Company presentation June 2020 Eurotorg the largest retail chain...

Minsk, Belarus

Company presentationEurotorg – the largest retail chain in Belarus

June 2020

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2

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CONTAINED IN THIS PRESENTATION.

1. Eurotorg overview

2. Belarusian economy overview

3. Eurotorg key investment highlights

4. Operating results

5. Financial results

2.4х

EBITDA / Interest expenses

Eurotorg overview

Fast-growing undisputed market leader…

…and impeccable track record on international capital markets

19% 38% ~5x

Larger than player #21Market share

in modern food

retail1

Market share

in total food

retail1

872

Grocery stores

as of the end of 1Q 2020

«Most Impressive Debut

Issuer in Emerging Markets»

Source: Company data, Boston Consulting Group, National Statistical Committee of Belarus, Company consolidated IFRS financial statements

1. Based on retail revenue in 2019. Company calculating based on data of the National Statistical Committee of Belarus. 2. As of 31.03.2020. 3. Calculated using average number of tickets per day in December 2019.

The award for Belarus’ first corporate

USD 350 million Eurobond

4. Calculated as e-commerce sales in 4Q 2019 divided by total retail sales (grocery retail sales plus e-commerce sales) in 4Q 2019. 5. 2019 metrics converted to USD at average USD/BYN rate of 1 USD = 2,0914 BYN in 2019 (according to the National Bank of the Republic of

Belarus). 6. EBITDA calculated as profit/(loss) for the period from continuing operations, adjusted for income taxes, finance costs and depreciation and amortisation. 7. The Company adjusts Free cash flow for Acquisition of bonds related to operating activities of Statusbank, which is

not associated with the Company’s core retail business.

+71 +9,8%

Retail sales

growth,

2019 vs 2018

New stores,

y-o-y2

2017 2018

Credit ratings on par

with Belarus’

sovereign rating

Both agencies noted

Company's positive

performance

В- stable

В- stable

В stable

В- stable

byA+ ruA- stable

2019

Eurotorg has become the first non-

Russian company to be assigned a

credit rating by Russian rating agency

4

В stable

3.6 mn ~5%~10%

В- pisitive

«Debut of the year»

The award for RUB 10 bn

bonds on Moscow Exchange

2018 2019

6.2%

3.0х

Net debt / EBITDA

7.4%

FCF7 / Revenue

… with strong financial performance,…

IAS 17, 2019

2020

Agencies affirmed the

Company’s credit ratings

byA+ ruA- stable

В stable

В- positive

$2.4 bn

Revenue5

$146 mnEBITDA margin6EBITDA5,6

E-commerce

sales share in

4Q 20194

Online grocery

orders delivered

in 2019

Of all Belarusians shop in

Company’s stores every day3

▪ Return to growth

▪ Focus on small stores /

leased space

Over 25 years Eurotorg has not only become the undisputed leader in the grocery

retail market, but has created a platform to tap into any retail segment in Belarus

10

121

203

298

438 453500

762

870 872

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Company data1. Converted to USD at average USD/BYN rate: 2008 – 0.2200, 2009 - 0.2863, 2010 – 0.3000, 2011 – 0.8350, 2012 – 0.8570, 2013 – 0.9510, 2014 – 1.1850, 2015 – 1.5865.

2. Up to June 2018, businesses were owned by entities controlled by Eurotorg majority shareholders. In June 2018 businesses were consolidated within the Group.

