xxl q2 2014

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PAGE 1 INTERIM REPORT Q2 2014 XXL ASA Q2 Growth Revenue +32% EBITDA +47% HIGHLIGHTS Total revenues of NOK 1 246 million (NOK 945 million), up 32 per cent EBITDA increased by 47 per cent to NOK 184 million Successful opening in Finland One new store in Norway and two new stores in Sweden

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Quarter 2 results XXL ASA

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Page 1: XXL Q2 2014

PAGE 1

INTERIM REPORT Q2 2014

XXL ASA

Q2 Growth

Revenue +32%

EBITDA +47%

HIGHLIGHTS

Total revenues of NOK 1 246 million (NOK 945 million), up 32 per cent

EBITDA increased by 47 per cent to NOK 184 million

Successful opening in Finland

One new store in Norway and two new stores in Sweden

Page 2: XXL Q2 2014

Q2 2014

PAGE 2

KEY FIGURES

(Amounts in NOK million) Q2 2014 Q2 2013 H1 2014 H1 2013

FY 2013

Audited

GROUP

Operating revenue 1 246 945 2 280 1 724 4 010

Growth (%) 31,8 % 38,8 % 32,3 % 29,5 % 29,1 %

Gross profit⁴ 530 392 931 688 1 611

Gross margin (%) 42,5 % 41,4 % 40,8 % 39,9 % 40,2 %

EBITDA² 184 126 257 177 460

EBITDA margin (%) 14,8 % 13,3 % 11,3 % 10,3 % 11,5 %

EBIT¹ 166 112 222 150 401

EBIT margin 13,4 % 11,8 % 9,7 % 8,7 % 10,0 %

Basic Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11

Average number of shares (1 000 shares) 1 094 450 1 094 450 1 094 450 1 094 450 1 094 450

Net cash flow from operating activites 33 117 407

Like for like revenue growth 5,2 % 7,1 % 7,8 % 3,0 % 3 %

Number of stores at quarter end 39 30

SEGMENT

Norway

Operating revenue 785 687 1 508 1 270 2 883

Growth (%) 14,3 % 29,0 % 18,8 % 19,7 % 19,8 %

Gross profit⁴ 352 300 644 531 1 223

Gross margin (%) 44,9 % 43,6 % 42,7 % 41,8 % 42,4 %

EBITDA 197 149 319 237 588

EBITDA margin (%) 25,2 % 21,7 % 21,2 % 18,6 % 20,4 %

Number of stores at quarter end 23 20

Sweden

Operating revenue 385 257 695 452 1 125

Growth (%) 49,8 % 72,5 % 53,8 % 75,9 % 60,6 %

Gross profit⁴ 156 92 267 157 386

Gross margin (%) 40,6 % 35,8 % 38,3 % 34,8 % 34,3 %

EBITDA 37 4 43 1 26

EBITDA margin (%) 9,7 % 1,7 % 6,2 % 0,3 % 2,3 %

Number of stores at quarter end 15 10

Finland

Operating revenue 76 0 76 0 0

Growth (%) N/A N/A N/A N/A N/A

Gross profit⁴ 21 0 21 0 0

Gross margin (%) 27,6 % 0,0 % 27,6 % 0,0 % 0

EBITDA 2 -1 -5 -1 -4

EBITDA margin (%) 2,6 % 0,0 % -6,1 % 0,0 % 0,0 %

Number of stores at quarter end 1 0

HQ & logistics

Operating revenue 0 2 0 2 2

EBITDA -53 -27 -101 -60 -150

EBITDA margin (%) -4,2 % -2,9 % -4,4 % -3,5 % -3,7 %

Page 3: XXL Q2 2014

Q2 2014

PAGE 3

Strong improvement in EBITDA margin and

successful entry in Finland Oslo, 28 August 2014: The Nordic sporting goods retailer Megasport AS (to be renamed to XXL ASA) reports continued strong growth and increased margins in the second quarter and first half year of 2014. One new store in Norway and two new stores in Sweden are added to the XXL Group this quarter, but most important, a successful entry in Finland. The XXL Group (Megasport AS, to be renamed XXL ASA with subsidiaries) continues its strong growth path with total operating revenues in the quarter of NOK 1 246 million (NOK 945 million), equaling a 32 per cent growth rate compared to the same quarter last year. Operations in Norway reported a 14 per cent revenue growth, while the Swedish operation achieved a 50 per cent growth. In addition to growth in Norway and Sweden, XXL has successfully opened its first store and started online sales in Finland. With only one store and e-commerce XXL has reached sales of NOK 76 million in the first three months of operations. On the opening day, 2

