Halfjaarlijkse financiële verslaggeving

23 May 2024

Pepco Group N.V.

Interim results for six months ended 31 March 2024

Strong H1 profit growth with tangible strategic progress

Pepco Group, the fast-growingpan-European variety discount retailer, today reports interim results for the six- month period ended 31 March 2024.1

KEY HIGHLIGHTS

• Record H1 Group revenue of €3.2bn, up 13.8% year-on-year("y-o-y")
• Group gross margin up 310 basis points ("bps") to 43.1%, driven by Pepco
• Record underlying Group EBITDA (IFRS16) of €487m up 28.2%, driven by Pepco EBITDA up 38.9%
• More measured store growth and disciplined capital investment
• Strong operating cash flow of €182m, an increase of €99m over the last year
• 289 net new stores opened in H1, of which 86 in Q2
• Group expects to deliver underlying full year FY24 EBITDA (IFRS 16) of around €900m (FY23: €753m)

Note: Austria is now classified as a discontinued operation following the Group's exit of Pepco Austria. Therefore, all numbers above have been represented (including comparators) to exclude Austria.

• Group revenue of €3,200m, growing +13.8% y-o-y (+11.1% at constant currency)
• LFL revenue declined by 2.5% during H1 against a strong comparator (H1 FY23 LFL +11.1%) o Pepco LFL -3.2%; Poundland LFL -0.7%; Dealz Poland -4.6% in H1
• Gross margin of 43.1% (H1 FY23: 40.0%), driven by strong recovery in Pepco (+480 bps y-o-y)
• Underlying EBITDA (IFRS16) of €487m up 28.2% y-o-y

• 1. Strong Pepco EBITDA growth of 38.9%; Poundland EBITDA down 6.5%; Dealz EBITDA up 100.0%
• Underlying PBT of €174m up 21.7% y-o-y
• Net debt at end of H1 FY24 was €429m (pre-IFRS16), representing 0.9x LTM EBITDA (pre-IFRS16) leverage

1

Commenting on the results, Andy Bond, Executive Chair of Pepco Group, said:

"We are today reporting a solid Group performance for the first half, including record revenues and a significant uplift in gross margin, reflecting good progress against strategic priorities set out last autumn. The standout performer was Pepco's Central and Eastern European business, the key engine driver for the Group. We have successfully rebuilt gross margin and store profitability in this region back towards pre-pandemic levels with further opportunities for improvement. This achievement underscores Pepco's continuing and compelling customer offer across apparel and general merchandise at market-leading prices. Despite a positive FMCG contribution, Poundland's performance was behind expectations due to challenges in implementing the significant range change to Pepco products, which we are addressing. Dealz Poland continued to make progress.

"Across the Group, we made significant strides in improving gross margin in H1, which increased by 310 basis points to 43.1%. This improvement was driven by enhanced product purchasing, as well as a more normalised environment for commodity prices, foreign exchange and freight cost versus the prior year, notwithstanding some impact from the situation in the Red Sea.

"We continued to expand our footprint across Europe, with 289 net new stores opening, primarily within our core high-growth CEE markets, focusing capital on openings that deliver the strongest returns. The robust performance delivered in the half reflects successful delivery against our strategy and a fantastic contribution from all colleagues across the Group, as we continue to build Europe's leading variety discount retailer.

"Looking ahead, while consumer sentiment in some of our key markets remains challenging, we expect to deliver underlying EBITDA (IFRS16) for the full year in the region of €900 million, compared with €753 million in the previous year. We will also benefit from greater focus on disciplined capital investment, with an improvement in free cash flow generation expected in the full year. This financial strength positions us well to continue executing our growth strategy while maintaining a strong balance sheet."

CONFERENCE CALL

Pepco Group will host a conference call for analysts and investors to discuss its H1 FY24 interim results on Thursday 23 May at 4.30pm BST (5.30pm CEST). Investors and analysts who would like to participate in the Q&A session can dial in using the relevant number below and quote "Pepco Group Half Year".

