1

23 January 2019

Joules Group plc

(“Joules”, the “Group”)

Interim Results for the 26 weeks ended 25 November 2018

Strength of the Joules brand and flexible ‘total retail’ model deliver profits ahead of initial expectations

Highlights:

26 weeks ended

25 November

2018

26 November

2017 Change

Group Revenue £113.1m £96.2m +17.6%

Underlying Profit Before Tax1 £10.7m £9.3m +14.7%

Underlying pro forma basic EPS2 9.7p 8.5p +14.7%

Interim Dividend 0.75p 0.70p

• Group revenue increased by 17.6% to £113.1 million (up 17.5% in constant currency)

– Approximate revenue growth of +14%3 excluding the impact of the successful transition of certain

wholesale accounts to a retail concession model in the Period

• Underlying Profit Before Tax increased by 14.7% to £10.7 million

• Active4 customers increased by 20% to 1.4 million

• International revenue increased by 64.2% and now represents 15.8% of Group revenue

• Net cash of £4.3 million, an improvement of £1.3 million on the prior year

• Continued retail sales momentum through the Christmas trading period, with retail sales +11.7% in the

seven weeks to 6 January 2019

• The Board reiterates its confidence in achieving full year 2019 Underlying PBT in line with its

expectations

Colin Porter, Chief Executive, commented:

“Joules has delivered another strong performance in the first half of year. As previously reported, this outcome is

ahead of our initial expectations for the Period and has been achieved despite challenging trading conditions.

The business’s success during this first half of the year is testament to the strength of our distinctive brand and the

efforts of our fantastic team. We continue to benefit from a well-invested and flexible ‘total retail’ model in the UK,

which enables us to respond and adapt to shifting customer preferences. Internationally, the brand continues to

grow very well in both the US and Germany.

During 2019 the brand will celebrate its 30th Birthday, marking three decades of Joules delivering fun, quality

clothing for families and friends to make lasting memories together. We have some very exciting celebrations

planned throughout the year built around some of the special moments we have shared with our customers since

the Joules story began - when Tom started selling practical clothing with a distinctive twist on a stand at a country

1 Underlying excludes the cost of share based payments. A reconciliation to reported (IFRS) results is included in the Financial Review below. 2 Underlying EPS: Underlying Profit Before Tax with tax deducted at a consistent rate divided by the number of shares in issue as at 25 November 2018.

3 Comparative growth is based on adjusting the prior period as if the retail concession model was being operated in that period. The prior period

restatement is unaudited and approximate. Comparative growth by segment is included in the Financial Review below. 4 A customer registered on our database who has transacted in the last 12 months.

2

show in Leicestershire - back in 1989.

We have continued to trade well since the Period end with a good performance through the festive period and

positive customer reactions to our new collections. We have an outstanding brand, good momentum and a growing

customer base and we look forward to the second half of the financial year with confidence.”

Enquiries:

Joules Group plc Tel: +44 (0) 1858 435 255

Colin Porter, CEO

Marc Dench, CFO

Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133

Alex Brennan

Lucy Wollam

Peel Hunt LLP, Nominated Advisor Tel: +44 (0) 20 7418 8900

Dan Webster

George Sellar

Guy Pengelley

Liberum Capital Limited Tel: +44 (0) 20 3100 2000

John Fishley

Joshua Hughes

Joules - ‘a premium lifestyle brand with an authentic British heritage’

Established in Britain by Tom Joule three decades ago, Joules is a premium lifestyle brand with an authentic

heritage.

The Joules story began in 1989, when Tom Joule started selling clothing on a stand at a country show in

Leicestershire. Today, it is a true multi-channel lifestyle brand; its products are available through its own retail

stores, online, at rural shows and events and wholesale channels both in the UK and internationally.

Joules carefully designs and sells clothing, footwear and accessories for women, men and children, as well as ever-

growing homeware, eyewear and licensed product collections.

The brand’s values of quality, Britishness, family, and humour, coupled with its unique use of colour and print set

Joules apart. This approach, along with an unwavering attention to detail and drive to surprise and delight its

customers with unexpected details, has been central to the brand’s success and remains at the heart of everything

Joules creates.

During 2019 the brand will celebrate its 30th birthday, marking three decades of Joules delivering fun, quality

clothing for families and friends to make lasting memories together. The brand has some very exciting celebrations

planned throughout the year, built around some of the special moments shared with its customers since the Joules

story began back in 1989.

www.joules.com | www.joulesgroup.com

Joules Fast Facts

• Joules is an international brand, available in the UK, USA, Germany, France and other European markets

• Joules operates 123* stores in the UK and ROI across a range of location types, has a significant online business

and a well-established wholesale business with over 2,000 stockists worldwide, including John Lewis and

3

Nordstrom Joules’ talented in-house print design team lovingly hand-draw all the prints and unexpected

unique details you see within its collections each season

• Joules is proud of its British heritage and still has strong roots in Market Harborough, the site of its first shop

and head office – since day one

• Colin Porter joined as COO in 2010 and became CEO in September 2015, with Tom Joule focusing on the

creative side of the business in his capacity as Chief Brand Officer

• Joules received Mark of Excellence for The Best Fashion Retailer at the Retail Week Awards 2018

• Joules recently won Fashion Retail Business of the Year (between £101m and £500m turnover) at the Drapers

Awards 2018, for the second year in a row. The Group also won the Drapers Mainstream Brand of the Year in

both 2017 and 2016, and Best British Fashion Retailer of the Year in 2015

*As at 25 November 2018, excluding concessions

4

CHIEF EXECUTIVE’S REPORT

I am delighted to update the Group’s stakeholders on a strong first half performance despite the widely-reported

challenging trading conditions for the sector. We have continued to expand across both our core UK market, where

we continue to grow our customer base, and internationally, where the brand continues to expand at pace in both

our key target markets, the US and Germany.

Group Revenue during the 26 weeks to 25 November 2018 (the “Period” or “first half”) increased by 17.6% to

£113.1 million (H1 FY18: £96.2 million), reflecting strong growth across both our Retail and Wholesale segments.

