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 This press release is an advertisement and not a prospectus within the meaning of the applicable laws. This press release is not an offer to sell securities or the solicitation of an offer to buy securities. Any offer of securities to the public referred to in this press release will be made only on the basis of information contained in the Polish-language prospectus (the “Prospectus”) published by Dino Polska S.A. (the “Company”) in connection with the planned initial public offering of its shares in Poland and its intention to admit and introduce its shares to trading on the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.). Following its approval by the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego), the Prospectus was published and made available on the Company’s website and, for information purposes only, on the website of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Oddział – Dom Maklerski PKO Banku Polskiego w Warszawie (“PKO BP Securities”).

Dino Polska S.A. (the “Company” or “Dino”), one of the fastest-growing supermarket chains in Poland, published its prospectus today and is launching its initial public offering (the “Offering”).

The book-building process among Institutional Investors will be conducted between 20 March and 4 April 2017. PKO BP Securities, UBS Investment Bank, and Wood & Company Financial Services, a.s. Spółka Akcyjna (Oddział w Polsce) will act as Joint Global Coordinators and Joint Bookrunners. Erste Group Bank AG will be acting as a Joint Bookrunner. The Offering Agent and the Stabilizing Manager will be PKO BP Securities.

Retail investors can place purchase orders between 22 March and 3 April 2017 at selected Customer Service Locations of PKO BP Securities and other investment firms joining the Retail Consortium in Poland and accepting purchase orders for Offer Shares from Retail Investors. The Retail Consortium includes: PKO BP Securities, Biuro Maklerskie Alior Banku, Dom Maklerski Banku Ochrony Środowiska, Centralny Dom Maklerski Pekao, Dom Maklerski Pekao, Dom Maklerski BZ WBK and Dom Maklerski mBanku.

INDICATIVE SUMMARY TIMETABLE OF OFFERING

 
DETAILS OF THE PUBLIC OFFERING

• The Offering will consist of no more than 48,040,000 existing series A ordinary shares (the “Offer Shares”), representing 49% of the Company’s share capital, owned by the Selling Shareholder, Polish Sigma Group S.à r.l. with its registered office in Luxembourg (belonging to Polish Enterprise Fund VI, managed by Enterprise Investors) (the “Selling Shareholder”). The Offering does not involve a capital increase or raising of additional capital by Dino.
• It is anticipated that after completion of the Offering, Tomasz Biernacki (Dino’s founder), holding 50,000,000 ordinary shares representing 51% of the Company’s share capital, will remain the Company’s majority shareholder.
• The Offering will be addressed to Retail Investors and Institutional Investors in Poland, and to selected foreign Institutional Investors outside of the United States in reliance on Regulation S under the U.S. Securities Act of 1933 (the “Securities Act”) and to qualified institutional buyers in the United States pursuant to and subject to the requirements of Rule 144A of the Securities Act.
• It is anticipated that Retail Investors will be able to acquire a total of about 5% of the total number of Offer Shares finally allotted in the Offering.
• The Offering will also be addressed to Management Option Scheme Investors, being Management of Dino Polska S.A. covered by the Management Option Schemes who will be able to file purchase orders under the same conditions as for Institutional Investors.
• The shares belonging to Tomasz Biernacki will be subject to a lock-up agreement for a period of 720 days from the date of the first listing of the Company’s shares on the WSE. Any shares purchased by members of the Management Board of the Company and other senior managers of the Company being participants of the incentive schemes (as Management Option Scheme Investors) in the IPO will be subject to a two-year lock-up agreement from the date of the first listing of the Company’s shares on the WSE. In case the Selling Shareholder holds any shares in the Company following the Offering, it will be subject to a lock-up period of 180 days from the date of the first listing of the Company’s shares on the WSE. The Company will be subject to a 360-day lock-up period from the date of the first listing of the Company’s shares on the WSE in respect of any new issuance of shares.
• The Company’s shares will be listed on the regulated (main) market of the WSE.

DINO’S STRATEGY

Dino’s strategy assumes further growth through focusing on three key areas:

1. Continued fast organic growth in the number of stores. The Company believes there is a market capacity for at least 2,700 Dino stores in Poland and plans to exceed the number of 1,200 stores by the end of 2020.
   Dino plans to continue its strategy of ownership of the majority of store premises and leveraging its organic roll-out capabilities in the current format by increasing the density of store coverage in the current areas of operation and gradual expansion towards new regions in Poland.
   The Company intends to make additional investments supporting the roll-out of new stores, including construction of a fourth distribution centre by the end of 2018 and modernization and expansion of the existing meat processing plant of Agro-Rydzyna and construction of another meat processing plant in a new location (by the end of 2020).
2. Continued delivery of LFL sales growth. Dino expects to be able to continue to deliver LFL sales growth. To achieve this objective, the Company will take actions aimed at increasing the number of shoppers in Dino stores and the value of sales per shopper.Key trends affecting changes in consumers’ lifestyles and grocery shopping habits supporting the foregoing plans, according to industry reports, include:
   • seeking shops near where they live and shopping convenience;
   • demand for higher-quality and branded products;
   • increasing health consciousness and focus on fresh and healthy food, including local Polish products.

