Europris

Investor Presentation • Oct 31, 2024

Q3 2024 presentation

31 October 2024

CEO Espen Eldal CFO Stina 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.

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This Presentation speaks as of 31 October 2024. 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.

The Europris group

A Nordic retail champion in the making…

…with strong concepts across 378 stores

* Sales includes the Europris chain (directly operated and franchise stores), Lunehjem (consolidated as of March 2021), the Lekekassen group (consolidated as of August 2021), the Strikkemekka group (consolidated as of July 2022) and ÖoB (Runsvengruppen; consolidated as of May 2024) 4

Financial highlights - third quarter

• Group sales of NOK 3.2bn, up 50.4%
  • Organic growth of 4.4%
• Gross margin of 39.7%, down 5.6%-p
  • Organic decline of 1.6%-p, and down 1.3%-p excluding unrealised effects from currency hedging
  • Opex-to-sales ratio of 26.5%, on a par with last year both reported and organically
• Group EBIT of NOK 168 million, down NOK 67m
  • Organic decline of NOK 22m, reflecting the gross margin decline
  • Negative EBIT contribution of NOK 45m from ÖoB
• Net profit to parent of NOK 84m, down NOK 60m
  • Unrealised loss on interest rate swaps of NOK 12m vs unrealised profit of NOK 2m last year

Kvarud analyse shopping centre index and Virke retail index, using figures reported by Statistics Norway

6

Satisfactory quarter in a challenging market

• Our campaign-driven low-price concept remains relevant
• Sales growth mainly driven by campaigns and consumables
• Many consumers remain cautious and hold back on investment purchases
• Higher sales and footfall in the Europris chain
• Flat sales and footfall in ÖoB, which is an improvement from the first half of the year
• Gross margin under pressure from changes in sales mix, higher costs for inbound freight, and a weak NOK

Third quarter year-onyear sales growth (%)

First nine months yearon-year sales growth (%)

High ambitions in Sweden: Grow ÖoB revenues by SEK 1bn by 2028 with an EBIT margin of 5%

Category harmonisation and joint sourcing

Improve customer experience

Strengthen execution across the value chain

ÖoB integration process progressing to plan

• Two organisations in good spirits good collaboration and solid contributions from employees in both Europris and ÖoB
• Change of Country Manager in Sweden, with André Sjåsæt taking charge
• Closed down ÖoB's sourcing offices in China, consolidating operations to Europris and Tokmanni's sourcing office in Shanghai
• Joint sourcing and negotiations progressing according to plan
• ERP project progressing as planned

Implementing "the Europris' way of working"

• Implementing same stringent management follow-up routines as in Europris
• Regional manager from Europris temporarily relocating to Sweden
• Implementing Europris' campaign principles and methodology
• Adjusting frequency and structure for the printed direct marketing leaflet
• Adjusting in-store concept for campaigns

Testing Europris' visual profile in selected stores

Continued recognition for our climate efforts

• Top score on PwC's climate index for 2024
  • Among the 18 of the 100 largest companies in Norway to receive top rating as a climate leader
• Several key initiatives collectively defining climate leadership:
• Established climate targets aligning with the Paris Agreement
• Consistent reduction of absolute emissions past three years
• Comprehensive reporting on emissions, encompassing both direct operations and the entire value chain
• Adds to recognition from Financial Times and Statista as one of 'Europe's Climate Leaders', and A- score from CDP

Financials

CFO Stina C Byre

Group financials – third quarter highlights

Key figures group, third quarter 2024

Sales NOK 3.2bn	Growth of 50.4%, impacted by acquisition of ÖoB Organic growth of 4.4%
Gross margin 39.7%	Down 5.6%-p, impacted by lower margin level in ÖoB Organic decline of 1.6%-p, or down 1.3%-p excluding unrealised currency
Opex-to-sales 26.5%	Unchanged year-on-year, both reported and organic
EBIT NOK 168m	Down NOK 67m, impacted by EBIT-loss of NOK 45m for ÖoB Organic decline of NOK 22m
Net profit to parent NOK 84m	Reduction of NOK 60m, impacted by unrealised loss on interest rate swaps of NOK 12m vs unrealised profit of NOK 2m last year

Group financials – first nine months highlights

Key figures group, first nine months 2024

Sales NOK 8.4bn	Growth of 30.9%, impacted by acquisition of ÖoB Organic growth of 4.1%
Gross margin 41.2%	Down 3.2%-p, impacted by lower margin level in ÖoB Organic decline of 0.5%-p
Opex-to-sales 26.0%	Up ~1.0%-p (reported and organic)
Group EBIT NOK 613m	Down NOK 129m, impacted by EBIT-loss of NOK 61m for ÖoB Organic decline of NOK 68m
Net profit to parent NOK 396m	Reduction of NOK 79m, impacted by unrealised loss on interest rate swaps of NOK 6m vs unrealised profit of NOK 19m last year and positive impact from fair value adjustment of option to acquire remaining 80% of ÖoB of NOK 32m

Group – cash, debt and liquidity

First nine months

• Cash from operating activities of NOK 365m (734m)
  • More negative net change in working capital than last year, impacted by planned inventory build-up from earlier arrivals and higher volumes of Christmas goods
• Negative net change in cash of NOK 582m (-383m)
• Net debt of NOK 5,091m (3,852m)
  • NOK 1,614m excluding lease liabilities (1,256m)
• Cash and liquidity reserves of NOK 1,360m (1,363m)