April, the brand new

Helsinki store reached gross sales of NOK 6.4 million, with customers queuing up in 1.5 km line outside the store at the opening. Most remarkably, XXL is already showing a positive EBITDA-margin in Finland with second quarter EBITDA of NOK 2 million. Gross margin for the Group improved to 42.5 per cent, compared to 41.4 percent in the same quarter in 2013. The improvement includes NOK 19 million of supplier bonuses relating to 2013 which equals 1.5 per cent of sales. Adjusted gross margin for second quarter is thus 41.0 per cent. Sweden is showing significant improvement in gross margin, while the adjusted gross margin in Norway was somewhat below last year. Operating expenses before depreciation in the second quarter of 2014 increased to NOK 346 million (NOK 266 million) which is an increase of 29.9 per cent compared to the same period in 2013, mainly driven by an increase in the number of stores. There was a significant improvement in efficiency where operating expenses decreased from 28.1 per cent of sales in Q2 2013 to 27.7 per cent in Q2 2014. The figures include a one-off cost of NOK 5 million in the second quarter of 2014. Adjusting for this, operating expenses is 27.3 per cent of sales, down 0.8 per cent points from the same period in 2013. Both Norway and Sweden showed improvement in cost as per cent of sales. As a result Group EBITDA in second quarter of 2014 was NOK 184 million, up from NOK 126 million in the same quarter last year, which is an increase of 46.6 per cent. Adjusted for the supplier bonuses for 2013 and the one-off cost item the increase was 35.9 per cent, which gives an EBITDA margin of 13.7 per cent compared to 13.3 per cent in 2013. The group had net financial expenses in the quarter of NOK

59 million (NOK 57 million), resulting in a net profit of NOK 80 million for the quarter, compared to a profit of NOK 37 million in the same period last year. Inventories were higher than normal at the end of the quarter, mainly due to a poor winter and planned build-up of assortment for new stores. This inventory build-up is also reflected in the cash flow from operations, which was weaker than the same period last year. The financial position is good. Total liquidity reserves as of 30 June 2014 totaled NOK 234 million and the equity ratio was 25 per cent. The strong growth of the revenues and earnings are expected to continue throughout 2014, following the plan for new store openings in Sweden and Finland. By the end of 2014 XXL is planning to open two new stores in Sweden and three in Finland.

Strategy and operations

The XXL Group operates a retail chain with large, fully-owned sporting goods stores. As of 30 June 2014, the group operated 23 stores in Norway, 15 stores in Sweden, one in Finland, plus E-commerce in all three countries. Nordic growth strategy XXL is actively focusing on expanding its footprint in the Nordic countries. An important part of this strategy is entering into new markets. With each new market, the organization is better prepared and poised to be successful, which has been demonstrated with the successful entry into Finland. Continuous efforts are made to improve operations,

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Q2 2014

PAGE 4

combined with a strong focus on driving growth throughout the organization.

Market conditions

Temperatures and snow conditions play an important role in the demand for winter sports goods in the Nordic region. The first quarter was impacted by a mild winter, but the early spring resulted in good sales of spring and summer related products. XXL’s efficient logistics provides the ability for stores to rapidly switch from winter to summer assortment, enabling the company to achieve strong sales growth in the two first quarters of 2014. This proves that the XXL concept is dynamic and not dependent on perfect seasonal conditions.

The markets in Norway, Sweden and Finland are characterized by local differences in terms of both size, consumer behavior and margins, but all three markets have a strong the demand for a wide range of sporting goods, following a strong culture for outdoor activities, distinct difference between seasons as well as generally good household economies.

