Europris

Quarterly Report • Jul 11, 2024

Q2 2024

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EUROPRIS ASA EUROPRIS ASA

Highlights 20243
Key figures 4
Period review5
Financial review - group 7
Segment Norway9
Segment Sweden10
Financial statements 12
Alternative performance measures 22

Highlights

Second quarter 2024

• Closed the ÖoB transaction on 2 May, acquiring remaining 80 per cent for a final purchase price of NOK 200.5 million
  • » ÖoB included with revenue of NOK 728 million, gross margin of 32.4 per cent and negative EBIT of NOK 16 million
• Group sales of NOK 3,109 million, up 34.6 per cent
  • » Organic (excluding the acquisition of Runsvengruppen (ÖoB)) sales growth of 3 per cent
  • » Overall good sales development in Norway but negative impact from timing of Easter and lower sales of high-ticket seasonal items
• Gross margin of 41.9 per cent (44.5 per cent)
  • » Organic gross margin of 44.7 per cent, up 0.2 percentage points
• Opex-to-sales ratio of 23.6 per cent (21.5 per cent)
  • » Organic opex-to-sales ratio of 22.7 per cent, up 1.2 percentage points
• EBIT of NOK 339 million (NOK 362 million) and EBIT margin of 10.9 per cent (15.7 per cent)
  • » Organic EBIT of NOK 354 million and organic EBIT margin of 14.9 per cent
• Net profit of NOK 266 million (NOK 260 million) attributable to parent
  • » Positive impact from fair value adjustment of the ÖoB option of NOK 32 million and remeasurement of the initial 20 per cent stake of NOK 17 million
  • » Negative impact from interest rate swaps of NOK 1 million this year vs positive at NOK 22 million last year

First half 2024

• Group sales of NOK 5,135 million, up 21 per cent
  • » Organic sales growth of 3.9 per cent
• Gross margin of 42.4 per cent (44 per cent)
  • » Organic gross margin of 44.1 per cent, up 0.1 percentage points
• Opex-to-sales ratio of 25.9 per cent (24.2 per cent)
  • » Organic opex-to-sales ratio of 25.8 per cent, up 1.6 percentage points
• EBIT of NOK 445 million (NOK 507 million) and EBIT margin of 8.7 per cent (12 per cent)
  • » Organic EBIT of NOK 461 million and organic EBIT margin of 10.5 per cent
• Net profit of NOK 313 million (NOK 331 million) attributable to parent
  • » Positive impact from fair value adjustment of the ÖoB option of NOK 32 million
  • » Positive impact from interest rate swaps of NOK 6 million this year vs positive at NOK 17 million last year
• Solid financial position with net debt of NOK 1,520 million (NOK 1,617 million)

Key figures

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
GROUP KEY INCOME STATEMENT FIGURES
Retail sales	2,926	2,142	4,791	3,908	8,745
Wholesale sales	158	145	297	290	634
Other	25	23	47	44	88
Total operating income	3,109	2,310	5,135	4,243	9,467
% growth in total operating income	34.6%	4.3%	21.0%	7.9%	5.0%
Cost of goods sold	1,807	1,282	2,955	2,375	5,276
Gross profit	1,302	1,028	2,180	1,869	4,191
Gross margin	41.9%	44.5%	42.4%	44.0%	44.3%
Opex	735	497	1,332	1,026	2,222
Opex-to-sales ratio	23.6%	21.5%	25.9%	24.2%	23.5%
EBITDA	567	531	847	842	1,970
EBITDA margin	18.2%	23.0%	16.5%	19.9%	20.8%
EBIT (Operating profit)	339	362	445	507	1,295
EBIT margin (Operating profit margin)	10.9%	15.7%	8.7%	12.0%	13.7%
Net profit	266	259	313	330	909
Profit attributable to owners of the parent	266	260	313	331	909
Earnings per share (in NOK)	1.65	1.61	1.94	2.05	5.64
GROUP KEY CASH FLOW AND BALANCE SHEET FIGURES
Net change in working capital	94	195	(297)	(267)	281
Capital expenditure	37	23	86	94	142
Financial debt	5,226	4,251	5,226	4,251	3,715
Cash	129	-	129	-	676
Net debt	5,097	4,251	5,097	4,251	3,039
- Lease liabilities	3,577	2,634	3,577	2,634	2,669
Net debt ex 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

Period review

The group finalised the acquisition of Runsvengruppen (ÖoB) in the second quarter of 2024, an important strategic milestone on the path to creating a Nordic champion in discount variety retail, with Europris and ÖoB as leading brands with similar concepts in Norway and Sweden. This brings the combined last twelve months group turnover to NOK 13.5 billion. The work to integrate ÖoB has gotten off to a good start and the cooperation will continue with full speed after the summer holidays.

Many consumers in both Norway and Sweden have faced a tougher financial situation for some time, due to high inflation and higher interest rates, creating a retail landscape where consumers are even more price conscious. This might hold especially true for lower and medium income households, which are the most frequent shoppers in concepts like Europris and ÖoB. On the one hand, the concepts prove their relevance in the prevailing market conditions, as exemplified by higher sales growth for campaign sales and for consumables. On the other hand, the trend with lower sales of higher-value items such as garden furniture continued also this year. The group is continuously taking measures to stay relevant and to be a preferred shopping destination regardless of market conditions.

