FACTBOOK 2019/20 A GLOBAL BRAND, A POLISH COMPANY We are an international retail company based in Gdańsk with almost 30 years of experience in designing and selling clothes and accessories. 39 countries We own five fashion brands. off-line + on-line PLN 9.9 billion revenues e-commerce 1,746 12% stores of revenues 24,000+ employees 2 TABLE OF CONTENTS 1 . GROUP OVERVIEW 4 2. HISTORY 8 3. BRANDS 14 4. E-COMMERCE 36 5. REGIONS 40 6. VALUE CHAIN 58 7. BUSINESS MODEL 74 8. FINANCIALS 96 9. STRATEGY 102 10. OUTLOOK 108 11. PRESENCE ON WARSAW STOCK EXCHANGE 112 12. CORPORATE SOCIAL RESPONSIBILITY 118 13. RISK MANAGEMENT 134 GLOSSARY 138 3 1 . GROUP OVERVIEW Vision, mission and values inspire us in our everyday work and influence the way we function.Mission determines the role and the purpose of LPP’s existence, while vision defines our ambitions and sets the direction in which we are heading. Values describe the manner in which LPP employees behave, regardless of their position. Values are like a DNA code. They not only influence the way we function as an organization but also determine our approach to customers, employees, business partners and all our stakeholders. OUR OUR VISION MISSION Passion drives us forward, We help our customers to realize making our company the top their dreams through the way fashion retailer in the world. they look and feel. 4 FIRE–FUELLED WE ARE FUELLED BY INTERNAL FIRE. We are full of energy. We are passionate about our business, our brands and our customers. We are proud to be part of LPP. AMBITION–DRIVEN AMBITION DRIVES US IN ACTION. We seek new challenges every day and strive for excellence. We dare for more. We expect the unexpected. SOCIALLY–RESPONSIBLE WE ARE RESPONSIBLE FOR WHAT WE DO. We care for our closer and further surroundings. We support our employees and partners. We listen to their needs to act in harmony with nature. TEAM–ORIENTED AS A TEAM WE ARE THE GREATEST STRENGTH. The opinion of each team member is just as important. We treat everyone as we would like to be treated ourselves. Fairness, respect, justice and tolerance are our guideposts of action. 5 MURMANSK 1,785 km @ NO. OF LPP STORES @5 END OF 2019/20 GDAŃSK • LPP’s headquarters LPP ON THE • Design centres of AND THE FURTHEST LOCATIONS Reserved, Cropp, Sinsay brands FROM LPP's HQs • Back-office @29 • E-commerce WORLD STAGE • Distribution centre @19 @332 @ @23 GDAŃSK A GLOBAL CLOTHING RETAILER @ @1 @ WARSAW @874 WARSAW • Reserved design @ @19 centre CRACOW • Showrooms of 5 @ @89 @104 brands LPP is successfully developing on the core Polish market LONDON @57 1,295 KM 10 and consistently expanding on foreign markets. @ @31 @ 6 @59 CRACOW At the end of 2019/20 LPP had 1,746 stores in 25 countries @29 • Design centres for House and Mohito and on 3 continents. @ 5 21 brands 25 @ @ 3 ABU DHABI @ 1 4,502 KM 1 @ 2 Reserved, Moscow, Russia Reserved, Munich, Germany @ 1 @ @ 6 Poland Czech Rep. Slovakia Hungary Reserved 200 Reserved 24 Reserved 17 Reserved 15 Cropp, Prague, Czech Republic House, Budapest, Hungary Cropp 176 Cropp 22 Cropp 13 Cropp 3 House 181 House 17 House 10 House 2 Mohito 142 Mohito 14 Mohito 8 Mohito 5 Sinsay 173 Sinsay 12 Sinsay 9 Sinsay 6 Outlets 2 Outlets 0 Outlets 0 Outlets 0 Lithuania Latvia Estonia Bulgaria Reserved 6 Reserved 6 Reserved 6 Reserved 8 Cropp 5 Cropp 4 Cropp 6 Cropp 4 House 3 House 3 House 6 House 4 Mohito, Moscow, Russia Sinsay, Warsaw, Poland