Efficiency improvements

XXL’s growth strategy also implies a strong and continued focus on operational improvements in stores, supply chain and logistics. These efforts have enabled XXL to increase the operating margins and at the same time deliver strong growth. The new central warehouse in Sweden, which opened in October 2013, covers all product flow outside of Norway and is instrumental in achieving economies of scale and more optimal sourcing in Sweden. Additional benefits of the warehouse's location inside the EU include more efficient logistics and an improved gross margin, due to lower prices from suppliers and reduced customs from Norway, as XXL Sweden used to receive its goods from the existing central warehouse in Norway. Lean and sales focused organization

XXL is a lean organization with a strong focus on sales growth and effective operations. Good sales people in all stores is a key success factor, and recruitment and training are important activities to ensure all employees “live the brand” and are able to contribute to continued success for XXL.

The Finnish market entry has demanded significant resources from the whole XXL organization, both to ensure a successful launch of the first store and the XXL concept in Finland. We are therefore delighted to see that the first months of operation in Finland are significant above our expectations.

Operating segments

The group’s reporting structure comprises three operational segments based on XXL’s operations in Norway, Sweden and Finland, in addition to HQ and logistics.

Norway

XXL is the largest market player in Norway with 25 per cent market share. The market is characterized by high consumption of sports equipment and clothing. XXL further strengthened its leading position during the second quarter. Operating revenues increased by 14.3 per cent to NOK 785 million (NOK 687 million). This increase was primarily due to the opening of three new stores during the last 12 months, but the like for like growth was also strong with 6.1 per cent. EBITDA was NOK 197 million (NOK 149 million). The growth in profit is a result of both higher sales and improved margins. The improvement includes NOK 16 million of supplier bonuses which is related to the financial year 2013. Adjusted EBITDA margin is 23.1 per cent compared to 21.7 per cent last year. Several new stores were opened in smaller towns during 2013 and 2014, Steinkjer, Tønsberg, Mo i Rana and Hamar. All stores are already profitable, and stores opened in 2013 are already as profitable as the average Norwegian store. Sweden

XXL continues with its solid growth in Sweden. Operating revenues grew by 49.8 per cent (45.9 per cent in local currency) and amounted to NOK 385 million (NOK 257 million). The strong growth is mainly due to the sales from five new stores opened during the last 12 months. Like for like growth was 2.0 per cent (-0.1 per cent in local currency) lowered by one additional store in Stockholm cannibalizing from the existing stores. The additional store in Stockholm has though given a positive synergy effect on marketing cost for the other Stockholm stores. XXL now has four stores in Stockholm, The last store is located in central Stockholm making it possible for XXL to reach a significant higher share of the population of the biggest city in Scandinavia.

The growth in Q2 implies that XXL will continue to gain market share from competitors in Sweden. One of the key competitors, Decathlon, has recently closed its first store in Stockholm, after only two years of operation. This store was close to the XXL store located in Bromma, Stockholm. This may be a proof of how strong the XXL concept is. XXL’s strong growth in Sweden will continue in 2014 with the

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Q2 2014

PAGE 5

opening of two more stores. This development proves that Swedish consumers have welcomed the XXL concept. There has been significant improvement in both gross margins and operating expenses. The improvements in margins is a result of the new central warehouse in Sweden which has reduced customs duties, but has also achieved better prices from suppliers and improved logistics costs. Improvement in operating expense is a result of better store operations and reduced cost due to synergies, as for example marketing cost in Stockholm. Improvements in gross margin and operating expenses resulted in an EBITDA of NOK 37 million (NOK 5 million), which is up 733 per cent. The improvement includes NOK 2 million supplier bonuses which is related to the financial year 2013. Adjusted EBITDA margin is 9.1 per cent compared to 1.7 per cent last year. Finland

The opening of the first store in Finland was and is a huge success, and together with e-commerce sales well above expectations, XXL is very pleased with the entry into the Finnish market. Operating revenue for the first quarter was NOK 76 million. The gross margin in Finland is lower than both Norway and Sweden. This can be explained by using very low prices when entering a new market. There is only one chance to make a solid first impression and XXL shall be cheapest in the market. At a more mature stage gross margin for Finland should come closer to that of Sweden. A combination of good planning, professional operations and the Finnish consumer embracing the XXL concept has resulted in a positive EBITDA of NOK 2 million already in the first quarter of operation. XXL is planning to open three additional stores within the end of 2014. E-Commerce

E-commerce is an important focus area for XXL, representing the sales channel with the highest growth rate. E-commerce is included in the country figures, but is managed by a specialized e-commerce team and operates the websites xxl.no, xxl.se and xxl.fi. Operating revenue for E-commerce in second quarter is NOK 73 million (NOK 38 million) a growth of 92 per cent. All markets are showing high growth, as well as the launch of the Finnish website.

