XXL — Investor Presentation 2021

Feb 5, 2021

XXL ASA – Q4 2020

Presentation of financial results 5th of February 2021

Important notice

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the XXL Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the XXL Group's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the XXL Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although XXL believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

XXL is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither XXL nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared for the interim results presentation for the fourth quarter 2020, held on 5th of February 2021. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

XXL ASA – Q4 2020

Presentation of financial results 5th of February 2021

Headlines Q4 2020 – XXL is on track

Q4 2020

• Strong sales at NOK 2.6 billion (+11% vs 2019)
• Strong gross margin at 40.4% (+19 pp)
• Strong EBITDA at NOK 327 million (+536 mnok vs 2019)

2020 total

• Operating revenue at NOK 10.4 billion (+16% vs 2019)
• Strengthened gross margin at 37.6% (+3 pp)
• Gaining market shares in all markets
• Overall eCom growth of 43% vs 2019

Outlook

• Strong cash flow and XXL basically dept free
• Change program on track and in implementation mode
• XXL with strong concept and capabilities to succeed post Covid

Highlights Q4 2020 - Improved seasonal execution

• Operating revenue of NOK 2 572 million (NOK 2 319 million), up 11% driven by 20% growth in Norway
• Improved seasonal execution compared to last year
• Group like for like growth of 9%
• E-com growth of 57%
• Strong gross margins (+19%-p) driven by good price management, lower seasonal sell down and improved campaign execution
• EBITDA of NOK 327 million (negative of NOK 209 million) – all segments posting positive development vs. LY (+ NOK 187 million adjusted for the extraordinary write down last year of NOK 349 million)
• Solid balance sheet gives financial flexibility
• Restated historic 2019 and 2020 figures related to supplier bonuses to better align bonuses to sales

Gaining market shares in all markets in 2020 – important to look at the long-term perspective

• During 2020 XXL has gained market shares in all markets
• Improved campaign execution in second half of 2020 resulting in higher sustainable margins and somewhat lower growth
• Changed consumer behavior in Finland during covid-19 => one stop shopping with Hypermarkets gaining shares

^* Sweden is measured ex. Outlets, WKO numbers in Q4 are unweighted

XXL capitalizing on our strong e-com platform with increasingly importance for the business

eCom % growth vs. 2019

Q4-19 Q4-20 2019 2020

E-com – secure operational excellence

• Customer behavior has changed towards more online shopping and XXL has benefited from our e-commerce platform and being a one stop destination for buying sports and outdoor products
• 900 000 parcels delivered in Q4-2020 and > 3 300 000 parcels delivered in 2020
• During Black Week > 85% of all parcels expedited from central warehouse within 24 hours
• XXL continue to invest in order to improve omnichannel solutions, both online and in-store operations
• XXL has launched an ambitious growth strategy for e-commerce to maintain and further strengthen our leading position in the Nordics

04.02.2021

Highlights 2020 – a volatile year

• Operating revenue of NOK 10 423 million (NOK 8 992 million), up 16%, with 20% growth in Norway
• Group like for like growth of 13%, eCom growth of 43%
• Gaining market share in all markets
• Improved gross margins during the year, driven by lower seasonal sell-down, good price management and better campaign execution
• EBITDA of NOK 1 117 million (NOK 538 million)
• All segments with positive development vs LY
• Extraordinary write down of inventory LY (NOK 349 million)
• The significant reduction in inventory during 2020 lead to a strong balance sheet entering into 2021
• During extraordinary conditions XXL has proved it's omni-channel capabilities
• Solid contributions from our employees during a demanding period

^{48 45} 2019 2020 TURNOVER AUSTRIA (MEURO) WKO vs. XXL (YoY) -21.0 -14.0 -5.7 -5.2 Q4 2020 WKO XXL

Stable top line and gaining market shares in 2020

• XXL has now seven stores in Austria but due to covid-19 they have been closed for 4 weeks in Q4 20 and in total 10 weeks during 2020
• During this period the whole organization has worked to optimize cost levels
• Capitalize on the growing e-com platform
• Q4 growth on e-com: 59% growth vs. 2019
• 2020 growth on e-com: 36% growth vs. 2019

Continued improvements into 2021

• Reduced marketing costs and increased efficiency
• Adapt and optimize concept to local market conditions
• Continue to selectively expand store network and further capitalize on the e-com platform
• Open new central warehouse in Q1-2021 will reduce logistic costs