Mohito 5 Mohito 4 Mohito 5 Mohito 6 Sinsay 4 Sinsay 2 Sinsay 6 Sinsay 3 Outlets 0 Outlets 0 Outlets 0 Outlets 0 Romania Croatia Serbia Slovenia Reserved 15 Reserved 6 Reserved 6 Reserved 2 Cropp 10 Cropp 5 Cropp 2 Cropp 1 House 9 House 4 House 2 House 1 VLADIVOSTOK Mohito 9 Mohito 5 Mohito 2 Mohito 1 7,481 km Sinsay 16 Sinsay 9 Sinsay 9 Sinsay 1 Outlets 0 Outlets 0 Outlets 0 Outlets 0 B&H Russia Ukraine Kazakhstan Reserved 1 Reserved 85 Reserved 25 Reserved 3 SHANGHAI, CHINA 8,004 km Cropp 1 Cropp 81 Cropp 24 Cropp 2 • Offices House 1 House 52 House 20 House 2 Mohito 1 Mohito 61 Mohito 12 Mohito 2 Sinsay 1 Sinsay 51 Sinsay 20 Sinsay 1 Outlets 0 Outlets 2 Outlets 3 Outlets 0 DHAKA, BANGLADESH 6,717 km • Offices Finland Germany UK Qatar Reserved 1 Reserved 19 Reserved 1 Reserved 2 Cropp 1 Egypt Kuwait Belarus 0 House 1 Reserved 1 Reserved 1 change from Mohito 1 franchise stores Sinsay 1 UAE Israel to own stores Outlets 0 Reserved 1 Reserved 3 7 2. HISTORY Sale of goods imported from Asia 1991 1993 1994 1995 1997 Creation of Mistral company by Marek Piechocki Opening CEO First designed of offices clothes • Present in the retail business since 1989 in Shanghai • CEO of LPP since 2000 • The Best-Performing CEO according to Harvard Business Review (2013) and Jerzy Lubianiec PRESIDENT of the SUPERVISORY BOARD Mistral transformed • 1991–1997 ran Mistral company as a sole trader (LPP’s predecessor) into LPP • 1995–2000 CEO of LPP • Since 2000 President of the Supervisory Board of LPP 8 Further international expansion (Lithuania, Ukraine, Slovakia) Start of IPO on international the Warsaw expansion Stock Exchange (Russia, Czech (debut at Republic, PLN 48.4 share Estonia, Hungary, price) Latvia) 1998 2001 2002 2003 2004 Launch of Reserved Launch of Cropp – first retail store brand opened 9 Divesture Launch of Esotiq brand of Sinsay brand Acquisition of Artman, owner Payment of House and of first dividend Mohito brands 2005 2008 2010 2010/11 2013 Launch of the modern Creation of Distribution Joining the Esotiq brand Centre ACCORD alliance in Pruszcz Gdański Further international expansion (Romania, Bulgaria) 10 Opening of Reserved London flagship. Campaign with Kate Moss. Entry to Belraus and Serbia Reserved global New countries: campaign with Germany, Croatia Cindy Crawford. Launch of Tallinder brand (closed down LPP entered in 2017); new Slovenia, Israel country in ME: and Kazakhstan. United Arab Emirates 2014 2015 2016 2017 2018 LPP among Middle East family Entry into MSCI entry (Egypt, companies and WIG20 Qatar, Kuwait, – LPP joins indices Saudi Arabia) Family Business Network Poland Signing Reserved global LPP a family agreement with campaign 'I Can company SGS company on Boogie' with after changes in audits in Asian actress Joanna shareholder factories Kulig. structure 11 KEY EVENTS IN 2019/20 January March/April May August Due to e-commerce development, We launched on-line stores of all our We concluded the agreement on the We made the decision to enter the 26th we increased the warehousing space brands on the Croatian market, thus lease of warehousing space in Slovakia off-line market i.e. North Macedonia (Fulfillment Centre) in Stryków to increasing our own on-line presence to where, in January 2020, we launched a (plans for 2021/22). 46,400 m2. 12 markets. warehouse dedicated to e-commerce services (Fulfillment Centre). We launched our operations in Bosnia and Hercegovina, the 24th off-line market, by opening retail stores of our 5 brands with total area of 5,500 m2. 