Entering discount variety retail in Sweden

On 2 May 2024 the group announced that it had closed and settled the acquisition of the remaining 80 per cent of Runsvengruppen AB (ÖoB). The final purchase price of NOK 200.5 million comprised 2,579,678 Europris shares in addition to a cash component of NOK 13 million. Europris had sufficient treasury shares to cover the transaction and the cash payment was almost in full netted by costs reimbursed from the arbitration. The shares transferred on 2 May are subject to a 12-month lock-up period, while shares issued in connection with the acquisition of the first 20 per cent stake in 2019 no longer are under lock-up.

ÖoB is regarded as a turnaround case. The company has had flat sales development and declining profitability since 2018 – in contrast to double-digit top line growth for several other players in the Swedish variety retail market. After closing the acquisition, Europris has mobilised a transformation and integration programme to realise synergies across the value chain and to unlock the inherent potential in ÖoB. This programme is led by VP Strategic Projects André Sjåsæt in close collaboration with management and other key stakeholders from the organisations in both Sweden and Norway.

Europris believes the main value drivers for ÖoB will be a revival of top-line growth and an improvement of the gross margin for the existing store portfolio. The ambition is to grow annual sales by SEK 1 billion to SEK 5 billion by the end of 2028, and to restore profitability to an EBIT-margin level of 5 per cent. Within the same time frame, Europris also expects to realise purchasing synergies in the range of NOK 20-40 million benefiting the Norwegian operations.

The sales and margin targets for ÖoB are based on the current store portfolio, and given a successful turnaround, Europris sees a long-term opportunity to expand the store network by 30-50 stores to some 125-145 stores.

Although the board and management of Europris are confident in their ambitions and plans for ÖoB, it will take time to implement and execute the turnaround. Lead times are long in retail – with respect to procurement cycles, customer perceptions and shopping patterns. The planned turnaround of ÖoB is therefore not a quick fix and patience will be required before results from the work to be done can be expected.

The profitable growth journey ahead will be based on three main levers:

• category harmonisation and joint sourcing,
• improving the customer experience, and
• strengthening execution across the value chain.

The transformation will be supported by an investment programme of more than SEK 300 million over the years 2024-2028, including upgrading and modernising the store concept, an upgrade of the IT platform, and various maintenance investments.

Certain one-off charges were made to the ÖoB accounts before Europris took full ownership, to align accounting principles with those of the Europris group. The gross margin was negatively impacted by SEK 23 million and impacts on the opex and some write-downs totalled SEK 26 million. The total EBIT impact of these one-offs hence totalled close to SEK 50 million.

On an operational level, ÖoB developed somewhat weaker than expected in the first half of the year, with lower sales for non-food categories, including seasonal items. Sales for the first half fell by 2.1 per cent. The gross margin was 31.2 per cent for the first half year, down 3.2 percentage points vs last year. Of this, 1.2 percentage points reflected one-off effects. Product mix also had a negative impact, due to a higher share of sales from consumables which on average holds lower margins. Cost control has remained solid, and opex grew by only 0.9 per cent excluding one-offs. EBIT for the first half year was negative with SEK 155 million, or negative with SEK 105 million excluding the one-offs, compared to negative at SEK 45 million in the first half last year.

Recognised for climate efforts

Europris has been included in the fourth edition of 'Europe's Climate Leaders', a list compiled by Financial Times and Statista over 600 European companies which contribute to the green transition. Europris is proud to have been recognised as one of two retailers in Norway and among the top 12 retailers in Europe. The ranking is based on several factors, including total GHG emission reductions and core emissions intensity in scope 1 and 2 over a five-year period. Transparency on scope 3 emissions and disclosure efforts such as CDP, as well as climate goals anchored in the Science-Based Targets initiative (SBTi), were also included in the evaluation.

Financial review - group

Please note that financials for the new segment Sweden have been included from 1 May 2024. Comparisons on an organic level exclude the acquisition of ÖoB in Sweden.

Profit and loss – second quarter

Total operating income amounted to NOK 3,109 million in the second quarter (NOK 2,310 million), up 34.6 per cent year-on-year. Organic sales, excluding the acquisition of ÖoB, increased by 3 per cent, and the Europris chain had like-for-like growth of 1.1 per cent. The quarter had two more sales days than the same period of last year, but the timing of Easter and lower sales of higher-ticket seasonal items affected sales negatively compared to the same period last year.

Gross profit amounted to NOK 1,302 million (NOK 1,028 million), with a gross margin of 41.9 per cent (44.5 per cent). Organic gross margin was 44.7 per cent, up by 0.2 percentage points. The group recognised a net unrealised loss of NOK 17 million on hedging contracts and accounts payable, compared to a loss of NOK 8 million in the same period last year – impacting the gross margin change negatively by 0.2 percentage points.

Operating expenditure (Opex) was NOK 735 million (NOK 497 million). Organic opex was NOK 540 million, up 8.6 per cent, reflecting an increase from 255 to 259 directly operated stores and an overall negative impact from inflation and wage growth. The opex ratio increased to 23.6 per cent (21.5 per cent), with the organic opex ratio at 22.7 per cent.

