HALF YEAR RESULTS

11TH OCTOBER 2016

CONTINUING GOOD PROGRESS

1

• Solid H1 performance

• Power Brand active customers +15%

• Digital KPIs progressing well

• FCA full authorisation a major milestone

• New USA website launched

• Remaining Fit 4 the Future rollout extended

• Current trading on track

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

H1 PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

2

CRAIG LOVELACE, CFO

FINANCIALS

3

• Revenue £429.4m, +1.0%

• Product revenue +0.6%; gross margin -190bps to 55.9%

• Financial Services revenue +1.9%; gross margin -130bps to 55.0%

• Trading profit* £31.6m, -19.8% yoy.

• Adjusted EPS 8.95p

• Net debt £286.7m

• First half dividend held flat at 5.67p

FINANCIAL SUMMARY

4* Defined as continuing PBT excluding exceptionals and unrealised FX movement

REVENUE

£m H1 FY17 H1 FY16 Change

Product 300.9 299.2 +0.6%

Financial Services 128.5 126.1 +1.9%

Cont. Revenue 429.4 425.3 +1.0%

% yoy growth Q1 (13wks) Q2 (13wks)

Product -1.6% +2.7%

Financial Services +3.4% +0.7%

Cont. Revenue -0.2% +2.1%

• Trading throughout the half volatile, in line with the wider sector

• Current trading on track

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6

REVENUE BY BRAND

£m H1 FY17 H1 FY16 Change

JD Williams 75.8 75.6 +0.3%

Simply Be 53.3 50.2 +6.2%

Jacamo 31.4 30.4 +3.3%

Power Brands 160.5 156.2 +2.7%

Secondary Brands 75.2 74.9 +0.4%

Traditional Segment 65.2 68.1 -4.2%

Product total 300.9 299.2 +0.6%

Financial Services 128.5 126.1 +1.9%

JD Williams Brand +11%,

Un-migrated Fifty Plus title -18%

7

REVENUE BY CATEGORY

£m H1 FY17 H1 FY16 Change

Ladieswear 134.3 134.6 -0.3%

Menswear 42.4 40.6 +4.5%

Footwear 30.8 33.2 -7.2%

Home & Gift 93.4 90.8 +2.9%

Product total 300.9 299.2 +0.6%

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GROSS MARGIN PERFORMANCE

• Group gross margin 55.6%, -170bps

• Product gross margin 55.9%, -190bps

– Buying in margin +50bps

– Promotions -190bps

– Mix +30bps

– Inventory clearance -80bps

• Financial Services gross margin 55.0%, -130bps

9

FX EXPOSURE AND SENSITIVITY

• Current FX rates an industry

headwind

• Tightened hedging strategy

• FX breakdown:

• $85m - hedging strategy

in place

• €0.6m – natural hedge

with Irish business

• £145m – indirect FX

cost pressures

China

PakistanUK

India

Bangladesh

Turkey

Sri Lanka

ROW

Sourcing breakdown

10

FX EXPOSURE AND SENSITIVITY

FY17:

• Largely mitigated previously guided £3m headwind; reinvested this

into promotional activity

• 98% hedged at $/£1.46

FY18

• 50% hedged at $/£1.30

• At $/£1.25, c.£7m PBT headwind

• Every 5cents move from this rate implies c.£1.5m PBT headwind

(with our current hedged position)

• Mitigating actions underway to offset headwinds as much as possible

OPERATING EXPENSES

£m H1 FY17 H1 FY16 Change

Product gross profit 168.1 172.9 -2.8%

Financial Services gross profit 70.7 71.0 -0.4%

Gross profit 238.8 243.9 -2.1%

Warehouse & fulfilment (38.2) (38.4) -0.5%

Marketing & production (87.5) (86.0) +1.7%

Admin & payroll (64.0) (64.1) -0.2%

Depreciation & amortisation (13.6) (12.2) +11.5%

Operating Profit* 35.5 43.2 -17.8%

Operating Margin 8.3% 10.2%

IAS39 restatement credit - 4.4

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12

GROUP PROFIT & LOSS

£m H1 FY17 H1 FY16 Change

U’lying Operating Profit* 35.5 43.2 -17.8%

Finance Costs (net) (3.9) (3.8) -2.6%

Underlying Trading Profit 31.6 39.4 -19.8%

Exceptional Costs (10.2) (14.8) -31.1%

Unrealised FX movement (0.3) (0.8)

Profit Before Tax 21.1 23.8 -11.3%

Taxation (4.2) (4.7) -10.6%

Profit from Cont. Ops 16.9 19.1 -11.5%

Discontinued Ops (G&O) 0.0 (0.2)