     The proximity format adopted by the Dino Group and the Company’s strategy address these consumer trends.

3. Continued improvement in profitability. In 2014-2016 Dino generated a consistent increase in its gross and EBITDA margins, and expects to be able to continue to improve profitability through increasing the scale of the business, favourable characteristics of its business model, and a number of strategic initiatives. These include:
   • economies of scale leading to further gross margin growth due to fast roll-out of the Company’s stores network and increased LFL sales and, consequently, rapidly increasing purchasing volumes helping to improve purchasing terms;
   • increased cost efficiency at the single-store level achieved through taking regular actions aimed at cutting the costs of store operation;
   • significant operational leverage leading to further growth in the EBITDA margin due to a number of relatively fixed cost items growing at a lower rate than sales;
   • planned investment in optimization of the logistics network shortening delivery routes and leading to a further decrease in transport costs relative to sales.

     The Company expects all these initiatives and inherent features of the Dino Group’s business model and strategy to contribute to the further improvement of its profitability in the future.

COMPETITIVE STRENGTHS

The Company plans to pursue its growth strategy through further exploitation of the chain’s strengths and competitive advantages, which include:

• Leading position in the fast-growing proximity supermarket segment in Poland
• Proven rapid network roll-out capabilities based on own real estate
• Outstanding offer of fresh and branded products and competitive pricing
• Cost-effective and scalable business model
• Proven track record of strong financial performance
• Experienced management team

NUMBER OF STORES EVOLUTION

FINANCIAL RESULTS

* EBITDA defined as operating profit plus depreciation and amortization adjusted for one-off items incl. reserves in relation to the new management incentive plan and other IPO-related one-off expenses in the total amount of PLN 7.5m in 2016.

** The Dino Group defines net debt as interest-bearing loans, borrowings and finance lease liabilities + current portion of interest-bearing loans and finance lease liabilities less any cash and cash equivalents. The net debt ratio is the measure of the indebtedness of the Dino Group less cash and cash equivalents.

MARKET ENVIRONMENT

Retail food market

In 2010-2015 the market for retail trade in grocery items in Poland grew at an average annual rate of 3.4%. The traditional grocery segment fell on average by 7.7% per year, while the modern segment increased its market share by 15 pp. Overall grocery retail sales in Poland are expected to grow at an average annual rate of 3.7% through 2020.

The observed growth in the Polish grocery market is an effect of the encouraging macroeconomic situation, growing disposable income, and related growth in consumer spending. The government’s Family 500+ program, declining unemployment, and regular increase in the minimum wage support individual consumption in Poland. This is particularly observed in the smaller towns where Dino stores are located.

Proximity segment

The segment of proximity supermarkets, in which the Dino Group operates, is the fastest-growing segment of the retail grocery market in Poland in terms of the number of stores. In 2010-2015 this segment generated CAGR (annual growth) of 13.2%. It is expected that this segment will be the fastest-growing segment in 2015-2020 in terms of CAGR in the number of stores, at about 10.7%.

Proximity supermarkets in Poland are operated mainly as general grocery stores with an area of 200 to 500 m², in the form of a hard franchise or owned stores, offering 4,000-8,000 stock-keeping units, about 90% of which are food items. They are typically located near residential zones in large, medium-sized and small towns.

Proximity supermarkets are successfully growing in Poland for the following reasons:

• they have an advantage over larger-format stores, particularly hypermarkets and large supermarkets, resulting from a more convenient location for customers and the ability to complete their shopping in a much shorter time;
• they offer a broader assortment than discount chains or convenience stores;
• they have an advantage over independent grocery stores resulting from centralized logistics and the scale of purchasing.

All of these advantages led to doubling of the share of proximity supermarkets in the Polish grocery market in 2010-2015 in terms of the number of stores (source: Roland Berger report).

Szymon Piduch, CEO of Dino Polska S.A., commented: “We are one of the fastest-growing supermarket chains in Poland, operating in the promising proximity segment. We are growing dynamically, and increased the number of stores from 111 at the end of 2010 to 628 at the end of 2016, while maintaining very good LFL sales figures. I believe that Dino has very good prospects for further growth. We estimate that the Polish market has the capacity for at least 2,700 Dino stores, and we plan to exceed 1,200 stores by the end of 2020. We plan additional investments supporting the opening of new stores, including construction of new distribution centre, modernization and expansion of the existing meat-processing plant operated by Agro-Rydzyna, and construction of another meat plant at a new location. It is also our goal to maintain continued growth in like-for-like sales and consistent improvement in profitability. I believe that the Company can be attractive for investors. The steady increase in the scale of operations since the beginning of Dino’s existence has shown that we are effectively realizing our strategic goals.”

