Europris 10. November 2017 Norway s leading discount variety retailer
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Europris at a glance Norway s leading discount variety retailer Europris in figures 1 Undisputed market leadership in Norway Nationwide presence Wide assortment at very low prices 245 stores 4 90% brand awareness 3 Efficient sourcing with direct access to end producers 25 years of continuous growth since start in 1992 Total revenue development (NOKm) 2 6 000 5 000 4 000 5.5 / 5.1bn Chain 2 / Company sales 4.1% LFL growth 2 3 000 2 000 1 000 43% Gross margin 13% Adj. EBITDA margin - General note: Please refer to page 20 for important terms and definitions that apply on this page. 1. All figures for fiscal year 2016 except where explicitly stated otherwise. 2. Based on chain sales 2016 (including franchise stores). 3. According to TNS Gallup; sum of assisted and non-assisted awareness 2014. 4. As of September 2017. Source: Europris 2
Wide assortment that taps into a large addressable market Groceries General merchandise Europris has a truly mixed assortment 2 Personal Care 9% Laundry & Cleaning 3% Pets 3% Home & Kitchen 15% Candy & Chocolate 5% Total addressable market 1 : ~NOK 280bn Groceries 12% Clothes & Shoes 8% Hobby & Office 7% Handyman 7% House & Garden 11% Electronics 9% Travel, Sports & Leisure 11% Speciality retail Large market Competitive flexibility Resilience 1. Total addressable market for packaged food, home & garden, clothing & shoes, leisure & office, health & beauty, and electronics & appliances. 2. Active SKUs year end 2014 Source: Euromonitor, Europris 3
Europris is #1 in Norwegian discount variety retail with NO 1:1 competitor Sales in Norway 2016 (NOKm) 6 000 5 000 4 000 3 000 2 000 1 000 - Entered in 2014 1 Offering Discount variety retail Tools, car supplies, leisure products Hardware, home, leisure, electrical, multimedia Tools, home, electrical, DYI, garden, leisure, car supplies, clothing Discount variety non-food retail Clothing, textiles, cosmetics, tools, home Home, DIY, tools, garden, leisure, electrical # of stores May 2017 244 61 80 32 385 24 17 Assortment overlap to Europris 2 Source: Euromonitor, Ravninfo, Europris 1. Chain sales including franchise stores. 2. Management estimates. 4
Discount variety retail set for continued structural growth 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Clear discount variety retail outperformance Structural trends underpin continued growth Index: 1999 = 100 CAGR Consumer focus on value for money 1200 1000 800 Discount variety retail +14% FMCG supportive of channel as source of growth Landlords increasingly positive due to strong footfall and online resilience Expanding seasons Favorable demographics 600 400 200 0 Source: Ultima Universet, Varde Hartmark Analyser Note: 2016 figures are estimates 5
and continues to thrive in the face of an increasingly online retail space International players in the discount variety retail space continue to display strong growth in markets with significantly higher e-commerce penetration than Norway 6
Clear long term white space opportunity and a solid near term pipeline Total: 245 13 7 5 Six new stores opened so far in 2017 Solid pipeline of new stores Five additional stores confirmed for 2017 Nine confirmed for 2018 so far (three stores subject to zoning process) Reknes Brekstad 17 14 6 Long-term potential of 320-330 stores defined in 2015 Kokstad Tasta 7 22 14 17 24 16 9 Gran Rælingen 20 16 9 9 9 11 More than 25k inhabitants per store Between 15k and 25k inhabitants per store 15k or fewer inhabitants per store Note: # of stores updated as at end of September 2017 7
Our new stores continue to deliver Store payback analysis for stores opened 2012 2015 Average revenue Average EBITDA Average capex per store Year 1 (12 months) Year 2 (12-24 months) Year 1 (12 months) Year 2 (12-24 months) 2012 13.5m 15.2m 0.5m 1.1m 1.5m Stores opened 1 2013 15.6m 16.7m 0.9m 1.2m 1.8m 2014 14.4m 15.9m 1.0m 1.4m 1.7m 2015 18.3m NA 1.4m NA 2.1m Positive performance by the group s newly opened stores Strong returns continue for latest store vintages 1.4 years average payback on investment (capex) 4.0 years average payback on total committed capital (capex + inventory) Inventory value inflated from NOK depreciation during 2015 Average inventory per store Payback period (excl. inventory) (Based on Year 2 EBITDA) 3.3m ~1.4 years 3.0m ~1.5 years 3.1m ~1.2 years 3.9m NA 2016 store vintage also indicating strong results Payback period (incl. inventory) (Based on Year 2 EBITDA) ~4.6 years ~4.0 years ~3.4 years NA General note: Please refer to page 20 for important terms and definitions that apply on this page. 1. 2012: Including 10 stores and excluding 1 closed store; 2013: Including 10 stores; 2014: Including 9 stores; 2015: Including 9 stores Source: Europris 8