We successfully opened our new central warehouse in Austria from 1 st of February - from plan to reality in seven months

New central warehouse serving Austria

• CWA opened as planned 1st of February
• Initial setup serving eCom deliverables with first 200 parcels sent out to customers 1st of February
• CWA enables XXL to provide higher service levels to stores and our customers
• Next day delivery to all Austrian stores
• Next day delivery for pickup@store
• Next day home delivery for 80% of end customers depending on geography (orders placed before 12:00)
• Highly automated warehouse with dedicated area for ski/bike assembly and eCom orders
• 7000m2
• 20.000 Autostore bins, 3.700 pallets

Financial Review Q4 2020

2020 – a special year with different focus areas in each quarter

Strengthen balance sheet 169 MNOK vs. Q1 2019 • Clearance sales and lower purchases significant lower inventory resulting in improved cash flow and higher liquidity reserves • Capital raise • New agreed long term loan facilities • Covid-19: Contingency plans • Secure cash flow – top line – purchases – cost savings • Secure top line growth and market shares Secure cash flow and top line Operational efficiency • Operational efficiency – margin improvements – cost reductions • Strategic initiatives including – category development – in-store experience – omni-channel champion Q1 Q2 Q3 Q4 Seasonal execution • Seasonal execution • Campaign and operational excellence • Stay alert for fast changes in the market

Key figures

(Amounts in NOK million)	Q4 2020	Q4 2019 (Restated)	FY 2020	FY 2019 (Restated)
GROUP
Operating revenue	2 572	2 319	10 423	8 993
Growth (%)	10,9 %	-9,8 %	15,9 %	-5,1 %
Gross profit	1 040	496	3 904	3 106
Gross margin (%)	40,4 %	21,4 %	37,5 %	34,5 %
OPEX %	27,7 %	30,4 %	26,7 %	28,6 %
EBITDA	327	-209	1 117	538
EBITDA margin (%)	12,7 %	-9,0 %	10,7 %	6,0 %
EBIT	133	-375	364	-153
EBIT margin	5,2 %	-16,2 %	3,5 %	-1,7 %
Net Income	13	-357	126	-290

Positive sales development in Q4 vs. LY: +10.9%

• Good development in especially Norway with 19.6% growth
• Like for like growth of 9.1%
• E-com growth of 57% and a strong gross profit growth of 86%
• Most categories with growth, but especially strong for Outdoor, Homegym and Bikes
• Gross margins ended at a strong 40.4%, up from 21.4% LY, explained by good price management, improved campaign execution, and lower seasonal sell down. In addition, the low gross margin in 2019 included an extraordinary writedown of inventory (net effect of NOK 349 million)
• OPEX% in Q4 is 2.7 p.p lower than last year, driven by like for like growth driving scale in operations, good cost control in the segments, and improved marketing efficiency
• EBITDA ending at NOK 327 million

Gross margin development

• Strong gross margin development in the quarter, up from 21.4% in Q4 2019 to 40.4% in Q4 2020
• Broad based improvement all segments strengthened margins
• Gross margin improvement explained by good price management, improved campaign execution and lower seasonal sell down. Also the low gross margin in Q4 2019 included an extraordinary write down of inventory (net effect of NOK 349 million)
• Sustainable gross margin levels going forward
• improved market dynamics
• improved campaign approach and execution
• healthier assortment and inventory levels

OPEX development

• Group OPEX% down by 2.7 points to 27.7% in Q4
• Driven by positive like for like growth yielding scale in operations
• Good cost control in the segments
• Improved marketing efficiency

Increased costs in HQ and Logistics segment, mainly explained by ongoing improvement program, restructuring costs and temporary increased use of external advisors

EBITDA development

EBITDA increase in Q4 of NOK 536 million vs. LY

• Extraordinary write down of inventory last year (NOK 349 million in net effect)
• Driven by sales growth in the Norwegian market and strong gross margins in all Nordic markets
• Lower OPEX% driven by positive like for like growth, and higher marketing efficiency
• All segments with EBITDA growth, and especially strong in Norway
• EBITDA margin of 12,7% in Q4 2020 vs. -9,0% in Q4 2019

