Q2 and H1 2015 - Results
14 August 2015
Norway’s leading
discount variety retailer
2
So far in 2015 - Summary
Europris continues to outperform the market
Europris realises growth potential through a record number of store upgrades
Europris rules the seasons
Europris remains on a strong profitable growth track
1
2
3
4 1
1
1
1
3
Q2 – Highlights:
A robust quarter in a challenging season
• Group revenue increased by 4.4% – Easter peak sales days in Q1 vs. Q2 last
year
• Two new store openings
• Like-for-like sales growth of 1.9% vs. market
of 0.7%
• EBITDA (excluding IPO cost) up 15.3%
• Refinancing – improved terms and flexibility
• Listed on Oslo Børs
33
147
113
258
67
168
Q1 Q2 Q3 Q4
EBITDA adjusted, NOK million
2014 2015
854
1,053 1,054
1,297
985 1,100
Q1 Q2 Q3 Q4
Group revenue, NOK million
2014 2015
4
H1 2015 – Highlights:
Growth track underpinned by first half year performance
• Group revenue increased by 9.4%
• Delivering on the store rollout programme with
five new store openings
• Like for like sales growth of 6.2% vs. market of
2.1%
• EBITDA (excluding IPO cost) up 30.6%
Parasols:
9,521 pieces
+41% from last year
Soil:
667,559 sacks
+9%
Lounge sets:
10,769 sets
+39%
Harris paintbrushes:
618,432 pieces
+51%
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
•1. Market includes a large number of shopping centres throughout Norway (e.g. 230 in 2014)
•Source: Kvarud Analyse, Europris
Continued outperformance of the market
LFL growth performance
Y-o-Y LFL growth (%)
x Europris growth relative to market growth in the period
2.6x 3.3x 2.7x 3.0x
7.0 %
11.7 %
1.9 %
6.2 %
2.7 %
3.6 %
0.7 %
2.1 %
0%
2%
4%
6%
8%
10%
12%
14%
2014 Q1 2015 Q2 2015 H1 2015
Europris Market
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• Spring/summer is our most weather
dependent season – According to yr.no south-eastern Norway has
had the coldest May in 36 years and June was
not better…
• Planning and execution of the season has
been very good
• Flexibility in marketing and campaigns
• Active in-season management
• First seasonal evaluation done in June – Still room for improvements next year!
Seasonals drive traffic despite tough conditions
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Europris rules the seasons
January sales, Åsane Easter, Hunstad Spring started in week 12, Eiker
National day, Lillehammer Summer start, Fauske Fun for kids, Åssiden
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Gross margin development
• Gross margin was 44.1% in H1 2015 vs.
41.4% in H1 2014.
• Gross margin positively impacted by: – Realised savings from our low cost country
sourcing program
– Take over of franchise stores
– Currency hedging
• Currency hedging – The market has adjusted selling prices faster
than the six month horizon we have on
hedging.
– Assuming a stabilisation in the fx rates for
USD and EUR to NOK we expect the gross
margin to be normalised going forward.
44.8 % 44.1 % 42.5 % 41.4 %
43.1 %
Q2 H1 FY
2015 2014
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OPEX* development
• OPEX in % of revenue was 32.8% in H1
2015 vs. 32.0% in H1 2014.
• Store modernisation programme
accelerated
• Takeover of franchise stores
• Project costs related to – Automatic store replenishment system
– E-commerce
• Overall good cost control
29.5 %
32.8 %
28.5 %
32.0 % 30.2 %
Q2 H1 FY
2015 2014
* Adjusted for nonrecurring expenses.
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EBITDA* development
• EBITDA* margin of 11.3% in H1 2015 vs.
9.5% in H1 2014.
• High like-for-like sales growth
• Improved gross margin – Currency hedging
– Sourcing savings
• OPEX increased, but overall good cost
control.
15.3 %
11.3 %
13.9 %
9.5 %
12.9 %
Q2 H1 FY
2015 2014
* Adjusted for nonrecurring expenses.