Underlying Profit Before Tax (“PBT”) increased by 14.7% to £10.7 million (H1 FY18: £9.3m). This represented a

very pleasing outcome given the broader external trading challenges faced by the sector.

We have delivered growth across all product categories with continued momentum in our core womenswear range

and the successful extensions of our footwear and accessories categories. This has been complemented by the

further development of Joules branded products with licence partnerships, including launches of Joules watches

and stationery, the expansion of gifting and increased distribution of the Joules sofa range in partnership with DFS.

We continue to focus on delivering product extension opportunities that are right for the brand and our customer,

with an exciting pipeline of brand relevant licence arrangements, planned for the second half of this financial year

and beyond.

As consumer spending increasingly moves online and as customers have ever more choice as to where to browse

and buy brands, our flexible integrated ‘total retail’ model has enabled us to respond. Our well-developed E-

commerce proposition, in combination with our balanced and flexible portfolio of stores in desirable locations and

our presence in partner channels, online and in-store, enables us to be agnostic as to where our customers shop.

Customers increasingly begin their journey in one channel and end in another, with stores, both Joules-owned and

those of our partners, driving brand awareness and new customer acquisition. Similarly increased online traffic

continues to drive footfall into stores.

We have continued to invest in our infrastructure to support the Group’s future growth plans. Just before the start

of the Period, we went live with our new company-wide ERP system, Microsoft Dynamics AX, which we continue

to enhance and evolve. During the Period, we made investments to enhance the end-to-end customer experience

across our retail channels. Since the Period end, we have started work on our new head office development in

Market Harborough. On completion of the new facility, expected in FY21, we will house all Joules head office

employees under one roof which we anticipate will enhance creativity, efficiency and further reinforce our strong

brand and culture.

5

FINANCIAL REVIEW

PROFIT BEFORE TAX

Underlying PBT increased by 14.7% to £10.7 million (H1 FY18: £9.3 million). Statutory PBT increased by 12.1% to

£9.3 million (H1 FY18: £8.3 million).

UNDERLYING AND STATUTORY RESULTS

Certain items have been excluded from the underlying results reported in the front section of these Interim Results.

In the Period and prior period these solely relate to non-cash share based compensation plan expense. These

adjustments are intended to provide the reader with a more meaningful year-on-year comparison.

Executive and employee share based compensation plans were established at the time of the IPO, in May 2016. In

accordance with IFRS2, the non-cash expense related to awards under the share plans is accounted for within

administrative expenses, until the shares are exercised, typically assumed as three years. The first awards under

these plans were made in FY17 and the second awards were made in FY18. As the share plan award cycle matures

over the first three years, the related expense is anticipated to increase each year. The associated income

statement expense of £1.4 million in the Period (H1 FY18: £1.0 million) is treated as ‘non-underlying’ as it is non-

comparable across periods whilst the share plan award cycle is in the initial three years, prior to reaching maturity.

A reconciliation between underlying and reported (IFRS) results is provided below.

26 weeks ended 25 November 2018

26 weeks ended 26 November 2017

£million Underlying

Share based

compensation Reported Underlying

Share based

compensation Reported

Revenue 113.1 113.1 96.2 96.2

Gross profit 61.9 61.9 53.5 53.5

Admin expenses (51.1) (1.4) (52.4) (44.0) (1.0) (45.0)

Operating profit 10.9 (1.4) 9.5 9.4 (1.0) 8.4

Net finance costs (0.2) (0.2) (0.1) (0.1)

Profit before tax 10.7 (1.4) 9.3 9.3 (1.0) 8.3

Operating profit 10.9 9.4 Dep'n & amort'n 3.7 3.9 EBITDA 14.6 13.3

6

REVENUE

Group revenue increased by 17.6% to £113.1 million from £96.2 million (up 17.5% on a constant currency basis).

Retail and Wholesale revenue growth was impacted by the transition in the Period of some UK wholesale accounts

to the retail concession model, which provides greater future trading flexibility and consistency of customer

proposition. Approximate revenue growth excluding the impact of this transition is disclosed below for

comparative purposes:

26 weeks ended 25 November 2018

Revenue £million Reported growth % Approx. comparative

growth5 %

Retail 79.9 21.2% 10%

Wholesale 32.5 8.0% 26%

Other 0.8 232.1% N/a

Group 113.1 17.6% 14%

Retail

Retail revenue increased by 21.2% to £79.9 million, which represents growth of approximately 10% when adjusting

for the transition of wholesale accounts to retail concession model in the Period. This growth was driven by our

continued focus on delivering an enjoyable and seamless cross-channel experience to customers, irrespective of

how, when and where they want to shop the Joules brand.

E-commerce

E-commerce performed particularly well in the first half and now represents 46.5% of all retail sales (H1 FY18:

35.8%). The strong performance of our owned E-commerce channels was attributable to our growing active

customer base, which helped drive increased traffic. In addition, ongoing investment in both the customer

experience and infrastructure of our digital platforms improved conversion trends. This growth was

complemented by good performance on our partner retailer websites.

Stores

We opened five new stores in the first half. At the end of the Period, the Group operated 123 owned stores

(H1 FY18: 113), in addition to 34 concessions (H1 FY18: 5) and three franchises (H1 FY18: 3). Our stores are

in desirable locations, operate on relatively short lease terms and continue to play an important role in the

expansion of the Joules brand in the UK. Our stores portfolio plays an increasingly important role in a

customer’s digital purchase journey, with increased utilisation of our click & collect and in-store returns

services.

Wholesale

Wholesale revenue increased by 8.0% to £32.5 million, approximately 26% growth adjusting for the transition of

wholesale accounts to retail concession model in the Period. This very strong growth reflects continued

momentum in the Group’s target international markets, North America and Germany, and good UK performance.

Wholesale revenue in North America grew by over 100% in the Period.

5 Comparative growth is based on adjusting the prior period as if the retail concession model was being operated in that period. The prior period

restatement is unaudited and approximate.

7

Licensing

Revenue from licensing activity increased to £0.8 million (H1 FY18: £0.2 million). This increase is the result of

improved performance within existing licensing partnerships, as we increased distribution and grew the product

range, and the launch of new brand licence partnerships in new product categories including Joules watches.

