Europris

Investor Presentation • Jul 11, 2024

Q2 2024 presentation

11 July 2024

CEO Espen Eldal CFO Stina C Byre VP Strategic Projects André Sjåsæt

Disclaimer

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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

Second quarter 2024 in brief

• Finalised acquisition of Runsvengruppen (ÖoB) on 2 May 2024
• Important strategic milestone on the pathway to creating a Nordic champion in discount variety retail
  • Combined turnover last twelve months of NOK ~13.5bn
  • Final purchase price of NOK 200.5m for the remaining 80%
  • Good start on the cooperation to integrate the businesses
• Group sales of NOK 3.1bn, +34.6%
  • Organic growth of 3.0%
• Group EBIT of NOK 339 million, down NOK 23m
  • Organic decline of NOK 8m
  • Negative EBIT of NOK 16m from ÖoB

Relevant concept in tough times for many consumers

• A tougher economic climate creates more prices conscious consumers
  • Higher sales growth for campaigns and consumables
  • Consumers still holding back on investment purchases lower sales of high-ticket items such as garden furniture
  • Increased share of private label sales
• Provides opportunities for discount variety retailers
  • Offer good value for money
  • Ability to adapt to changes in market conditions with a wide range of essential products

Our climate efforts are being recognised

• Europris has been included in the fourth edition of Financial Times' and Statista's 'Europe's Climate Leaders'
• The list covers some 600 European companies that contribute to the green transition
• The ranking is based on several factors, and Europris is one of two retailers in Norway and among the top 12 retailers in Europe

Facsimile: Financial Times, 25 April 2024 7

Financials

CFO Stina C Byre

Group financials - second quarter

Highlights group

• Group sales up 34.6%, with organic growth of 3%
• Gross margin down 2.6%-p, with organic increase of 0.2%-p or up 0.4%-p excluding unrealised currency
• Opex-to-sales ratio increased by 2.1%-p, with organic increase of 1.2%-p
• Group EBIT of NOK 339m, with organic EBIT decline of 2.2%
• Net profit to parent up NOK 6m
  • Positive impact by fair value adjustment of the option to acquire ÖoB (NOK +32m) and remeasurement of the initial 20% stake (NOK +17m)
  • Unrealised loss on interest rate swaps of NOK 1m vs gain of NOK 22m last year

Key figures group, second quarter 2024

Group financials - first half

Highlights group

• Group sales up 21%, with organic growth of 3.9%
• Gross margin down 1.6%-p, with organic gross margin roughly on a par with last year
• Opex-to-sales ratio increased by 1.8%-p, with organic increase of 1.6%-p
• Group EBIT of NOK 445m, with organic EBIT decline of 9.2%
• Net profit to parent down NOK 18m
  • Positively impacted by fair value adjustment of option to acquire ÖoB (NOK +32m) – gain from remeasurement of the initial 20% stake was offset by loss up until takeover
  • Unrealised gain on interest rate swaps of NOK 6m vs gain of NOK 17m last year

Key figures group, first half 2024

Solid financial position

• Cash from operating activities of NOK 208m, on a par with last year
  • Negative net change in working capital related to normal seasonal fluctuations
• Negative net change in cash of NOK 547m (-593m)
  • Paid dividend of NOK 523m (604m)
• Solid financial position
  • Net debt of NOK 5,097m (4,251m) excluding lease liabilities NOK 1,520m (1,617m)
  • Cash and liquidity reserves of NOK 1,441m (1,005m)

Cash flow, NOK million	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Cash from operating activities	488	574	208	208	1,769
- of which change in net working capital	94	195	(297)	(267)	281
Cash used in investing activities	(18)	(23)	(67)	(310)	(358)
Cash from financing activities	(527)	(648)	(688)	(491)	(1,199)
Net change in cash	(57)	(97)	(547)	(593)	212
Cash at beginning of period	186	(31)	676	464	464
Cash at end of period	129	(128)	129	(128)	676
Key financials	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Net debt (excl. lease liabilities)	1,520	1,617	1,520	1,617	371
Cash and liquidity reserves	1,441	1,005	1,441	1,005	2,205

Segment Norway – second quarter

2023

2024

• Sales up 3%, with LFL growth of 1.1% for the chain
  • Negative impact from timing of Easter offset two extra sales days
  • Seasonal items sold well, with the exeption of higher-ticket items within garden furniture
  • Sales of NOK 131m from pure play companies, down 1.3%, as lower sales for Lekekassen offset growth for Strikkemekka
• Gross margin up 0.2%-p, or up 0.4%-p excluding unrealised currency effects
• EBIT down 2.2% from opex growth and higher lease depreciations

2,3 2,4 Sales, NOK bn 44,5 44,7 Gross margin, % 362 354 EBIT, NOKm 21,5 22,7 Opex-to-sales, %

Key figures Norway, second quarter

Segment Sweden – consolidated May and June

Highlights Sweden

• Combined sales for May and June of NOK 0.7bn, with gross margin at 32.4%
  • LFL sales declined by 3.5% for the ÖoB chain for the full second quarter, reflecting lower sales for non-food categories, including seasonal items

Key figures Sweden, May and June

2023

2024

Soft first half for Sweden, in addition to one-offs

• One-off effects to align accounting principles booked before Europris ownership period commenced, with a total negative EBIT impact of SEK ~50m
  • Gross profit impacted by SEK -23m
  • Opex and write-downs of SEK -26m
• Key figures ÖoB first half 2024:
  • Sales of SEK 2bn, down 2.1%
• Gross margin of 31.2%, down 3.2%-p, negatively impacted by one-offs (-1.2%-p) and product mix from a higher share of consumables
• EBIT of SEK -155m, or -105m excluding one-offs, down from SEK -45m last year

Sweden (ÖoB)