A dynamic store portfolio of directly operated and franchised stores # of stores 260 240 229 220 220 213 205 196 200 189 63 180 71 83 160 96 140 102 102 120 239 238 54 60 245 45 100 80 60 40 87 94 109 130 149 166 185 178 200 20-2010 2011 2012 2013 2014 2015 2016 Q3 2016 Q3 2017 Directly operated Franchise 9
The Europris customer Who are they? Families What do they like? Our customers «love»: and some special, loyal customers Value for money Spend less save more Adults 40+ Spending time shopping Bargain hunting for great deals 10
What Europris can offer Unbeatable campaign prices! Nice shopping experience! Wide assortment! accounting for c. 27% of chain revenue and always a season at low prices 11
continues to be well received by customers Strong price perception Clear bargains Respondents agreeing with statement: offers generally low prices Respondents agreeing with statement: a place where bargains can be made 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: MediaCom survey with 1,400 respondents over 15 years of age that have heard of Europris and have a store in proximity to where they live, updated autumn 2016; Europris analysis Note: 2008 levels indexed to 100 12
Europris is adapting its approach to reach a younger audience Electronic distribution of weekly direct marketing campaign December 2014 indexed to 100 700 600 500 400 300 200 >500% increase in distribution since 2014! 100 -- Source: Europris analysis 13
Europris is building its digital capabilities with the MER customer loyalty club e-crm first step on digital ladder towards a full e-commerce offering 14
Strong revenue growth Consistent store roll-out and solid LFL growth has driven sales Total sales CAGR: 10% Avg. LFL growth: 5% # of Chain stores (year end) Sales (NOKm) Y-o-Y total sales growth (%) 300 6 000 13% 14% 250 200 213 220 229 239 5 000 4 000 3 757 4 259 4 629 5 085 10% 12% 10% 150 3 000 8% 9% 8% 6% 100 10 9 9 11 2 000 4% 50 1 000 2% 0 2013 2014 2015 2016 0 2013 2014 2015 2016 0% x # of new store openings General note: Please refer to page 20 for important terms and definitions that apply on this page Source: Europris 15
High and stable profitability Stable gross margin Gross profit (NOKm) Margin (%) Consistently high EBITDA margin Adjusted EBITDA (NOKm) Margin (%) 2 500 2 000 42,7 % 43,1 % 1 603 1 835 44,5 % 2 060 2 184 42,9 % 50,0 % 45,0 % 40,0 % 35,0 % 800 700 600 551 13,8 % 640 667 14,0 % 13,5 % 1 500 30,0 % 500 465 13,1 % 13,0 % 25,0 % 400 12,9 % 1 000 20,0 % 300 12,4 % 12,5 % 15,0 % 500 10,0 % 200 12,0 % 5,0 % 100 0 2013 2014 2015 2016 0,0 % 0 2013 2014 2015 2016 11,5 % General note: Please refer to page 20 for important terms and definitions that apply on this page. Source: Europris 16
Consistent profitability profile Profitability by location Adj. EBITDA % Profitability by competitive intensity Adj. EBITDA % 16,0 % 16,0 % 14,0 % 12,9 % 12,7 % 13,6 % 14,0 % 13,1 % 12,8 % 13,5 % 12,0 % 12,0 % 10,0 % 10,0 % 8,0 % 8,0 % 6,0 % 6,0 % 4,0 % 4,0 % 2,0 % 2,0 % 0,0 % City Rural Town 0,0 % Limited Some Significant Source: Europris analysis Definitions: number of stores in each category in 2016 By location: City: 60 stores; Rural: 64 stores; Town: 115 stores. Analysis excludes Solheimsviken which was closed in September. By competitive intensity: Limited: 60 stores; Some: 112 stores; Significant: 67 stores. Analysis excludes Solheimsviken which was closed in September 2016. 17
A strong and profitable store base Adj. EBITDA in NOK 000 per square meter sales area in 2016 for the 219 like-for-like stores in the Europris chain 10 8 6 96% of like-for-like stores are profitable (210 out of 219) Two unprofitable stores in 2015 now in the black Profitability in all five remaining underperforming stores in 2015 has improved Four new underperforming stores in 2016 being addressed 4 2 0-2 Source: Europris analysis 18
Key investment highlights 1 Unchallenged market leader in a fast growing retail segment 2 Unique discount variety retail model 3 Impressive track record of growth, high profitability and solid cash generation 4 Strong future growth potential 19