International revenue

Total international revenue increased by 64.2% and now represents 15.8% of total Group revenue (H1 FY18:

11.3%). This very strong performance demonstrates the appeal of the Joules brand in our target international

markets. International wholesale grew by 78% in constant currency, with growth in existing accounts and the

addition of several new accounts. International E-commerce in the US and Germany continued to perform very

well, with strong and encouraging growth albeit from a relatively low base.

26 weeks ended 25 November

2018

26 November

2017

Increase Share of

Group

revenue

H1 FY19

Share of

Group

revenue

H1 FY18

UK £95.3m £85.3m 11.7% 84.2% 88.7%

International £17.8m £10.9m 64.2% 15.8% 11.3%

Total £113.1m £96.2m 17.6% 100.0% 100.0%

GROSS MARGIN

Gross margin at 54.8% was 80 basis points below the comparable period in the prior year (FY18 H1: 55.6%).

Retail gross margin was impacted by the increasing mix of E-commerce sales, which have a lower gross margin

than store sales, but deliver a higher operating margin, and by increased levels of new customer acquisition activity

in the Period, which resulted in a 21% increase in new customers year on year. We also saw an increased customer

participation in our core annual events.

Wholesale gross margin was in line with the comparable prior year period, with an improved UK and Europe margin

offset by accelerated sales growth in the US where margins are lower.

ADMINISTRATIVE EXPENSES

Underlying administrative expenses increased by 15.9% from £44.0 million to £51.1 million, representing 45.1% of

revenue (H1 FY18: 45.8%). Excluding the impact of the conversion of wholesale accounts to the retail concession

model and the resulting increase in sales commissions (linked to the retail sales made in concessions), underlying

administrative expenses increased by less than 10%, reflecting leverage from previous investments in central

capabilities and infrastructure.

Depreciation and amortisation decreased by £0.2 million to £3.7 million (H1 FY18: £3.9 million), the decrease being

due to several older stores now being fully depreciated as well as a lower level of capital expenditure compared to

the prior year, most notably from a lower number of store openings.

NET FINANCE COSTS

Underlying net finance costs of £0.2 million (H1 FY18: £0.1 million) related to interest and facility charges on the

Group’s revolving credit facility and term loan with Barclays Bank Plc.

8

TAXATION

The tax charge for the period was £2.0 million (H1 FY18: £1.9 million). The effective tax rate for the Period was

21.9% (H1 FY18: 22.6%), which was higher than the applicable UK corporation tax rate due to the impact of non-

deductible expenses.

EARNINGS PER SHARE

Basic earnings per share for the Period were 8.3 pence (H1 FY18: 7.3 pence).

Underlying pro forma basic earnings per share for the Period were 9.7 pence (H1 FY18: 8.5 pence). Underlying pro

forma basic EPS is calculated using Underlying PBT less tax at the effective statutory rate.

26 weeks ended 25 November

2018

26 November

2017

Underlying PBT £million 10.7 9.3

Tax rate 20.0% 20.0%

Tax – underlying £million (2.1) (1.9)

Earnings – underlying £million 8.5 7.4

Shares (million) 87.8 87.8

Underlying basic EPS - pence 9.7 8.5

DIVIDEND

The Board is pleased to declare an interim dividend of 0.75 pence (FY18: 0.70 pence). The interim dividend will be

paid on 9 April 2019 to those shareholders on the register at the close of business on 8 March 2019.

CASH FLOW AND CAPITAL EXPENDITURE

Free cash flow, excluding expenditure on our new head office development, was £6.2 million in the period (H1

FY18: £2.1 million). This improvement reflects a lower level of core capital expenditure, primarily due to fewer

store openings, as well as the expenditure on the now live company-wide ERP implementation in the comparable

period last year.

Core capital expenditure in the first half was £5.0 million (H1 FY18: £8.6 million). Major areas of capital expenditure

included new stores and enhancements to online and in-store customer experience capabilities. The development

of our new head office incurred spend of £0.7 million in the Period (H1 FY18: £4.4 million). Having obtained

planning permission in November 2018, work has now commenced and we anticipate further expenditure of

around £15 million on the development over the next 24 months.

9

26 weeks ended 25 November

2018

26 November

2017

£million

EBITDA 14.6 13.3

Net working capital - change (1.9) (2.5)

Operating free cashflow 12.7 10.8

Interest - net (0.2) (0.1)

Tax paid (1.3) 0.1

Capital expenditure - core (5.0) (8.6)

Free cash flow (core capex) 6.2 2.1

Capital expenditure - new Head Office (0.7) (4.4)

Cash flow before financing 5.5 (2.3)

Net cash / (debt) 4.3 3.0

NET CASH AND BORROWINGS

Net cash at the end of the Period was £4.3 million (H1 FY18: £3.0 million), an improvement of £1.3 million.

Gross cash was £15.7 million at the end of the first half (H1 FY18: £12.8 million) and Group borrowings were £11.4

million at the end of the first half (H1 FY18: £9.8 million).

The Group has a £25 million revolving credit facility (‘RCF’) provided by Barclays Bank Plc to fund seasonal working

capital requirements. This facility has been extended since the Period end to July 2022.

The development of the new head office is being funded, in part, through a new £9.5 million term loan facility,

arranged with Barclays Bank Plc (‘Term Loan’) after the period end. This new term loan incorporates the existing

£3.5 million term loan that was used to part fund the initial acquisition of the head office site. The Term Loan will

be utilised over the next 18 months and is repayable by December 2023.

At the first half Group borrowings comprised the RCF £8.0 million, the Term Loan £3.2 million and legacy asset

loans of £0.2 million.

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STRATEGIC REVIEW

We have a clear strategy for the long-term development of Joules as a premium lifestyle brand, both in the UK and

internationally. This strategy is built on the four pillars described below and is underpinned by our distinctive

brand, unique products and unwavering customer focus. Our strategy is delivered by our strong, experienced

senior management team and talented teams across the globe, who are key to the brand’s continued success and

supported by well-invested systems and infrastructure.

During the Period, we continued to deliver excellent further progress against each strategic growth pillar.