1993 1997

22 3867

- Number of stores

Company

was founded

as a

wholesale

business

Opening

of the 1st

store in

Minsk

▪ Focus on retail

▪ Over ~$1 bn1 invested to become the undisputed leader in the

grocery retail market

▪ Launch of e-commerce platform

▪ Deleveraging

(Net debt / EBITDA decreased

from 5.6x to 3.2x)

▪ Development of new strategy:

small format, capex-light growth

▪ Wholesale champion

▪ Price leader reputation

First audited

financial

statements

under IFRS

$350 mn Eurobonds

offering

Credit ratings from S&P

(“В-”) and Fitch (“В-”)

Started cooperation with EBRD

Continued cooperation with EBRD

Credit rating upgrade

by Fitch (to “B”),

outlook upgrade by

S&P (to “positive”)

1Q 2020

Credit ratings from

Expert RA (byA+)

RUB 10 bn bonds on

MOEX

RUB 3.5 bn syndicated

loan

5

Online grocery

platform

launched2

20192013 2014 2015 2016 2017 2018 March2020

4.9%5.6%

16.5% 16.2%

12.0%10.6%

4.6% 4.7%

Macroeconomic snapshot

Since 2016 refinancing rate has declined from

25% to 7.75%

Refinancing rate, %

Real disposable income of households is

growing steadily

Source: National Bank of the Republic of Belarus

Inflation in Belarus is at stable low level

Gold and foreign exchange reserves are

>1.5 times higher than during 2015-2016 crisis

16.3%

2013 20162014

0.9%

-5.9%

2015

-6.9%

2.8%

2017

7.9%

2018

6.0%

1Q

2020

2019

7.1%

Real disposable income of households, %growth to the corresponding period of the previous year

Source: National Statistics Committee

CPI, %, December on December

BYN has strengthened after the March’s peak

USD/BYN exchange rate dynamics


Source: National Bank of the Republic of Belarus

A slight decrease in GDP in Q1 2020

20192013 20152014

3.1%

2016 2017 1Q

2020

2018

1.0%1.7%

(3.8%)

(2.5%)

2.5%

1.2%

(0.3%)

Real GDP growth, % y-o-y


7

(March on March)

Downward trend

continued in 2017-2020

2014 2015 2016 20182017 2019 Apr. 1

2020

5.1

7.2

4.24.9

7.37.8

9.4

Gold and foreign exchange reserves, USD bn

Source: National Bank of the Republic of Belarus, at the end of the period

5%

10%

15%

20%

25%

30%

Jan'16 Jan'17 Jan'18 Jan'19 Jan'20

1,0

1,5

2,0

2,5

3,0

Jan'15 Jan'16 Jan'17 Jan'18 Jan'19 Jan'20

7.75%

June 1

2020

2.37June 23

2020

2.64March 24

2020

>3,5 years Belarusian Ruble

has been stable

Eurotorg investment highlights

9

2Unique customer proposition make Eurotorg the #1 shopping destination

in the minds and hearts of consumers

3More than just a grocery store – Eurotorg is a platform to tap into

any retail business segment

4 Lean and balanced governance structure

2

Eurotorg is the absolute leader of the Belarusian retail market on all metrics1

5 Strong operating and financial results and perfect debt management history

323

29 4715 25

Belarus coverage by the key market players, number of localities2

10

Eurotorg has an unmatched leadership over the competition…

Share of modern food retail format1 among top 6 players, 2019, %

38%

7% 7% 6% 6% 6%

32%

Share of total food retail market1ХХ%

~5x

19% 4% ~16%

Players

#2 - #6 #5#3#2 #4

covered by Eurotorg without any modern

retail competitors

>190 localities

…as the only modern retail player in a half of its locations…

Eurotorg’s penetration into

formats vs player #23

(sales by format4, 2019),

> by x times

…with leadership positions across all formats and in all types of

localities…

Regional centres

and Minsk

>50 ths people

0-20 ths people

20-50 ths people

> 4.0x

> 2.3x

> 3.6x

> 2.6x

Supermarket

Convenience

Hypermarket

> 4.4x

> 1.6x

> 2.0x

Source: Belarus National Statistical Committee, Company and players’ data, Boston Consulting Group.

