[PPT] - N BROWN GROUP PLC INTERIM RESULTS 16 OCTOBER 2012 1 N Brown Group PowerPoint Presentation

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N Brown Group

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N BROWN GROUP PLC

INTERIM RESULTS

16 OCTOBER 2012

SLIDE 2

N Brown Group

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N Brown Group plc

ALAN WHITE CHIEF EXECUTIVE

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N Brown Group

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RESULTS SUMMARY

2012 £m 2011 £m % Revenue 379.3 363.7 +4.3 EBITDA 54.9 54.9

Operating Profit

45.7 47.0

2.8

Trading Profit 42.0

44.0

4.5

Adjusted EPS (p) 12.48 12.10 +3.1 Dividend (p) 5.45 5.29 +3.0

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N Brown Group

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KEY FEATURES – INTERIM RESULTS

Revenue – improving trend
Gross margin – mix impact
Online – increasing penetration
Recent acquisitions – encouraging trends
Stores and International – progress report
Update on strategy plans
Current trading - positive

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N Brown Group

SUMMARISED P/L

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Revenue Operating Profit £m TY LY % TY LY % Established 368.2 355.5 +3.6 49.4 49.9

1.0

International/Stores 11.1 8.2 +35.4 (3.7) (2.9)

27.6

379.3 363.7 +4.3 45.7 47.0

2.8

LFL Revenue +3.7%

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N Brown Group

Ladieswear

Menswear Stand Alone Upmarket Brands

AGE

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KEY BRAND PORTFOLIO

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N Brown Group

Brands Target Age £m % of Total % Change <50 143 38 +12 >50 236 62

379

100 +4 2011

New Customer Sales

+20%

2%
Active established customer accounts

+1%

5%
Sales per established customer account

+1% +6%

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HOME SHOPPING CUSTOMERS

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N Brown Group

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CUSTOMER RECRUITMENT

TY 44% 10% 16% 30% LY 39% 11% 13% 37%

Focus On Young/Mid Focus On Mid/Old

61% of first order value online

Online Brand Advertising Press Advertising Mini Catalogues

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N Brown Group

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HOME SHOPPING PRODUCTS

Turnover £m % of Total % Change Ladieswear 188 49

2

Footwear 42 11 +4 Menswear 48 13 +12 Home & Leisure 101 27 +13 379 100 +4 Ladieswear 50% Sizes 20-38 Menswear 50% 46”-64” Waist Corsetry 75% D-L Cup Footwear 92% E-EEEEEE fitting 83% 38”+ Back 41% size 7+ ASP +2%

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N Brown Group

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SLIDE 11

N Brown Group

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PRODUCT DEVELOPMENT

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N Brown Group PRODUCT GROSS MARGIN RATE

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SS12 AW12 Product mix

ve
ve

Amazing value lines

- ve
ve

Marketing discounts

++ve

Stock clearance

++ve

Online trading

ve
ve

Net impact

90bps

+100-150 bps

bps

400
300
200
100

100 200

SS10 AW10 SS11 AW11 SS12 AW12

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N Brown Group

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INTERNET PENETRATION

50 100 150 200 250 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Online Sales (£m) 10 20 30 40 50 60 % of Home Shopping Sales £21m £33m £52m £73m £106m

6% 10% 15% 21% 25% 33%

+70% +55% +57% +40% +45%

38%

£128m +21% £150m +17%

43%

£13m

48%

£175m +17% £196m +12%

53%

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N Brown Group

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INTERNET SALES BY CUSTOMER GROUP

% Penetration % Growth TY LY <50 70 65 +19 >50 42 40 +7 53 48 +12

Growth rates +7% > total

SLIDE 15

N Brown Group ONLINE SALES DRIVERS

Customer mix
Recruitment - 61% first orders online
Email - automatic – 2.3m
service - £2m
Site developments - SEO
Product promotions
Size guides
Social media - e.g. 75k Facebook fans (x4)
High engagement scores
Faster page loads

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N Brown Group ONLINE ONLY PRODUCT SALES

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Moda in Pelle Gemma Collins AX Paris Glamorise Computer Games Telephones

40k Lines Sales +57% >90% DD

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N Brown Group MOBILES & TABLETS

17 0.0% 5.0% 10.0% 15.0% 20.0% Apr-11 May… Jun-11 Jul-11 Aug… Sep… Oct-11 Nov… Dec… Jan-12 Feb-… Mar-… Apr-12 May… Jun-12 Jul-12 Aug… Sep… % of session % of online demand

Mobile optimised checkout
Mobile optimised browse
Convergence – bounce/ conversion rates

