Delivery Hero : Half-Year Financial Report 2022

Delivery Hero | Half-Year Financial Report 2022

Company | Interim Group Management Report | Half-Year Financial Statements | Further Information

HALF-YEAR

FINANCIAL REPORT

JANUARY-JUNE2022

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Delivery Hero | Half-Year Financial Report 2022

Company | Interim Group Management Report | Half-Year Financial Statements | Further Information

DELIVERY HERO AT A GLANCE

		H1 2022		H1 20211
		(EUR million)		(EUR million)		Change
Group
GMV2		20,023.6		13,316.0		50.4%
Total Segment Revenue2, 3, 4	4,185.7	2,682.5	56.0%
Adjusted EBITDA2		-323.0		-350.8
Adj. EBITDA/GMV (%)		-1.6%		-2.6%
Asia
GMV	13,438.6	7,875.4	70.6%
Segment Revenue	1,865.8	1,166.9	59.9%
Adjusted EBITDA		-80.5		-230.7
Adj. EBITDA/GMV (%)		-0.6%		-2.9%
MENA
GMV2		3,947.5		3,155.0		25.1%
Segment Revenue2		1,006.0		684.9		46.9%
Adjusted EBITDA	40.1	65.0
Adj. EBITDA/GMV (%)	1.0%	2.1%

		H1 2022		H1 20211
		(EUR million)		(EUR million)		Change
Americas
GMV2		1,232.5		884.4		39.4%
Segment Revenue2	327.1	226.9	44.2%
Adjusted EBITDA		-80.0		-80.2
Adj. EBITDA/GMV (%)		-6.5%		-9.1%
Integrated Verticals
GMV5		848.7		402.2		>100
Segment Revenue	770.8	374.0	>100
Adjusted EBITDA		-182.3		-105.8
Adj. EBITDA/GMV (%)		-21.5%		-26.3%

1. Delivery Hero Korea LLC ("DHK") was part of the Asia segment but is excluded from January 2021. Woowa is included in the Asia segment since the closing of the transaction on March 4, 2021. Delivery Hero's operations in Bosnia and Herze- govina, Bulgaria, Croatia, Montenegro and Serbia, are reflected in the Europe Segment until June 17, 2021. Romania is in- cluded in the performance of the Europe segment for the first six months of 2021.
2. Revenue, adjusted EBITDA, Gross Merchandise Value (GMV) as well as the respective growth rates for MENA and Americas are impacted by hyperinflation adjustments as Argentina, Lebanon and Türkiye qualify as hyperinflationary economies ac- cording to IAS 29.
3. Total Segment Revenue is defined as revenue before subtraction of voucher expenses.
4. Due to intersegment consolidation adjustments, revenue of the segments do not sum up to Total Segment Revenue.
5. GMV is accounted for in the respective platform segments and shown in the Integrated Verticals segment for illustrative purposes only.

Europe
GMV	1,405.1	1,401.1	0.3%
Segment Revenue	311.4	285.9	8.9%
Adjusted EBITDA		-20.3	1.0
Adj. EBITDA/GMV (%)		-1.4%	0.1%

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INTERIM GROUP

MANAGEMENT REPORT

A. GROUP PROFILE PAGE4

1. ECONOMIC REPORT PAGE4
2. 1. MARKET AND INDUSTRY ENVIRONMENT
   2. BUSINESS DEVELOPMENT
   3. 1. OPERATING RESULT OF THE GROUP
      2. BUSINESS DEVELOPMENT BY SEGMENT
      3. FINANCIAL POSITION
      4. NET ASSETS
3. RISK AND OPPORTUNITIES PAGE 12
4. OUTLOOK 2022 PAGE 12

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Delivery Hero | Half-Year Financial Report 2022

Company | Interim Group Management Report | Half-Year Financial Statements | Further Information

INTERIM GROUP MANAGEMENT REPORT

A. GROUP PROFILE

The statements made in the Annual Report 2021 on the business model, the Group structure, the segments, the management and supervision as well as research and development ("R&D") are still applicable for the first six months of 2022.

Management System

Since the beginning of 2022 the number of orders is no longer used as a non-financial performance indicator to manage the Group as a whole as the focus has shifted from generating orders to profitability. As such the number of orders is no longer considered a key performance indicator for resource allocation decisions to be based on as it is deemed contradictory to the objective of profitable growth.

Employees

The number of employees decreased to 49,417 as of June 30, 2022 (December 31, 2021: 52,006) mainly due to a decrease in delivery personnel which was partially offset by an increase in product development personnel.