HQ and logistics

The HQ and logistics segment includes cost related to the group’s headquarter and logistics operations, as well as centralized E-commerce management and all financial income and financial expenses. Operating expenses of these functions were NOK 53 million (NOK 27 million). The increase compared to last year is related to one additional central warehouse, more goods to handle as a result of growth Group and Group functions to handle the growth. There has also been a change in policy related to bonus

accruals. From 2014 bonus for management is accrued during the year instead of taking all cost in December as in 2013. The bonus accrual for 30 June 2014 equals NOK 6 million, where of NOK 3 million in the second quarter. The increase in cost is also including a one-off cost of NOK 5 million accrued in 2014. Adjusted cost rate for the quarter is 3.6 per cent (2.9 per cent).

Financials

(Figures in brackets = same quarter previous year, unless otherwise specified)

Consolidated income statement

Operating revenues increased by 32 per cent to NOK 1 246 million (NOK 945 million). The increase was primarily due to new stores opened in the last 12 months, but also reflecting strong E-commerce growth and growth in existing stores. At the end of the quarter, XXL operated 39 stores compared to 30 at the end of the same quarter in 2014. Gross profit amounted to NOK 530 million (NOK 392 million), an increase of 35 percent and is driven by higher operating revenue. The improvement includes bonus from suppliers of NOK 18 million related to 2013. Adjusted increase is 31 per cent, and gives a gross margin of 41.0 per cent (41.4 per cent).

The gross margin in Norway is slightly lower than last year, but must be viewed together with the high Like for Like sales growth. Sweden has a significant improvement in gross margin which is a result of continuous improvement of purchasing practices as well as the effects from the new central warehouse in Sweden.

Operating expenses were NOK 1 079 million (NOK 833

million), up 30 per cent. New stores are the largest contributor to the increase as well as the new central warehouse in Sweden, which has been operational since October 2013. Most of the new established stores are opened in Sweden where the operating expenses are higher than in Norway.

Net financial expenses increased by NOK 2 million and came to NOK 59 million (NOK 57 million). The increase was primarily due to foreign exchange differences.

Tax expenses were NOK 27 million (NOK 17 million). The effective tax rate was 25 per cent (31 per cent). Net profit improved from NOK 37 million to NOK 80 million as a result of the reasons stated above.

Consolidated cash flow

Cash flow from operating activities YTD was NOK 33 million which is lower than last year (NOK 117 million), mainly due to increased inventory

of NOK 241 million following the poor

winter and build-up for new stores. Cash used by investing activities was negative NOK 49

Page 6: XXL Q2 2014
Page 7: XXL Q2 2014

Q2 2014

PAGE 7

Condensed consolidated financial statements UNAUDITED, FOR THE PERIOD ENDED JUNE 30, 2014