Alternatively, a live audio webcast of the call will be available via the following link: https://brrmedia.news/PCO_HY_24

2

FORTHCOMING DATES

The Group intends to issue the following update in the near future:

• Q3 FY24 trading update: 11 July 2024

EXPLANATORY NOTES

1. The Group financials are prepared on an unaudited basis for the six-month (First Half) period ending 31
   March 2024. Within this the 'Pepco' and 'Dealz Poland' segments operate on a calendar month basis with the six-month period ending on 31st March 2024, whilst the 'Poundland UK & ROI' segment operates on a trading week basis with the 26-week period also ending on 31 March 2024.
2. Revenues are unaudited with foreign currency revenues translated at the average rate for the month in which they are made.
3. LFL revenue growth is defined as year-on-year("y-o-y") revenue growth for stores open beyond their trading anniversary.
4. Underlying EBITDA is defined as profit on ordinary activities (excluding non-underlying items) net of depreciation, amortisation, finance costs and taxation.
5. Underlying profit before tax ("PBT") excludes non-underlying items (see financial statements note 6 'Non- Underlying Items' for more details).
6. Net debt (pre-IFRS 16) represents borrowings from credit institutions and finance lease liabilities (pre-IFRS 16) net of cash and bank balances.

3

STRATEGY REVIEW

The Group has focused on a number of strategic priorities over the near term, which include the following:

1. Rebuild profitability in Pepco's core CEE business
2. Strengthen the Group's position in key markets with disciplined growth
3. Review all underperforming and non-core areas
4. Deliver stronger cash generation and cost focus

We have outlined the progress across each of these pillars below.

1. Rebuild profitability in Pepco's core CEE business

The Pepco CEE business is the key engine driver for the Group. Pepco's core CEE business generates just over 50% of the Group's revenues, but given the historically strong profitability of these stores, it generates the majority of the Group's operating profit. The Pepco CEE store network also delivers the highest returns across the estate.

Pepco enjoys strong brand recognition in CEE with a leading market share position, both in its largest home market of Poland, as well as in neighbouring countries. The latest market share data from Euromonitor1 highlights that Pepco continued to grow market share in 2023 across all markets, versus the prior year.

The core CEE estate had seen store profitability (4 wall EBITDA) decline since 2019, as a result of external factors (supply chain disruption, input cost inflation, weak consumer, adverse movements in foreign exchange) as well as internal factors (losing focus on price leadership, unfocused growth). Reversing this trend and driving improving 4 wall EBITDA is a priority for value creation within the Group.

Our objective at the start of the year was to rebuild our Pepco CEE 4 wall EBITDA (pre-IFRS16) back towards pre- Covid levels. We have already reached that target based on a last twelve months (LTM) performance through to March 2024, driven by a strong recovery in gross margin and various other operating initiatives. We expect that Pepco CEE 4 wall EBITDA will continue to improve during the second half of the fiscal year.

In addition, we have reduced the capex spend per store and optimised working capital requirements for each store which will further drive the return on invested capital on our newest stores.

2. Strengthen the Group's position in key markets with disciplined growth

The Group's ambition remains to be Europe's leading variety discount retailer. It aims to achieve this by offering quality clothing, general merchandise and FMCG products at the best prices, with stores conveniently located close to our customers, whether that is in high streets, retail parks or shopping malls. Maintaining price leadership is critical to provide a compelling value proposition for our customers and grow market share.

The Group strengthened its store profitability and customer positioning in the CEE region during the period using its proven, profitable and scalable model. New store growth was focused in core existing markets, where we have greater confidence in driving returns. For Pepco, there was a particular focus on growing scale in our core CEE business, while we continue to assess our performance in Western Europe. For Poundland in the UK, the growth of new stores was primarily driven by the conversion of Wilko stores.

