Europris

Investor Presentation • Jul 14, 2022

Q2 and first half year 2022 presentation

14 July 2022

CEO Espen Eldal CFO Stina C Byre

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.

This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates or intends to operate. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of its subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation to update any forward-looking statements or to conform these forward-looking statements to our actual results. Furthermore, information about past performance given in this Presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its parent or subsidiary undertakings or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

By reviewing this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial reports of the Company and the disclosures therein. The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons in possession of this Presentation are required to inform themselves about, and to observe, any such restrictions. No action has been taken or will be taken in any jurisdiction by the Company that would permit the possession or distribution of this Presentation in any country or jurisdiction where specific action for that purpose is required.

No shares or other securities are being offered pursuant to this Presentation. This Presentation does not constitute an offer to sell or form part of, and should not be construed as, an offer or invitation for the sale or subscription of, or a solicitation of an offer to buy or subscribe for, any shares or other securities in any jurisdiction, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any offer, contract, commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company.

By reviewing this Presentation you agree to be bound by the foregoing limitations.

This Presentation speaks as of 14 July 2022. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation shall be governed by Norwegian law, and any disputes relating to hereto is subject to the sole and exclusive jurisdiction of Norwegian courts.

30 years of consecutive growth

1992-2020: Europris chain sales (all stores, both directly operated by the group and the franchise stores) 2021: Europris chain sales, Lunehjem (consolidated as of March 2021) and Lekekassen (consolidated as of August 2021) LTM 2022: Europris chain sales, Lunehjem and Lekekassen

Strong second quarter for Europris

• Total sales of NOK 2,216m, up 5.7%
• Sales up 1.3% excluding acquisitions
• Positive timing effect from Easter and an average of 8% of stores closed in 2021
• Gross margin of 48.2%, up by 1.0%-p
• Opex-to-sales ratio of 21.7% (21.6%)
• Opex increase of 6.1%, affected by acquired companies
• EBITDA of NOK 589m, up 9.7%
• Net profit to parent of NOK 325m, up 15.0%
• Strikkemekka acquired for NOK 88.4m

•Group sales (NOK million)

•Net profit attributable to parent (NOK million)

Good performance for the first half year

• Total sales of NOK 3,932m, up 3.1%
• Sales down 1.4% excluding acquisitions
• On average 9% of stores closed in 2021
• Gross margin of 46.5%, up by 1.1%-p
• Opex-to-sales ratio of 24.5% (23.7%)
• Opex increase of 6.4%, affected by acquired companies
• EBITDA of NOK 866m, up 4.6%

•Group sales (NOK million)

•Net profit attributable to parent (NOK million)

Sales growth for low-price items

8

Strategic acquisition of another e-commerce pure player

• 67% of Strikkemekka.no acquired for NOK 88.4m in cash
• Revenues of NOK 180m and EBITDA of NOK 16.5m in 2021
• Strikkemekka.no is Norway's second-largest online store in its category, offering private label and branded yarn, yarn accessories and in-house developed patterns
• Designhandel.no (Norway and Sweden) is an online store for kitchenware and smaller home interior products
• Founder Eirik Fuglestad continues as CEO and 33% owner
• Transaction closed 1 July

Outperforming the general market

Retail sales development per May**, three-year-stacked (%)*

• Overall strong market performance last three years
• Strong development for total retail segment
• Closed borders
• Increased consumption in private households
• Shopping centres more heavily affected by social distancing and temporary closure of stores
• Europris has significantly outperformed the market during Covid-19
• Unique range of quality products at low prices

Financials

Sales increase in the second quarter

• Group sales of NOK 2,216m, up 5.7%
• Sales excluding acquisitions increased by 1.3%
• One more sales day vs last year
• Like-for-like sales increase of 0.5% for the Europris chain*
• Positive timing effect from Easter and an average of 8% of stores closed in 2021
• Border trade picking up

Growth strategy increases online sales

Total e-commerce sales (NOK million)

• Total e-com sales of NOK 147m
• 6.6% of group sales
• Lekekassen had sales decline in Norway in Q2, but growth in June and increase in Q2 in Sweden
• E-com sales from Europris.no of NOK 53m (83m)
• Parts of the decline related to higher click and collect sales last year from closed stores

