The Allied Opportunity1

“To re-launch Britain’s best known flooring retail brand and revolutionise the customer experience”.

Agenda 2

Introductions

Background and History

The UK Flooring Market

Allied market positioning

The Franchise model

Our proposition

Headline Financials

Summary

Introductions

3

Introductions 4

Clive Hutchings (Pending)Over 35 years retail experience from the sales floor to the Boardroom. Clive was CEO of Allied Carpets Group plc from January 2002 to 2009 (reporting directly to the French owners) and after taking Allied to its first operating profit in 7 years, he oversaw the management of the business through its sale to Hilco and administration. Paul Davies (In-situ)With nearly 30 years Franchise experience with major brands such as Perfect Pizza, KFC, & Haagen Dazs, Paul spent the last 6 years developing the franchise model at United Carpets before joining the Allied team. He is a regular speaker at franchise events and is well know and respected amongst the franchise community. Moony Victoire-Nijjar (Pending)Moony previously worked with Clive and graduated at Allied. He has considerable experience as a commercial finance director and change manager with particular expertise in the retail and distribution sectors. He has managed M&A projects including acquisitions, private equity fund raising and main market IPO.

Background & History

5

HistoryOver 60 Years Flooring Heritage

6

1953 Creation of the

company by Harold Plotnek in Birmingham

1978 Acquisition of

Allied by the ASDA Group

1993 Acquisition by Carpetland

of Allied (excluding the Maples Furniture). The combined group was renamed Allied Carpets Group

1996 Floatation of

Allied Carpets on LSE on 23 July 1996 with Mkt Cap of £350m

1999 Launch of Allied

at Home Acquisition of

Allied Carpets by Saint-Maclou for £83m

2009 - 2012 Administration

followed by Hilco re-structuring with the objective to downsize the business to a profitable going concern

2004/05 Allied Carpets

first Profit for seven years.

New Chairman appointed.

2002 Appointment

of Clive Hutchings to CEO of Allied Carpets Group plc.

2012 - Present Hodges family

acquire Allied Brand

Franchise concept tested

Clive Hutchings joins team

Investment partner sought

The UK Flooring market

7

Flooring Market Overview 8

9

Carpet57%

Wood & Lam-inate16%

Vinyl15%

Other12%

Sales by product category

Flooring Market Overview

Competitor Review 10

Existing Store Proposition 11

Allied market positioning

12

Original Allied Brand No.1 Carpet retail brand Still receiving over 3000

hits to the web address Customer profile ABC1-

Middle England Brand perceptions:

Reliable Trustworthy Great Service Carpet specialists Always in SALE A little dated

13

New Allied BrandValues: On Trend & Innovative Simple, Clear & Transparent Trustworthy, Credible & Professional

14

Target Customers: ABC1 (Traditional Allied) Professional Women Younger couples/families

15New Allied Brand

16New Allied Brand

17New Allied Brand

Customer Journey

Selection

• Room• Carpet type –

twist etc.• Price per sq mtr

Estimate

• Measure & plan• Add Fitting,

Underlay etc.

Install• Delivered to

store• Fitted by sub-

contractors

18

Selection• Colour• Texture –

suitability• Project Budget

Estimate• Measure & plan• Upgrade

underlay, confirm

Install

• Delivered to Fit Centre

• Fitted to SLA standards

• Follow up “Happy Call”

OLD WAY NEW WAY

The Franchise Model

19

UK Franchising Overview 20

930 franchises in UK contributing £13.7b to economy

39,000 outlets employing 560k people 92% of franchisee businesses in profit Only 2.3% of all closures due to commercial failure Average age of new franchisee is 41yrs 50% increase in female franchisees 2005 to 2013 22,500 franchisees in UK (25% operate multiple

units) 1 in 4 UK franchises export their model overseas Biggest issue is recruitment

Allied Benefits to the Franchisee

21

Re-launch of a recognised and respected brand Low entry price of £65k, up to 70% funding

available Use of 21st century technology & cutting edge

design Full support by team with proven achievement Impressive ROI with committed franchisee Competitive commission structure Female friendly BFA membership Multi-site opportunity for suitable candidates

22Allied Franchise TerritoriesSum Avg. Min. Max.

Population 240,337

9,950 3749 14,420

Households 109,244

4306 1,672 6,555

Target HH’s 10,704 640 0 5191A21 HH’s 567 22 0 262A24 HH’s 503 22 0 264

Franchisee Economics 23

Max. cash requirement = £65k (Discounted Franchise Fee )

Strong working capital model<2 years cash payback of Fee11% - 13% EBITDAAverage 51% ROI per annum-10% sales = 26% ROI per annum

Year 1 Year 2 Year 3Cashflow £ £ £Income 489,492 650,053 732,173Payments (448,537) (591,567) (656,762)Cashflow 40,955 58,485 75,411Fee (65,000)Cash balance c/f (24,045) 34,441 109,851P&LSales 386,660 539,015 607,375EBITDA 611 59,336 79,080EBITDA % 0.2% 11.0% 13.0%

Balance sheetShareholders funds (53,556) 5,780 84,860

Our Proposition

24

Our proposition Locations

1000 – 1500 sq ft Showrooms Main Rd/High St with good visibility and passing trade Franchisee holds lease No need for warehouse space

25

Operations Owner/Managers supported by experienced Retail

teams Outsource service options until skills acquired SAP system with data analysis and KPI reporting

Our proposition Supply Chain

Multiple suppliers No Stock Individual Franchisee credit terms

26

Key milestones (Delayed) Aug/Sept – Re-launch Yeovil Store & open 2

Franchises Dec 2014 - 2 more stores opened to support “POC” Feb 2015 – Launch at National Franchise Exhibition