The Group delivered 289 net new store openings during the first half of FY24. As previously highlighted, our store opening schedule for the year was front-end loaded, reflecting commitments made during FY23 and to take advantage of our peak trading period. While we opened 203 net new stores in Q1, this reduced to 86

1 Aggregated market data based on Euromonitor country and category reports (2023)

4

net new stores in Q2. This excludes the impact of exiting Austria which resulted in the closure of 73 stores. The Group continues to expect to open at least 400 net new stores in FY24.

New store openings across H1 FY24 by brand

Note: Austria is now classified as a discontinued operation following the Group's exit of Pepco Austria. Therefore, all numbers above (including comparators) exclude Austria.

Pepco - New store growth principally to be focused on CEE in the near term

The Group opened 215 net new Pepco stores during the first half, with 147 net new stores in CEE and 68 net new stores in Western Europe. The opening programme during H1 partly reflects commitments for store openings that were agreed in the FY23 financial year, and therefore we expect a lower number of new store openings during the second half of the year.

Just under 70% of net new store openings were across our core CEE markets during the period. Going forward, our store location strategy will be even more targeted into the CEE region, given the familiarity of these markets and our confidence in driving returns, which will enable us to further solidify our strong market position. There remains a significant white space opportunity in our core CEE markets. We saw 61 new net store openings in Poland in the period, with 1,317 stores in total at the period end. Outside of Poland, the majority of new openings within the CEE took place in Bosnia and Herzegovina, Bulgaria and Czechia.

Western Europe ("WE") remains an important area of focus for Pepco, particularly within Iberia (Spain, Portugal) and Italy, which account for 86% of WE sales and 82% of WE stores. While we remain confident in developing a store performance model that will allow us to drive profitable growth and attractive returns in WE, we will significantly reduce the number of new store openings in this region over the near term until we have conviction in delivering against its full potential.

We expect that the opening of a new distribution centre ("DC") in Madrid, Spain in late summer will be an important step in realising higher returns as it will structurally reduce current high transport and distribution costs, while improving availability in stores and drive improved sales. The opening of the DC will cut lead times on clothing and general merchandise products within Spain and Portugal, while lowering stock holding and distribution costs. The DC is expecting first deliveries to stores from September. The DC will help support growth in the region over the next five years and beyond.

Poundland - New store growth driven by Wilko conversions

We see good potential in the UK discount space over the coming years, as one of the largest markets in Europe. Poundland opened 81 stores during H1 FY24 - the higher-than-normal store openings during the period largely reflects 46 Wilko conversions over the period. In addition, we closed 40 stores in the period, with many linked to the opening of the new Wilko conversions nearby, as well as some lease expiries. There has been a mixed performance from the Wilko conversions to date, due to a combination of the scale of the conversions required to trade the stores through the Christmas period and the transition to new Pepco-sourced clothing and general merchandise products during H1, which has had an impact across Poundland's business.

Pepco-sourced clothing was first introduced across the Poundland estate from September 2023, bringing new, high- quality ranges into the UK market at a lower price point. In addition to customers benefiting from enhanced value, the move will help to drive increased Pepco brand awareness and further leverage the Group's fully integrated

5

sourcing entity, PGS. While customer reaction to the new Pepco clothing ranges has driven higher net promoter scores (NPS) and positive feedback - notably around value - there have been issues with the offer not fully replicating the previous depth of Poundland's men's and women's ranges and coverage across sizes, which has led to lower LFL revenues in the clothing categories since its implementation. These transition issues will continue during FY24 and while we expect an improved trajectory in Poundland's clothing performance during the second half of the year, we are only expecting to see the full benefit of the changes from FY25 onwards.

Pepco-sourced general merchandise was also introduced into Poundland stores from March 2024. Revenues in this category were impacted during the period as old GM was phased out to introduce the new Pepco-sourced stock. We expect the disruption is now largely behind us, with an improving performance in the second half, but as with clothing, we only expect to see the full benefit of this transition in FY25 and beyond.