Net debt development

Financial Summary Q4-2020

• Restatement of 2019 and 2020 numbers related to new accounting principle for supplier bonuses
• EBITDA of NOK 327 million
• Broad based improvement all segments posting positive development and especially strong in Norway
• Strong gross margins
• Lower opex%
• Continued positive cash flow in the quarter
• Significant reduction in Working Capital and Inventory compared to previous years
• Strong balance sheet
• Net interest-bearing debt of NOK 71 million, a reduction of NOK 1.2 billion vs. last year
• Liquidity reserves of NOK 1.1 billion
• Gives financial flexibility

Strong current trading under challenging conditions - staying alert for fast changes in the market

Strong January 2021

• Good winter conditions all over Nordics with snow and cold weather
• Sales growth of ~50% all Nordic segments with strong growth
• E-com sales with growth above 100% vs. LY
• Continued sustainable gross margin levels

Staying alert for fast changes in the market

• Close monitoring of changes in COVID-restrictions across all markets
• High responsiveness from defined contingency plans with necessary measures depending on impact and operational limitations

Preparing for new "staycation spring/summer"

• Preparing for a new "staycation" spring/summer
• Solid and strong balance sheet giving financial flexibility
• Focusing on commercial excellence, seasonal planning and campaign execution in addition to securing product availability

2020 has been a great year for XXL, but we still have many elements we need to improve – 2021 will be a year for implementation

NEW ZONE CHANGING IN STORES	In H1 2021 we will implement new  zone structure across all stores Objective is to realize activity  based sectors that benefits our staff, customers and partners	ELECTRONIC SHELF LABELS (ESL)	We have had ESL in SE/AT since  2017 and are in H1 2021 rolling out next generation ESL in Norway This will enable increased  operational efficiency, and improve our flexibility and responsiveness to price changes
RFID TECHNOLOGY IN STORES	In H1 2021 we will implement  RFID-technology across all Norwegian stores and other markets soon to follow This will enable better inventory  control and accuracy in addition to better customer experience	REVITALIZED BRAND PLATFORM	The XXL brand is strong and with  high recognition across all markets We will re-energize the XXL  brand to strengthen customer perception and stronger emphasize our value propositions

In addition, we will continue implementing several initiatives and improvements initiated in 2020 across the entire organization and all markets

Post Covid-19 we believe in a more stable market dynamics and that XXL will capitalize on our strong business model and capabilities

Significant challenges in sporting goods retail PRE-COVID

• Inventory build-up and stagnation across all players and markets
• Highly competitive intensity with strong price and margin pressure
• Weakened balance sheets and liquidity for several key players in the Nordics (and Europe)

More stable market dynamics POST-COVID

• Persistent increase activity levels expected in key markets
• Strong recovery expected already in 2021 in Europe driven by continued spend on sportswear and equipment as economies recover
• Retail capacity balanced during 2020 in Norway and Sweden
• More healthy competitive dynamics and stabilized margin levels
• Accelerated online shift across all markets

XXL with strong concept and key capabilities to succeed

• Strong, stable and long-term owners
• Strong balance sheet and capitalization gives is us the opportunity to invest in future growth
• Realizing a defined strategic roadmap with demonstrated ability to execute
• XXL's branded big-box concept with key capabilities for future growth and strengthened position
• XXL with a solid omnichannel position

Our ambitions going forward is to continuously gain market shares and strengthen our profitability

Our ambition is long-term market share gains in all markets and continue the growth within the e-com channel

IMPROVE GROSS MARGIN

We target to strengthen and improve our gross margin further from the stabilized 2020-levels (> 39% in gross margin)

DECREASE COST-RATIO

We continue to invest in improved operational efficiency to decrease the cost ratio and increase quality

Closing remarks

Q4 2020 takeaways	• Improved seasonal execution compared to last year • Top-line growth of 11% - especially strong in Norway with 20% growth, and a solid e commerce growth of 57% • Gross margins at good and sustainable levels • EBITDA of NOK 327 million (negative of NOK 209 million LY) • Solid balance sheet gives financial flexibility
Priorities	• Optimize inventory and cost base • Secure efficient processes and quality in seasonal operations • Increase marketing efficiency • Improve category and concept offering • Accelerate our strategic action plan for e-com • Priority on changes with direct customer impact
Outlook	• Solid start of 2021, but unpredictable COVID-situation going forward • Several ongoing cost measures and a strong balance sheet • 2 new stores signed for 2021, 1 in Sweden and 1 in Austria • Capex in 2021 of NOK ~250-300 mill, related to ongoing improvement programs • Our ambitions going forward is to continuously gain market shares and strengthen our profitability