Condensed Consolidated Interim Income Statement

(Amounts in NOK million) Q2 2014 Q2 2013 H1 2014 H1 2013FY 2013

Audited

Total Operating Revenue 1 246 945 2 280 1 724 4 010

Cost of goods sold 716 554 1 349 1 036 2 399

Personnel expenses 173 131 351 259 606

Depreciation 18 14 35 27 59

Other operating expenses 173 135 324 253 544

Total Operating Expenses 1 079 833 2 059 1 574 3 609

Operating Income 166 112 222 150 401

Total Financial Income 18 1 36 14 42

Total Financial Expense 76 58 160 131 267

Net Financial Income (+) / Expense (-) -59 -57 -124 -117 -225

Profit before income tax 108 54 98 33 176

Income tax expense 27 17 27 13 51

Profit for the period 80 37 71 21 125

Basic Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11

Diluted Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11

Other comprehensive income

Items that may be subsequently reclassified to profit or loss

Foreign currency rate changes 4 -2 6 1 1

Total Other Income and Expense 4 -2 6 1 1

Total comprehensive income for the year 84 35 77 22 126

The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements

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Q2 2014

PAGE 8

Condensed Consolidated Interim Statement of Financial Position

(Amounts in NOK million) 30.6.14 30.6.13

31.12 2013

Audited

NON CURRENT ASSETS

Intangible Assets

Goodwill 2 734 2 734 2 734

Other intangible assets 215 195 214

Total Intangible Assets 2 948 2 929 2 948

Fixed Assets 420 363 413

Noncurrent Financial Assets 4 6 4

Total Non Current Assets 3 373 3 298 3 365

CURRENT ASSETS

Inventory 1 314 894 1 073

Trade and Other Receivables 193 118 227

Cash and Cash Equivalents 44 47 170

Total Current Assets 1 550 1 058 1 469

TOTAL ASSETS 4 923 4 356 4 834

SHAREHOLDERS' EQUITY

Paid-in Capital 1 096 1 096 1 096

Retained Earnings 154 -27 78

Total Shareholders' Equity 1 250 1 069 1 173

LIABILITIES

Deferred tax liability 66 49 41

Total Provisions 66 49 41

Other long-term debt

Other long-term debt 991 1 099 1 038

Loan from shareholder 1 752 1 592 1 669

Total other long-term debt 2 743 2 691 2 707

Total long-term debt 2 809 2 740 2 747

Short-term debt

Accounts payable 440 250 415

Short-term borrowings 118 78 139

Derivatives - 8 4

Tax payable 23 8 48

Public duties payable 114 87 120

Other short-term debt 171 115 188

Total short-term debt 865 547 913

TOTAL LIABLILITIES 3 673 3 287 3 661

TOTAL EQUITY AND LIABILITIES 4 923 4 356 4 834

The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements

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Q2 2014

PAGE 9

Condensed consolidated interim Statement of Changes in Equity

(Amounts in NOK million)

Paid-in

Capital

Retained

earnings

Foreign Currency

Rate Changes

Total

Shareholders'

Equity

Shareholders' Equity 01.01.13 1 096 -48 0 1 048

Net income H1 2013 21 21

Foreign currency rate changes 1 1

Shareholders' Equity 30.06.13 1 096 -27 1 1 069

Shareholders' Equity 01.01.14 1 096 77 1 1 173

Net income H1 2014 71 71

Foreign currency rate changes 5 5

Shareholders' Equity 30.06.14 1 096 148 6 1 250

The share capital as of 30.06.2014 is 109.5 million NOK

The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements

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Q2 2014

PAGE 10

Condensed consolidated interim statement of cash flows

(Amounts in NOK million) H1 2014 H1 2013

FY 2013

Audited

Operating Activities

Profit before income tax 98 33 176

Adjustments for:

Income tax paid -25 -17 -25

Depreciation 35 27 59

Impairment of non-current assets 0 0 1

Interest payments 42 46 80

Interest expense on shareholder loan 83 75 152

Amortisation of capitalised transaction costs 4 4 8

Fair value movement of financial derivatives -4 -4 -8

Changes in working capital:

Changes in inventory -241 -115 -295

Changes in accounts receivable 50 166 55

Changes in accounts payable 25 -17 147

Prepayments of financial leases -5 -1 40

Changes in other assets and liabilities -29 -92 17

Cash provided (used) by operating activities 33 105 407

Investing Activities

Acquisition of fixed assets and intangible assets -49 -53 -152

Cash provided (used) by investing activities -49 -53 -152

Financing Activities

Payments on long-term debt -68 -28 -60

Interest payments -42 -46 -80

Change in bank loans 0 12 0

Cash provided (used) by financing activities -110 -62 -140

Net Change in Cash and Cash Equivalents -126 -10 114

Cash and cash equivalents - beginning of year 170 57 57

0 0 -2

Cash and Cash Equivalents - End of Period 44 47 170

The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements

Effect of foreign currency rate changes on cash and equivalents

Page 11: XXL Q2 2014

Q2 2014

PAGE 11

Notes to the interim financial statements

Note 1 General information

XXL ASA and its subsidiaries' (together the "company" or the "group operating activities are related to the resale of sport clothes in the Nordic countries. All amounts in the interim financial statements are presented in NOK million unless otherwise stated. Due to rounding, there may be differences in the summation columns. The condensed interim financial statements were authorized for issue by the Board of Directors in XXL ASA on 28 August 2014. These condensed interim financial statements have not been audited.