B. ECONOMIC REPORT

1. Market and Industry Environment

The Organisation for Economic Co-operation and Development (OECD) projects a downwards revision of its global GDP growth forecast for 2022. Based on its June 2022 re- port, global GDP growth is expected to reach 3% in 2022, which is around 1.5 percentage points lower than the previous forecast provided in December 2021. The slowdown in growth is driven, among other factors, by the ongoing war in Ukraine, COVID-19 lockdowns in China, reduced household purchasing power, tighter monetary policies as well as a sharp rise in commodity prices1. Moreover, global inflation is expected to remain elevated due to food and energy prices and supply chain shortages, with consumer price inflation reaching on average 6.6% in advanced

economies and 9.5% in emerging markets and developing economies in 2022, based on the latest IMF forecast2. Due to the current economic backdrop of slower growth paired with rising inflation rates, the world economy may enter into a stagflationary period. Additionally, the OECD highlights the high amount of uncertainty around their outlook 1. The World Bank also projects that global GDP growth will slow down to 2.9% in 2022, which constitutes almost a one-third downgrade to its previous forecast of 4.1% from January 2022.

Effective February 24, 2022, Russia launched a large-scale invasion of Ukraine, causing catastrophic human suffer- ing. In addition, it is also likely to dampen the global economic outlook by slowing growth and jacking up inflation. Although Delivery Hero does not run operations in Ukraine during the reporting period, an adverse effect on global purchasing power due to a spike in commodity and energy prices, as a result of supply chain disruptions and punishing sanctions, is likely to continue.

Moreover, the economic development in 2022 is dependent on the impact from COVID-19 on a global scale as well as how effective the economic policy actions in countries will be.

Below, we examine the four regional segments, based on the World Bank's Global Economic Prospects Report from June 2022.

Please note that the regions described below (defined by the World Bank Report) differ in country constellation from Delivery Hero segments defined for financial reporting purposes but serve as an indication for the economic outlook of the segments.

Asia

Across East Asia and Pacific (EAP), growth is expected to decelerate to 4.4% in 2022, compared to 7.2% in 2021. This is driven by a slowdown of growth in China due to strict COVID-19 lockdowns and measures to limit the spread of

the virus. Even though East Asia and Pacific is less affected by the effects of the war in Ukraine with regard to inflation and output, rising commodity prices and the impact on global demand could weaken the recovery in the region. Moreover, there are several regional differences with regard to the speed of economic recovery. In two-thirds of the EAP countries, the generated output is expected to remain below the levels seen before the pandemic3.

For our largest market South Korea, the OECD projects GDP growth to moderate to 2.7% in 2022, from 4.0% in 2021. Consumption is expected to recover, given the easing of COVID-related social distancing measures, however, with a drag from rising inflation. Moreover, higher-than- projected interest rate rises could be a risk for the development of domestic demand1.

Growth in South Asia is expected to reach 6.8% in 2022, which is 0.8 percentage points lower than previously forecasted by World Bank experts in January 2022, mainly due to spillovers from the war in Ukraine that could impact the region negatively. Especially rising commodity and food prices are a challenge for South Asia3.

MENA

GDP in the Middle East and North Africa region is expected to grow by 5.3% in 2022. This forecast was upgraded by

0.9 percentage points vs. previous expectations from Jan- uary 2022 and even up by 1.9 percentage points compared to 2021, as the region should benefit from the recent in- crease in oil prices as well as high vaccination rates across its population. However, there is a divergence between oil exporters, which benefit from rising oil prices, and oil im- porters, which are exposed to increasing energy and food prices3.

Europe

The economy in the Europe and Central Asia region is expected to shrink by 2.9% in 2022, after growing by 6.5% in 2021. The war in Ukraine has caused severe spillovers to the region and its economies, especially regarding trade,

1 OECD: Economic Outlook, June 2022.

2 IMF: World Economic Outlook Update, July 2022.

3 World Bank Group: Global Economic Prospects, June 2022.

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Delivery Hero | Half-Year Financial Report 2022

Company | Interim Group Management Report | Half-Year Financial Statements | Further Information

its financial markets as well as consumer and business con- fidence. Rising commodity prices as well as lower external demand are also challenging factors3.

Americas

In 2022, growth within the Latin American & Caribbean region is expected to slow down to 2.5%, after 6.7% in 2021. Moreover, growth is expected to remain subdued in the subsequent two years. Rising inflation and interest rates as well as tighter financial conditions are expected to have a negative impact on the region's growth rates3.

Hyperinflated Economies

Since Q3 2018, the Americas segment revenues and growth rates have been impacted by the Argentine operation qualifying as a hyperinflationary economy under IAS 29. This assessment remained applicable for H1 2022.

Lebanon has classified as a hyperinflationary economy as per IAS 29 since Q4 2020, the same applies to Türkiye since Q2 2022. Therefore, revenues and growth rates in the MENA segment were impacted.

Sector Development

Delivery Hero has an extensive geographic footprint with operations across several attractive markets in Asia, MENA, Europe, and Latin America.