EBITDA was NOK 567 million (NOK 531 million). The organic EBITDA was NOK 525 million, a decline of NOK 6 million or 1.1 per cent. The EBITDA margin was 18.2 per cent (23.0 per cent), while the organic EBITDA margin was 22.1 per cent.

EBIT amounted to NOK 339 million (NOK 362 million). The organic EBIT was NOK 354 million, a decline of NOK 8 million or 2.2 per cent. The EBIT margin was 10.9 per cent (15.7 per cent), while the organic EBIT margin was 14.9 per cent.

The group closed the acquisition of the remaining 80 per cent of Runsvengruppen (ÖoB) on 2 May 2024, and thereby became the full owner of the company. According to IFRS 3, a step acquisition shall be remeasured to fair value at the acquisition date, including a fair value measurement of the option to acquire the remaining shares. In total, a gain of NOK 32 million has been recognised in the profit and loss as a result of the

fair value assessment of the option. The remeasurement of the initial 20 per cent stake resulted in a gain amounting to NOK 17 million. See more information in note 7.

The group recognised a net unrealised loss on interest-rate swaps amounting to NOK 1 million for the quarter, compared to an unrealised profit of NOK 22 million in the same quarter last year.

Net profit for the second quarter of 2024 was NOK 266 million (NOK 259 million). Net profit attributable to owners of the parent company was also NOK 266 million (NOK 260 million).

Earnings per share was NOK 1.65 (NOK 1.61).

Profit and loss – first half

Total operating income amounted to NOK 5,135 million in the first half 2024 (NOK 4,243 million), an increase of 21 per cent. Organic sales increased by 3.9 per cent, and the Europris chain saw a like-for-like sales increase of 2.9 per cent.

Gross profit for the group was NOK 2,180 million (NOK 1,869 million), with a gross margin of 42.4 per cent (44.0 per cent). Organic gross margin was 44.1 per cent. The group recognised a net unrealised currency gain of NOK 2 million on hedging contracts and accounts payable (loss of NOK 3 million).

Opex amounted to NOK 1,332 million (NOK 1,026 million). Organic opex was NOK 1,137 million, up 10.8 per cent. This reflected an increase from 255 to 259 directly operated stores and the overall impact of inflation and wage growth. The opex ratio increased to 25.9 per cent (24.2 per cent), with an organic opex ratio of 25.8 per cent.

EBITDA was NOK 847 million (NOK 842 million). The organic EBITDA was NOK 806 million, a decline of NOK 36 million or 4.3 per cent. The EBITDA margin was 16.5 per cent (19.9 per cent), while the organic EBITDA margin was 18.3 per cent.

EBIT was NOK 445 million (NOK 507 million). The organic EBIT was NOK 461 million, a decline of NOK 46 million or 9.2 per cent. The EBIT margin was 8.7 per cent (12 per cent), while the organic EBIT margin was 10.5 per cent.

The group recorded an estimated loss of NOK 16 million on its 20 per cent stake in ÖoB up until the point of control on 2 May, partly offsetting gain from the fair

value adjustments of the option of NOK 32 million and the NOK 17 million gain from the remeasurement of the initial 20 per cent stake. See more information in note 7.

The group recognised a net unrealised profit on interest-rate swaps, amounting to NOK 6 million (unrealised profit of NOK 17 million).

Net profit for the first half of 2024 was NOK 313 million (NOK 330 million). Net profit attributable to owners of the parent company was NOK 313 million (NOK 331 million).

Earnings per share was NOK 1.94 (NOK 2.05).

Cash flow

Cash from operating activities for the first half year was positive at NOK 208 million (same as last year, positive at NOK 208 million).

The change in net working capital for the first half year was negative at NOK 297 million (negative at NOK 267 million), which is related to normal seasonal fluctuations.

The net change in cash was negative at NOK 547 million (negative at NOK 593 million). A dividend of NOK 523 million was paid in the second quarter (NOK 604 million).

Capital expenditure for the first half year was NOK 86 million (NOK 94 million). The decrease mainly related to fewer store projects and IT projects compared to last year.

Financial position and liquidity

Financial debt was NOK 5,226 million at 30 June 2024 (NOK 4,251 million). Adjusted for lease liabilities, financial debt amounted to NOK 1,649 million (NOK 1,617 million).

Net debt amounted to NOK 5,097 million at 30 June 2024 (NOK 4,251 million). Adjusted for lease liabilities, net debt was NOK 1,520 million (NOK 1,617 million).

Cash and liquidity reserves for the group amounted to NOK 1,441 million at 30 June 2024 (NOK 1,005 million).

Financing

The first of the two options in the group's current 3+1+1 year financing agreement from June 2023 has been exercised. The group has also refinanced a SEK 400 million overdraft facility for the Swedish operations.