Note 2 Basis of preparation

These condensed interim financial statements for the three months ended 30 June 2014 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRS as adopted by the European Union ('IFRS').

Note 3 Accounting policies

The accounting policies applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended 31 December 2013, except for the adoption of amended standards and new interpretations which are mandatory from 1 January 2014. These are described below:

IFRS 10 Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional

guidance to assist in the determination of control where this is difficult to assess. Adoption of IFRS 10 did not have any material effect on these financial statements.

IFRS 12 Disclosures of Interest in Other Entities includes the disclosure requirements for all forms of interest in other entities, including joint arrangements, associates, structured entities and other off-balance sheet vehicles. Adoption of IFRS 12 did not have any material effect on these financial statements.

Note 4 Estimates, judgments and

assumptions

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgments made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31.12.2013.

Note 5 Financial risk management and

Financial Instruments

Determination of fair value

The interest rate swap contract expired during the second quarter. At the date of the contract expiration the fair value of the swap was NOK 0. There no other open derivative contracts as of 30 June 2014.

.

Note 6 Earnings per share

Q2 2014 Q2 2013 H1 2014 H1 2013

Total profit ( in NOK million) 80 37 71 21

Weighted average number of ordinary shares in issue1 094 449 501 1 094 449 501 1 094 449 501 1 094 449 501

Adjustment for:

Weighted number of ordinary shares in issue for diluted earnings per share 1 094 449 501 1 094 449 501 1 094 449 501 1 094 449 501

Basic Earnings per share (in NOK) 0,07 0,03 0,06 0,02

Diluted Earnings per share (in NOK) 0,07 0,03 0,06 0,02

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Note 7 Seasonality of operations

Our business is seasonal, and we have historically realized a higher percentage of our total operating revenue and operating income in the first quarter of each year. This seasonality is a characteristic of the Nordic sports retail market since countries in the Nordic region are attractive and reputed places for winter sports. Therefore sales of winter related products are higher when winter conditions are favorable. For example, we generated approximately 19.4 per cent of our total operating revenues in the three months ended 31 March 2013 and 43.0 per cent by the end

of 30 June 2013. Accordingly our working capital increases in the fourth quarter of the year, since we significantly expand our inventory of the winter sport product range. Revenue and profit related to the rest of our products is more evenly spread between the second and the third quarter. As a result, our working capital fluctuates during the year in response to seasonal trends in our business, with a peak in July and December.

Note 8 Operating Segments

The Group's business is the sale of sports and leisure equipment. Segment performance is reviewed by Management and the Board of Directors as three reportable geographical segments and HQ & Logistics segment. The following presents the Group’s revenue by geographic segment:

Q2 2014

Amounts in NOK million Norway Sweden Finland

HQ &

Logistics Total

Operating revenue 785 385 76 - 1 246

Gross profit 352 156 21 - 530

EBITDA² 197 37 2 -53 184

Operating Income 191 33 2 -59 166

Q2 2013

Amounts in NOK million Norway Sweden Finland

HQ &

Logistics Total

Operating revenue 687 257 - 2 945

Gross profit 300 92 - 0 392

EBITDA² 149 4 -1 -27 126

Operating Income 142 1 -1 -30 112

01.01.2014 - 30.06.2014

Amounts in NOK million Norway Sweden Finland

HQ &

Logistics Total

Operating revenue 1 508 695 76 - 2 280

Gross profit 644 267 21 - 931

EBITDA² 319 43 -5 -101 257

Operating Income 306 33 -5 -112 222

01.01.2013 - 30.06.2013

Amounts in NOK million Norway Sweden Finland

HQ &

Logistics Total

Operating revenue 1 270 452 - 2 1 724

Gross profit 531 157 - -0 688

EBITDA² 237 1 -1 -60 177

Operating Income 223 -6 -1 -66 150

01.01.2013 - 31.12.2013

Amounts in NOK million Norway Sweden Finland

HQ &

Logistics Total

Operating revenue 2 883 1 125 - 2 4 010

Gross profit 1 223 386 - 2 1 611

EBITDA² 588 26 -4 -150 460

Operating Income 560 8 -4 -163 401

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Note 9 Related Party Transactions