2021 was again an unprecedented year in many ways with impacts continuously stretching out into the first half of 2022. The COVID-19 pandemic still has dramatic effects on people's lives and societies. One of the consequences brought about by the resulting situation was an increased usage of delivery services in many markets where the underlying already strong structural growth was further em- phasized. However, the impact of reopening effects was felt across the industry, as the demand for food delivery services somewhat softened after social distancing measures were eased during the first half of 2022.

In our industry change is everywhere. What started as a marketplace, connecting restaurants with customers, has evolved significantly over recent years. By establishing our own delivery capabilities, Delivery Hero was also able to provide restaurants, which otherwise would not have been able to economically deliver food on their own, with customers. We thereby not only increased the quality of our service by offering a wider selection of high-qualityrestaurants to more customers, but also expanded our total addressable market (TAM). By continuously investing in logistics and technology, we are looking for ways to maximize the quality of our service offering, the utilization of our rider network and the efficiency of our operations. This includes first as well as last-milelogistics, as Delivery Hero's approach is to "deliver anything, fast, easy and to your door".

In the first half of 2022, we continued with this approach. We have invested further in our Quick Commerce busi- ness. However, as we already have sufficient customer coverage in our core markets, we have reduced the speed of Dmart openings and invested more in product assortment and availability. The concept of quick last-mile delivery services for convenience and grocery items continues to be a key strategic initiative for our business, capitalizing on the extensive investments Delivery Hero has made in logistics and technology for first and last-mile delivery over the past years. However, we also acknowledge that the capital market environment changed at the beginning of the year.

Due to rising interest rates and geopolitical uncertainty, profitability and liquidity have increasingly come into the focus of investors. In some cases, this has also resulted in more rational competition. Irrespective of this, Delivery Hero will move forward with a clear focus on the path to profitability.

2. Business Performance

a) Performance

The first half of 2022 was driven by continuous growth and the focus on improvements to profitability. GMV4 increased by 50.4% to € 20.0 billion compared to H1 2021, mainly driven by Woowa5. Total Segment Revenue6 increased significantly by 56.0 % on a year-on-year basis to

• 4,185.7 million in the first half of the year 2022, mainly driven by Woowa5 and Integrated Verticals. The negative adjusted EBITDA7 of the segments (H1 2022: € 323.0 mil- lion, H1 2021: € 350.8 million) improved slightly. While losses from Integrated Verticals increased in line with growth, Asia contributed the most to the adjusted EBITDA improvement (+€ 150.2 million adjusted EBITDA improve- ment). The adjusted EBITDA to GMV margin has improved from negative 2.6% in H1 2021 to negative 1.6% for the first half of the year 2022.

b) Acquisitions and Investments

The Group completed two smaller acquisitions which include acquiring 100% shares in Shiver Nebula GmbH, Ger- many, for a consideration of € 3.6 million and 100% share capital of S.A.R.L. Room Service, Principality of Monaco, for a consideration of € 4.0 million.

During H1 2022 the Group invested in additional shares in Glovo, which resulted in cash outflows of € 21.3 million.

After the end of the reporting period on June 30, 2022, Delivery Hero executed the closing of the acquisition of Glovoapp23 S.A. (formerly Glovoapp23 S.L.; "Glovo") on July 4, 2022, which was entered into on December 31, 2021. Prior to the acquisition Delivery Hero held a 44.2% minority stake in Glovo on an undiluted basis. Delivery Hero acquired 50.3% of the voting shares in Glovo resulting in a total shareholding of 94.5%. The total consideration transferred amounts to € 509.5 million consisting of

• 394.8 million transferred in newly issued shares and share-based payment replacement awards of € 114.7 mil- lion. The closing of the transaction was subject to certain conditions precedent and regulatory approvals, including

1. Gross Merchandise Value (GMV) is the total value paid by customers (including VAT, delivery fees and service fees less other subsidies).
2. Increase driven by Woowa is based on its inclusion to the Group since the clos- ing of the transaction on March 4, 2021 (four months in H1 2021 vs. six months in H1 2022).
3. Total Segment Revenue is defined as revenue before the reduction of vouchers.

7 Performance measure not defined by International Financial Reporting Stand- ards (IFRS). Adjusted EBITDA is defined as earnings from continuing operations before income taxes, financial result, depreciation and amortization and non- operating earnings effects. Non-operating earnings effects comprise, in particu- lar (i) expenses for share-based compensation, (ii) expenses for services in con-

nection with corporate transactions and financing rounds, (iii) expenses for reorganization measures and (iv) other non-operating expenses and income, especially the result from disposal of tangible and intangible assets, the result from sale and abandonment of subsidiaries, allowances for other receivables and non-income taxes. Adjusted EBITDA excludes depreciation from right-of-use assets under IFRS 16.

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