Continued growth in gross margin

• Gross margin of 48.2%, up 1.0%-p
• Active work with price management, campaigns and product mix, combined with competitive freight agreement
• Net unrealised currency gain of NOK 20m (gain of NOK 24m)

Opex-to-sales ratio Inclusion of subsidiaries and expansion of store network affected opex

• Opex was NOK 480m, up 6.1%
• Increase in opex affected by acquired companies and an increase in number of directly operated stores (from 240 to 247)
• Opex-to-sales ratio of 21.7% (21.6%)

Sales growth and cost control yield increased profitability

EBITDA (NOK million)

• EBITDA of NOK 589m, up 9.7%
• EBITDA margin of 26.6%, up 1%-p
• The combination of sales growth, margin improvement, and good cost control led to improved profit

Solid liquidity position

• Net change in cash YTD was negative with NOK 603m (negative with 348m)
• Timing differences in accounts payable and other liabilities
• Increased inventory from higher purchase prices and higher volumes of seasonal items
• Paid dividend of NOK 644m (434m)
• Net debt of NOK 3,429m (2,641m)
• Net debt excluding lease liabilities of NOK 1,475m (803m)
• Cash and liquidity reserves of NOK 1,000m (1,577m)

	Q2	Q2	YTD	YTD
Cash flow, NOK million	2022	2021	2022	2021
Cash from operating activities	426	649	(8)	381
- of which change in net working capital	15	205	(583)	(289)
Cash used in investing activities	(38)	(52)	(41)	(73)
Cash from financing activities	(415)	(546)	(554)	(656)
Net change in cash	(27)	51	(603)	(348)
Cash at beginning of period	(6)	141	570	540
Cash at end of period	(33)	192	(33)	192

Our strategic focus areas

Warehouse expansion in accordance with plan

• Warehouse expansion progressing on schedule
• Good progress for shuttle automation
• Improved picking efficiency
• Replacement of some hardware parts in Q3

Successful in-store testing of the new toy concept

• Updated visual concept «Lekeplassen» for the toy category
• Convincing results from updated stores
• Plan a full roll-out during the second half this year
• Update of both the visual concept and the product range

Relentless improvement of the customer experience

• Successful launch of app linked to the customer-club MER
• Rich app content from day one
• Overview of campaigns and access to digital marketing leaflet
• Overview of fixed MER deals and any personal coupons
• Receipts from all previous shopping trips
• Store locator
• Tested cooperation with Lekekassen
• Discount offered to MER members

Three new store openings in the second quarter

• Three new store openings in Q2
• Lagunen in Bergen in Vestland county
• Fjellhamar outside Oslo in Viken county
• Setermoen in Troms county
• Two stores relocated in Q2
• Lena in Innlandet county
• Forus in Rogaland county
• Seven stores in pipeline for 2022 and beyond
• One is subject to planning permission

A strong and resilient concept for more uncertain times

• Close and continuous monitoring of supply chain shielded from disturbances
• Direct agreement with the Maersk shipping company securing capacity
• Consumers facing higher prices and interest rates, combined with a reopened society
• The Europris concept is well suited for current market environment, with low prices and strong campaigns
• Gross margin for the Europris chain expected to stabilise at higher than pre-pandemic level
• Europris celebrates its 30th anniversary as the market leader
• Ready to develop further while balancing customers needs with delivering profitable growth

Next event: Q3 presentation 3 November 2022

Appendix

Long-term financial and operational ambitions
ÖoB
Sales days and store projects
Analytical information
Alternative Performance Measures (APM's)

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 five 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

A low-risk synergistic partnership today

Potential for true European scale tomorrow

Transaction highlights

20% initial stake in Runsven-gruppen AB	• Based on EV using fixed multiple of 7.7x actual EBITDA 2018 • Purchase price settled in Q4 at NOK 115 million based on ÖoB EqV of NOK 574 million • Shares acquired in the market by Europris at a total cost price of NOK 98 million • Share for share transaction, settled by treasury shares • 2.6% ownership stake in Europris (4,35m shares)
Option to acquire remaining 80% stake	• Exercisable in 2020 within six months after agreement on ÖoB's 2019 EBITDA • Based on EV using fixed multiple of 7.7x average 2019 and 2020 EBITDA • Share for share transaction
Lock-up	• Shares issued to sellers of ÖoB are subject to lock-up