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Realisation of growth potential on track
• Three new stores in Q1 – Stokmarknes, January
– Strømsø, March
– Ottestad, March
• Two new stores in Q2 – Enebakk, June
– Pindsle, June
• One more store opened on 2 July with a
strong start – Giske
• On track to deliver net 10 new stores in
2015
5
7
11
6
13
14
7
19
20
10 8 8
11
12
15
14
16
21
8
Total: 225
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
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Modernisations at all-time high
• 33 stores modernised – Q1: 17
– Q2: 16
• 3 stores relocated – Q1: 1 (Bø)
– Q2: 2 (Kongsvinger and
Iseveien/Sarpsborg)
• Expect 75-80% of own stores to be in
latest format at year end – Several franchise stores in the
pipeline for modernisation
Share of own stores in latest format:
Chain store projects 2014 and H1 2015:
12%
44%
65%
2013 2014 H1 2015
9 5
51
36
0
10
20
30
40
50
60
70
2014 H1 2015
Modernisation/reloc.
New stores
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Our key focus areas
1. Continuing to gain market share – Extensive modernisation programme continues
– Ambitious category development programme
– Owning the seasons in Norway
– Improved store network: More stores and better
locations
2. Maintaining good underlying cost control
3. Improving working capital through increased
inventory turnover
Financial review
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Improved financial terms and flexibility
• On 23 June the Group refinanced its existing bank debt.
• Net finance in Q2 includes nonrecurring cost of NOK 57 million (no cash effect) related to the
former term loan and credit facilities.
• New 5 year term loan of NOK 1,650 million with SEB (agent) and DNB – Amortization optional within the period
– RCF of NOK 450 million of which NOK 350 million may be used for ancillary facilities
• Significantly improved terms with reduced fees and interest margins. Interest rate of 2.22% in
Q3.
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Profit and Loss
• Q2 2015 – Revenue growth of 4.4%
– IPO related costs of NOK 30 million
– Refinancing costs of NOK 57 million
– Income tax expense reduced by NOK 4 million
due to final decision on pending tax issue
• H1 2015 – Revenue growth of 9.4%
– Depreciation of contractual rights included in
H1 14 with NOK 38 million, fully written down
at year end 2014.
– Adjusted profit before tax increased by NOK
45 million
Amounts in NOK million Q2 15 Q2 14 H1 15 H1 14
Total operating income 1,100 1,053 2,086 1,907
Operating profit 120 116 164 118
Net financial income (exp.) -113 -46 -148 -92
Profit before tax 8 69 16 27
Income tax expense -2 19 0 7
Profit for the period 10 51 16 19
Non-recurring items
IPO cost and refinancing 87 0 87 0
Other nonrecurring items 0 19 7 38
Total nonrecurring items 87 19 94 38
Profit before tax, adjusted 95 88 110 65
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Cash flow and working capital
Cash flow, NOK million Jun 15 Jun 14 FY 14
Cash from operating activities -135 -69 296
Cash used in investing activities -52 -63 -114
Cash (used in)/from financing activities 18 -161 -230
Net change in cash and cash equivalents -168 -293 -48
Cash and cash equivalents at 1 January 245 293 293
Cash and cash equivalents at end of period 77 0 245
Change in working capital, NOK million Jun 15 Jun 14 FY 14
Inventory -128 -34 -105
Accounts receivables and other short-term
receivables
95 -11 -28
Accounts payable and other short-term
liabilities
-103 -96 74
Change in working capital -136 -141 -59
• Cash-flow subject to normal seasonality
• Inventory increased due to – Opening of net 10 new stores and take-over of
7 franchise stores
– Value of goods purchased in foreign
currencies increased
• No repayment of loans in 2015 – Voluntary repayment of NOK 100 million in
June 2014 in addition to scheduled repayment
• Net cash-flow from the IPO of NOK 46 million
of which; – NOK 18 million is used for repayment of
shareholder loan.
– The remaining amount will be used to pay the
IPO related costs
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Outlook
• Norwegian retail market continue its positive
development
• Discount retail is still underpenetrated in Norway
and continue to take market shares
• Europris has a truly mixed assortment – Large market
– Competitive flexibility
– Resilient business model
• White space and new business opportunities
• We maintain our positive outlook from the IPO
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So far in 2015 - Summary
Europris continues to outperform the market
Europris realises growth potential through a record number of store upgrades
Europris rules the seasons
Europris remains on a strong profitable growth track
1
2
3
4 1
1
1
1
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«Norway’s leading discount variety retailer»
The best is still ahead of us.