(NEC) Dec 2015 – 28 stores opened with a further 20

territory commitments

Marketing Platform Website:

Simple, clear, inspirational & informative View in a Room and Samples delivered within 48 hours Full SEO and PPC strategy Lead generator - Transactional for non-franchise territories Micro site for franchisees

27

Store support Initial launch using local radio, newspapers and Leaflets Ongoing local magazines & radio Potential Regional TV & Radio (when territories allow) Social Media campaigns – Facebook, Twitter, Pinterest Home Interest Magazine editorial – Allied Ambassadors

Growth Strategies 28

POC – 100Franchisees

100 – 400Franchisees

EuropeanFranchise

Proof Of Concept. Feb 2015 Launch. Year 1

30 Franchisees 6 Corporate

Local & Social media

Recruitment Drive Call Centre

Support Website Leads Opening Teams TV, Radio,

Magazines Supplier Rebates

Re-sales Cutting Warehouse Affinity schemes Kiosks Europe

Short -Term Medium -Term Longer -Term

Headline Financials

29

Trading Summary 30

Max. cash requirement £529k includes £254k of set-up

2 years cash payback20 Self funded owned Franchises83 Total stores tradingOnline Transactions & LeadsCombined EBITDA £3M+Safety margin v “What-if’s”

Year 1 Year 2 Year 3Cashflow £ £ £Income 3,817,403 11,530,001 20,485,973Payments (3,940,566) (10,043,576) (17,152,364)Net Cash (123,164) 1,486,424 3,333,609Set-up (253,800) 0 0Cash c/f (376,964) 1,109,461 4,443,070Max. Cash need (529,006)P&LSalesFranchisor 371,164 1,912,473 4,339,631Owned Stores 952,077 3,770,595 8,321,894Online 1,728,938 3,921,465 4,464,780Total Sales 3,052,179 9,604,534 17,126,306EBITDAFranchisor (330,993) 556,211 1,921,664Owned Stores (32,304) 136,496 589,317Online 94,003 554,313 664,727Total EBITDA (269,295) 1,247,020 3,175,708EBITDA % -8.8% 13.0% 18.5%

No' of Owned Stores 5 13 20Total no' of Stores 20 50 83

Franchisor Summary 31

Max. cash requirement £534k includes £140k of set-up

2 years cash paybackEBITDA = £1.9m Year 3Trading breakeven at 17 stores

Year 1 Year 2 Year 3Cashflow £ £ £Income 330,174 2,064,577 4,892,024Payments (712,643) (1,533,345) (2,989,950)Cashflow (382,468) 531,232 1,902,074Set-up (140,400)Cash c/f (522,868) 8,364 1,910,438Max. Cash need (534,690)P&LSales 371,164 1,912,473 4,339,631EBITDA (330,993) 556,211 1,921,664EBITDA % 29.1% 44.3%

Total no' of Stores 20 50 83

Balance sheetShareholders funds (447,993) 108,218 1,605,286**Excludes Website & Owned stores [total 83 stores/50 trading full year]

Online Summary 32

Max. cash requirement £121k.Includes £68k development / launch costs.

Pay back within 1 year.Good w/c trading model.15%+ EBITDA.

Year 1 Year 2 Year 3Cashflow £ £ £Income 2,239,238 4,740,189 5,384,242Payments (2,075,179) (4,175,202) (4,838,676)Net Cashflow 164,058 564,987 545,566Set-up (68,400)Cash c/f 95,658 660,645 1,206,211Max. Cash need (120,782)P&LSales 1,728,938 3,921,465 4,464,780EBITDA 94,003 554,313 664,727EBITDA % 5% 14% 15%

Balance sheetShareholders funds (210,013) 186,033 696,384

Owned Stores Summary 33

Max. cash requirement £45k.Pay back by Q1Good working cap. trading model

£1.4m value (£85k each)Full year EBITDA = £1.5m

Year 1 Year 2 Year 3Cashflow £ £ £Income 1,247,990 4,725,235 10,209,707Payments (1,152,744) (4,335,030) (9,323,738)Cashflow 95,246 390,205 885,969Set-up (45,000) 0 0Cash c/f 50,246 440,451 1,326,420Max. Cash need (45,000)P&LSales 952,077 3,770,595 8,321,894EBITDA (32,304) 136,496 589,317EBITDA % -3.4% 3.6% 7.1%

Total no' of Stores 5 13 20

Investment Opportunity 34

Maximum cash flow need = £700kPay back within 2 years£1.4m value of 20 owned Franchises

EBITDA Year 3 potential exit valueFuture £17k per Franchise fee profit

Market Sales £65.2 m £121.5 m £242.9 mNo of Stores 100 200 400Owned Stores 20 15 15Turnover £ £ £Franchise Fee Income 6,073,748 12,147,496 24,294,99150% of Supplier rebate 321,909 643,817 1,287,635Website Revenue 4,464,780Owned Stores Revenue 12,147,496 9,110,622 9,110,622Total Revenue 23,007,933 21,901,935 34,693,248

EBITDAFranchise model 2,546,678 6,869,808 16,700,369Website 664,727 -260,410 -286,451Owned Stores 1,581,603 1,186,202 1,186,202Total EBITDA 4,793,009 7,795,601 17,600,120EBITDA % 21% 36% 51%

Summary

35

Summary 36RIGHT PROPOSITION:

That reflects Todays Customer needs Simple, Clear & Female friendly Franchise for rapid expansion and Owner/Manager

motivation “light” with no huge establishment cost or stock Outsource supply chain to avoid handling and warehouse

costs Qualified Team to supportRIGHT TIMING Housing market set to improve - Flooring market will follow Pensions and “Buy to Let” exhausted Franchise market looking for new Brand opportunities Women in business on the rise