Presentation of results for third quarter 2015

CEO Pål Wibe

CFO Espen Eldal 12 November 2015

Norway’s leading

discount variety retailer

2

Highlights in the third quarter

• Group revenue increased 7.6%

• Like-for-like sales increased 2.9%, outperforming

market growth of 1.9%

• Improved gross margin

• Adjusted EBITDA* up 8.1%

• Close to doubling of net profit in the quarter

• Successful category developments

• Two new store openings

• Significantly lower interest expenses due to

successful refinancing

• Nominated to Retailer of The Year Award

Group revenue, NOK million

Adjusted EBITDA*, NOK million

• Adjusted for nonrecurring expenses of NOK 3.7 milllion in 2014.

854

1 053 1 054 985

1 100 1 135

Q1 Q2 Q3

2014 2015

33

147

113

67

168

122

Q1 Q2 Q3

2014 2015

3

0

126

196

0

0

0

75

75

77

212

0

49

255

124

0

239

90

24

55

122

42

183

177

169

•Market includes a large number of shopping centres throughout Norway (e.g. 230 in 2014)

•Source: Kvarud Analyse, Europris

Continues to outperform the market

Overall growth performance

Y-o-Y LFL growth (%)

x Europris growth relative to market growth in the period

2.6x 1.5x 2.4x

1.9 % 2.1 %

2.7 % 2.9 %

5.0 %

7.0 %

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q3 2015 YTD 2015 2014

Market Europris

4

0

126

196

0

0

0

75

75

77

212

0

49

255

124

0

239

90

24

55

122

42

183

177

169

•Market includes a large number of shopping centres in Rogaland. Europris has 23 LFL stores in Rogaland

•Source: Kvarud Analyse, Europris

Strong performance in oil region

Growth performance in Rogaland

Y-o-Y LFL growth (%)

x Europris growth relative to market growth in the period

2.6x Nm. 11.3x

-0.9 %

0.6 %

3.0 %

6.7 % 6.8 %

7.7 %

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Q3 2015 YTD 2015 2014

Market Europris

5

0

126

196

0

0

0

75

75

77

212

0

49

255

124

0

239

90

24

55

122

42

183

177

169

Nonstop growth focus:

Concept and category development

Two core drivers of the Europris growth plan:

Concept and category

development

supporting LFL growth

Focused new store

rollout programme

LFL growth 2014:

LFL growth YTD 2015:

7.0%

5.0%

Net new stores 2015:

Planned net new

stores 2016:

9

8

Europris growth relative

to market

2.6x

2.4x

Europris growth relative

to market

6

Pre 2013/2014 Pre 2013/2014

Europris generetion 5.0 is introduced

BEFORE (Pre 2013/2014)

TODAY (2014/2015)

7

Realizing the potential in

concept development

• We are testing an upgrade to

5.01!

• Improved “shop-in-shop”

categorisation

• Brands more prominently

displayed

• “Value for money” visualisation

one step up

• The best of all… – Same investment as previous

version

– Limited cost for roll-out of

main elements to existing

stores

POST 2015

8

Successful test pilot 5.01

9

Successful test pilot 5.01

10

Category development - yarn

11

• Successful yarn pilot since May

• Roll-out in early September to

app. 150 stores – Improved sales display

– Increased shelf space

• Investment covered by supplier

• Results: 37.5% growth on yarn

last two weeks of September

A very promising start

12

Pet food “A” brand to be launched

• Pet food is an important traffic

driver

• Purina is a quality brand and dog

food test winner

• On sale in Europris from Q1 2016

13

More modern stores than ever

• Expect 75-80% of own stores to be in latest format at year end 2015 – Six projects planned for Q4 of which three are relocations

– Several franchise stores in the pipeline for modernisation in 2016

– Relocation/extension pipeline for 2016 very strong with 11 projects confirmed

• Positive sales results in modernised stores – Basket increased from day 1

– Traffic growth expected to come over time

Share of own stores in latest format: Chain store projects:

12%

44%

2013 2014 YTD 2015

73%

9 7 5 5

46 47

0

20

40

60

80

2014 YTD 2015

New stores Relocations Modernisations

14

0

126

196

0

0

0

75

75

77

212

0

49

255

124

0

239

90

24

55

122

42

183

177

169

Nonstop growth focus:

New stores

Two core drivers of the Europris growth plan:

Concept and category

development

supporting LFL growth

Focused new store

rollout programme

LFL growth 2014:

LFL growth YTD 2015:

7.0%

5.0%

Net new stores 2015:

Planned net new

stores 2016:

9

8

Europris growth relative

to market

2.6x

2.4x

Europris growth relative

to market

15

Extensive plan for store rollout

• Seven new stores opened so far in 2015

of which two opened in Q3 - Giske and

Begby

• Two store openings planned in Q4 –

Bodø and Grorud

• One store was cancelled due to

disagreement on commercial terms

• Solid pipeline of new stores with 9

approved by the Board and several in

negotiations: – 6 confirmed for 2016

– 1 confirmed for 2016/2017

– 2 waiting for municipal approval

– Wide range of prospects and good

opportunity flow

– No closures planned for 2016

5

7

11

6

13

15

7

19

20

10 8 8

11

12

15

15

16

21

8

Total: 227

More than 25k inhabitants per store

Between 15k and 25k inhabitants per store

15k or fewer inhabitants per store

Stokmarknes

Ottestad

Strømsø

Enebakk

Pindsle

Giske

Begby

Financial review

17

Gross margin development

• Gross margin was 43.6% in Q3 2015 vs.