The brand’s continued success was recognised again at the 2018 Drapers Awards where Joules won Fashion Retail

Business of the Year (£101m-£500m revenue) for the second year running, against strong competition from other

leading lifestyle brands.

1. INCREASING CUSTOMER VALUE

Our goal is to increase our base of active customers and to develop the engagement of these customers with Joules

as a brand that reflects their lifestyles. By doing this successfully, our customers interact with us more frequently

and increase their total spend across our product categories. They also act as the best advocates for our brand,

helping to further grow our active customer base.

During the Period, awareness of the Joules brand continued to grow and our active customer base increased by

20% against the prior year to 1.4 million6, driven by new customer acquisition from our stores and increasingly

effective digital marketing activity. Engagement from our customers across social media channels continues to

increase, reflecting the growing importance of these channels for strengthening the brand-customer connection.

Our multi-channel customers (those that shop across stores and online channels) continue to be our most valuable

and continue to grow as a proportion of our overall active customer base.

During 2019, Joules will celebrate its 30th Birthday. This milestone celebration provides a number of opportunities

to further engage with our customers, across social and digital channels as well as in stores throughout the year.

To reflect our heritage and brand journey so far, we have a range of exciting events and campaigns planned –

around the theme of ‘making memories’ – that will celebrate our brand, products and customers.

2. DRIVE TOTAL UK BRAND SALES

Our objective is to deliver a seamless and enjoyable experience to customers, irrespective of how, when and where

they choose to shop the Joules brand. The continued development of an integrated and consistent customer

focused proposition is central to our growth strategy and is reflected in our infrastructure investments. The

flexibility of our integrated model has been key to our strong performance in the first half, enabling us to engage

with our customers wherever they choose to interact with and purchase the brand.

Total UK revenue increased by 11.7% to £95.3 million in the Period.

E-commerce channels now represent almost 50% of all retail sales, reflecting strong growth both on our owned E-

commerce platform (joules.com) and on our partner retailer platforms. Conversion of online traffic to purchases

on joules.com continued to improve, driven by customer experience enhancements and infrastructure investments

including on-site search enhancements, cross-sell enhancements and product imagery improvements.

We opened five new stores in the Period, across lifestyle, high street and outlet locations. The payback period on

new stores remains comfortably below our appraisal threshold of 24 months. We evaluate new stores and monitor

6 Customer numbers and historic comparisons have been restated to reflect better data matching

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existing store performance based on contribution to our flexible ‘total retail’ model, considering the value that

each location delivers through brand awareness, customer acquisition and the touch-points along a customer’s

digital journey. Approximately 20% of store transactions now relate to non-traditional store sales activities

including, for example click & collect, order-in-store and E-commerce returns or exchange.

We successfully converted our John Lewis womenswear wholesale business to the retail concession model during

the first half. This model, which we also operate with Next Label, provides us with more control of the product

proposition and ranging, which ensures better consistency of proposition for our customers across all our retail

channels.

Despite the challenging UK high street, we have continued to benefit from good performance in our wholesale

partners, with an evolving presence in both online only and leisure destination retailers.

3. INTERNATIONAL EXPANSION

The Joules brand and products continue to resonate well internationally and, during the Period, we made further

progress in our priority markets in North America and Germany, through both Wholesale and E-commerce

channels. We have a growing customer base in both markets.

Total international revenue increased by 64.2% to £17.8 million in the Period, representing 15.8% of Group

revenue.

Our US wholesale business saw very strong performance, with revenue growing by more than 100%. This was

driven by good growth in key existing accounts, including Dillard’s and Nordstrom, where we increased distribution

into more locations and grew the product range; continued sales growth in our large base of independent stockists;

and the addition of several new key accounts that provide exciting growth potential for the future.

Our German wholesale business grew by approximately 35% with the brand continuing to be received well by the

important independent stockist channel. We continue to develop our relationship with Zalando, increasing the

range and depth of our product offering with them during the Period.

Looking forward, we have strong growth in our Spring/Summer 2019 international order book in both North

America and Germany. We have also recently launched an E-commerce proposition for several other international

markets, offering localised payment and delivery options. Although still small the early results from this new offer

are encouraging and provide further support for the international appeal of the Joules brand.

4. PRODUCT EXTENSION

Our core categories continue to perform well, with outerwear, tops, dresses and knitwear within womenswear and

kidswear again resonating strongly with customers.

We continued to extend our product offering within, and into, categories to meet the lifestyle needs of our

customers, which are appropriate for our brand. We extended our in-house developed ranges in women’s

accessories, most notably bags, and in footwear.

This organic product extension was complemented by the further development of Joules branded licensed

products, on which we work closely with a small number of carefully selected partners. In the Period we launched

a range of ladies’ and men’s watches and a stationery and gifting collection, both of which have received a very

positive customer reaction. At the end of the period we launched a range of Joules DAB radios and complementary

small electricals.

In addition to these new partnerships, we extended our collaboration with Boots on toiletries and beauty gifting

to include a men’s collection for Christmas 2018 and we continue to see growth in our ladies’ toiletries range. Our

12

DFS sofa collections continued to perform very well, supported by an extension to 63 stores and the introduction

of a sofa bed to the collection.

This growth and extension in existing partnerships coupled with the early positive results from new partnerships

delivered very strong licensing revenue growth in the Period.

Looking forward we have an exciting pipeline of brand relevant product category extensions.

13

OUTLOOK

The strength of the Joules brand, our unique products and loyal and growing customer base combined with our

flexible integrated ‘total retail’ model and talented team position us well to continue to grow within what will

remain a challenging retail environment. We anticipate that customer expectations and shopping behaviours will

continue to evolve at pace and the physical retail sector will continue to face the pressures of declining footfall and

above inflation cost growth. When combined with the current economic uncertainty it is likely to mean that the

overall UK retail sector will continue to be quite challenging over the foreseeable future. Our rapidly growing

international business and contribution from brand licensing partnerships provide further confidence in our

continued progress.

At the time of writing this report the outcome of Brexit remains unclear. We have, for some time, been preparing

for, developing and testing contingency plans based on a ‘hard Brexit’ on 29 March 2019. These plans include the

establishment of an EU based third party distribution centre that will be operational from April 2019 to serve our

EU wholesale customers; scheduling, where possible, earlier in-bound deliveries for our Spring/Summer 2019

products; evaluating and preparing for increased administrative activities such as export documentation; and

extending hedging arrangements for our US dollar foreign currency requirements given the potential for Sterling

volatility.