Segment Norway

Key figures

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Total operating income	2,381	2,310	4,407	4,243	9,467
% growth in total operating income	3,0%	4,3%	3,9%	7,9%	5,0%
Cost of goods sold	1,315	1,282	2,463	2,375	5,276
Gross profit	1,065	1,028	1,943	1,869	4,191
Gross margin	44.7%	44.5%	44.1%	44.0%	44.3%
Opex	540	497	1,137	1,026	2,222
Opex-to-sales ratio	22.7%	21.5%	25.8%	24.2%	23.5%
EBITDA	525	531	806	842	1,970
EBITDA margin	22.1%	23.0%	18.3%	19.9%	20.8%
EBIT (Operating profit)	354	362	461	507	1,295
EBIT margin (Operating profit margin)	14.9%	15.7%	10.5%	12.0%	13.7%
EUROPRIS CHAIN KEY FIGURES
Total chain sales	2,325	2,277	4,254	4,092	8,945
% growth in total chain sales	2.1%	2.7%	4.0%	5.2%	4.2%
% growth in like-for-like chain sales	1.1%	1.1%	2.9%	3.5%	2.6%
Total number of chain stores at end of period	282	280	282	280	282
- Directly operated stores	259	255	259	255	257
- Franchise stores	23	25	23	25	25
PURE PLAY
Sales	131	133	276	290	823

Sales for segment Norway totalled NOK 2,381 million in the second quarter, up by 3 per cent. The gross margin of 44.7 per cent was up 0.2 percentage points, and up 0.4 percentage points excluding effects from unrealised currency losses. Opex increased by 8.6 per cent and the opex-to-sales ratio of 22.7 per cent was up 1.1 percentage points. EBIT was NOK 354 million, down by 2.2 per cent.

The Europris chain showed total growth of 2.1 per cent and like-for-like growth of 1.1 per cent. The quarter had two more sales days than last year, although this was offset by the negative timing effect from an earlier Easter this year. Campaign sales continued to perform well and the recently upgraded kitchen category showed strong development.

Europris remains a relevant seasonal destination, as demonstrated by strong sales of seasonal items during a warm spring in May. A wetter and colder June led to lower sales of seasonal items going into the summer. Overall in the second quarter, seasonal items sold well, with the exception for garden furniture. Items with a price point above NOK 1,000 showed a sales decline of 23 per cent, while items with a price point below NOK 1,000 achieved a sales increase of 4 per cent. Items with a price point above NOK 1,000 accounted for 5 per cent of sales in the second quarter, down from 6.6 per cent last year.

The like-for-like footfall to stores increased, and the customer club continued to grow and reached almost 1.6 million members at 30 June 2024.

Europris relocated two stores, expanded four stores, and modernised two stores in the second quarter. The total number of stores was 282 at 30 June 2024, of which 259 were directly operated and 23 were franchises. The board has approved an additional eight stores for 2024 and beyond, of which four are subject to a planning permission process.

Sales from the pure play companies amounted to NOK 131 million in the second quarter, 1.3 per cent below the same quarter last year. This reflected lower sales in Lekekassen, while Strikkemekka continued to show sales growth.

Segment Sweden

Key figures

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Total operating income	728	-	728	-	-
% growth in total operating income	1.2%	-	1.2%	-	-
Cost of goods sold	492	-	492	-	-
Gross profit	236	-	236
Gross margin	32.4%	-	32.4%	-	-
Opex	195	-	195	-	-
Opex-to-sales ratio	26.7%	-	26.7%	-	-
EBITDA	42	-	42
EBITDA margin	5.7%	-	5.7%	-	-
EBIT (Operating profit)	(16)	-	(16)
EBIT margin (Operating profit margin)	(2.1%)	-	(2.1%)	-	-
ÖoB CHAIN KEY FIGURES
Total chain sales	721	-	721	-	-
Total number of chain stores at end of period	94	-	94	-	-

The Swedish operations in ÖoB have been included in the financials with effect from 1 May 2024, and sales for May and June combined amounted to NOK 728 million. Gross margin in the same period was 32.4 per cent, and the opex-to-sales ratio 26.7 per cent. EBIT was negative at NOK 16 million.

For the full second quarter, the ÖoB chain had a total sales decline of 4.0 per cent and a like-for-like sales decline of 3.5 per cent. As previously mentioned, the lower sales were related to weaker development for the non-food categories, including seasonal items.

The customer club had just above 2 million members at the end of the first half 2024 and the total number of stores was 94 at 30 June 2024 (all directly operated).

Risk factors

The Europris group is exposed to a variety of risks, as described in the directors' report and note 2 of the consolidated financial statements in the annual report for 2023 – there have been no material changes since this.

Related parties

Related parties of the Europris group include its associates, key management personnel, directors, and major shareholders. No significant transactions were conducted with related parties.

Outlook

Europris is well positioned as a recognised market leader in Norway, and with the acquisition of ÖoB the group has taken an important step towards becoming a leading player in the Nordic discount variety retail market.

ÖoB has built a solid brand and a strong price position with Swedish consumers over many years. However, the company has shown a flat revenue development

and declining margins over the past five years, and a turnaround is required to gradually unlock the value potential over the years to come.

Europris has identified considerable potential to increase both sales and profitability, by harmonising concepts and product ranges and improving the customer experience, through joint sourcing, and by sharing best practise for operations and business development. The ambition is to grow annual sales for the existing store portfolio in ÖoB by SEK 1 billion to SEK 5 billion by the end of 2028, and to restore profitability to an ÖoB EBIT-margin level of 5 per cent. Within the same time frame, Europris also expects to realise purchasing synergies in the range of NOK 20-40 million benefiting the Norwegian operations.

Shipping transport from Asia is still being routed around the Cape of Good Hope due to the situation in the Red Sea. This is creating capacity constraints due to a lack of containers and higher war surcharges. The group is taking measures to mitigate negative effects to the extent possible.

