FULL YEAR RESULTS

27TH APRIL 2017

OVERVIEW

• No longer in transition

• Systems project complete by Summer 2018

• Benefitting from improved trading agility

• Strong ladieswear performance and market share gains

• Financial Services performance driven by quality of the loan book

• Macro environment remains challenging

• Current trading encouraging

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AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

2

CRAIG LOVELACE, CFO

FINANCIALS

3

FINANCIAL SUMMARY

* Defined as continuing PBT excluding exceptionals and unrealised FX movement

• All P&L items are on a 52 week basis unless stated

• Revenue £887.7m, +2.5%

• Product revenue +3.4%; gross margin -150bps to 54.7%

• Financial Services revenue +0.4%; gross margin +110bps to 55.7%

• Trading profit* £80.6m, -8.7% yoy

• Adjusted EPS 22.18p

• Net debt £290.9m

• Final dividend held flat at 8.56p

4

REVENUE

£m FY17 FY16 Change

Product 627.2 606.6 +3.4%

Financial Services 260.5 259.6 +0.4%

Group Revenue 887.7 866.2 +2.5%

% yoy growth Q1 (13wks) Q2 (13wks) Q3 (18wks) Q4 (8wks)

Product -1.6% +2.7% +5.9% +6.9%

Financial Services +3.4% +0.7% -0.5% -2.3%

Group Revenue -0.2% +2.1% +4.1% +3.6%

5

REVENUE BY BRAND

£m FY17 FY16 Change

JD Williams 158.3 151.2 +4.7%

Simply Be 114.2 103.9 +9.9%

Jacamo 65.3 62.8 +4.0%

Power Brands 337.8 317.9 +6.3%

Secondary Brands 155.2 152.7 +1.6%

Traditional Segment 134.2 136.0 -1.3%

Product total 627.2 606.6 +3.4%

Financial Services 260.5 259.6 +0.4%

Group Revenue 887.7 866.2 +2.5%

JD Williams Brand +12%,

Fifty Plus title - 9%

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REVENUE BY CATEGORY

£m FY17 FY16 Change

Ladieswear 256.5 246.1 +4.2%

Menswear 85.8 82.0 +4.6%

Footwear & Accessories 69.0 68.5 +0.7%

Home & Gift 215.9 210.0 +2.8%

Product total 627.2 606.6 +3.4%

7

GROSS MARGIN PERFORMANCE

• Group gross margin 55.0%, -70bps

• Product gross margin 54.7%, -150bps

– Buying in margin +40bps

– Promotions -80ps

– Mix +10bps

– FX -70bps

– Inventory clearance -50bps

• Financial Services gross margin 55.7%, +110bps

8

FX EXPOSURE AND SENSITIVITY

• FX breakdown (net annual purchases):

• $125m - hedging strategy in place

• €0.6m – natural hedge with Irish business

• £130m – indirect FX cost pressures

$ exposure; pre mitigating actions FY18 FY19

% Hedged 90% 25%

Hedging rate 1.27 1.27

PBT headwind yoy at $/£1.25 c.£10m c.£1m

5 cents movement sensitivity (on

unhedged position)

c.£0.4m c.£3.2m

9

OPERATING EXPENSES

£m FY17 FY16 Change

Product gross profit 343.1 340.9 +0.6%

Financial Services gross profit 145.2 141.7 +2.5%

Gross profit 488.3 482.6 +1.2%

Warehouse & fulfilment (79.6) (76.7) +3.8%

Marketing & production (162.5) (161.7) +0.5%

Admin & payroll (130.3) (122.6) +6.3%

EBITDA 115.9 121.6 -4.7%

EBITDA margin 13.1% 14.0% -90bps

Depreciation & amortisation (27.6) (25.2) +9.5%

Operating Profit* 88.3 96.4 -8.4%

Operating margin 9.9% 11.1% -100bps

10

GROUP PROFIT & LOSS

£m FY17 FY16 Change

Operating Profit* 88.3 96.4 -8.4%

Net Finance Costs (7.7) (8.1) -4.9%

Trading Profit 80.6 88.3 -8.7%

Impact of 53rd week 2.0 -

Exceptional Costs (25.2) (17.2)

Unrealised FX movement 0.2 1.1

Profit Before Tax 57.6 72.2 -20.2%

Taxation (13.3) (17.3) -23.1%

Loss from discontinued ops - (0.6)