We are improving all elements of our "game play" and are moving up to the mid-field keeping possession of the ball

"Strengthen the defense"

• Secure a healthy balance sheet and inventory
• Secure cost control and start realizing cost reductions
• Secure a more analytical, structured and fact-based decision making

"Take control of the mid-field"

• Secure efficient processes and quality in daily operations and longterm planning
• Improve cross functional cooperation
• Strengthen seasonal planning and campaign execution

"Apply high-pressure attacking"

• Improve customer experience and perception of XXL
• Improve concept, category plans and marketing
• Realize sales and market share growth

Q4: Norway and Sweden – improvement on several parameters

• Gaining market shares improved seasonal execution
• Improved top line growth vs a weak last year, driven by strong e-com growth
• Gross margin increases vs. LY due to improved price management, lower seasonal sell down, and good campaign execution. Also extraordinary write down of inventory last year
• Opex improvements explained by like for like growth and scale in operations

• EBITDA of NOK 319 million (NOK* 43 million)

• Growth of 2.2% vs. LY (excluding Outlets), driven by strong ecom growth. Partly offset by cancellation of "mellandagsrea"

• Improved gross margin explained by good campaign execution and the extraordinary write down LY
• Opex improvements explained by lower personnel costs, and improved marketing mix
• EBITDA of NOK 78 millions (negative of NOK* 89 million LY)

Q4: EBITDA improvements in both Finland and Austria. Best EBITDA in XXL Finland history in 2020

• Solid EBITDA (NOK 67 million) due to solid gross margin and good opex control – 2020 proved to be the most profitable year since the entry into Finland in 2014
• Negative like for like growth of 8.5%, loosing some market shares, especially towards Hypermarkets. XXL has gained market shares in 2020 and a strong contender to market leadership in Finland
• Continued strong gross margins due to improved price management and better campaign mix

• Opex decrease explained by lower personnel costs and improved marketing mix

• Gaining market shares under very challenging market conditions (store closures for 4 weeks in Q4)

• Capitalizing on the e-com platform significant growth
• Gross margins affected by mix effects from e-com sales, as well as extraordinary write down of inventory last year
• Opex improvements explained by good cost control

• New central warehouse to be open in Q1 2021

• In Q4 we had a thorough review of our standardized supplier contracts, particularly related to supplier bonus

• Based on this we revised our accounting policy related to "income from suppliers" ("IFS")
• The new accounting policy is more appropriate, and better measures the profitability of XXL
• We also concluded the need to restate 2019 annual and quarterly reports and Q1, Q2 and Q3 2020 quarterly reports*
• The new accounting recognizes IFS in the P&L once good is sold to customer, while it was previously recognized over the P&L once received from supplier (i.e. once good is purchased from supplier).
• Change only related to timing of recognition of IFS and has no cash effect

Effect on reported figures:

(Amounts in NOK million)	Q4 2019 (As reported)	Adjustment	Q4 (2019) (Restated)
Total Operating Revenue	2 319	-	2 319
Cost of goods sold	1 860	-37	1 823
Personnel expenses	455	-	455
Depreciation*	166	-	166
Other operating expenses*	249	-	249
Total Operating Expenses	2 730	-37	2 693
Operating Income	-411	37	-375
Net Financial Income (+) / Expense (-)*	-48	-	-48
Profit before income tax	-459	37	-423
Income tax expense	-72	7	-65
Profit for period the	-387	30	-357

	FY 2019		FY (2019)
(Amounts in NOK million)	(As reported)	Adjustment	(Restated)
Total Operating Revenue	8 993	-	8 993
Cost of goods sold	5 934	-47	5 887
Personnel expenses	1 652	-	1 652
Depreciation*	691	-	691
Other operating expenses*	916	-	916
Total Operating Expenses	9 193	-47	9 146
Operating Income	-201	47	-153
Net Financial Income (+) / Expense (-)*	-183	-	-183
Profit before income tax	-383	47	-336
Income tax expense	-57	10	-47
Profit for the period	-326	37	-290