1. Retail revenue. 2. As of 31.12.2019. Top players by retail sales in 2019 with an allowance for acquisitions. Retail sales of Gippo include retail sales of Belmarket, retail sales of Santa include retail sales of Rublevskij.. 3. Player #2 is defined by each criteria. 4. Formats distribution:

convenience stores - <400 sqm, supermarkets – 400-2,500 sqm, hypermarkets- >2,500 sqm; Eurotorg stores are categorized based on retailers' own classification 5. Minsk suburbs Borovaya and Schomyslitsa are included into «Regional centres and Minsk». 6. Excluding regional

centres and Minsk.

Eurotorg maintains a position of the undisputed leader of the grocery retail

market in Belarus

Gap between #1 and (#2+#3…+#6)

Eurotorg’s presence in

cities/settlements vs player #23

(modern retail selling space, 2019),

> by x times

… on the underpenetrated market

Poland ’06

90%

Belarus ’18

Belarus ’19

Romania

Turkey

Russia ’07

Ukraine

Russia ’18

87%

Poland ’18

48%

Germany

UK

48%

49%

52%

55%

62%

47%

68%

83%

Modern grocery retail penetration, %, 2018

5

5

6

1

11Source: Company data

1. As of 31.03.2020.

2. In 1Q 2020, without e-commerce sales.

Multi-format retail model

Eurotorg is a multi-format chain: from grocery convenience stores to hypermarkets

Rural settlements with

population of <2 ths.

people

Densely populated

city districts

Close to transport routes in

urban localities with

population of >50 ths.

people

64 882 2,860221

Urban settlements/cities,

within walking distance for

target customers

~800 ~9,500 ~20,000~3,500

12%

TOTALHypermarketSupermarketUrban

convenience

Rural

convenience

146

589

99 38

872

14% 43% 63%

385

3% 49% 24% 25%

37%

Average selling

space1, sqm

Owned selling

space1, %

Share in the total

offline retail

revenue2, %

Photo

Location

# of stores1

# SKU (average)

1

FOUNDATION

Евроторг #2

#3 #4

#5

12

Best price Balanced assortment

Focused: Top-1,000 SKUs make

up 56% of sales1

Fresh: ~40% - Eurotorg’s share in

fruit sales nationwide1

Local: 75% - share of local

produce in total sales1

Coalitional loyalty programCustomer experience

Unparalleled marketing campaign

coverage: >2.0 mn of participants2

(>20% of the population)

37% of revenue comes from

participants of marketing

campaigns

Customers’ image of retailers

Significant price leadership

Strong private labels at

affordable prices

Direct import

2.5 mn loyalty

cards3

62% of

purchases made

with loyalty cards3

Sources: Company data, surveys by Boston Consulting Group, April 20181. In 2017. 2. Since the game's launch in February 2016. 3. According to data on active cards as of December 2019. 4. Gippo acquired Belmarket in March 2018. Data for Gippo is shown as Gippo’s performance across these

metrics is superior to Belmarket’s

(#4)

(#5)

(#1) (#2)

(#3)

Continuity of core retail concept and focus on value enhancement for

customers enabled the Company to achieve an outstanding level of loyalty

✓

✓

✓

✓

Customer

experienceLoyalty

Assortment

Price

Buying power

4

VALUE

ENHANCEMENT

✓

✓

2

Discounts from >130 partners

3.0

1.3

1.0

1.2

0.9

0.6

13

Eurotorg loyalty program = ticket to the national consumer ecosystem

and a brand support tool

Examples of third party partners in the program

Source: Company data

Note: 1. In December of 2019. 2. In 1H 2018. 3. Nielsen Store Equity Index measures the brand's strength, customer loyalty and recognition. SEI is calculated on the basis of willingness to

recommend, pay premium prices and travel to the store. 4. Including Brusnichka. 5. As of 2016.

Eurotorg enjoys one of the highest Store Equity Indices (SEI2,3) not only in Belarus but in the

whole EMEA universe

2

(S.Africa)

( (Gomel)4

(Poland)

(Brest)4

(Minsk)4

Пятерочка (Moscow)5

(Turkey)

SEI >3 = very

strong brand

MinskCumulative discount system in Euroopt retail

chain

Access to participation in non-price promos

(Udacha v pridachu, Bonsticks, etc.)