We are selectively continuing our store development programme, where we are confident of delivering an appropriate return on investment and an enhanced customer experience. This includes upgrading both external and internal signage, improving lighting, installing new flooring and enhancing colleague areas.

Dealz - Brand awareness growing strongly

Dealz Poland opened 33 new stores during the period, reaching a landmark of 316 stores at the period end. The vision for Dealz is to become the largest value discounter in Poland. Our Dealz stores complement the Pepco business in Poland, offering well-known international FMCG brands and general merchandise. Brand awareness is growing quickly for our key target customers aged between 19-45 years old, with over 750,000 customers shopping at Dealz every week.

The introduction of Pepco-sourced general merchandise to Dealz was later than planned, impacting performance in H1, but is now landing and is expected to deliver improved performance in H2. The quality and prices on offer are superior to previous ranges and will enhance Dealz core FMCG offer, with expected margin benefits.

3. Review underperforming and non-core areas

One of the key immediate areas of focus, as outlined at the Capital Markets Day last October, was to review areas of underperformance in the business - whether that be markets as a whole, non-core projects and any areas that are not delivering the required levels of return that we have set ourselves.

We have acted swiftly to address non-core activities across the business in order to focus on our retail operations. This has included stopping early-stage plans on franchising and wholesaling opportunities. We paused our new look refit programme across the CEE markets, exited loss-making Pepco Austria, and undertook a rigorous performance review of all stores across the Group. We have strengthened our internal investment approvals and revisited our store evaluation processes to provide greater certainty on the results from new store openings and other investments going forwards.

Pepco 'Plus' format on hold

Our Pepco Plus format of stores offers three categories (FMCG in addition to clothing and GM). Pepco Plus is not material to the overall Pepco estate as we operate a very small number of Pepco Plus stores all located within just two regions - Spain and Portugal. Overall, at the end of H1 we operated 121 stores, accounting for 3% of overall Pepco stores. Our Pepco Plus format has created additional complexity to our operations in order to offer FMCG product, leading to higher levels of capex deployed and providing a distraction for management versus our core clothing and GM categories. In order to simplify the business, and to focus on the stronger returns delivered by our standard Pepco format, the Group will pause the rollout of new Pepco Plus stores, pending a more detailed review of the future of this format within the Group.

6

Exit of Pepco Austria

The Group announced on 19 February 2024 that it would cease its operations in Austria. The Group entered the market in 2021 and operated 73 Pepco stores in the country. The decision to discontinue these operations was made as part of the Group's review of performance across all its markets. Pepco Austria was burning cash at the rate of approximately €1m per month, such that the exit is expected to improve underlying EBITDA. Austria has been classified as a discontinued item in the accounts. In total, Austria has led to a non-cash loss on discontinued operations of €50.5 million, largely reflecting impairment of loans and receivables payable to other subsidiaries of the Group. The cash costs associated with the exit of Austria amount to approximately €13m, including costs.

'New look' store renewal paused

We paused our Pepco "New Look" programme in the autumn last year - we had initially targeted to re-fit all 2,500 Pepco stores in CEE. This was due to a challenging market backdrop and weaker consumer environment in our core CEE markets, with the programme not delivering the required level of incremental sales and returns to justify the capital spend. Going forward, rather than adopting a wholesale renewal programme across the whole estate, the Group will selectively refresh stores where it will drive the highest returns.

4. Deliver stronger cash generation and cost focus

At the Capital Markets Day last October, we committed to deliver more measured growth - doing less, to achieve more - with a greater focus on improving profitability and cash generation. As a result, the Group has taken a more disciplined approach to investment capex in FY24, which is principally related to new store growth and refits. The number of net new store openings is expected to be significantly lower this financial year compared to FY23 (668). We also expect to spend significantly less on the Pepco store re-fit programme, with 219 conversions to date, compared to 715 in FY23.