Statement by the board of directors

We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 2024 has been prepared in accordance with current applicable accounting standards and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the group. We also confirm that the directors' report contains a true and fair review of the development and performance of the group, together with the risks and uncertainties facing the group.

Fredrikstad, 10 July 2024 THE BOARD OF DIRECTORS OF EUROPRIS ASA

Tom Vidar Rygh Chair

Hege Bømark

Claus Juel-Jensen

Bente Sollid

Susanne Holmström

Jon Martin Klafstad

Pål Wibe

Espen Eldal CEO

EUROPRIS ASA Q2 and first half 2024

Interim condensed consolidated statement of profit and loss

Figures are stated in NOK 1,000	Notes	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
		Unaudited	Unaudited	Unaudited	Unaudited	Audited
Total operating income		3,108,896	2,310,467	5,135,097	4,243,158	9,466,921
Cost of goods sold		1,807,375	1,282,041	2,955,474	2,374,623	5,275,676
Employee benefit expenses		415,260	290,549	778,350	625,550	1,373,081
Depreciation	5	227,892	168,807	402,232	335,079	674,608
Other operating expenses		319,689	206,920	553,797	400,575	848,426
Operating profit		338,680	362,150	445,243	507,331	1,295,130
Net financial income (expense)		(53,645)	(29,715)	(86,457)	(73,465)	(190,517)
Profit/(loss) from associated companies	7	12,540	(158)	1,564	(8,072)	(54,489)
Change in fair value of option	6,7	32,309	-	32,309	-	101,789
Profit before tax		329,884	332,277	392,659	425,793	1,151,912
Income tax expense		63,924	73,136	80,149	95,450	243,060
Profit for the period		265,960	259,142	312,510	330,343	908,852
Profit attributable to non-controlling interests		(248)	(662)	(259)	(473)	218
Profit attributable to owners of the parent		266,208	259,803	312,769	330,815	908,634
Interim condensed consolidated
statement of comprehensive income
Profit for the period		265,960	259,142	312,510	330,343	908,852
Items that subsequently may be reclassified to profit or loss			-
Exchange differences on translation of foreign operations		834	(27)	1,087	912	1,878
Total comprehensive income		266,794	259,115	313,597	331,255	910,730
Comprehensive income attributable to non-controlling interests		(248)	(662)	(259)	(473)	582
Comprehensive income attributable to owners of the parent		267,042	259,776	313,856	331,727	910,149
Earnings per share (basic and diluted - in NOK)		1.65	1.61	1.94	2.05	5.64

Interim condensed consolidated statement of financial position

Figures are stated in NOK 1,000	Notes	30 June 2024	30 June 2023	31 Dec 2023
		Unaudited	Unaudited	Audited
ASSETS
Total intangible assets	5	3,028,822	2,873,901	2,861,038
Total fixed assets	5	4,043,876	3,029,143	3,050,724
Total financial assets	6	79,963	257,449	152,121
Total non-current assets		7,152,661	6,160,493	6,063,883
Inventories		3,133,408	2 254,313	2,142,699
Trade receivables		218,931	148,090	217,671
Other receivables	6	149,893	98,128	109,848
Option at fair value through profit or loss	6,7	-	-	101,789
Cash		129,306	-	676,323
Total current assets		3,631,537	2,500,531	3,248,329
Total assets		10,784,198	8,661,024	9,312,212
EQUITY AND LIABILITIES
Total paid-in capital	8	308,341	234,738	235,172
Total retained equity		3,216,743	2,731,438	3,326,044
Total shareholders' equity		3,525,085	2,966,176	3,561,216
Non-controlling interests		50,316	49,962	50,575
Total equity		3,575,400	3,016,138	3,611,791
Provisions		77,003	152,921	46,301
Borrowings	6	1,020,455	1,083,448	1,041,843
Lease liabilities		2,671,314	2,050,060	2,079,997
Total non-current liabilities		3,768,772	3,286,430	3,168,141
Borrowings	6	628,679	533,141	5,000
Current lease liabilities		905,757	584,212	588,626
Accounts payable		1,098,578	648,136	879,881
Tax payable		(478)	(1,383)	254,847
Public duties payable		303,610	305,968	396,593
Put option liability		27,980	43,541	27,980
Other current liabilities	6	475,899	244,842	379,353
Total current liabilities		3,440,026	2,358,456	2,532,280
Total liabilities		7,208,798	5,644,886	5,700,421
Total equity and liabilities		10,784,198	8,661,024	9,312,212

Fredrikstad, 10 July 2024 THE BOARD OF DIRECTORS OF EUROPRIS ASA

Interim condensed consolidated statement of changes in equity

Figures are stated in NOK 1,000

	Share capital	Treasury shares	Share premium	Other paid in capital	Retained earnings	Total	Non controlling interests	Total equity
At 1 January 2024	166,969	(5,922)	51,652	22,472	3,326,045	3,561,216	50,575	3,611,791
Profit for the period	-	-	-	-	312,769	312,769	(259)	312,510
Other comprehensive income	-	-	-	-	1,087	1,087	-	1,087
Dividend	-	-	-	-	(523,403)	(523,403)	-	(523,403)
Net sale of treasury shares	-	2,602	-	70,567	100,245	173,415	-	173,415
At 30 June 2024	166,969	(3,320)	51,652	93,039	3,216,743	3,525,084	50,316	3,575,400