Discounts from >130 partners in retail and

services industry with >2,000 outlets

Additional benefits for Statuscard edition (co-

branding partnership with Statusbank): up to

1.5% cash-back; 3% annual interest accrual

on any balance

2.5 mn active users with 62% retail sales

penetration1

Benefits for the customer

Loyalty card provides unique benefits across all verticals in the "Eurotorg universe” with

additional value generated by third party partners

3.0

4.7

3.7

3.9

3.3

2.8

2.1

4

14

Over the last 25 years the Company invested >$1 bn in its business to

become the leader in the grocery retail

25 years track record of grocery

retailer with the lowest prices

25 YEARS / EXPERIENCED MANAGEMENT TEAM / >$1 BN OF INVESTMENTS

3

The largest loyalty

program in the countryBy far the highest

customer loyalty

112.1 ths. sqm total area3

73% of area is owned

240 cars

own fleet

50%+ deliveries

by own fleet

~75%centralization level

4 DC2 3 warehouses

Source: Company data.1. As of 31 March 2020. 2. DC in industrial park «Great Stone» supplies all non-food products for the Company’s grocery stores.

3. Including DC area of 96.3 ths. sqm and warehouses’ area of 15.7 ths. sqm.

Superior logistics infrastructure✓ ✓✓

✓ ✓ ✓

Own stores with best locations In-house IT platform

“Market” - in-house

development since 2005:

ERP, Planograms,

Auto order, WMS,

loyalty programms

Benefits of the in-house ERP solution

1

2

3

4

Fully compatible with the operating

model and development strategy

Scalability

Speed of improvements and fine-tuning

More cost effective compared to ERP

from global vendors

100%regional coverage in Belarus

322localities covered by the Company1

872stores from smaller convenience

format to hypermarkets1

37% / 44%selling / total area

owned1

15

One of the largest (by # of

orders) online grocery

business in Eastern Europe

Overview of e-commerce channel

3.6 mn

0.6%

Orders

EBITDA margin

Key facts (2019)Eurotorg is one of the very few profitable online grocery business globally in the market,

which has the highest growth rates in Europe

Online services revenue, mn USD

UK

France

Germany

Russia

Turkey

Sweden

Czech Rep.

Greece

Romania

Poland

Norway

CAGR

'14-'17

8%

12%

20%

21%

24%

32%

59%

179%

189%

19%

70%

24%

CAGR

'17-'22

7%

8%

19%

11%

26%

21%

32%

11%

35%

15%

17%

17%

Country

Belarus

3Eurotorg’s online grocery business is one of the largest in CEE and

one of the few profitable in the world

Online grocery retail

accounted for ~5% of

total net retail sales1

$103 mn

Revenue

Online store with a traditional

hypermarket product range at favourable

prices with prime service

Nationwide online hypermarket

✓ Speed of delivery

✓ Order fulfilment accuracy

✓ Delivered goods quality

✓ Focus on Minsk and large cities

✓ Best prices for grocery products, soft

drinks and non-food goods

✓ Covering the whole Belarus, even the

most remote regions

✓ Future non-food marketplace framework

Positive profitability in

e-commerce on a

standalone basis

Own fulfillment & delivery

infrastructure2

✓ 5 dark stores (average space of 3 ths.

sqm) + 1 warehouse with space of 6.8

ths. sqm

✓ ~460 order pickers

✓ ~620 couriers / ~390 vehicles – own

delivery fleet

✓ Simple and quick return / replacement

procedure

Source: Company data, Boston Consulting Group.