Cash flow, NOK million	Q3 2024	Q3 2023	YTD 2024	YTD 2023	FY 2023
Cash from operating activities	157	526	365	734	1,769
- of which change in net working capital	(211)	163	(508)	(104)	281
Cash used in investing activities	(25)	(33)	(92)	(343)	(358)
Cash from financing activities	(167)	(284)	(855)	(774)	(1,199)
Net change in cash	(35)	209	(582)	(383)	212
Cash at beginning of period	129	(128)	676	464	464
Cash at end of period	94	81	94	81	676
Key financials	Q3 2024	Q3 2023	YTD 2024	YTD 2023	FY 2023
Net debt (excl. lease liabilities)	1,614	1,256	1,614	1,256	371
Cash and liquidity reserves	1,360	1,363	1,360	1,363	2,205

Segment Norway – third quarter

Highlights Norway

• Sales of NOK 2.2bn, up 4.4%
  • Gross margin decline of 1.6%-p, or down 1.3%-p excluding unrealised currency effects, stable opex-to-sales and EBIT decline of 9.3%
• LFL growth of 2.9% for the Europris chain
  • Higher footfall, campaigns and upgraded categories drivers of growth
• Sales of NOK 155m from pure play companies, up 11.6%, attributable to Strikkemekka
  • Private label yarn sourced together with Europris welcomed by customers
  • Soft launch into Germany (yarnmania.de)
  • Recruited VP Digital Commerce to ensure more support and improved follow-up of pure play companies

Segment Sweden – third quarter

2023

2024

Highlights Sweden

• Sales of NOK 1bn with gross margin of 30.7% and an EBIT-loss of NOK 45m in the third quarter
• Stable footfall and LFL sales (local currency SEK)
• Growth in campaign sales
• Higher sales of consumables, while non-food had sales decline - impacted by low inventories and limited availability of goods

Key figures Sweden, third quarter

Ready for the important upcoming fourth quarter

• Long period with high inflation and higher interest rates have led to price consciousness and cautious spending
  • Campaigns and consumables drive sales growth but puts pressure on the gross margin
• Improving outlook for consumer sentiment although volume growth expected to take some time
  • Inflation coming down in Norway and Sweden
  • Interest rates already on the way down in Sweden and expected down in 2025 in Norway
  • Real wage growth expected this and next year
• Secured sufficient inventory for the important Christmas season
• Turnaround plan for ÖoB progressing according to plan confident in ambition to reach sales of SEK 5 billion and 5% EBIT margin in 2028

Next event: Q4 presentation 29 January 2025

Appendix

Long-term financial and operational ambitions
-----------------------------------------------

Sales days and store projects

Analytical information

Alternative Performance Measures (APM's)

Long-term financial and operational ambitions - segment Norway

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

Sales days and store projects – segment Norway

Number of sales days

Year	Q1	Q2	Q3	Q4	Total
2023	77	71	79	79	306
2024	75	73	79	80	307
2025	76	71	79	81	307

•Number of store projects (franchise projects in brackets)

2023	Q1	Q2	Q3	Q4	Total
New stores	2	2	1	2	7
Store closures	-	-	1	-	1
Relocations / expansions	3	2	1	-	6
Modernisations	3	3	2	(1)	9

2024E	Q1	Q2	Q3	Q4	Total
New stores	-	-	-	1	1
Store closures	-	-	-	-	-
Relocations / expansions	3	6	3	2	14
Modernisations	5	2	2	-	9

Sales days – segment Sweden

Number of sales days

Year	Q1	Q2	Q3	Q4	Total
2023	89	91	92	91	363
2024	90	91	92	91	364
2025	89	91	92	91	363

Analytical information¹– segment Norway

Seasonality	• As a rule-of-thumb, the Easter impact is approximately NOK 65-80 million in revenue and NOK 13-16 million in EBITDA
Quarterly Opex	• Europris stores: as a rule-of-thumb, Opex in quarter one year earlier + inflation + NOK 1.6-1.7 million per extra directly operated store (DOS)
Capex	• New store – NOK 2.4 million per store (average of five per year) • Relocation – NOK 1.7 million per store (average of 10 per year) • Modernisation – NOK 1.5 million per store (average of 10 per year) • Category development – NOK 15 million per year • IT and maintenance – NOK 30 million per year • In addition, for 2024: IT (ERP/POS) of NOK 15 million and warehouse (automation expanded high-bay area) of NOK 30 million
Rent	• Majority of contracts are CPI-adjusted • Recognised under IFRS-16 leases

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.

Sales

Sales is the same as the IFRS definition of total operating income.

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.

Opex / Opex-to-sales ration

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 Opexto-sales ratio divides the Opex by Total operating income and is useful for benchmarking this cost base vs the development in sales.

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.

EBIT / EBIT margin

EBIT is earnings before interest and taxes and is the same as the IFRS definition of operating profit. EBIT is a wellknown 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.

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.

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.

Financial debt

Financial debt is the sum of borrowings and lease liabilities. Financial debt is useful to see total debt as defined by IFRS.

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.

Europris: 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.

Constant currency

Constant currency is the exchange rate which the group uses to eliminate the effect of exchange rates fluctuations when calculating financial performance numbers.

Segment Norway

The Norway segment includes Europris and the pure play companies Lekekassen, Strikkemekka and Lunehjem.

Segment Sweden

The Sweden segment includes the ÖoB chain.

Pure play

Pure play includes the Lekekassen group, the Strikkemekka group and Lunehjem.

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 all stores under the brand name Europris and ÖoB. Europris has both directly operated stores and franchise stores while ÖoB only has directly operated stores.

Like-for-like (LFL) sales growth

LFL growth is defined as the growth in total chain sales for stores that have been open for every month of both the previous and the current calendar year. LFL is calculated in constant currency.

Organic growth

Organic growth is defined as the growth excluding any structural changes (acquisitions or sale of companies). Segment Sweden has been excluded in organic growth for the group.