Group Profit 16.9 18.9 -10.6%

* Continuing operations and pre-exceptional items

H1 FY16 included £4.4m

IAS39 restatement credit

NET ASSETS

13

£m 27 August

2016

29 August

2015

Change

Non Current Assets 211.1 194.4 +8.6%

Inventories 99.0 89.0 +11.2%

Receivables/Prepayments 563.6 533.4 +5.7%

Creditors/Accruals (118.7) (128.5) -7.6%

Provisions (7.9) 0.0

Retirement Benefit Surplus 0.5 2.2

Net Debt (286.7) (239.8) 19.6%

Net Assets 460.9 450.7

Gearing 62% 53%

14

RECEIVABLES & PROVISIONING

£m 27 August

2016

29 August

2015

Change

Gross Trade Receivables 601.8 606.8 -0.8%

Opening Bad Debt Provision 97.6 100.9 -3.2%

Gross Bad Debt Charge 55.1 51.4 +7.2%

Debtors Written Off (76.3) (58.1) +31.5%

Closing Bad Debt Provision 76.4 94.2 -19.0%

Provision Ratio 12.7% 15.5% -280bps

CASH FLOW

15

-10

0

10

20

30

40

50

60

3.0

(10.2)

49.1 12.1

(19.3)

(8.5)(4.3)

(24.2)

8.3

FY17 GUIDANCE

• Gross margin:

– Product margin -50bps to -150bps

– Financial Services margin +50bps to -50bps

• Group operating costs (excluding D&A) up 2% to 4%

• Depreciation & Amortisation £29m-£30m

• Net interest costs £8m-£9m

16

FY17 GUIDANCE

• Capex c.£40m

• Net debt £280m-£300m

• Tax rate c.20%

• Exceptional costs c.£12m

• FY17 will be a 53-week year; PBT benefit c.£2m

17

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

H1 PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

18

FINANCIAL SERVICES

TY LY Change

Arrears rate (> 28 days) 9.8% 10.0% -30bps

Provisions rate 12.7% 15.5% -280bps

New credit recruits (rollers) 120k 150k -19%

19

• Awarded full unconditional FCA authorisation on 21st September

• Good performance in both arrears and provision rate

• New credit recruits yoy movement viewed against +15% H1 FY16

• Trialling lower interest rates for new recruits through peak

FINANCIAL SERVICES EXCEPTIONAL COST

20

• Internal review of our complaint procedures identified an issue with

the calculation of claims

• Very small number of customers, <1%

– Majority of customers received some form of payment

• Notification made to FCA

• Exceptional cash cost of £9m

BREAKDOWN OF DEBT BOOK

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LY TY

Core Payment arrangements Other

+4%

-25%

Overall -0.8%

CREDIT USAGE BY BRAND

22

FashionWorld

Simply Be Jacamo Marisota High andMighty

JDWilliams

Traditionaltitles

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

H1 PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

23

OUR STRATEGY

4624

H1 ACHIEVEMENTS

PROCESS

Further OTB

improvements

Shortening of product

lead times

Moved to 10pm Next

Day cut-off

Increasing flexibility

of marketing activity

PEOPLE

Continue to invest in

digital capabilities

New Heads of

Creative,

Merchandising and

Retail

New NED, Richard

Moross

SYSTEMS

New USA website

launched

New Merchandising

system

Figleaves moved

onto demandware

Launch of JDWorks

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JD WILLIAMS

• JD Williams brand performing strongly, +11%

– Active customers up 20%

– Online penetration 56%, up 7ppts

– Online revenue +18%

– Online sessions up 46% yoy

– Brand awareness up 42% yoy

• Launch of ‘The Cut’, a collection of our best

priced items

• Fifty Plus title a headwind, -18%

– Migration commenced, will take 2 seasons

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• Active customers up double-digit

• New customers +22%

• 91% online penetration; first order

penetration 98%

• Innovative product

• Brand awareness +23% yoy

• Increasing customer engagement

• Launching app ahead of peak

SIMPLY BE

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• New customers +8%

• Brand awareness +15%

• New season campaign

launched with rugby player

Dan Biggar

• Truly digital brand

• Engaging social campaigns

JACAMO

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• Targeted consumer segments