1. Calculated as e-commerce sales in 4Q 2019 divided by total retail sales (grocery retail sales plus e-commerce sales) in 4Q 2019 2. As of 30.06.2019

51 6281

96 103

20172015 20192016 2018

2015

6.6%

2016

-4.4%

2017

-0.2%

2018 2019

1.7% 0.6%

Online services EBITDA margin, %

1.3

O’Key

Eurotorg 3.6

1.8Utkonos

X5 Retail

Frisco

Maxima

1.4

0.6

0.5

Number of orders, 2019, mn

16

Andrei Zubkou

Chief Executive

Officer

Management

Alesya Sapunova

Chief Financial

Officer

Vladimir Vasilko

Chairman of the

Board of Directors

Sergey Litvin

Member of the

Board of Directors

Shareholders

Board of Directors1

Corporate governance structure

Evgeny Zhygimont

First Deputy CEO

Alexander Shuliak

Commercial Director

Igor Vorobyov

Marketing Director

Pilip Artsemenka

Chief Retail Officer

Source: Company data.

1. Board of Directors of Eurotorg Holding Plc.

Ownership structure, %

Vladimir Vasilko Sergey Litvin Andrei ZubkouAlexandr Litvin

Dzianis Zelianukha

Human Resources

Director

Andrei Zubkou

Member of the Board

of Directors, Chief

Executive Officer

Anatolii Friptu

Executive Director,

Eurotorg

Holding Plc

49.75%

48.75%

0.5%

1.0%

Andrei Shkadzinski

Logistics Director

Vladimir Vasilko Alexandr Litvin

Sergey Litvin Andrei Zubkou

Established corporate governance practices4

Source: Company data . 1. Retail sales represent revenue from grocery stores and e-commerce, net of VAT. This number differs from consolidated IFRS revenue, which also includes wholesale and other revenue, lease income, and revenue of subsidiaries (StatusBank and others). 2.

Net selling space added across formats include selling space of newly opened stores minus selling space of closed stores and changes in the selling space in the existing stores.. 3. Localities were classified based on the population: Minsk – more than 1,000 ths people, Regional centers

– 250-1,000 ths, Large cities – 50-250 ths, Mid-sized and small cities – less than 50 ths, Rural localities – all localities outside cities. 5. Change of the selling space of hypermarket in Minsk on Montazhnikov str., 2 is not included in the calculation. 4. In 2019 selling space in Minsk

decreased due to selling of the hypermarket with selling space of 5,200 sqm.

Eurotorg operating results in 2019

✓ Retail sales growth : +9.0% y-o-y1

✓ Key revenue growth driver : further expansion (+108 stores in 2019 and +4,5% growth of selling space, y-o-y)

✓ Focus on developing smaller grocery formats on leased premises :

▪ 171 sqm – average selling space of newly opened stores

▪ 91% of newly added stores in leased premises

✓ Rural convenience stores : +10 stores in 2019 vs. +130 stores in 2018 – slow

down in format development

✓ Further growth of E-commerce business:

▪ +9.0% sales growth of two online grocery services (E-dostavka.by and

Gipermall.by) in 2019

▪ 5% - E-commerce sales share in total retail sales in 4Q 2019

Retail sales1,

net of VAT, BYN bn

4.1

2018 2019

4.4

9.0%

95%

2019

5%

Retail sales structure,

% оf total retail sales

Online grocery

Grocery retail

39% 40% 41% 45% 49%

27% 24% 23% 23% 23%

35% 36% 36% 32% 28% Hypermarket

201920182015 2016 2017

Supermarket

Convenience

-4.2 pp

0.1 pp

+4.1 pp

Change of share in

retail sales,

2019 vs 2018

Retail sales structure by formats, net of VAT, %

Breakdown of selling space of newly opened stores by form of ownership

and average selling space of newly opened stores, % and sqm

592

50% 60%86% 90% 91%

50% 40%14%

2018Avg.

2011-’13

Avg.