During 2019 the brand will celebrate its 30th Birthday, marking three decades of Joules delivering fun, quality

clothing for families and friends to make lasting memories together. We have some very exciting celebrations

planned throughout the year built around some of the special moments we have shared with our customers since

the Joules story began - when Tom started selling practical clothing with a distinctive twist on a stand at a country

show in Leicestershire - back in 1989.

Our strong retail sales performance has continued through the important Christmas trading period, with sales for

the seven weeks to 6 January 2019 up by 11.7%.

This continued robust retail sales performance and strength of the Spring Summer 2019 wholesale order book give

the Board confidence in the Group achieving full year 2019 Underlying PBT in line with its expectations.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

We confirm to the best of our knowledge that:

- The condensed interim set of financial statements has been prepared in accordance with IAS 34 “Interim

Financial Reporting” as adopted by the European Union;

- The Interim Report includes a fair review of the information required by DTR 4.2.7R (indication of

important events during the first six months and description of principal risks and uncertainties for the

remaining six months of the year); and

- The Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related

parties’ transactions and changes therein).

By order of the Board

14

Joules Group plc

Condensed consolidated income statement

For the six months ended 25 November 2018

Note

Unaudited

26 weeks

ended 25

November

2018

£'000

Unaudited

26 weeks

ended 26

November

2017

£'000

Audited

52 weeks

ended 27

May

2018

£'000

REVENUE 2 113,136 96,189 185,933

Cost of sales 4 (51,188) (42,719) (82,403)

GROSS PROFIT 61,948 53,470 103,530

Administrative expenses 4 (51,061) (44,025) (90,226)

Share based payments 4 (1,383) (1,019) (1,766)

Total administrative expenses (52,444) (45,044) (91,992)

OPERATING PROFIT 9,504 8,426 11,538

Finance costs (217) (141) (348)

PROFIT BEFORE TAX 9,287 8,285 11,190

Income tax expense

(2,036)

(1,869)

(2,564)

PROFIT FOR THE PERIOD 7,251 6,416 8,626

Basic earnings per share (pence) 10 8.26 7.33 9.86

Diluted earnings per share (pence) 10 8.14 7.27 9.74

Joules Group plc

15

Condensed consolidated statement of comprehensive income

For the six months ended 25 November 2018

Note

Unaudited

26 weeks

ended 25

November

2018

£’000

Unaudited

26 weeks

ended 26

November

2017

£’000

Audited

52 weeks

ended 27

May

2018

£’000

Profit for the period 7,251 6,416 8,626

Items that may be reclassified subsequently to profit or loss:

Net gains/(losses) arising on changes in fair value of hedging

instruments entered into for cash flow hedges 8 4,608 (2,706) (308)

Gains/(losses) arising during the period on deferred tax on cash

flow hedges 8 (876) 489 31

Other comprehensive income for the period 3,732 (2,217) (277)

Items that may be reclassified subsequently to profit or loss:

Exchange difference on translation of foreign operations 8 30 72 422

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 11,013 4,271 8,771

16

Joules Group plc

Condensed consolidated statement of

financial position

Unaudited

Unaudited

Audited

As at 25 November 2018 25 November 26 November 27 May

2018 2017 2018

Note £’000 £’000 £’000

NON-CURRENT ASSETS

Property, plant and equipment 18,043 18,878 18,049

Intangibles 14,613 11,447 12,614

Deferred tax 535 767 1,148

Derivative financial instruments 9 223 - 428

TOTAL NON-CURRENT ASSETS 33,414 31,092 32,239

CURRENT ASSETS

Inventories 41,002 26,606 32,795

Trade and other receivables 9 22,582 18,943 16,456

Cash and cash equivalents 9 15,659 12,848 8,571

Derivative financial instruments 9 4,043 77 910

TOTAL CURRENT ASSETS 83,286 58,474 58,732

TOTAL ASSETS 116,700 89,566 90,971

CURRENT LIABILITIES

Trade and other payables 9 53,298 38,865 40,008

Current corporation tax payable 2,118 1,834 1,355

Borrowings 9 8,685 6,512 5,559

Provisions 292 1,846 1,031

Derivative financial instruments 9 - 3,701 1,680

TOTAL CURRENT LIABILITIES 64,393 52,758 49,633

NON-CURRENT LIABILITIES

Borrowings 9 2,713 3,322 2,972

TOTAL LIABILITIES 67,106 56,080 52,605

NET ASSETS 49,594 33,486 38,366

EQUITIES

Share capital 875 875 875

Share premium 11,410 11,410 11,410

Hedging reserve 8 3,455 (2,356) (277)

Translation reserve 8 391 11 361

Merger reserve (125,807) (125,807) (125,807)

Retained earnings 159,270 149,353 151,804

TOTAL EQUITY 49,594 33,486 38,366

These financial statements of Joules Group plc (Company Registration Number 10164829) were approved by the Board

of Directors and authorised for issue on 23 January 2019 and were signed on behalf of the Board of Directors by -

MARC DENCH

Chief Financial Officer

Joules Group plc

17

Condensed consolidated statement of changes in

equity - unaudited

As at 25 November 2018

Merger

reserve

Hedging

reserve

Translation

reserve

Share

capital

Share

premium

Retained

earnings

Total

equity

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Balance at 28 May 2017 (125,807) (139) (61) 875 11,410 142,956 29,234

Profit for the period - - - - - 6,416 6,416

Other comprehensive income for the

period - (2,217) 72 - - - (2,145)

Total comprehensive income for the

period - (2,217) 72 - - 6,416 4,271

Dividend issued - - - - - (1,050) (1,050)

Credit to equity for equity-settled

share based payments excl. NI - - - - - 807 807

Gains arising during the period on

deferred tax on share based

payments

- - - - - 224 224

Balance at 26 November 2017 (125,807) (2,356) 11 875 11,410 149,353 33,486

Profit for the period - - - - - 2,210 2,210

Other comprehensive income for the

period - 1,940 350 - - - 2,290

Total comprehensive income for the

period - 1,940 350 - - 2,210 4,500

Basis adjustment to hedged inventory 139 - 139

Dividend issued - - - - - (613) (613)