(unaudited)

	Share capital	Treasury shares	Share premium	Other paid in capital	Retained earnings	Total	Non controlling interests	Total equity
At 1 January 2023	166,969	(5,938)	51,652	22,054	2,725,784	2,960,521	322,082	3,282,603
Profit for the period	-	-	-	-	330,815	330,815	(473)	330,343
Other comprehensive income	-	-	-	-	705	705	207	912
Dividend	-	-	-	-	(603,865)	(603,865)	(19,800)	(623,665)
Non-controlling interests on acquisition of subsidiary	-	-	-	-	278,000	278,000	(252,054)	25,946
At 30 June 2023	166,969	(5,938)	51,652	22,054	2,731,439	2,966,176	49,962	3,016,138
(unaudited)

Interim condensed consolidated statement of cash flows

Figures are stated in NOK 1,000	Notes	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
		Unaudited	Unaudited	Unaudited	Unaudited	Audited
Cash flows from operating activities
Profit before income tax		329,884	332,277	392,659	425,793	1,151,912
Adjusted for:
Depreciation of fixed and intangible assets		227,801	168,807	402,141	335 079	674,608
Change in fair value of option		(32,309)	-	(32,309)	-	(101,789)
Share of profit/loss from associates		(12,540)	158	(1,564)	8,072	54,489
Changes in net working capital		94,010	194,880	(297,450)	(267,383)	280,977
Income tax paid		(118,491)	(121,764)	(255,365)	(293,171)	(291,189)
Net cash generated from operating activities		488,356	574,358	208,112	208,390	1,769,007
Cash flows from investing activities
Proceeds from sale of fixed assets		-	-	-	-	84
Purchases of fixed and intangible assets	5	(36,826)	(23,296)	(86,105)	(93,745)	(141,700)
Acquisition		18,307	-	19,047	(216,598)	(216,598)
Net cash used in investing activities		(18,519)	(23,296)	(67,058)	(310,343)	(358,214)
Cash flows from financing activities
Net change overdraft and RCF (Revolving Credit Facility)		193,346	90,000	193,346	400,000	-
Repayment of debt to financial institutions		(9,640)	(1,250)	(29,582)	(2,500)	(45,738)
Principal paid on lease liabilities		(188,514)	(133,176)	(329,782)	(264,512)	(530,172)
Dividend		(523,403)	(603,865)	(523,403)	(603,865)	(603,865)
Sale of treasury shares		1,350	-	1,350	-	850
Dividends paid to non-controlling interests in subsidiaries		-	-	-	(19,800)	(20,034)
Net cash from financing activities		(526,861)	(648,291)	(688,071)	(490,676)	(1,198,960)
Net increase (decrease) in cash		(57,024)	(97,230)	(547,017)	(592,629)	211,834
Cash at beginning of period		186,330	(30,911)	676,323	464,488	464,488
Cash at end of period		129,306	(128,141)	129,306	(128,141)	676,323

Previously, the group's cash pool and all cash were netted in the condensed consolidated statement of cash flows. From the second quarter of 2024, cash outside of the group's cash pool is not netted, but presented separately.

NOTES

Note 1 Corporate information

The interim condensed consolidated financial statements of Europris ASA and its subsidiaries (collectively, the group) for the second quarter and the six months ended 30 June 2024 were authorised for issue by the board on 10 July 2024.

Europris ASA is domiciled in Norway and is a discount variety retailer. In May 2024, the group took full ownership of the Swedish discount variety retailer ÖoB. With this, the group is present with a store network across Norway and Sweden. The group also offers online shopping.

These condensed interim financial statements have not been audited.

Note 2 Basis of preparation and changes to the group's accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the second quarter and six months ended 30 June 2024 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the group's annual financial statements at 31 December 2023.

New standards, interpretations and amendments adopted by the group

The accounting policies adopted in preparing the interim condensed consolidated financial statements are consistent with those followed in the preparation of the group's annual consolidated financial statements for the year ended 31 December 2023. New standards and interpretations effective at 1 January 2024 do not impact the annual consolidated financial statements of the group or the interim condensed financial statements of the group.

The group has applied the temporary exception, introduced in May 2023, from the accounting requirements for deferred taxes in IAS 12, so that the group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes. The group is continuing to assess the impact of the Pillar Two income taxes legislation on its future financial performance.

Note 3 Critical accounting estimates and judgements

The preparation of interim condensed financial statements requires management to make accounting judgements and estimates that impact how accounting policies are applied and the reported amounts for assets, liabilities, income and expenses. Actual results may differ from these estimates. The critical accounting estimates and judgements are consistent with those in the consolidated financial statements for 2023, see note 3 for more details.

Note 4 Segment information

The group management is the group's chief operating decision-maker. The segments are reported in accordance with how the chief operating decision-maker evaluates profitability and achievements. The Norway segment relates to Europris and the Sweden segment relates to ÖoB. The pure play companies Lekekassen, Strikkemekka and Lunehjem, are all individually below the threshold for being reportable and are integrated into the Norway segment.