As a result of the above, we expect capital expenditure in the full year to be significantly lower y-o-y, which will in turn result in an improvement in free cash generation during the year. The reduction in H1 capex versus prior year was limited given the front loading of new stores in FY24, with some capex also rolling over from FY23. Capex in the second half will be lower than the first, with full year FY24 capex expected to be around €275m, compared with €390m in FY23.

Evidence of the strong cash generation can be seen in the H1 underlying operating cash flow of €182m, which more than doubled from the same period last year, increasing by €99m y-o-y. Free cash outflow for the Group was €4m, an improvement of €85m over the same period last year. However, FCF was impacted by a number of items including the Hungary fraud and higher levels of inventory due to the Red Sea, understating the cash performance in H1.

Cost and operational efficiencies

We are driving improvements in operating costs primarily though a focus on back office and end-to-end supply chain efficiencies. We also continue to invest in technology, both in new stores and in our refits. Initiatives include the installation of self-scan tills, and the implementation of modern retail point-of-sale systems which improves the speed and quality of service to our customers and simplifies the work for our colleagues.

The rollout of a modern Oracle ERP (enterprise resource planning) IT platform across the Group is continuing. Poundland successfully launched new modules during summer 2023, giving it a single, modern inventory management and finance solution, while introducing enhanced visibility and management of financial data, along with greater efficiency in managing accounts payable. Pepco remains in the planning stage of this same ERP platform, with an expected go live date during 2025. These investments are fundamental to the future successful growth of the business, providing a robust system, while delivering operating efficiencies.

7

Capital allocation

Our Board and management team are highly focused on optimising our capital allocation to support high-return growth investments and driving enhanced efficiencies in our business model. While market conditions remain challenging, our strategic objectives of driving LFL growth in our core markets, targeting more measured growth, making strong progress on recovering gross margin and improving operating cost efficiency gives us confidence that we can deliver long-term cash flow and value to our shareholders. We also remain focused on maintaining a strong balance sheet and healthy liquidity.

PEOPLE

In April 2024, the Group announced the appointment of Stephan Borchert as its Chief Executive Officer, effective from 1 July 2024 subject to EGM approval, concluding an extensive global executive search process undertaken by the Board. Stephan will commence an induction period starting on 1 July for three months. Andy Bond will remain in his role as Executive Chair during this transition period, reverting to the role of Non-Executive Chair on 1 October 2024, the start of the new financial year.

Stephan is an accomplished CEO with a strong track record of leading international companies across various sectors including fashion, beauty, pharmacy and healthcare services. Stephan served from 2018 to 2022 as CEO of GrandVision, the global leader in optical retail operating more than 7,400 stores in more than 40 countries worldwide under more than 33 different retail banners, with annual revenue of €4bn. Prior to GrandVision, Stephan was President of Sephora EMEA on the Global Executive Committee.

During the period, there were a few changes to the Board. Pierre Bouchut stepped down in his role as Independent Non-Executive Director and Audit Committee Chair at the AGM in March 2024. The Board thanks Pierre for his service and commitment to the Company over the last three years.

Frederick Arnold will be appointed to the Board as a non-executive director, subject to EGM approval on 6 June 2024, replacing Pierre's position as Audit Committee Chair. Frederick is an experienced senior financial executive who has extensive experience serving as board chair, audit committee chair and chair of a variety of transactional and other special committees across numerous public and private UK and US companies.

In addition, we announced the appointment of Sean Mahoney to the Board as a non-executive director in March 2024. Sean has joined the Board's audit and nomination committees. Sean has extensive experience serving as a board director for large public and private companies across Europe and the US. Sean also serves as a director of Ibex Group, an independent investment holding company and Pepco Group's largest shareholder.