Net Income 44.3 54.3 -18.4%

11

NET ASSETS

£m 4 March

2017

27 Feb

2016

Change

Non Current Assets 217.8 205.5 +6.0%

Inventories 105.5 101.5 +3.9%

Receivables/Prepayments 577.9 560.9 +3.0%

Creditors/Accruals (120.5) (113.0) +6.6%

Provisions (19.9) 0.0

Retirement Benefit Surplus 8.3 10.8 -23.1%

Net Debt (exc. customer loan book) 290.9 289.7 +0.4%

Net Assets 478.2 476.0 +0.5%

Gearing 61% 61%

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LEVERAGE

£m 4 March

2017

27 Feb

2016

EBITDA (53 weeks) 117.9 121.6

Net Debt 290.9 289.7

Net Debt/EBITDA 2.47x 2.38x

Securisation facility on loan book 270.0 250.0

Loan book adjusted Net Debt 20.9 39.7

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RECEIVABLES & PROVISIONING

£m 4 March

2017

27 Feb

2016

Change

Gross Trade Receivables 599.5 624.7 -4.0%

Opening Bad Debt Provision 97.6 100.9 -3.3%

Gross Bad Debt Charge 113.5 110.3 +2.9%

Debtors Written Off (146.4) (113.6) +28.9%

Closing Bad Debt Provision 64.7 97.6 -33.7%

Provision Ratio 10.8% 15.6% -480bps

14

CASH FLOW

15

(1.2)

117.9 (25.2)

(42.3)

1.9 (7.8)

(40.2) 20.3

(25.8)

-40

-20

0

20

40

60

80

100

120117.9 (25.2)

(25.8)

(42.3)

1.9 (7.8)

(40.2) 20.3

(1.2)

FY18 GUIDANCE

• Gross margin:

– Product margin -120bps to -20bps

– Financial Services margin flat to +100bps

• Group operating costs (excluding D&A) +3.5% to +5.5%

• Depreciation & Amortisation £29m to £30m

• Net interest costs £8m to £9m

16

FY18 GUIDANCE

• Capex c.£40m

• Net debt £300m to £320m

• Tax rate c.20%

• Exceptional costs c.£3m

17

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

18

FINANCIAL SERVICES KPI’S

TY LY Change

Customer account arrears rate (> 28 days) 9.9% 10.9% -100bps

Provisions rate 10.8% 15.6% -480bps

New credit recruits (rollers) 129k 136k -5%

• Quality of the customer loan book continues to improve

• Trial offering lower APR to new recruits encouraging

19

FINANCIAL SERVICES EXCEPTIONAL COST

• Deadline for complaints announced as August 2019; not mid-2018

as previously indicated

• Marketing of deadline has led to greater than anticipated volume of

complaints

• Individual pay-outs higher than initially assumed as older age

profile of complaints and therefore increased by compounding

interest

• Exceptional cost £22.9m, with cash cost spread FY17-20

20

BREAKDOWN OF CUSTOMER LOAN BOOK

FY10 FY16 FY17

Core Payment arrangements

+4%

-44%

Overall -5.6%

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AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

22

OUR STRATEGY

4623

OUR TRANSFORMATION

PEOPLE

Head office re-

organisation

New talent – design,

merchandising, digital

marketing, IT

New operating Board

Outsourced non-core

competencies

BRAND CONSOLIDATION

From 44 brands to 11 brands

PROCESS

Stock flexibility

Shorter lead times

Supply chain

Digital-first marketing

Improved delivery offer

Unconditional FCA

authorisation

SYSTEMS

Warehouse extension

Merchandising system

Foundation releases for

new credit system

USA website

Finance system

Completion of

systems project

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NOW AN ONLINE RETAILER

0

100

200

300

400

500

600

700

FY12 FY13 FY14 FY15 FY16 FY17

Online penetration Non-online penetration Unlikely to move online

FY12-17 online revenue +50%

25

ONLINE KPI’S

• FY17 online revenue +10%; Power Brand online revenue +14%

• Smartphone sessions +49%

TY LY Change

Online penetration 69% 65% +4ppts

Online penetration of new customers 77% 72% +5ppts

Conversion rate 5.6% 5.8% -20bps

% of traffic from mobile devices 71% 66% +5ppts

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TY LY Change

Ladieswear share, size 16+ 4.2% 3.4% +80bps

Menswear share, chest size 44”+ 1.5% 1.5% -

Group returns rate 26.8% 27.4% -70bps

• Further improvements in Open to Buy

• Average lead times down 20% year on year

PRODUCT KPI’S

27

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MOMENTUM IN LADIESWEAR

• Ladieswear +10.4% in H2

• Strong performance a result of

the changes made:

– Design team

– Stock flexibility

– Price re-calibration

– Brand consolidation

• Lingerie up 7% in FY17

PRODUCT PARTNERSHIPS

• Over 100 new third-party brands added since the start of FY17

• Partnerships to increase access to our brands:

– Jacamo on ASOS now live

– Announced partnership with Tesco

– Several other partnerships in the pipeline

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30

JD WILLIAMS

• JD Williams brand +12%

– Online revenue +19%

– ‘The Cut’ exceeding expectations

– Age agnostic proposition

resonating well

– New Bridal range launched

• Fifty Plus migration well on track

– Down 9% in FY17: H1 -18%; H2

+1%

– Migration complete by H2 FY18

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• Active customers +20%

• Simply Be Unique range

performing well

• App launched and well

received

• #WeAreCurves campaign

SIMPLY BE

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• Active customers +12%

• #RealManRunway

• Launch of Jacamo Unlimited – unlimited next day delivery for £9.95 a year

JACAMO

REAL MAN RUNWAY

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• Pleased with actions taken to improve performance:

– H1 -4.2%, H2 +1.6%

– Launch of new bespoke publications

– Improved product range

• Gained 50bps market share in Ladieswear age 65+

TRADITIONAL SEGMENT

CUSTOMER KPI’s

TY LY Change

Active customer accounts 4.30m 4.27m +0.7%

Power Brand active customer accounts 2.2m 2.1m +1.2%

Power Brand customers exc Fifty Plus 1.9m 1.7m +9.9%

% growth of most loyal* customers +3.6% -0.4% +400bps

Customer satisfaction rating 86.4% 84.6% +180bps

• Drag from Traditional and Fifty Plus significantly lessened

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35

RECORD CUSTOMER SATISFACTION SCORE

73.574.375.776.777.578.378.578.979.680.080.580.681.181.381.481.782.182.782.983.183.883.883.984.084.886.487.2

82.177.4

45 50 55 60 65 70 75 80 85 90 95 100

Sports DirectCurrys/PC World

TK MaxxLloyds Pharmacy

WH SmithPrimark

IkeaB&Q

ArgosMatalan

PoundlandBoots UK

HomebaseHolland & Barrett

SuperdrugDebenhams

New LookH&MEbay

M & SSpecsavers

NextJohn Lewis

AppleWilko

N BrownAmazon.co.uk

Retail (Non-food)UK all-sector average

Source: UK Institute of Customer Services

INTERNATIONAL

USA:

• Revenue £15.5m, +8.5% (-4.2% constant fx); loss £1.3m (FY16 £1.0m)

• As expected, performance through peak impacted by site go-live

Ireland:

• Revenue £15.9m, +18.8% (+3.8% constant fx); profit £3.3m (FY16 £0.8m)

Looking forward:

• Laid the foundations for international expansion

• Significant future growth potential

• New International Director Richard Clark

36

FIT 4 THE FUTURE

• Very pleased with progress so far

• Major milestone: High & Mighty go-live in May – web platform and

Financial Services system

• Agile project approach focused on risk minimisation

• Pace of development unchanged:

– New releases onto High & Mighty and USA sites monthly

– Other brands migrated after peak, by end Summer 2018

• Costs, benefits and timing of benefits unchanged

37

38

FIT 4 THE FUTURE

USA website

Planning

TransformationPhase One

Forecasting Tool

Global

Multichannel

Transformation

Credit

TransformationPowercurve

Decisioning

SimplyBe –

Euro

20162015 2017

UK site

development

UK Credit Management

Monthly releases

Gone live

2018

Future go live

Monthly releases

High &

Mighty

Other sites

go live

SUMMARY

• Now an online retailer

• Customer led development strategy

• Macro environment remains challenging

• Current trading encouraging

39

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

40

APPENDIX

• Operating cash flow

• Group cash flow

• Financial Calendar

• Investor relations contacts

41

OPERATING CASH FLOW

£m FY17 FY16

Operating Profit 65.1 78.5

Depreciation, Amortisation & Share option charge 28.1 28.1

Decrease in Inventory (4.0) (6.7)

Decrease/(increase) in Receivables (21.6) 0.9

(Decrease)/increase in Payables (0.2) (12.2)

Increase in Provisions 19.9 -

Pension obligation (0.2) (1.7)

Cash generated from operations 87.1 86.9

42

GROUP CASH FLOW

£m FY17 FY16

Cash generated from operations 87.1 86.9

Taxation paid 1.9 (22.4)

Dividends paid (40.2) (40.2)

Capital expenditure (42.3) (58.2)

ESOT share issue net proceeds 0.1 0.4

Net finance costs (7.8) (9.6)

Net cash outflow (1.2) (43.1)

Opening Net Debt 289.7 246.6

Closing Net Debt 290.9 289.7

43

FINANCIAL CALENDAR

• Q1 trading statement 20th June 2017

• First half results XX October 2017

44

IR CONTACT DETAILS

Bethany Hocking

Director of Investor Relations and Corporate Communications

Email: bethany.hocking@nbrowngroup.co.uk

Tel: 0161 238 1845

Mobile: 07887 536 153

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