The Group's related parties include its associates, key management, members of the board and majority shareholders. The Board members represent 97.7 per cent of the shares (voting rights) in the Group. None of the Board members have been granted loans or guarantees in the current year. Furthermore, none of the Board members are included in the Group’s pension or bonus plans. The Group's principal owner, Xin Holding Guernsey, has provided an interest-bearing shareholder loan to the Group. The group has outstanding a loan to an associate, XXL Game Reserve, amounting to NOK 4 million as of 30 June 2014. As of 30 June 2014, the book value of this loan was NOK 1 752 million. The interest on the loan is calculated using the arm's length principle.

Note 10 Commitments

The Group has entered into agreements with fixed payment commitments in respect of the following as of 30.06.2014: Long term lease contracts for new stores in Finland, total commitments of 298.3 mNOK for the next 6-10 years.

Note 11 Fixed Assets and intangible assets

Note 12 Subsequent Events

On 15 July 2014, the Group refinanced the Prior Senior Facility and entered into a new senior facility agreement, which comprises a 5-year term loan facility of NOK 1 087 million, a multicurrency revolving credit facility and an overdraft facility. With the new loan agreement, the interest rate margin will be significantly reduced.

(Amounts in NOK million) PPE Goodwill

Other

intangible

assets

Balance 01.01.2014 413 2 734 214

Additions 45 0 4

Disposals 0 0 0

Depreciation and amortisation -32 0 -3

Net exchange differences -6 0 0

Balance 30.06.2014 (unaudited) 420 2 734 215

Additions mainly related to purchase of f ixtures and fittings in new and existing stores.

Amounts in NOK million PPE Goodwill

Other

intangible

assets

Balance 01.01.2013 325 2 734 200

Additions 38 0 15

Disposals 0 0 0

Depreciation and amortisation -25 0 -2

Net exchange differences 7 0 0

Reclassification fixed assets* 18 0 -18

Balance 30.06.2013 (unaudited) 363 2 734 195

Additions mainly related to purchase of f ixtures and fittings in new and existing stores.

*) Assets reclassif ied as part of the implementation of f ixed assets register

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PAGE 14

Disclaimer

This report includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this notice, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “may,” “assume,” “plan,” “intend,” “will,” “should,” “estimate,” “risk” and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forward-looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this notice.

Footnotes/Definitions Non – GAAP Measures Certain financial measures and ratios related thereto in this

quarterly report, including growth, gross profit, gross margin, EBIT, EBIT margin, EBITDA, EBITDA margin, working capital and net interest bearing debt (collectively, the “Non-GAAP Measures”), are

not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented in this quarterly report because they are among the measures used by

management to evaluate the cash available to fund ongoing, long-term obligations and they are frequently used by other interested parties for valuation purposes or as a common measure of the

ability of a company to incur and meet debt service obligations. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under

IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to profit for the year, total operating revenues, operating income or any other

performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies.

1)

EBIT

Our EBIT represents operating income. 2)

EBITDA Our EBITDA represents operating income plus depreciation. 3) Like for Like

Like for Like or Comparable stores are stores that have been open all months of the current year and all months of the previous year.

Stores that have been relocated or significantly expanded are excluded from Like for Like stores. 4) Gross profit

Gross profit represents operating revenue less cost of goods sold. 5) Working capital

Working capital consists of accounts receivables, accounts payables, inventory, other receivables and other current liabilities. 6) Net interest bearing debt

Net interest bearing debt is defined as total other long-term debt and short-term borrowings less cash and cash equivalents

www.xxlasa.com/investor

Q2 and H1 results: 31.07.2014

Q3 results: 06.11.2014

Q4 and full year results: 25.02.2015

FINANCIAL CALENDAR

Contact person:

E-mail:

Phone:

INVESTOR CONTACT

Tolle Grøterud

[email protected]

4790272959