Important terms and definitions Term Definition Chain Chain sales Stores LFL growth Company All Europris stores including both stores owned by the Company (directly operated) and franchise stores Total retail sales of the Chain All stores of the Chain, both franchise and stores owned by the Company (directly operated), unless explicitly stated Measure of growth rate for same-store sales. Same-store sales exclude the sales of a store if the store was not open for the full calendar year and the entire prior calendar year. The stores included in calculating like-for-like growth are redefined each year at the beginning of the year and include both directly owned stores and franchise stores. The measure includes stores that have been refurbished, relocated or expanded during an applicable calendar year Europris ASA (with subsidiaries) Franchise takeover Acquisition of a franchise store and conversion to a directly operated store. Transaction date and consolidation into Company financial accounts may differ from the date of formal merger Accounting standards Gross profit Gross margin EBITDA Adjusted EBITDA Adjusted EBITDA margin EBITA Adjusted EBITA Cash conversion Europris changed the accounting principles for its audited financial statements from Norwegian GAAP to IFRS with effect from 1 January 2014 and has restated its audited financial figures for 2013 and 2012 Gross profit represents Company revenue less the cost of goods sold excluding unrealised foreign currency effects Gross profit as a percentage of Company revenue EBITDA represents operating income before depreciation and write-downs. EBITDA is not a measure of liquidity or performance calculated in accordance with IFRS EBITDA before certain non-recurring operating expenses defined by management Adjusted EBITDA as a percentage of Company revenue EBITDA less depreciation of fixtures & fittings and software (consistent with reported operating income going forward before any impairment charges). EBITA is not a measure of liquidity or performance calculated in accordance with IFRS EBITA before certain non-recurring operating expenses defined by management (the same as for adjusted EBITDA) Adjusted EBITDA less total capital expenditures (excluding amounts under financial lease) divided by adjusted EBITDA. Cash conversion is not a measure of liquidity or performance calculated in accordance with IFRS 20
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides or by accepting delivery of this document, you agree to be bound by the following limitations. IMPORTANT INFORMATION The presentation and any information provided does not constitute or form part of, and should not be construed as, an offer to acquire any securities of the Company or any of its subsidiaries nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase any securities of the Company or any of its subsidiaries, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. FORWARD LOOKING STATEMENTS Matters discussed in this document may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as believe, expect, anticipate, intends, estimate, will, may, continue, should and similar expressions. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; and developments in the Company s markets. The forward-looking statements in this Company Introduction are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management s examination of historical operating trends, data contained in the Company s records and other data available from third parties. Although the Company believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results of the Company or the industry to differ materially from those results expressed or implied in this Company Introduction by such forward-looking statements. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue influence on any forward-looking statement. NO UPDATES Nothing contained in this Company Introduction is or should be relied upon as a promise or representation as to the future. Except where otherwise expressly indicated, this Company Introduction speaks as of the date hereof. Neither the delivery of this Company Introduction nor any purchase of any of the securities, assets, businesses or undertakings of Europris shall, under any circumstances, be construed to indicate or imply that there has been no change in the affairs of Europris since the date hereof. In addition, no responsibility or liability or duty of care is or will be accepted by Europris or their respective Representatives for updating this Company Introduction (or any additional information), correcting any inaccuracies in it which may become apparent or providing any additional information. The information contained in this Company Introduction is necessarily based on economic, market and other conditions as in effect on the date hereof or as stated herein. It should be understood that subsequent developments may affect such information and that Europris have no obligation to update or revise such information. 21