2014-’16

2019

10%

2017

9%Average selling space

of newly opened stores, sqmxx

% of newly opened stores

on owned space

% of newly opened stores

on rented space

545 231 138 171

Growth highlights in 2019

18

Growth of the retail chain in 2019

+108 stores

+14.4 ths sqm Retail chain growth in new localities, 2019

Rural

localities

0.7

Regional

centres

Minsk

8.2

Large cities

-4.3

4.7

-1.7

21 5 11 42 -29

Minsk Regional

centres

Rural

localities

Large cities

2.74.1

- - - 19 39

- - -

xx Net new selling space2, ths sqmNet new stores openings

+50 stores+7.7 ths sqm

+58 stores+6.8 ths sqm

Mid-sized and

small cities

Mid-sized and

small cities

Retail chain growth in previously covered localities3, 2019

New localities

4

5

Previously covered

localities

19

513

325 278355

Sales density and traffic density, 2016-2019, USD / sqm per month and tickets / sqm per day

544 561 541

335376

340 302325

292376 390 367

‘16 ‘17 ‘18 ’19

3.2

2.1

0.8

2.1

3.43.2 3.1

2.2 2.2 2.12.4 2.2 2.2

0.7 0.7 0.7

Source: Company data.

1. In 2019, according to Belarussian Automobile Association.

’16 4Q

’19

2Q

’19

’17 ’18 1Q

’19

3Q

’19

1.9%1.1%2.8%

-7.0% -4.7%-3.5%

-2.3%

-4.0%

4Q

’19

’18

-8.5%

-2.6%

’16 ’17 1Q

’19

2Q

’19

3Q

’19

-4.0%-7.5% -6.5%

0.6%

-2.9%

1Q

’19

’18

5.6%

’16 ’17

1.9%

2Q

’19

3Q

’19

4Q

’19

1.6%

6.2%

9.3%

0.6%

‘16 ‘17 ‘18 ’19 ‘16 ‘17 ‘18 ’19 ‘16 ‘17 ‘18 ’19

‘16 ‘17 ‘18 9М’19 ‘16 ‘17 ‘18 9М’19 ‘16 ‘17 ‘18 9М’19 ‘16 ‘17 ‘18 9М’19

Commentary

▪ Negative LFL sales in 2019 (-4.3%) due to negative LFL

traffic (-4.6%), which was affected by cannibalization.

▪ Continual improvement in LFL sales over the last three

quarters.

▪ LFL average ticket grew by 0.3% in 2019, despite real

disposable income increase at 6.0%. LFL average ticket

increased moderately because of significant increase of

consumption in other categories: utility rates (+12.2%), non-

food sector (e.g. new car sales increased by 22%1) and was

also affected by a high comparable base in 2018 due to high

levels of marketing activity in the year-ago period.

▪ Sales density has decreased y-o-y, but there is still

significant distance in absolute terms against Russian

peers:

− 1.8x times higher than sales density of Magnit

− ~1.5x times higher than sales density of X5 and

Lenta

▪ Traffic density has also been decreasing but still strongly

ahead of key Russian retailers (e.g. ~1.5x times higher

than average traffic density of X5 and Magnit)

LFL metrics growth y-o-y, 2016-2019

LFL sales LFL traffic LFL average ticket

Sales density, USD / sqm per month

Traffic density, tickets / sqm per day

Commentary

-4.6% +0.3%

Improving

LFL sales

5 Improving LFL results / leading sales and traffic densities

-4.3%

▪ Net working capital as a percentage of revenue slightly

decreased, reflecting shortening of the payment cycle with

suppliers

▪ Capex remained low as the Company continued to

implement its low-cost expansion strategy

Key summary financials

3. Net working capital includes inventories, trade receivables and trade payables. 4. Includes acquisition of PP&E and intangible assets. 5. Calculated as net cash from operating activities less capital expenditures plus proceeds from

sale of property, plant and equipment. The Company adjusts net cash from operating activities for acquisition of bonds related to operating activities of Statusbank, which is not associated with the Company’s core retail business.