Norway	Sweden	Total
2,381	728	3,109
1,315	492	1,807
1,065	236	1,302
540	195	735
525	42	567
354	(16)	339
44.7%	32,4%	41.9%
22.7%	26,7%	23.6%
22.1%	5,7%	18.2%
14.9%	(2,1%)	10.9%
2,332	801	3,133
8,578	2,206	10,784

Note 5 Fixed and intangible assets

Figures are stated in NOK 1,000	Fixtures and fittings	Land	Buildings	Right-of use asset	Software	Trademarks	Goodwill	Total
Carrying amount 1 January 2024	380,532	21,225	107,730	2,541,237	78,394	591,267	2,191,378	5,911,762
Acquisition of subsidiaries	72,366	-	12,984	772,647	21,832	223	153,153	1,033,204
Exchange differences	(495)	-	(24)	(1,100)	(26)	-	(303)	(1,949)
Additions	75,789	-	513	452,189	9,803	-	-	538,294
Disposals	-	-	-	(6,381)	-	-	-	(6,381)
Depreciation	(42,351)	-	(3,349)	(339,633)	(16,870)	(28)	-	(402,232)
Carrying amount 30 June 2024	485,841	21,225	117,854	3,418,957	93,132	591,461	2,344,228	7,072,698

	Fixtures and fittings	Land	Buildings	Right-of use asset	Software	Trademarks	Goodwill	Total
Carrying amount 1 January 2023	338,070	21,225	113,230	2,434,465	92,967	591,267	2,191,053	5,782,277
Acquisition of subsidiaries	348	-	-	-	-	-	323	671
Additions	76,922	-	701	361,429	16,122	-	-	455,173
Disposals	-	-	-	-	-	-	-	-
Depreciation	(39,085)	-	(3,112)	(275,048)	(17,833)	-	-	(335,079)
Carrying amount 30 June 2023	376,255	21,225	110,819	2,520,845	91,256	591,267	2,191,378	5,903,044

Note 6 Bank borrowings and financial instruments at fair value

On 30 June 2023 the group entered into a financing agreement with DNB, Nordea and Danske Bank. The agreement has a 3 + 1 + 1-year structure. The first 1-year option has been exercised.

	30 June 2024		31 December 2023
Figures are stated in NOK 1,000	Amortised cost	Nominal value	Amortised cost	Nominal value
Debt to financial institutions	1,020,455	1,022,883	1,041,843	1,044,271
First-year instalment non-current debt	5,000	5,000	5,000	5,000
Total	1,025,455	1,027,883	1,046,843	1,049,271

The amortised cost of the bank debt is assessed as not differing materially from fair value.

Overdraft facilities – off-balance sheet	30 June 2024	31 December 2023
Overdraft and multi-currency group account	726,800	325,500
Revolving facility loan	1,200,000	1,200,000
Guarantees	10,000	10,000
Total	1,936,800	1,535,500
Drawn guarantees	625,100	7,145
Undrawn overdraft facilities	1,311,700	1,528,355

Covenants are measured and reported quarterly. In the bank agreement, the covenant (leverage ratio - net debt/ adjusted EBITDA) will be at 3.5 for any test date in the remainder of the agreement period. The group was in compliance with financial covenants.

Assets/liabilities measured at fair value through profit and loss		31 December 2023
Interest rate swaps	77,046	71,322
Foreign exchange contracts	4,904	446
Option at fair value through profit or loss	-	101,789
Foreign exchange contracts	(14,155)	(31,274)
Total	67,795	142,282

Interest rate swaps

The group has entered into interest-rate swap agreements of a total of NOK 600 million to hedge part of its interest-rate risk fluctuations. Of these contracts, NOK 300 million expires in July 2027 and NOK 300 million in July 2030. With these contracts 60 per cent of the principal of the group's bank loans is presently hedged.

Forward exchange contracts

The group is exposed to currency exchange risk arising from the import of goods for sale. These transactions are mainly settled in USD and EUR. The group aims to achieve predictable cash outflows in NOK by using forward contracts as a hedging strategy for its exposure to USD and EUR.

Note 7 Business combination

In June 2018, the group acquired 20 per cent of Runsvengruppen AB (ÖoB), a Swedish discount variety retailer. In addition to the 20 per cent holding of shares, Europris held an option to acquire the remaining 80 per cent of the shares.

On 2 May 2024, the group closed the acquisition of the remaining 80 per cent of ÖoB and became full owner of the company. The final purchase price was NOK 200.5 million, of which NOK 187.5 million was paid with Europris treasury shares and NOK 13 million was paid in cash (netted towards outstanding payments from the seller of awarded costs under the arbitration award of 19 December 2023). Europris transferred 2,579,678 treasury shares to the seller, RuNor AS, and these shares are subject to a customary 12-month lock-up. The lock-up for the initial consideration shares delivered in 2019 is no longer in force (the remaining balance of the initial consideration shares is 1,449,898 shares). In total RuNor AS holds 4,029,576 shares, corresponding to 2.41 per cent of the share capital in Europris ASA.

ÖoB has its head office in Skänninge and runs 94 stores across Sweden. The acquisition of ÖoB is an important strategic milestone on the path of creating a Nordic champion in discount variety retail. With this, the group has a combined annualised turnover of around NOK 13.5 billion (estimated based on historic figures). Europris and ÖoB are similar concepts and leading brands in their segment. ÖoB had total revenues of SEK 1,226 million (loss of SEK 126 million) in the period up to 2 May and total revenues of SEK 725 million (loss of SEK 20 million) in the period from 2 May to 30 June 2024.

