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Dia FINANCIAL RESULTS & STRATEGIC UPDAT

Stable Q1 performance – early positive top line results, supported by continued cost discipline and strengthened financial foundations.

Effective response to COVID-19 crisis: focus on protecting employees, customers and

communities; stores open and well-stocked; supply chain operating smoothly

DIA Group, (“DIA” or “The Group”) an international distributor of food and household items operating in Spain, Portugal, Brazil and Argentina, today issued its first quarter 2020 financial results as well as a progress update on its strategic business transformation plan.

Q1 2020 FINANCIAL HIGHLIGHTS (all figures in € million)

● Net Sales: 1,696m (Q1 19: 1,733m) broadly stable despite 12% fewer stores and adverse currency effect in Brazil1.

● Like-for-Like: +3% with underlying pre-COVID-19 growth in Spain and Portugal driven by business transformation effect.

● Gross Profit: 358m (Q1 19: 370m) down on increased logistics costs to support strategic shift to enhanced fresh offer and one-off COVID-19 costs.

● Labour Costs: down 1% notwithstanding higher COVID-19 related staff activities.

● Operating Expenses: up 6% on COVID-19 costs including Group-wide protective materials.

● Restructuring Costs: 6m (Q1 19: 67m), business transformation first phase completed.

● EBITDA: 61m (Q1 19: 17m), driven by the Restructuring Costs reduction; Adjusted EBITDA: -0.5m (Q1 19: 12m) impacted by COVID-19 costs.

● Net Financial Debt: improved by 36m despite negative seasonality, with enhanced debt maturity profile following long-term refinancing agreement and bond repayment in July 2019.

● Trade Working Capital: better than expected inflow of 49m thanks to Net Sales increase and small improvement in days of Trade Working Capital.

● Available Liquidity: stable at 425m (December 2019: 421m).

Commenting on the results, Stephan DuCharme, Chairman, said: “DIA delivered stable top line performance in the first quarter with Like-for-Like improvement also continuing into the first months of Q2, showing early positive results of our business transformation plan which is now into its second phase. This performance was supported by continued cost discipline and underpinned by a strengthened financial structure with positive cash flow, lower net debt with an enhanced maturity profile and improved trade working capital. “The core foundations are in place thanks to our success last year in attracting world-class talent to the business, re-establishing retail basics and creating a new Group operating model based on strengthened and devolved country leadership, strategically supported by a lean corporate center.

“During the COVID-19 crisis our team worked tirelessly and effectively to serve our customers and I am very proud of their efforts, underpinned by our renewed strong fundamentals. Our crisis response very much showed the important role DIA plays within our communities. We will further reinforce this thanks to DIAContribuye2020, our recently launched community support program created to help mitigate the negative consequences of this unprecedented situation. “Looking ahead, we will focus on the evolution of DIA’s commercial offer to address rapidly evolving consumer behaviors, offering our customers proximity, simplicity and digital solutions in partnership with an entrepreneurial group of Franchisees.

” DIA has completed the first phase of its business transformation initiated in May 2019, with key achieve

ments linked to the three key strategic pillars of the plan:

Investment in capabilities – attracting and retaining talent at all levels

● Country leadership strengthened by appointment of Ricardo Alvarez as CEO Spain; Marcelo Maia new Executive Chairman Brazil supported by a newly created DIA Brazil advisory board.

● As a result, new Group operating model in place, based on devolved and empowered country leadership with full P&L responsibility, strategically supported by a lean Group corporate center.

● Expanded and reinforced Group Board of Directors with four independent members, including digital and retail specialist Basola Valles appointed on January 15th, 2020. Focus on Culture & Trust – rebuilding trust and fostering long-term relationships

● Customers: New value-for-money proposition and effective COVID-19 response positively repositioning DIA within its communities.

● Employees: Collective Employee 2019-2021 Agreement signed in January 2020 and new performance-based culture introduced.

● Franchisees: New model in roll-out phase based on long-term partnership, transparent margin and payment terms, and opportunities for selected Franchisees to manage multiple locations.

● Suppliers: Alignment of all relationships and simplification of negotiations and agreements based on transparent approach. Rebuild DIA – re-establishing core retail practices ● Commercial: Optimized assortment offering enhanced product visibility and shopping experience rolled out in around 500 stores so far.

● Franchise: Strengthened network with 468 Group stores transferred from Franchise to Owned since January 1st, 2019, in line with Group strategy.

● Operational: Excellence program implemented including store layout improvements, product display planograms and logistic optimization measures; productivity ratios up with Net Sales/FTE growing 5.9% in Spain in January and February, ahead of COVID-19 lockdown.

● Finance: Focus on OPEX reduction and disciplined CAPEX allocation; Working Capital improvement following stock optimization efforts.

Phase 2 of DIA’s business transformation is now underway and a defined roadmap2 will be actively implemented by the country leadership teams, with strategic guidance, performance oversight and capital allocation provided by the corporate center. Immediate priorities for 2020 include the continued development of DIA’s commercial value proposition and new store concept based on Phase 1 learnings and post-COVID-19 consumer behaviors as well as further expansion of online and express delivery programs. The Group also announced targets aligned with the strategic roadmap, with net sales growth driven consistently by Like-for-Like Sales and the gradual roll-out of store refurbishments and relocations, as well as new openings from 2022 onwards. 

COVID-19 UPDATE

DIA delivered an effective operational response to COVID-19, protecting employees and customers, while ensuring stores remained open and well-stocked and maintaining the smooth operation of the supply chain. The Group’s response was focused on the following areas:

Protecting our people

● Comprehensive employee protective measures across all DIA stores and facilities including over 4 million masks, 260,000 liters of hand sanitizer, 10 million gloves, 48,000 visors and 10,000 cashier protective screens.

● Full pay for all self-isolating colleagues and a one-off COVID-19 bonus for all Group and Franchisee employees to recognize commitment and dedication.

● Further Franchisee support in terms of advanced technical cleaning services, protective equipment and staffing support at no charge.

● Free telematics healthcare launched, initially in Spain, for all employees and their families.

Serving our customers

● 95% of DIA stores open throughout the COVID-19 lockdown, with only limited short-term closures for deep cleaning purposes.

● Spain: Proactively increased online ordering capacity to meet customer demand, now reaching 500 cities, served by additional 2,200 staff members. Opened 13 new dark stores and reached agreement with Glovo to improve home delivery service, improving time-tomarket capacity.

Contributing to our communities

● Donations including food, personal protective equipment and warehousing space for national and local institutions in all markets where DIA operates.

● Launched DIAContribuye2020 social program to mitigate the negative consequences of the crisis on the communities where DIA operates.

● Initial DIAContribuye2020 activities include: the donation of 250,000 masks and 2,500 liters of hand sanitizer; the sale of protective masks at cost; a capped commitment to match any Franchisee donation; the distribution of more than 16,000 kilos of food throughout Spain; 50,000 Easter products for at risk groups in Galicia, Zaragoza & Madrid; and the use of 1,500 m2 of distribution center space for public authorities to stock clinical materials.

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