More information regarding Dino Polska S.A.:

Dino is a nationwide network of medium-sized supermarkets located in close proximity to where customers live. Its grocery stores are open every day (except for non-trade Sundays) from 6:00 a.m. to 11:00 p.m.¹. The Dino network is one of the fastest growing retail grocery trade networks in Poland. At the end of September 2020 it consisted of 1,371 stores across Poland.

The Dino Group’s business model blends the advantages offered by the format of conveniently-located mid-sized supermarkets with the capability of rapidly opening new stores and offering an attractive assortment primarily entailing attractively-priced branded and fresh products.

Dino stores offer customers approximately 5 thousand stock keeping units (SKUs). Most of the SKUs are either fresh products or branded products, including a full range of groceries, household chemicals and cosmetics as well as small household articles and appliances. Every Dino store has a staffed meat counter, with the Agro-Rydzyna meat processing plant supplying high quality meat and cold cuts.

The Dino Group’s logistics network consists of five distribution centers located in Krotoszyn, Jastrowie, Wolbórz, Rzeszotary and Łobez. Its geographic range makes it possible to deliver fresh products to all of the stores in Dino’s network every day of the week.

At the end of September 2020 the Dino Group had 24.1 thousand employees.

The Company has been listed on the main floor of the Warsaw Stock Exchange since April 2017. Dino Polska S.A. is majority-owned by Polish capital.

^{1 Some stores are open for less than the standard working hours in connection with aligning their operation to local regulations.}

Legal disclaimer:

This press release does not comprise a prospectus for the purposes of Directive 2003/71/EC and does not contain or constitute or form part of any offer or invitation, or any solicitation of an offer, for securities and should not be relied on in connection with any contract or commitment whatsoever. The offering of the securities referred to in this press release (the “Offering”) and the distribution of this press release and other information in connection with the Offering in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This press release is not an offer for sale of securities of the Company in the United States. Securities of the Company referred to herein may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company has not registered and does not intend to register any portion of the Offering in the United States or to conduct a public offering of any securities in the United States and any sale of the securities of the Company referred to herein in the United States or to U.S. persons will be made pursuant to an exemption from the registration requirements under the U.S. Securities Act of 1933, as amended and accordingly will be made only to persons who are “qualified institutional buyers” as defined in Rule 144A under the U.S. Securities Act of 1933, as amended. Copies of this press release and the information contained herein are not being, and should not be, distributed or sent (directly or indirectly) into the United States.

This press release is directed only at (i) persons who are outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “Order'”) and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (iv) other persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the Offering may lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons'”). Any investment activity to which this press release relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. The Offering will not be made to the public in the United Kingdom.

This press release is for promotional purposes only and under no circumstances shall constitute an offer or invitation, of form the basis for a decision, to invest in the securities of the Company. The Prospectus prepared in connection with the Offering and admission and introduction of the Company’s shares to trading on the regulated market of the Warsaw Stock Exchange is the sole legally binding document containing information about the Company and the Offering in Poland. The Company will be authorised to carry out the Offering to the public in Poland based on the published Prospectus approved by the Polish Financial Supervision Authority. For the purposes of the Offering in Poland and the admission and introduction of the Company’s shares to trading on the main market of the Warsaw Stock Exchange, the Company made the Prospectus available on the Company’s website and, for information purposes only, on the website of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Oddział – Dom Maklerski PKO Banku Polskiego w Warszawie.

This press release does not constitute a recommendation within the meaning of the Regulation of the Polish Minister of Finance Regarding Information Constituting Recommendations Concerning Financial Instruments or Issuers Thereof dated 19 October 2005.

No reliance may be placed for any purpose whatsoever on the information contained in this press release, any verbal discussion thereof, and such information may not be complete or accurate.

Acquiring investments to which this press release relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering investment should consult an authorized person specializing in advising on such investments.

Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna Oddział – Dom Maklerski PKO Banku Polskiego w Warszawie, UBS Limited, WOOD & Company Financial Services, a.s. Spółka Akcyjna, Oddział w Polsce and Erste Group Bank AG are acting solely for the Selling Shareholder and the Company and no one else in connection with the Offering, and will not be responsible to anyone other than the Selling Shareholder and the Company for providing the protections afforded to their clients nor for providing advice in connection with the Offering.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company or Dino Group. You can identify forward-looking statements by terms such as ‘expect’, ‘believe’, ‘anticipate’, ‘estimate’, ‘intend’, ‘will’, ‘could’, ‘may’ or ‘might’ or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including risks specifically related to the Company, Dino Group and their operations.