Sales days and store projects

Number of sales days

Year	Q1	Q2	Q3	Q4	Total
2021	76	71	79	81	307
2022	76	72	79	81	308
2023	77	71	79	79	306

•Number of store projects (franchise projects in brackets)

2021	Q1	Q2	Q3	Q4	Total
New stores	1	1	1	1	4
Store closures	-	-	-	-	-
Relocations	1	1	1	2	5
Modernisations	4	2	2	1	9

2022E	Q1	Q2	Q3	Q4	Total
New stores	1	3	1	1	6
Store closures	-	-	-	-	-
Relocations	2	2	-	2	6
Modernisations	5	3	4	3	15

Analytical info¹

Seasonality	• As rule-of-thumb, the Easter impact is approximately NOK 60-75 million in revenue and NOK 12-15 million of EBITDA
Quarterly OPEX	• Europris stores: as rule-of-thumb, OPEX in quarter one year ago + inflation + NOK 1.5-1.6 million per extra directly operated store (DOS)
CAPEX	• New store – NOK 2.0 million per store (average of 5 per year) • Relocation – NOK 1.5 million per store (average of 10 per year) • Modernisation – NOK 1.0 million per store (average of 10 per year) • Category development – NOK 15 million per year • IT & Maintenance – NOK 40 million per year • In addition, estimate for 2022: IT (ERP) of NOK 10-15 million and Warehouse (automation expanded high-bay area) of NOK 40 million

Alternative performance measures (APMs)

APMs are used by Europris for annual and periodic financial reporting in order to provide a better understanding of the group's financial performance. APMs are considered as wellknow and frequently used by users of the financial statements and are also used in internal reporting and by management to measure operating performance.

Gross profit / gross margin Gross profit is defined as Total operating income minus the cost of goods sold (COGS). The gross profit represents revenue that the group retains after incurring the direct costs associated with the purchase of the goods. Gross margin is defined as gross profit divided by total revenue and is useful for benchmarking direct costs associated with the purchase of the goods vs total revenues.	Capital expenditure Capital expenditure (Capex) is the sum of purchases of fixed assets and intangible assets as used in the cash flow. Capex is a well-known and widely used term among the users of the financial statements and is a useful measure of investments made in the operations when evaluating the capital intensity.
Opex Operating expenses (Opex) is the sum of employee benefits expense and other operating expenses. It is useful to look at cost of these two components combined, as they compose a large part of the fixed operating costs. The Opex-to-sales ratio divides the Opex by Total operating income and is useful for benchmarking this cost base vs the development in sales.	Financial debt Financial debt is the sum of borrowings and lease liabilities. Financial debt is useful to see total debt as defined by IFRS.
EBITDA / EBITDA margin EBITDA is earnings before interests, tax, depreciation of property, plant and equipment and right-of-use assets and amortisation of other intangibles. EBITDA is a well-known and widely used term among users of the financial statements and is useful when evaluating operational efficiency on a more variable cost basis as they exclude amortisation and depreciation expense related to capital expenditure. EBITDA margin is EBITDA divided by Total operating income and is useful for benchmarking this profitability parameter vs the development in sales.	Cash and liquidity reserves Cash and liquidity reserves is defined as available cash plus available liquidity through overdraft and credit facilities. This measure is useful to see total funds available short term.
EBIT EBIT is earnings before interest and taxes and is the same as the IFRS definition of operating profit. EBIT is a well-known and widely used term among the users of the financial statements and is useful when evaluating operational profitability. EBIT margin is EBIT divided by Total operating income, and thus the same as Operating profit divided by Total operating income.	Total chain sales Total chain sales are sales from all chain stores, that is both directly operated and franchise stores. This KPI is an important measure of the performance of the total Europris chain and considered useful in order to understand the development of the entire chain, regardless of ownership structure of stores.
Working capital Net change in working capital is the sum of change in inventories and trade receivables and change in other receivables less the sum of change in accounts payable and other current liabilities. Net change in working capital is a well-known and widely used term among the users of the financial statements and is useful for measuring the group's liquidity, operational efficiency and short-term financial conditions.	Directly operated store Directly operated store means a store owned and directly operated by the group. Franchise store Franchise store means a store operated by a franchisee under a franchise agreement with the group. Chain Chain means the sum of directly operated stores and franchise stores. Like-for-like sales growth 35 Like-for-like growth is defined as the growth in total chain sales for stores that have been open for every