Credit to equity for equity-settled

share based payments excl. NI - - - - - 788 788

Gains arising during the period on

deferred tax on share based

payments

- - - - - 66 66

Balance at 27 May 2018 (125,807) (277) 361 875 11,410 151,804 38,366

Profit for the period - - - - - 7,251 7,251

Other comprehensive income for the

period - 3,732 30 - - - 3,762

Total comprehensive income for the

period - 3,732 30 - - 7,251 11,013

Dividend issued - - - - - (1,141) (1,141)

Credit to equity for equity-settled

share based payments excl. NI - - - - - 1,098 1,098

Gains arising during the period on

deferred tax on share based

payments

- - - - - 258 258

Balance at 25 November 2018 (125,807) 3,455 391 875 11,410 159,270 49,594

18

Joules Group plc

Consolidated statement of cash flows

For the six months ended 25 November 2018 Unaudited Unaudited Audited

26 weeks 26 weeks 53 weeks

ended 25 ended 26 ended 27

November November May

2018 2017 2018

Note £’000 £’000 £'000

Cash generated from operations

Profit for the period 7,251 6,416 8,626

Adjustments for:

Depreciation 4 2,441 2,981 6,360

Amortisation 4 1,267 876 1,453

Share based payments 4 1,383 1,019 1,766

Finance cost expense 217 141 348

Income tax expense 2,036 1,869 2,564

Operating cash flows before movements in working capital 14,595 13,302 21,117

(Increase) in inventory (8,207) (5,412) (11,601)

(Increase) in receivables (6,126) (4,930) (2,443)

Increase in payables 12,477 7,819 8,105

Cash generated by operations 12,739 10,779 15,178

Interest paid (217) (141) (308)

Tax (paid)/received (1,273) 54 (2,227)

Net cash from operating activities 11,249 10,692 12,643

Cash flow from investing activities

Purchase of property, plant and equipment and intangible assets (5,701) (13,037) (17,228)

Net cash used in investing activities (5,701) (13,037) (17,228)

Cash flow from financing activities

Repayment of borrowings (5,275) - (596)

Proceeds from borrowings 8,155 9,207 8,500

Dividend paid 7 (1,141) (1,050) (1,663)

Net cash generated from financing activities 1,739 8,157 6,241

Net increase in cash and cash equivalents

7,287 5,812 1,656

Cash and cash equivalents at beginning of period 8,571 6,964 6,964

Effect of foreign exchange rate changes (199) 72 (49)

Cash and cash equivalents at end of period 15,659 12,848 8,571

19

Notes to the condensed consolidated financial statements

For the six months ended 25 November 2018

Reporting entity

Joules Group plc is a company domiciled in the United Kingdom. The condensed interim financial statements of Joules

Group plc as at, and for the 26 weeks ended, 25 November 2018 comprise the Company and its subsidiaries (together

referred to as the “Group”).

The Group financial statements as at, and for the 52 weeks ended, 27 May 2018 are available on request from the

Company’s registered office at Joules Group plc, 16 The Point, Rockingham Road, Market Harborough, Leicestershire,

LE16 7QU or at www.joulesgroup.com.

1. Basis for preparation

The interim financial statements have been prepared in accordance with the recognition and measurement

requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International

Accounting Standards Board (IASB) adopted by the European Union.

The accounting policies adopted in the preparation of the interim financial statements are the same as those set out in

the Group’s financial statements for the 52 weeks ended 27 May 2018, except for the adoption of new standards

effective from 28 May 2018. The Group has not early adopted any other standard, interpretation or amendment that

has been issued but is not effective.

This report is prepared in accordance with IAS 34. The interim financial statements do not constitute statutory accounts

within the meaning of section 435 of the Companies Act 2006. Statutory accounts for Joules Group plc for the year

ended 27 May 2018 have been delivered to the Registrar of Companies. The auditor’s report on those accounts was

unmodified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section

498 (2) or (3) of the Companies Act 2006.

Going concern

The Directors have prepared a detailed forecast with a supporting business plan for the foreseeable future. The forecast

indicates that the Group will remain in compliance with covenants throughout the forecast period. As such, the Directors

have a reasonable expectation the Company and Group will have adequate resources to continue in operational

existence for the foreseeable future. Therefore, they continue to prepare the financial statements on the basis of going

concern.

New significant accounting policies

This is the first set of the Group’s financial statements, where IFRS 9 and IFRS 15 have been applied. There was no impact

on the previously reported numbers from application of IFRS 9 or IFRS 15.

IFRS 9 “Financial instruments”

The standard is applicable to financial assets and financial liabilities, and covers the classification, measurement,

impairment and derecognition of financial assets and financial liabilities together with introducing new rules for hedge

accounting and a new impairment model for financial assets.

The adoption of IFRS 9 has no material impact on the Group’s financial statements. At the date of initial application of

IFRS 9, all of the Group’s existing hedging relationships were eligible to be treated as continuing hedge relationships.

Consistent with prior periods, the Group has continued to designate the change in fair value of the entire forward

contract in the Group’s cash flow hedge relationship and, as such, the adoption of hedge accounting requirements of

IFRS 9 had no significant impact on the Group’s financial statements in the current or prior financial periods.

20

IFRS 15 “Revenue from contracts with customers”

IFRS 15 supersedes IAS 11 “Construction contracts”, IAS 18 “Revenue” and related interpretations and it applies to all

revenue arising from contracts with customers, unless those contracts are in the scope of other standards. Under IFRS

15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in

exchange for transferring goods or services to a customer.

The Group has adopted IFRS 15 in the Period using the ‘modified retrospective method’ of adoption. The key

considerations associated with the impact of adopting IFRS 15 are described below. There was no impact on profit after

tax or retained earnings on adoption of IFRS 15.