Operationally, ÖoB has lost market share over time, has seen declining profitability and will need a turnaround to operate profitably in the future. The turnaround will be based on category harmonisation and joint sourcing with Europris, improving the customer experience in addition to strengthening the execution across the value chain.

ÖoB was consolidated into the Europris group's financial statements as of 1 May 2024, at which point Europris obtained control.

Due to the short time between 2 May 2024 and date of the Q2 report, the purchase price allocation is not

completed. The preliminary fair value calculation of ÖoB is estimated to NOK 399 million based on NOK/SEK exchange rate as of acquisition date. An excess value of NOK 157 million is identified in the preliminary purchase price allocation, which is mainly related to buildings, trademark and goodwill. Allocation between the various items remains to be concluded. For the interim financial statements NOK 153 is allocated to goodwill.

According to IFRS 3 Business combinations, a step acquisition shall be remeasured to fair value at the acquisition date. This includes a fair value measurement of the option to acquire the remaining shares. In total, a gain of NOK 32 million is recognised in profit and loss as a result of the fair value assessment of the option. The remeasurement of the initial 20 per cent stake has resulted in a gain amounting to NOK 17 million.

The group recorded an estimated loss of NOK 16 million on its 20 per cent stake up until the point of control.

The preliminary amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below.

Figures are stated in NOK 1,000

Total fixed assets	873
Inventories	860
Receivables	138
Cash	38
Total assets	1,910
Non-current liabilities	628
Current liabilities	1,035
Net assets	246
Goodwill	153
Net asset acquired	399
Consideration
Cash	13
Strike option (value of shares 2 May 2024)	172
Fair value of option to acquire 80 per cent	134
Fair value of initial 20 per cent share	80
Total consideration	399

Note 8 Treasury shares

The number of treasury shares held by Europris ASA changed as follows in the period from 1 January to 30 June 2024.

Change in number of treasury shares

Treasury shares 30 June 2024	3,319,636
Sale of treasury shares to senior executives	(22,621)
Payment for 80 per cent of Runsvengruppen AB with treasury shares	(2,579,678)
Treasury shares 1 January 2024	5,921,935

Average cost price for treasury shares are NOK 48.86.

Forward looking statements

The condensed interim report contains forward-looking statements, based on various assumptions. These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risk and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although Europris believes that these assumptions were reasonable when made, it cannot provide assurances that its future results, level of activity or performances will meet these expectations.

Alternative performance measures

APMs are used by the group for annual and periodic financial reporting in order to provide a better understanding of the group's financial performance. APMs are considered as well-know 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 operating income and is useful for benchmarking direct costs associated with the purchase of the goods vs total operating income.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Total operating income	3,109	2,310	5,135	4,243	9,467
- Cost of goods sold	1,807	1,282	2,955	2,375	5,276
= Gross profit	1,302	1,028	2,180	1,869	4,191
Gross margin	41.9%	44.5%	42.4%	44.0%	44.3%

Opex / Opex-to-sales ratio

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Employee benefits expense	415	291	778	626	1,373
+ Other operating expense	320	207	554	401	848
= OPEX	735	497	1,332	1,026	2,222
Opex-to-sales ratio	23.6%	21.5%	25.9%	24.2%	23.5%

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Operating profit	339	362	445	507	1,295
+ Depreciation	228	169	402	335	675
= EBITDA	567	531	847	842	1,970
EBITDA margin	18.2%	23.0%	16.5%	19.9%	20.8%

EBIT / EBIT margin

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 is useful for benchmarking this profitability parameter vs the development in sales.

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Change in Inventory	17	245	(134)	143	254
Change in accounts receivable and other current receivables	29	(10)	79	84	62
Change in accounts pay able and other current debt	48	(40)	(242)	(494)	(35)
= Net change in working capital	94	195	(297)	(267)	281

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Purchases of fixed asets	29	18	76	78	120
Purchases of intangible assets	8	5	10	16	22
= Capital expenditure	37	23	86	94	142

Financial debt

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

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Borrowings	1,020	1,083	1,020	1,083	1,042
Current borrowings	629	533	629	533	5
Lease liabilities	2,671	2,050	2,671	2,050	2,080
Current lease liabilities	906	584	906	584	589
= Financial debt	5,226	4,251	5,226	4,251	3,715

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2023	FY 2023
Cash	129	-	129	-	676
+ Total facilities	1,937	1,536	1,937	1,536	1,536
- Total drawn	(625)	(530)	(625)	(530)	(7)
= Cash and liquidity reserves	1,441	1,005	1,441	1,005	2,205

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.

(Amounts in NOK million)	Q2 2024	Q2 2023	YTD 2024	YTD 2024	FY 2023
Sales directly operated stores	2,066	2,012	3,788	3,623	7,932
Sales franchise stores	259	266	466	468	1,013
= Total chain sales	2,325	2,277	4,254	4,092	8,945

Definition of other terms used

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 sales growth

Like-for-like (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 local 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.

Europris ASA Dikeveien 57, P O Box 1421 NO-1661 Rolvsøy

Switchboard: +47 971 39 000 email: ir@europris.no

www.europris.no