Slide 1: Presentation The Company's current situation
LPP SA Presentation The Company’s current situation GDAŃSK, 18-03-2024
Slide 2: Agenda
Agenda 1. Disposal of Russian operations 2. Accounting treatment of the transaction 3. Estimated 4Q23 and 2023 results 4. 2024 outlook 5. Q&A 2
Slide 3: We do not trade in Russia
We do not trade in Russia LPP has no operating or trading activities in Russia. LPP divested the Russian business in June 2022. LPP does not own the Russian company, has no control over it and does not manage the structures. The Russian company in its own name and on its own account, sells goods in
Slide 4: Pre-war situation
Pre-war situation 2019 - expansion of the new Sinsay brand concept (larger stores, offer enriched with children’s and men’s collection, as well as home accessories). Sinsay’s new concept tailored to smaller cities (wide offer and low price) 2020 – COVID and company’s struggle for survival 20
Slide 5: Outbreak of war and Russia's attack on Ukraine
Outbreak of war and Russia’s attack on Ukraine December 2021 February 2022 February 2022 February-May 2022 Increased efforts on RUSSIA’S • LPP focuses on the employees • LPP hosts almost 300 people from the part of Western ATTACK of the Ukrainian company, Ukraine in Gdańsk, Cracow and countries to p
Slide 6: Difficult decision to sell the Russian company
Difficult decision to sell the Russian company February 2022 March 2022 April 2022 May/June 2022 outbreak of war • closing of offline stores, search for a buyer sale of the Russian • closing of online stores, of the Russian business business • store review (decision to close 90 stores with expiring
Slide 7: Urgent search for a way out of Russia
Urgent search for a way out of Russia LPP’S GOAL: • to recover some of the capital invested in the Russian market • to provide security and stability to employees who built the business with us, OPTION 1: OPTION 2: OPTION 3: Bearing the costs of closed Closing the business and Sale of the company st
Slide 8: Urgent search for an investor
Urgent search for an investor Solution selection process conducted under time pressure with few potential buyers OFFER 1 swap of LPP stores in Russia for stores of a Russian company outside Russia OFFER 2 purchase solely of LPP inventory in Russia OFFER 3 acquisition of selected lease agreements for
Slide 9: Sale of the Russian business
Sale of the Russian business LPP selected the offer from the Chinese consortium and Anna Pilugyna (ex-CEO of Russian Re Trading company). Despite the low equity, the offer seemed The transaction consisted of three elements: the most optimal at the time for the following 1. Price for the stores (USD
Slide 10: 2022-2024 transition period
2022-2024 transition period Obligations for the buyer: Rebranding of stores Need to start selling the Spring/Summer collection quickly Payment for goods from current turnover Need to generate cash to pay off tranches for stores Gradual takeover of management, design, purchasing, logistic
Slide 11: Russian company generates revenues independently
Russian company generates revenues independently Tasks taken over by the Russian company as part of the transition period: 1. Management of budgets and financial performance of the business 2. Relations with local banks and sourcing of financing 3. Complete inventory management for all warehouses an
Slide 12: Partial repayment of receivables
Partial repayment of receivables 1. Sale of Russian stores – selling price USD 135.5m Repayment schedule PLN m USD m % 30.12.2023 61.0 13.0 10% paid in Dec.2023 30.12.2024 120.0 27.1 20% PLN 540m 30.12.2025 210.0 47.3 35% to be repaid 30.12.2026 210.0 47.3 35% TOTAL 601.0 135.5 100% 2. Sale of goods
Slide 13: Sale structure
Sale structure 2021 2022 2023 2024 F 2025 F Total 100% 100% 100% Poland 39.3% 43.1% 42.4% Romania 6.3% 8.4% 8.3% Ukraine 7.1% 4.4% 6.8% Czech Republic 5.2% 6.7% 5.9% Germany 3.6% 4.2% 3.3% Russia 19.2% 0.0% 0.0% Trade agents - 7.5% 6.8% 3.0% 0.0% Other 19.3% 25.8% 26.5% Trade agents - FGT and AFIE c
Slide 14: Significant increase in LPP's revenues
Significant increase in LPP's revenues Revenue (PLN m) 2021 2022 YoY 2023 YoY LPP Capital Group Sale 11,338 15,926 40% 17,406 9% Sale (excl. agents) 11,338 14,731 30% 16,218 10% Poland 5,513 6,860 24% 7,385 8% Romania 889 1,330 50% 1,449 9% Czechia 731 1,067 46% 1,025 -4% Germany 499 672 35% 570 -15
Slide 15: LPP will not return to Russia
LPP will not return to Russia WE DO CONFIRM THAT: 1. The Russian business was sold in 2022 to an unrelated investor. 2. Entities: (1) Far East Services, (2) General Consulting Services, (3) FGT (FGT trade agent), and (4) Asia Fashion Import Export (AFIE trade agent), are not controlled by LPP SA in
Slide 16: Bank loans secured on LPP shares
Bank loans secured on LPP shares First bank loan granted in Second loan secured with Neither the Semper Simul 2020 to Semper Simul shares granted in 2021 Foundation, nor Foundation’s Foundation was used to Semper Simul subsidiaries, nor beneficiaries to finance purchase of LPP Foundation, used to fi
Slide 17: Change of Auditor
Change of Auditor 1. Grant Thornton (GT) was LPP’s auditor from 2004 to 2016. 2. EY was LPP’s auditor from 2017 to 2021. 3. The change of auditor resulted from regulations on mandatory rotation of audit firms. 4. Tender offer was conducted in March and April 2022 (3 offers were obtained). 5. Grant T
Slide 18: Kazakhstan is not a transit market for LPP
Kazakhstan is not a transit market for LPP 1. LPP did not ship goods to Russia through Kazakhstan. 2. LPP’s sales to its Kazakhstan subsidiary amounted to USD 15 million in 2022. 3. LPP currently has 23 stores in Kazakhstan. 4. The company’s sales in Kazakhstan account for 0.6% of Group’s revenues.