Restated numbers 2019

	Q1 2019		Q1 (2019)	ZUTA RESIGIEITEIT Q2 2019		Q2 (2019)	Q3 2019		Q3 (2019)	Q4 2019		Q4 (2019)
(Am ounts in NOK m illion)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restate d)	(As reported)	Adiustment	(Restate d)
Total Operating Revenue	2014		2014	2 1 8 7		2 1 8 7	2473		2 473	2319		2 3 1 9
Cost of goods sold	1193	15	1208	1330	$-16$	1314	1551	-9	1 5 4 2	1860	$-37$	1823
Personnel expenses	413		413	366		366 .	418		418 .	455		$-455$
Depre da fon*	173		173 .	175		175 .	177		177	166		166
Other operating expenses*	.216		216	218		.218.	.233		.233.	249		.249
Total Operating Expenses	1995	15	2010	2089	$-16$	2073	2379	۹	2 3 7 0	2730	$-37$	2 6 9 3
Operating Income	19	$-15$	$\boldsymbol{A}$	98	16	114	94	$\overline{9}$	103	$-411$	37	$-375$
Net Financial Income (+) / Expense (-)							52
Profit before income tax	$-24$	$-15$	$-39$	58	16	74	42		51	$-459$	37	$-423$
Income taxexpense	-5	$-2$	-7	12	3	15	8	$\overline{2}$	10	$-72$	7	$-65$
Profit for the period	-19	$-13$	$-32$	46	13	59	34		41	$-387$	30	$-357$
	Q1 2019		Q1 (2019)	YTDQ2 2019		YTDQ2 2019	YTDQ3 2019		YT D Q3 (2019)	FY 2019		FY (2019)
(Am ounts in NOK m illion)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restate d)	(As reported)	Adjustment	(Restate d)
Total Operating Revenue	2014		2014	4 2 0 1		4 2 0 1	6674		6 674	8993		8993
Cost of goods sold	1193	15	1208	2523		2522	4074	$-10$	4 0 6 4	5934		5887
Personnel expenses	413		413	779		779	1197		1 1 9 7	1652
Depre da fon*	173		173 ---	348		348	525		525	691		1652 .691
Other operating expenses*	216		216	434		434	667		667	916		916
Total Operating Expenses	1995	15	2010 .	4084		4083	6463	$-10$	6 453 . . .	9 1 9 3	$-47$	9 146 .
Operating Income	19	$-15$		117		118	211	10	220	$-201$	47	$-153$
						1.1.1.1
Net Financial Income (+) / Expense (-)	$-43$		$-43$	$-83$		-83	$-135$		$-135$	$-183$		$-183$
Profit before income tax	$-24$	$-15$	$-39$	34		35	76	10	85	$-383$	47	$-336$
ncome taxexpense	$-5$	$-2$	$\overline{a}$	7		8	15	3	18	$-57$	10	$-47$

Restated numbers 2020

				2020 Restatement
	Q1 2020		Q1 (2020)	Q 2 2020		Q2 (2020)	Q3 2020		Q3 (2020)
(Am ounts in NOK m illion)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)
Total Operating Revenue	2 162		2 1 6 2	2865		2865	2823		2823
Costof goods sold	1559		1511	1824	-19	1805	1 679		1672
Personnel expenses	460		460	427		427	506		506
Depreciation	179 .		179	182		182	199		199
Other operating expenses	227		227	229		229	225		225
Total Operating Expenses	2425		2377	2662	$-19$	2643	2609		2602
Operating Income						222			221
Net Financial Income (+) / Expense (-)						64
Profit before income tax	$-269$	48	$-221$	139	19	158	188		195
Income taxexpense	$-43$	8	$-35$	22	3	25	29		30
Profit for the period	$-226$	40	$-186$	117	16	133	159	6	165

	Q1 2020		Q1 (2020)	YTD Q2 2020		YTD Q2 2020	YTD Q3 2020		YTD Q3 (2020)
(Am ounts in NOK m illion)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)	(As reported)	Adjustment	(Restated)
Total Operating Revenue	2 162	$\mathbf{r}$	2 1 6 2	5027	۰	5027	7850		7850
Cost of goods sold	1559		1511	3383		3316	5062	$-75$	4 9 8 7
Pers onnel expenses	460		460	887		887	1393		1 393
Depreciation	179		179	361		361	560		560
Other operating expenses	227	$\blacksquare$	227	456	$\overline{\phantom{a}}$	456	681		681
Total Operating Expenses	2425	$-48$	2377	5087	-67	5020	7696	-75	7621
Operating Income	$-263$	48	$-215$	$-60$	67		154	75	229
Net Financial Income (+) / Expense (-)
Profit before income tax	$-269$		$-221$	$-130$				75
Income tax expense						$-10$			20
Profit for the period	$-226$		$-186$	$-109$			50		113