41.0% in Q3 2014

• Positive impact from sourcing initiatives and

takeover of franchise stores

• Gross margin positively impacted by annual

stocktaking: – During the year calculated gross margin is

reported and any calculation differences are

adjusted at stocktaking

– Q3 accounts include NOK 20.9 million for

calculation differences of which app. 15

million relates to previous periods

– Excluding calculation differences from

previous periods the gross margin was up

1.3%

– Q4 last year includes a positive result from

stocktaking of NOK 25.4 million.

40,1 % 42,5 %

41,0 %

47,2 %

43,2 % 44,8 %

43,6 %

Q1 Q2 Q3 Q4

2014 2015

18

OPEX development

• OPEX* in % of revenue was 32.9% in Q3

2015 vs. 30.4% in Q3 2014

• Growth driven by volume increase, new

store openings and takeover of franchise

stores

• Q3 includes NOK 15.3 million in special

costs – Stocktaking

– Opening of a new warehouse

– Timing differences of marketing costs

– Excluding the special cost the OPEX in % of

revenue was 31.6%

36,2 %

28,5 % 30,4 %

27,3 %

36,4 %

29,5 %

32,9 %

Q1 Q2 Q3 Q4

2014 2015

• Adjusted for nonrecurring expenses of NOK 3.7 milllion in 2014.

19

Adjusted EBITDA development

• Adjusted EBITDA* margin of 10.7% in Q3

2015 vs. 10.7% in Q3 2014

• Takeover of franchise stores dilutes EBITDA

margin initially, but contributes positively to

EBITDA – Four takeovers last twelve months

• OPEX increased, but overall good cost

control

3,9 %

13,9 %

10,7 %

19,9 %

6,8 %

15,3 %

10,7 %

Q1 Q2 Q3 Q4

2014 2015

• Adjusted for nonrecurring expenses of NOK 3.7 milllion in 2014.

20

Profit and loss account

• Q3 2015 – Revenue growth of 7.6%

– Improved gross margin

– Interest costs reduced by app. NOK 15 million

after the refinancing

– Unrealised gain on currency hedging contracts

and accounts payable of NOK 10.6 million

– Adjusted profit before tax up 59.4%

– EPS was NOK 0.45 in the quarter

• YTD 2015 – Revenue growth of 8.7%, key driver is LFL of

5.0% for the Chain

– IPO related costs of NOK 30 million and

refinancing costs of NOK 57 million in 2015

– Depreciation of contractual rights included in

2014 with NOK 47 million, fully written down at

year end 2014

– Adjusted profit before tax increased by NOK

83 million (+64.3%)

Amounts in NOK million Q3 2015 Q3 2014 YTD

2015

YTD

2014

Total operating income 1,135 1,054 3,220 2,961

Operating profit 104 77 267 195

Net financial income (exp.) -1 -26 -149 -118

Profit before tax 102 51 118 78

Income tax expense 28 14 28 21

Profit for the period 74 37 91 57

Nonrecurring items

IPO cost and refinancing 0 0 87 0

Other nonrecurring items 0 13 7 51

Total nonrecurring items 0 13 94 51

Profit before tax, adjusted 102 64 212 129

21

Cash flow and working capital

Cash flow, NOK million YTD

2015

YTD

2014

FY 2014

Cash from operating activities 0 118 304

Cash used in investing activities -87 -86 -122

Cash (used in)/from financing activities 15 -167 -230

Net change in cash and cash equivalents -72 -135 -48

Cash and cash equivalents at 1 January 245 293 293

Cash and cash equivalents at end of period 173 158 245

Change in working capital, NOK million YTD

2015

YTD

2014

FY 2014

Inventory -250 -187 -105

Accounts receivables and other short-term

receivables

77 -19 -28

Accounts payable and other short-term

liabilities

48 165 74

Change in working capital -125 -40 -59

• Cash flow subject to normal seasonality

• Inventory increased due to – Opening of net eleven new stores and

takeover of four franchise stores

– Value of goods purchased in foreign

currencies increased

• Working capital impacted by a delay in

supplier payments in 2014

• No repayment of loans in 2015 – Voluntary repayment of NOK 100 million in

June 2014 in addition to scheduled repayment

22

Summary and outlook

• Europris continues to outperform the market

despite unfavourable weather conditions

• Resilient business model in a slowing

Norwegian economy – Europris shows relative strength in Rogaland

• Discount retailing is expected to gain market

share in Norway

• Truly mixed assortment – Large market

– Competitive flexibility

• Nonstop growth focus – Strong focus on concept and category

development

– Strong pipeline of new stores, relocations and

extensions

23

Norway’s leading discount variety retailer

Q & A

Presentation of results for fourth quarter 2015

12 February 2016