6. Includes short-term and long-term loans and borrowings (including obligations under finance leases) 7. Includes interest on loans and borrowings and interest on finance leases.

Commentary

▪ Revenue growth mainly was driven by new store openings,

while LFL sales dynamics for the period was negative

▪ The gross margin decreased as a result of active

development of the new discounter format Hit! as well as the

set of initiatives to strengthen its price leadership positioning,

including active investments in shelf prices

▪ The EBITDA margin decreased as a result of:

− lower gross margin

− higher SG&A as a percentage of revenue primarily due to

higher personnel and rent expenses

− consolidation of the e-commerce business and its active

development during the period

▪ The net profit margin decreased due to the decreased

operating margin

▪ The Company’s net debt decreased by 13.9% to BYN 925 mn

▪ The Company maintained a moderate level

of net debt / EBITDA ratio of 3.0x

Source: Consolidated Group IFRS results. Some items in the Company’s financial statements have been reclassified, and comparative information in the release reflects these reclassifications

1. EBITDAR = EBITDA + rental expenses. 2. EBITDA is defined as profit/(loss) for the period from continuing operations, adjusted for income taxes, finance costs and depreciation and amortisation.

Revenue

1

Profitability

2

Free cash

flow

generation

3

Leverage

4

1

3

21

Revenue BYN mn 4,458 4,918

Revenue growth % 13.4% 10.3%

LFL sales growth % 2.8% -4.3%

Gross profit BYN mn 1,188 1,210

Margin % 26.6% 24.6%

EBITDAR1 BYN mn 513 440

Margin % 11.5% 9.0%

EBITDA2 BYN mn 396 306

Margin % 8.9% 6.2%

EBITDA IFRS 16 BYN mn - 435

Margin % - 8.8%

Net profit BYN mn 66 24

Margin % 1.5% 0.5%

Net profit IFRS 16 BYN mn - 43

Margin % - 0.9%

Net working capital3

as % of revenue % (5.6%) (4.9%)

Capex4 BYN mn 92 94

% of revenue % 2.1% 1.9%

Adj. Free cash flow5 BYN mn 351 365

% of EBITDA % 88.6% 119.2%

Debt6 BYN mn 1,250 1,219

Cash and cash equivalents BYN mn 176 295

Net debt BYN mn 1,074 925

Net debt / EBITDA x 2.71x 3.02x

Net debt IFRS 16 BYN mn - 1,280

Net debt IFRS 16 / EBITDA IFRS 16 x - 2.95x

EBITDA / interest expenses7 BYN mn 3.0х 2.4х

EBITDA IFRS 16 / interest expenses IFRS 16 BYN mn - 2.6х

4

Indicator 2018 2019

2

Financials highlights5

▪ Key factors of SG&A expenses growth in 2019:

(i) increase in personnel costs (by 0.7 pp)

(ii) rental costs growth (by 0.1 pp)

▪ Personnel costs increased primarily due to the following factors :

– overall growth in nominal average wages in Belarus (by 12.3% y-o-y in

2019)

– a 2.6% decrease in sales densities

– consolidation of e-commerce business, which has higher personnel

costs in its operating model.

▪ Rental costs increased by 0.1 pp, due to the Company’s openings in leased

premises (91% of all newly added selling space in 2019 were leased) and

consequent growth of rented selling space as a share of the total from

59.6% as of the end of 2018 to 63.1% as of the end of 2019.

22

SG&A overview and EBITDA margin bridge

Source: Consolidated Group IFRS results.

1. Personnel costs include wages and social security contributions. 2. EBITDA is net profit from continuing operations adjusted for income tax, financial expenses and depreciation of fixed and intangible assets.