Sale of goods

The Group’s contracts with customers for the sale of product generally include one performance obligation. The

Directors have concluded that revenue from the sale of product should be recognised at the point in time when control

of the asset is transferred to the customer. This is as follows for our different sales channels:

• Own store and concession revenue is recognised at point of sale of product; and

• Wholesale and E-commerce revenue is recognised on either dispatch or delivery.

This does not represent a change to the Group’s accounting policy and therefore, the adoption of IFRS 15 did not have

an impact on the timing of revenue recognition.

Variable consideration

Product sales provide customers with a right of return within a specified period and are therefore deemed to be variable

under IFRS 15.

Under IFRS 15, the Group uses the expected value method to estimate the value of goods that will be returned because

this method best predicts the amount of variable consideration to which the Group will be entitled. Under the old

standard, IAS 18, expected returns were estimated using a similar approach and therefore no adjustment to the value

of variable consideration was required on transition to IFRS 15.

In terms of presentation, prior to the adoption of IFRS 15, the amount of revenue relating to expected returns (and

corresponding adjustment to cost of sales) was deferred and recognised net in the balance sheet within current liabilities.

Under IFRS 15 a right of return is not a separate performance obligation and the Group is required to recognise revenue

net of estimated returns. A returns liability and a corresponding asset representing the right to recover products from

the customer is also recognised. There is no change to the Group’s revenue recognition under IFRS 15, however the

returns provision was previously recorded on a net basis within current liabilities and therefore on adoption of IFRS 15

the Group was required to adjust inventories and the returns provision to a gross basis. The Group has adopted IFRS 15

using the modified transition approach and has therefore not restated the prior period comparatives for the separate

recognition of the returns asset and the increase in the returns provision. The impact in the current financial period of

adopting IFRS 15 was an increase of £962,000 in both inventory and current liabilities.

21

Critical accounting judgements and key sources of estimation uncertainty

Drawing up the financial statements in accordance with IFRS requires management to make the necessary estimates and

assessments. Estimates are based on past experience and other reasonable assessment criteria. However, actual results

may differ from these estimates and assessments will bring about an adjustment in the value of the assets and liabilities

in the next financial year.

In accordance with IAS 1 the Group is required to disclose critical accounting judgements and key sources of estimation

uncertainty. The Directors have assessed that the Group does not have any critical accounting judgements or key

estimations that have been used in assumptions that may have a material impact on the amounts of assets and liabilities

recognised in the financial statements.

Areas of non-key financial estimates that do not have a material impact on the financial statements are detailed below:

Impairment: Stores are identified for impairment testing primarily on the basis of current performance, with growth

assumptions based on Directors’ knowledge and experience. The Directors have used forecast models and an

appropriate pre-tax weighted average cost of capital in its property, plant and equipment impairment calculations.

Inventory valuation: Inventory is carried in the financial statements at the lower of cost and net realisable value. Cost

includes product purchase price and associated inward transportation costs. Net realisable value is based on estimated

selling price less further costs incurred to disposal. The Directors have used their knowledge and experience of the retail

industry in determining the level and rates of provisioning required to calculate the appropriate inventory carrying

values. Sales in the retail industry vary with changes in consumer demand. As a result, there is a risk that the cost of

inventory exceeds its net realisable value. The Directors calculate the inventory provision on the basis of the ageing

profile of what is in stock. Adjustments are made where appropriate based on Directors’ knowledge and experience to

calculate the appropriate inventory carrying values.

Returns provision: Accruals for sales refunds are based on recent historical returns and the Directors best estimates and

are allocated to the period in which the revenue is recorded.

2. Revenue

An analysis of turnover by geographical market is given below:

UK International Total

£'000 £'000 £'000

26 weeks ended 25 November 2018 (Unaudited) 95,296 17,840 113,136

26 weeks ended 26 November 2017 (Unaudited) 85,285 10,904 96,189

52 weeks ended 27 May 2018 (Audited) 161,499 24,434 185,933

22

3. Segmental review

The Group has three reportable segments; Retail, Wholesale and Other. For each of the three segments, the Group’s

chief operating decision maker (the “Board”) reviews internal management reports on a monthly basis. Each segment

can be summarised as follows:

• Retail: Retail includes sales and costs relevant to owned stores, E-commerce, shows, 3rd party concessions and

franchises.

• Wholesale: Wholesale includes sales and costs relevant to the sale of products to other retail businesses or

distributors for onward sale to their customer.

• Other: Other includes income from licensing, central costs and items that are not distinguishable into

categories above.

The accounting policies of the reportable segments are the same as described in note 1. Information regarding the

results of each reportable segment is included below. Segment results, being underlying earnings before interest,

taxation and share based payment charge, are used to measure performance as the Board believes that such

information is the most relevant in evaluating the performance of certain segments relative to other entities that

operate within these industries.

There are no discontinued operations in the period.

Segment Review and Results 26 weeks ended 25 November 2018 Retail Wholesale Other Total

£’000 £’000 £’000 £’000

Revenue 79,872 32,458 806 113,136

Cost of sales (31,668) (19,520) - (51,188)

GROSS PROFIT 48,204 12,938 806 61,948

Administration expenses (excl. depreciation and amortisation) (27,608) (6,211) (13,534) (47,353)

Depreciation and amortisation (2,304) (333) (1,071) (3,708)

SEGMENT RESULT 18,292 6,394 (13,799) 10,887

Reconciliation of segment result to profit before tax

Share based payments (1,383)

Finance costs and similar charges (217)

PROFIT BEFORE TAX 9,287

Segment review and results

26 weeks ended 26 November 2017 Retail Wholesale Other Total

£’000 £’000 £’000 £’000

Revenue 65,886 30,060 243 96,189

Cost of sales (24,675) (18,044) - (42,719)

GROSS PROFIT 41,211 12,016 243 53,470

Administration expenses (excl. depreciation and amortisation) (22,595) (4,694) (12,879) (40,168)

Depreciation and amortisation (2,168) (199) (1,490) (3,857)

SEGMENT RESULT 16,448 7,123 (14,127) 9,445

Reconciliation of segment result to profit before tax

Share based payments (1,019)

Finance costs and similar charges (141)