12 September October December We started on-line sales in Ukraine, our We launched the international Reserved We opened stores of our all 5 brands We issued 5-year corporate bonds of 13th own e-commerce market, and we campaign starring the top model (of an area of 6,520 m2) in Helsinki, the total nominal value of PLN 300m, launched a pan-European on-line store. Kendall Jenner. Finland, the 25th country in which LPP quoted on the Catalyst bond market in sells goods in traditional stores. the Alternative Trading System (ATS). As the first Polish company, we joined We opened a warehouse (Fulfillment We announced the new LPP the New Plastics Economy Global Centre) in Romania, supporting our Sustainable Development Strategy for Commitment, a global initiative for e-commerce channel in South Eastern the years 2020-2025. circular economy in the area of plastic Europe. management. 13 3. BRANDS Our brands are our value and we put a lot of effort not only in creating but also in only different types of clothes, but different stores and shopping experience. developing them. Each of our five brands stands out from the others, offering not WE CONCENTRATE ON MAINSTREAM PRICES Clothes for every Anchor brand Fashion brand Casual streetwear An optimistic day inspirations KEY BRAND FEATURES with a broad customer emphasizing feminity brand. fashion brand. and original party base. and elegance. outfits. Women, men, Teenagers Teenagers Women, men, TARGET CUSTOMERS Young women children (boys and girls) (boys and girls) teenagers, children 2001 2008 YEAR OF LAUNCH 1998 2004 2013 (at LPP since 4Q08) (at LPP since 4Q08) COUNTRIES/ CEE, SEE, Baltic, CEE, SEE, Baltic, CIS, WE CEE, SEE, Baltic, CIS, WE CEE, SEE, Baltic, CIS, WE CEE, SEE, Baltic, CIS, WE REGIONS PRESENT CIS, WE, ME 454 360 318 283 324 # STORES/ FLOORSPACE 664.8 ths m2 147.9 ths m2 127.4 ths m2 111.7 ths m2 173.3 ths m2 AVERAGE STORE SIZE 1,464 m2 411 m2 401 m2 395 m2 535 m2 Note: sum of brands’ store numbers and floorspace does not equal group’s numbers due to outlets at the end of 2019/20. 14 REVENUES BY BRANDS PLN m 2010 2011 2012 2013 2014 2015 2016 2017 2018 2018/19 2019/20 Revenues 2,079 2,493 3,224 4,116 4,769 5,130 6,019 7,029 8,047 8,756 9,899 Reserved 1,099 1,368 1,714 2,074 2,311 2,434 2,693 3,160 3,578 3,881 4,047 Cropp 382 447 580 687 771 790 915 1,064 1,120 1,206 1,300 House 294 378 437 546 634 673 767 805 920 993 1,117 Mohito 62 104 259 456 523 586 737 829 782 846 897 Sinsay - - - 74 225 329 461 610 789 851 1,208 E-commerce 4 4 6 27 65 79 173 361 712 802 1,174 Other 162 192 227 252 241 239 261 200 146 178 156 Tallinder - - - - - - 12 1 - - - Esotiq 76 - - - - - - - - - - Floorspace (ths m2) 321,818 343,537 434,050 588,562 722,510 843,473 920,724 1,000,611 1,091,320 1,075,639 1,230,860 REVENUES BY BRANDS (PLN m) STORES BY BRANDS 12,0 2, 1,765 1,703 1,743 1,741 1,746 9,899 1, 1,627 1,0 1,516 8,756 1, 8,047 1,320 1, ,0 7,029 1,2 1,077 6,019 919 893 ,0 5,130 1, 4,769 4,116 800 3,224 ,0 600 2,079 2,493 400 2,0 2 0 0 21 211 212 21 21 215 21 217 21 211 212 21 211 212 21 21 215 21 217 21 211 212 RESERED Cropp House MOHITO SiNSAY E-commerce Oter RESERED Cropp House MOHITO SiNSAY Oter 15 # on-line markets 30 # off-line markets 25 # stores 454 revenues PLN 4.0 bn year of launch floorspace 1998 665 ths m2 16 3.1.