• Focus on driving loyalty

• Fashion World particularly strong H1

• High & Mighty transitioning from stores to

online

• Marisota increasingly used as a product

brand, focusing on fit solutions

• Figleaves moved to Demandware, significantly

increasing growth potential

SECONDARY BRANDS

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30

• Ambrose Wilson, Premier Man, Julipa, House of Bath

• Ring-fenced marketing team and product champions

• Improved customer response rates

• Improved product choice

• Actions taken starting to have a positive impact

TRADITIONAL SEGMENT

CUSTOMERS

TY LY Change

Active customer accounts 4.21m 4.27m -1.5%

Power Brand active customer accounts 2.1m 2.2m -2.6%

Power Brand customers exc Fifty Plus 1.8m 1.6m +14.7%

% growth of most loyal* customers -0.4% +1.0% -140bps

Customer satisfaction rating 84.6% 85.8% -120bps

* Defined as those customers who have ordered in each of the last four seasons

• Drag from our Traditional and Fifty Plus titles

• Customer satisfaction score significantly ahead of sector average

31

PRODUCT TY LY Change

Ladieswear share, size 16+ 4.3% 4.3% -

Menswear share, chest size 44”+ 1.3% 1.1% +20bps

Group returns rate 27.0% 27.8% -80bps

• Sourcing drives further in-season flexibility

• AW16 the first season with full influence from our in-house design team

PRODUCT

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PRODUCT PARTNERSHIPS

• New brands for AW16 include Wolf and Whistle, Vero Moda,

Religion, Helene Berman, Not Your Daughters Jeans, Timberland,

Ann Summers and Gossard

• Plans to sell curated ranges on a number of partner websites to

further extend our reach

– First trial: Jacamo on ASOS, January 2017

ONLINE

• Online revenue +7.5%; Power Brand online revenue +10%

• Our most profitable channel

• Smartphone sessions +42%

DIGITAL TY LY Change

Online penetration 68% 63% +5ppts

Online penetration of new customers 76% 69% +7ppts

Conversion rate 5.7% 5.7% -

% of traffic from mobile devices 70% 64% +6ppts

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USA

• Revenue £7.7m, +24.5% (+14.7% constant fx)

• Operating loss £0.5m vs £0.9m H1 FY16

• JD Williams brand performing strongly

• New web platform now live

• Marketing programme reduced during hypercare period, which will

impact performance through peak

• Global ship-anywhere capability from early 2017

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36

FIT 4 THE FUTURE

USA website

Planning

TransformationPhase One

Forecasting Tool

Global

Multichannel

Transformation

Credit

TransformationPowercurve

Decisioning

SimplyBe –

Euro

20162015 2017

Initial UK Site

UK Credit Management

Initial UK Power Brand

Remaining UK Sites

Gone live

2018

Future go live

Q1

FY18Q3

FY18

Q1

FY18

37

FIT 4 THE FUTURE

• Following Simply Be go-live (Q3 FY18) programme will be significantly

stepped down and site rollout moved into BAU activity

• FY18 capex will be c.£40m, in line with previous guidance (£30-40m)

– The additional programme costs will be incorporated in this capex

spend

• Overall gross benefits of £45m unchanged

– Continue to expect benefits to start to flow from FY18

– Full benefits from FY20

– Some benefits will be reinvested back into the business

SUMMARY

• Digital KPIs demonstrate the strategy is working well

• Trading agility:

– Marketing flexibility

– OTB and shorter product lead times

– Trialing new product partnerships

– Trialing lower interest for new customers

• Current trading on track

38

AGENDA

FINANCIALS

FINANCIAL SERVICES UPDATE

H1 PERFORMANCE AND STRATEGIC UPDATE

SUMMARY

ANY QUESTIONS?

39

APPENDIX

• Operating cash flow

• Group cash flow

• Financial Calendar

• Investor relations contacts

40

OPERATING CASH FLOW

£m H1 FY17 H1 FY16

Operating Profit post exceptionals 25.3 28.2

Depreciation, Amortisation & Share option

charge

14.1 14.0

Decrease in Inventory 2.6 5.8

Decrease/(increase) in Receivables (7.6) 16.5

Increase in Payables 17.1 9.2

Increase in Provisions 7.9 -

Pension obligation (0.2) 0.2

Cash generated from operations 59.2 73.9

41

GROUP CASH FLOW

£m H1 FY17 H1 FY16

Cash generated from operations 59.2 73.9

Taxation paid (8.5) (7.5)

Dividends paid (24.2) (24.2)

Capital expenditure (19.3) (31.6)

ESOT share issue net proceeds 0.1 0.2

Net finance costs (4.3) (4.0)

Net cash inflow 3.0 6.8

Opening Net Debt 289.7 246.6

Closing Net Debt 286.7 239.8

42

FINANCIAL CALENDAR

• Q3 trading statement 19th January 2017

• Full year results April 2017

43

IR CONTACT DETAILS

Bethany Hocking

Director of Investor Relations

Email: bethany.hocking@nbrowngroup.co.uk

Tel: 0161 238 1845

Mobile: 07887 536 153

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