International; Kantar; Willard Bishop

This is mainly driven by aggressive footstore expansion by Aldi and Lidl

Aldi and Lidl store expansion plans

Case study: Dollar General

Customers are fully embracing online … 2017

of all Norwegian consumers shopped online

13.5% Online retail in Norway grew

of online purchases in Norway were done via mobile

… but variety discount and grocery has been less exposed to online so far

Grocery & variety retailers do not accelerate online experience …

Challenging economics

In variety discount formats due to lower basket size and margins

Last-mile is complex

As logistics, handling and delivery costs are complex in Norway and variety discount in particular

… while customers value convenience and omnichannel experience

Customers value convenience

Access to extensive store network and broad assortment maintains convenience factor vs. online

Omni-channel experience

60% of customers in Norway have done research online before making the purchase in physical store

Still, changing consumer behavior is increasing expectations across the board also in Norway

We are a "digital" nation, but with a lower share making purchases online compared to other markets

Digital propensity of consumers across markets; % of population

The online development is likely to fuel continued growing difference between winners and losers

SOURCE: Odin; Euromonitor International 1 Based on search in Odin on Norwegian companies in industry classifications 474-477 (i.e. all retail excluding grocery retail, fuel retail and non-store retail)

Many changes are positive for discount variety retail and Europris in particular

• Omni-channel and eCRM provides consistent, "phygital" customer journeys
• Improved access to attractive locations and lower rental prices

• Distinct value proposition of low prices and large variety has proven successful in the UK – fueled with digital marketing

• Extensive store network, with a broad one-stop-shop assortment and increasing footprint – been successful in the US for, e.g., Lidl/Aldi

• Successful variety discounters offer a unique and broad assortment of quality own brand merchandise

• Europris has built warehouse and lower supply chain costs to drive profitability
• Increased purchasing power through Tokmanni and ÖoB drive lower COGS
• The Norwegian toll-free limit restricts cross-border competition

Historically several barriers have prevented online discount variety retail at scale

customer entry

to market

Last-mile example: Only a few of the current and potential Last Mile methods are used at the moment A

Commercially available Pilots ongoing In R&D

Profitability example: Economics of online grocery are challenging B

• Current online grocery basket profitability is only ~1%, but if half of the delivery costs can be cut, online will become as profitable as offline grocery
• Calculation assumes dark store picking and a basket size of around EUR 100 country specifics to be taken into account

ILLUSTRATIVE

1 Dark store picking; home delivery operating model

2 Includes vans cost and delivery payroll

3 Picking payroll, property expense, replenishment

4 IT, credit card fees, marketing;

5 Iincludes rebates paid to customers for poor quality goods or bonuses for delayed deliveries

SOURCE: McKinsey & Company – The future of last mile and The Future of online grocery 159