HUNGARY FRAUD INCIDENT

As reported on 27 February 2024, Pepco Group was the target of a sophisticated fraudulent phishing attack in its Hungarian business, resulting in a loss of approximately €15.5 million in cash. The investigation into the fraud by various national and international authorities, including the pursuit of any potential recovery, is ongoing. The Company has also undertaken a full investigation including a review of its phishing training and procedures throughout the Group, which have been fully re-communicated throughout the business with mandatory assessments. Additional actions have also been taken to strengthen controls across the business based on specific learning from this incident.

CURRENT TRADING AND OUTLOOK

Group LFL revenues in the seven weeks to 19 May 2024 are behind versus the prior year, partly reflecting the timing of Easter, which fell into March 2024 versus the prior year. In addition, managing availability in stores remains a challenge in relation to the issues in the Red Sea, with lower-than-expected stock of summer ranges hitting shelves

8

that has impacted revenues. Stock is typically taking 2-4 weeks longer to arrive, despite efforts to mitigate the impact by channeling stock through different shipping routes.

Despite this, the Group is confident of delivering a FY24 underlying EBITDA (IFRS 16) of around €900m, given the continuing recovery in the gross margin. Management continues to focus on what is within its control to drive free cash generation, leveraging the opportunity to grow in our existing core CEE markets in a targeted way, while keeping a strict focus on returns and driving cost efficiencies in our supply chain and back office. We remain confident in the strength of our customer proposition and our price leadership position, as well as our ability to deliver against our strategic growth priorities.

CHANGES TO REPORTING CALENDAR

The Board has reviewed the financial reporting calendar in relation to the frequency the Group reports to the market. The Group currently reports six times a year, which includes four quarterly trading updates as well as the half year and full year. Having reviewed our disclosure obligations and ensuring we strike a balance between keeping the market informed against the additional work and complexity for the management team in sticking with the current reporting schedule, we will be making the following changes to our reporting calendar, effective immediately:

• Remove Q2 and Q4 trading updates: The Group will no longer publish Q2 and Q4 trading updates given the proximity to the half year and full year results respectively.
• Add a pre-closeFY trading update: The Group will publish a pre-close full year trading update in late September to update on our full year position.

9

FINANCIAL REVIEW

Pepco Group N.V. Consolidated Condensed Interim Financial Statements for the six-month period ending 31 March 2024 are shown on page 19 onwards.

• The Group has recorded revenue in H1 FY24 of €3,200m, up 13.8% on prior year largely driven by continued store roll out strategy. The Group's total number of stores reached 4,845 at H1 FY24, a net increase of 781 stores from H1 FY23. Constant currency revenue growth was 11.1%, while LFL sales were down by 2.5% during the period across all of the Group's brands.

1. Pepco first half sales grew 16.3% to €1,986m; Poundland sales increased 5.3% to €1,054m while Dealz

Poland sales increased 55.3% to €160m.

1. The Group's net new stores in H1 FY24 was 289 versus 166 in H1 FY23. However, this reflects a back

half weighted store opening programme in FY23 compared with a first half weighted opening programme in FY24. The business opened 203 net new stores in Q1 FY24 and 86 in Q2 with guidance of around 400 net new stores for the full year FY24. While store growth is continuing it is at a more measured pace with increased focus on our core CEE region.

• 1. Negative H1 FY24 LFL across all core markets of -2.5% is driven largely by Pepco (-3.2%) against a strong comparative of +15.4% in H1 FY23. Poundland and Dealz have both been impacted by the transition to the Pepco range for both clothing and general merchandise leading to LFLs of -0.7% and -4.6% respectively for the half.
• The Group has delivered significant improvements in gross margin, now at 43.1%, a 310 basis points ("bps") increase versus the prior HY period of 40.0%. Pepco's margin expansion was the key contributor to this growth, with a margin of 45.5% in H1 FY24 up 480 bps compared to 40.7% at H1 FY23. This was driven by reductions in freight costs and commodity prices alongside improved discounts obtained from our suppliers.
• Recognising the backdrop of high inflation, operating costs have been a key focus and have been managed 10