CEO Espen Eldal VP Strategic Projects André Sjåsæt

Creating a Nordic champion in discount variety retail

Leading brands and similar concepts with potential to establish a strong Nordic position

Shared values and similar business cultures

Operational synergies across concepts → sharing "best practice"

Significant synergies throughout the value chain

ÖoB strengths

Profound expertise in wholesale and retail, coupled with a long and rich history

A leading concept in discount variety retail, recognised by customers for low prices and broad assortment

Store network with 94 stores across all of Sweden

2 million members in the "Lågprisklubben" customer club

Strong retail culture built on solid values

18

ÖoB challenges

• No revenue increase since 2015 in contrast to other players in Swedish variety retail with double-digit top line growth
• Declining footfall, especially post-Covid
• Increasing share of sales from consumables, putting pressure on the gross margin and a more challenging pricing environment
• Lost "ownership" of seasonal sales and higher margin non-food categories
• Underinvested due to weak profitability, liquidity strains, and uncertain ownership situation

ÖoB - revenue and margin development Revenue and EBIT-margin

Our ambition is to grow ÖoB revenues by SEK 1bn by 2028

Category harmonisation and joint sourcing

Improve customer experience

Strengthen execution across the value chain

Develop non-food categories and harmonise assortment across the chains

• Category harmonisation and joint sourcing

• Improve customer experience

• Strengthen execution across the value chain

• Develop the non-food categories and sharpen positioning towards the main seasons
• Harmonise assortment across market segments and extract purchasing synergies
• Harmonise and align portfolio and efforts on Private Labels
• Common pricing strategies with local adaptation to competition

Developing the non-food categories will enable higher margins

Europris - Well-diversified across the retail segments

ÖoB – More tilted towards consumables

Increasing gross margins will also be possible by harmonising the private label portfolio

Boost customer satisfaction and modernise the stores

• Category harmonisation and joint sourcing

• Improve customer experience

• Strengthen execution across value chain

• Implement proven category shop-inshops from Europris in ÖoB stores
• Upgrade and modernise stores and concept
• Strengthen brand position amongst target customer segments to attract new customers and grow frequency in existing customer base
• Further develop and strengthen ÖoB's loyalty program "Lågprisklubben"

Improving in-store customer experiences

Home Q1 21 Storage Q2 21 Textiles Q2 21 Choc & snacks Q3 21 Pet Foods Q1 22

DIY Q3 22

Toys Q4 22 Cleaning Q1 23 Personal Care Q3 23 Kitchen 2.0 Q1 24

Europris has implemented substantial concept and category upgrades last 4 years

• Target: Continue to develop Europris' store concept to deliver an even better customer experience
• Changes have helped create a more relevant and profitable product range everyday and for the seasons
• Implemented in all stores with involvement of our store staff

Example New kitchen concept rolled out towards the end of Q1 2024

After implementation of the new concept in week 11, the kitchen category grew by ~16% compared to an average of ~2% in the same period in 2021 to 2023

W11-26 2024

W11-26 2021-2023

~2%

Improve operational execution and governance

• Category harmonisation and joint sourcing

• Improve customer experience

• Strengthen execution across the value chain

• Strengthen campaign setup and execution across all touchpoints in the value chain
• Standardise and harmonise commercial toolbox across the concepts
• Strengthen operational sales management and implement "The Europris Way"
• Sharing and implementation of best practices across all operational and support functions (e.g. sustainability, supply chain management, etc.)

Strengthening campaigns and seasons

Sharpening the focus on campaigns and seasons to be relevant, attract customers and drive traffic and sales

Campaign driven

Low-price

Broad range

Unbeatable campaign offers + Champion of the seasons

Retail management is about putting all the pieces together

The transformation is well initiated and will continue over the coming years

• Many activities are already mobilised and initiated. Given buying cycles, seasonality and complexity many activities will be continued over the coming years
• Although many changes are implemented in the first years, customers will need more time to experience the full effects in the store network
• Europris have mobilised an integration programme setting clear priorities, structure and involvement across the two organisations
• The transformation programme is led by VP Strategic Projects André Sjåsæt in close collaboration with management and other key stakeholders from the organisations in Sweden and Norway

Our ambition is to grow ÖoB revenues by SEK 1bn by 2028

Category harmonisation and joint sourcing

Improve customer experience

Strengthen execution across the value chain

The ÖoB opportunity

Designing a five-year plan to revive growth and restore profitability in ÖoB

• Add sales of SEK 1 billion
• Strengthen gross margins
• Maintain cost efficiency
• Turnaround designed to generate ÖoB EBITmargin of 5% by 2028
• Improvement plan supported by investment programme of SEK >300 million
• Additional positive purchase synergies for Europris in the range of NOK ~20-40 millions

ÖoB - Revenue and margin development and ambition

32

Further long-term upside in adding more stores

• First priority is to create like-for-like growth and improve profitability in the existing store network
• Current store network in Sweden is smaller than for the most relevant competitors
• Long-term opportunity to expand store network by 30-50 stores to 125-145 stores 94

The Europris group

A Nordic retail champion in the making…

…with strong concepts across 378 stores

Becoming a champion in the Nordic discount variety retail market

• Current market offers opportunities for concepts like Europris and ÖoB
• Taking measures to mitigate negative effects of shipping capacity constraints and higher war surcharges
• Building on a solid brand and price position in the upcoming turnaround of ÖoB
• Considerable potential to increase sales and profitability in Sweden
  • Category harmonisation and joint sourcing
  • Improve customer experience
  • Strengthen execution across the value chain
• Ambition to lift ÖoB sales to SEK 5bn with 5% EBIT-margin in 2028

Next event: Q3 presentation 31 October 2024

Appendix

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	1	13
Modernisations	5	2	1	-	8

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.