Slide 19: Correct Polish version of the annual report
Correct Polish version of the annual report POLISH VERSION Two versions of the report are published simultaneously to ensure equal access to information. The Polish version of the report is sent for translation into English in advance and includes draft figures in the tables. In this case, in the ta
Slide 20: Estimated 4Q23 financial results
Estimated 4Q23 4Q23 – estimated data, unaudited financial results PLN m, IFRS16 4Q22 (before restatement) 4Q22 (as restated) 4Q23 YoY Revenues 4,185.0 4,185.0 4,840.9 15.7% Double-digit YoY revenue growth due to new Sinsay store openings, growing LFL Gross margin on sales 50.0% 49.6% 52.5% 2.9pp.
Slide 21: Strong 2023 results
Strong 2023 results 2023 - estimated data, unaudited 2022 2022 (as PLN m, IFRS16 (before 2023 YoY restated) restatement) Revenues 15,926.5 15,926.5 17,406.2 9.3% Single-digit YoY revenue growth due to new Gross profit margin on 51.1% 50.3% 51.5% 1.2pp. sales Sinsay traditional store openings. SG&A
Slide 22: LPP's safe financial standing
LPP’s safe financial standing At the end of January 2024, the company had net cash of PLN 813m, according to IAS 17 Lease agreements under IFRS16 as at 31.01.2024 amounted to PLN 3,908m As at 31.01.2024 Amounts in PLN m Long-term debt 490 Short-term debt 49 Bonds 286 Cash (1,077) Deposits (561)
Slide 23: Further development of LPP
Bieżąca Furthersytuacja development finansowa of LPP LPP Change of strategy - after exit from the Russian market - successfully completed Highest growth potential in the value- PRIORITY - development for-money segment – Continuation of dividend of the company in Central super dynamic payment / we ar
Slide 24: Growth in number of stores 2012-2023
Growth in number of stores 2012-2023 Romania 187 +48 Czech Republic 146 +23 2,244 2,275 Ukraine 144 +19 1,856 1,962 Slovakia 94 +9 1,627 1,703 1,743 1,741 1,746 +19 Serbia 81 1,516 1,181 1,292 Hungary 76 +22 1,320 944 11,077 077 642 686 753 792 872 990 Bulgaria 75 +20 573 434 Croatia 73 +18 332 B&H
Slide 25: Sinsay's dynamic development
REVENUES - SINSAY Sinsay's dynamic (PLN m) development +25% YoY +57% 1,982 YoY 1,995 +106% +36% YoY 1,431 YoY 5,013 Expansion of the Sinsay brand 3,623 136 620 2,148 Entering cities with smaller populations opens 1,146 1,118 unlimited growth opportunities for Sinsay in the 2019 2020 2021 2022 2023
Slide 26: We maintain our conservative guidance for 2024
We maintain our conservative guidance Dynamiczny for 2024 with the goalrozwój Sinsaygrowth of significantly in revenues Group revenues at ca Offline revenues – growth Online revenues – double- due to floorspace PLN 21bn development +20% YoY and positive LFLs digit YoY growth Gross margin on sales Ma
Slide 27: Promising start to 2024
Promising start to 2024 Sales figures for the period February 1 - March 15, 2024: Brand LFL stores online growth YoY Sinsay +29% +60% Reserved, Cropp, House, Mohito +4% +6% 27
Slide 28: Q&A
O&A RESERVED CROPP House MOHITO sinsay
Slide 29: Thank You
LPP Thank You RESERVED CROPP House MOHITO sinsay