PROFIT BEFORE TAX 8,285

23

4. Profit for the Period

26 weeks 26 weeks 52 weeks

ended 25 ended 26 ended 27

November November May

2018 2017 2018

£'000 £'000 £'000

Cost of inventories recognised as expense 44,415 37,284 68,998

Staff costs 17,793 16,805 34,937

Property, rent and service charges 7,002 6,517 13,534

Transportation, carriage and packaging 5,747 5,003 10,110

Depreciation of property, plant and equipment 2,441 2,981 6,360

Amortisation of intangible assets 1,267 876 1,453

Impairment loss recognised on trade receivables - 14 -

Share based payments 1,383 1,019 1,766

Write down of inventory in the period 24 20 150

Other expenses 23,560 17,244 37,087

103,632 87,763 174,395

5. Tax

The Group’s tax expense for the Period of £2.0m (November 2017: £1.9m) represents a tax rate of 21.9% compared to

22.6% in the comparative Period. The difference between the Group’s tax rate for the Period of 21.9% and the UK

statutory rate of 19.0% is due to expenses not deductible for tax purposes, being non-qualifying depreciation and

amortisation and other expenses non-deductible for tax purposes, differences in overseas tax rates and adjustments

in respect of the prior period .

Factors affecting the tax expense for the period are as follows:

Unaudited

26 weeks

Unaudite

d 26 weeks

Audited

52 weeks

ended 25

November

ended 26

November

ended 27

May

2018 2017 2018

£'000 £'000 £'000

Profit before income tax 9,287 8,285 11,190

Profits multiplied by the standard rate in the UK - 19.0% 1,765 1,574 2,126

Expenses not deductible for tax purposes and other permanent differences 336 463 563

Differences in overseas tax rates 32 25 17

Effect of adjustment in tax rate - - 45

Adjustment in respect of prior period (97) (193) (187)

Total income tax expense 2,036 1,869 2,564

6. Property, plant and equipment and intangibles

During the Period the Group made additions of £5,701,000 (November 2017: £13,037,000) and disposals of £nil

(November 2017: £nil). During the Period the Group’s capital expenditure consisted of new stores and investment in IT

systems to support E-commerce and stores.

24

7. Dividends

In the Period a final dividend of 1.30 pence per share was paid with a total value of £1,141,118 (November 2017:

£1,050,022) in respect of the year ended 27 May 2018. The Board has declared an interim dividend for the year

ending 26 May 2019. The interim dividend of 0.75 pence per share (H1 FY18: 0.70 pence per share) will be paid

on 9 April 2019 to those shareholders on the register at the close of business on 8 March 2019.

8. Hedging and Translation reserve

Hedging Translation

reserve reserve

£'000 £'000

Balance as at 28 May 2017 (139) (61)

(Losses)/Gains recognised in other comprehensive income (2,706) 72

Income tax relating to losses recognised in other comprehensive income 489 -

Balance as at 26 November 2017 (2,356) 11

Gains recognised in other comprehensive income 2,429 350

Income tax relating to losses recognised in other comprehensive income (489) -

Basis adjustment to hedged inventory 139 -

Balance as at 27 May 2018 (277) 361

Gains recognised in other comprehensive income 4,608 30

Income tax relating to gains recognised in other comprehensive income (876) -

Balance as at 25 November 2018 3,455 391

Hedging reserve

The reserve represents the cumulative gains and losses on hedging instruments in cash flow hedges. The cumulative

deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedge transaction impacts

the profit or loss or is included as a basis adjustment to the non-financial hedged item, consistent with the applicable

accounting policy.

Translation reserve

Exchange differences relating to the translation of the net assets of the Group’s foreign operations which relate to

subsidiaries only, from their functional currency into the Group’s presentational currency being Sterling, are recognised

directly to the translation reserve.

9. Financial instruments

Derivative financial instruments and cash flow hedges

The Group holds derivative financial instruments to hedge its foreign currency exposures. These derivatives, classified

as cash flow hedges, are initially recognised at fair value and then re-measured at fair value at the end of each reporting

date. Hedging instruments are documented at inception and effectiveness is tested throughout their duration. Changes

in the value of cash flow hedges are recognised in other comprehensive income and any ineffective portion is

immediately recognised in the statement of comprehensive income. If the firm commitment or forecast transaction

that is the subject of a cash flow hedge results in the recognition of a non-financial asset or liability, then at the time

the asset is recognised, the associated gains or losses on the derivative that had been previously recognised on other

comprehensive income are included in the initial measurement of the asset or liability. For hedges that do not result in

the recognition of an asset or liability, amounts deferred in other comprehensive income are recognised in the

statement of comprehensive income in the same period in which the hedged item affects net profit.

25

9. Financial instruments (continued)

Unaudited Unaudited Audited

as at 25 as at 26 as at 27

November November May

2018 2017 2018

£'000 £'000 £'000

Categories of financial instruments

Carrying value of financial assets:

Cash and cash equivalents 15,659 12,848 8,571

Trade and other receivables 22,582 18,943 16,456

38,241 31,791 25,027

Cash flow hedges 4,266 77 1,338

Total financial assets 42,507 31,868 26,365

Financial liabilities held at amortised cost:

Trade creditors (20,255) (18,524) (20,267)

Other payables (33,043) (20,341) (19,741)

Borrowings (11,398) (9,834) (8,531)

(64,696) (48,699) (48,539)

Cash flow hedges - (3,701) (1,680)

Total financial liabilities (64,696) (52,400) (50,219)

10. Earnings per share

Unaudited Unaudited Audited

26 weeks 26 weeks 52 weeks

ended 25 ended 26 ended 27

November November May

2018 2017 2018

Basic earnings per share (pence) 8.26 7.33 9.86

Diluted earnings per share (pence) 8.14 7.27 9.74

The calculation for basic and diluted earnings per share is based on the

following data:

Earnings

Earnings for the purpose of basic and diluted earnings per share

(£’000) 7,251

6,416

8,626

Number of shares

Weighted number of ordinary shares for the purpose of basic earnings

per share 87,778,302

87,501,864

87,503,058

Potentially dilutive share awards 1,324,157

708,864

1,014,761

Weighted number of ordinary shares for the purpose of diluted

earnings per share 89,102,459

88,210,728

88,517,819