Commentary

EBITDA2 margin bridge, % of revenue

% of revenue

SG&A structure (excl. D&A) according to IAS 17

0.2%

18.4%

2.1%

1.8%

2016

2.1%

9.8%

2015

2.5%0.4%

2.3%

2.2%

2.4%

2.8%2.8%

8.6%

2.5%

9.3%

2.0%1.0%

8.7%

1.1% 2.8%2.0%2.1%

2.6%2.7%

2018

0.8%

10.0%

20192017

15.9% 16.1% 16.5%17.9%

0.8%

15.8%

10.0%

0.1%2.0%

2019

(IFRS 16)

Personnel1Other Marketing Utilities Rent

5

SG&A increase (excl. D&A) as % of revenue by 0.5 pp

Professional

services

Other SG&A Other income

and expenses

-2.0 pp

EBITDA

2019 (IAS 17)

0.1 pp

EBITDA

2019 (IFRS 16)

RentPersonnel RentEBITDA

2018 (IAS 17)

Gross profit Marketing

expenses

-0.1 pp

Utilities

-0.7 pp -0.1 pp

0.3 pp 0.0 pp

-0.2 pp

2.6 pp8.9% 8.8%

6.2%

23

Working capital

Company steadily operates with a negative working capital

(63)

(72)

(63)

(78)

(68)

34 31 3846 40

7 77

33

(22)

(34)

(19)

(29)(25)

2015 2016 2017 2018 2019

Payables days

Inventory days

Receivables days

Cash conversion cycle

(397)

(550)(504)

(701) (689)

(211) (238) (300)(416) (409)

(59) (69)(72)

(37) (39)

(127)

(243)

(133)

(248) (241)

2015 2016 2017 2018 2019

Trade payables

Inventory

Trade receivables

Net working capital

Working capital, BYN mn

XX% Net working capital

as % of revenue

(3.4%)(6.7%)

Turnover days

Commentary

(4.2%) (4.9%)

▪ Net trade working capital as a percentage of revenue slightly decreased by 0.7 pp to -4.9%, reflecting shortening of the payment cycle with suppliers.

(5.6%)

5

Source: Consolidated Group IFRS results. Net working capital includes: inventory, trade payables and trade receivables. Inventory days: inventories * 365 / COGS; Payables days: trade payables * 365 / COGS; Receivables days: trade receivables * 365 / revenue; Cash conversion cycle: inventory days + receivables days – payables days. Minor differences in calculations of cash conversion cycle are due to rounding effect

Stable financial position and balanced debt portfolio

24

1 32

138 129

477

186

202520231П 2020 2П 2020 20242022

8

2021

218

85

Net debt and net debt / EBITDA, e-o-p

Net debt2 / EBITDA

Focus on deleveraging Optimized debt structure

Debt structure1, as of 31 December 2019

XXNet debt2, BYN mn

Improved debt maturity profile

5.6x 4.7x 3.2x 2.71x

Repayment shedule1 per year, as of 31 December 2019, USD mn

Average maturity: 3.6 years

140

2019

Cash and cash equivalents cover

loan repayments over next 2 years

1 240 1 211 1 1931 074

925

2015 2016 20192017 2018

By currencyBy lender

Eurobonds

Other

Syndicated loan

Belarusbank

RUB bonds

By debt type

Unsecured

Secured

46%

3.02x 2.95x

IFRS 16

1 280

2019

Available credit lines: USD 120 mn

5

Eurobonds Other debt

USD 86 mnOverall 2020-2021:

28%

11%

10%5%

57%42%

1%

EURUSD RUB

with RUB-EUR

swap

w/o RUB-EUR

swap

57%

26%

17%

Source: Consolidated Group IFRS results, National Bank of the Republic of Belarus. Ratios are calculated in reporting currency (BYN).

1. Debt includes loan, borrowing and bonds (financial lease not included). 2. Net debt is calculated as sum of current and non-current loans and borrowings (including finance lease obligations) minus cash and cash equivalents.

12.6%

87.4%

Contact details

25

Evgeniy Kosnikovskiy,

Head of IR

[email protected]

Company presentation June 2020 Eurotorg the largest retail chain...

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