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SEO Copy Refine results Sort by

ptions

Same product sequencing

n desktop

and mobile

PRODUCT WINDOW

MOBILES & TABLETS

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N Brown Group

CUSTOMER SERVICE

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Inbound orders -7%, inbound enquiry -18%
WECC - Affinity sales - £6m demand
My Account – 250k enquiry sessions / week
Enquiry to order ratio down 9%
Direct despatch +28%
Efficiency savings at DC
Next day cut off 5pm (2pm)  6pm AW12

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N Brown Group

FIGLEAVES HIGH & MIGHTY

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Revenue £13m
Returns down 1%
Gross margin up
Cost savings
Menswear strong
Excellent profit
New stores H2 2011
Revenue up 12%
Gross margin down
H2 Breakeven

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N Brown Group

INTERNATIONAL

Revenue +53%
Marisota > Simply Be direct mail
Simply Be strong online
60k Facebook fans
Losses reduced by £0.1m
System improvements H2
Returns rate still too high
Re-engineer business model 2013
Recruitment restricted to online PPC
Revenue -20%
Losses reduced by £0.3m

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FY Revenue c. £12m: FY Loss c . £3.5m (LY, £4.8m)

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N Brown Group

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Revenue - £1.7m
Online halo
Jacamo in Metro Centre,

Liverpool

Higher fashion demand
Replenishment sub-optimal
Loss £1.1m
Focus on Q4 trading
Q1 2013 evaluation

STORES

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N Brown Group

INTERIM SUMMARY

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Improving revenue trend
Gross margin down due to product, offer

and customer mix

Customer base growing
Online dominating business model

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N Brown Group

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N Brown Group plc

DEAN MOORE FINANCE DIRECTOR

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N Brown Group HIGHLIGHTS

26 weeks to 1 September 2012 2012 £m 2011 £m vs.LY % Turnover 379.3 363.7 +4.3% Operating profit 45.7 47.0

2.8%

Trading profit 42.0 44.0

4.5%

Pre-tax profit 41.8 44.8

6.7%

Adjusted earnings per share 12.48p 12.10p +3.1% Dividends per share 5.45p 5.29p +3.0% Borrowings 188.1 196.7

4.4%

Receivables 509.6 485.8 +4.9%

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N Brown Group GROUP TRADING ACCOUNT

26 weeks to 1 September 2012

2012 £m 2011 £m vs.LY %

Group Turnover 379.3 363.7 +4.3% Gross Profit 202.1 199.6 +1.3% Gross Margin % 53.3% 54.9%

160bps

Distribution Costs (31.7) (31.6) +0.3% Sales and Administration (124.7) (121.0) +3.1% Group Operating Profit 45.7 47.0

2.8%

Operating Margin 12.0% 12.9%

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SLIDE 27

N Brown Group

2012 £m 2011 £m vs.LY %

Group Operating Profit 45.7 47.0

2.8%

Finance Costs (net) (3.7) (3.0) +23.3% Group Trading Profit 42.0 44.0

4.5%

Unrealised FX movement (0.2) 0.8

Profit Before Tax

41.8 44.8

6.7%

Taxation (7.2) (10.8)

33.3%

Profit After Tax 34.6 34.0 +1.8%

GROUP PROFIT & LOSS ACCOUNT

26 weeks to 1 September 2012

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SLIDE 28

N Brown Group REVENUE SPLIT

26 weeks to 1 September 2012 2012 £m 2011 £m vs.LY % Product Sales 267.8 258.8 +3.5 Services 111.5 104.9 +6.3 379.3 363.7 +4.3

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N Brown Group PRE-TAX MARGIN

26 weeks to 1 September 2012

Gross Margin

Product Bad Debt /Financial Income Yield

90bps
70bps
Operating Costs

Cost base savings +80bps

Finance Costs

Refinancing

20bps
Pre-tax margin (11.1%)
100bps

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SLIDE 30

N Brown Group

2012 £m 2011 £m vs.LY % Non Current Assets 134.4 129.6 +3.7% Inventories 81.5 84.1

3.1%

Receivables/Prepayments 535.6 508.1 +5.4% Creditors/Accruals (148.6) (153.8)

3.4%

Retirement Benefit Surplus/(Deficit) 1.6 (0.2)

Net Borrowings

(188.1) (196.7)

4.4%

416.4 371.1 +12.2% Gearing 45% 53%

NET ASSET SUMMARY

At 1 September 2012

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SLIDE 31

N Brown Group RECEIVABLES AND PROVISIONING

26 weeks to 1 September 2012 26 wks to Aug 2012 £m 26 wks to Aug 2011 £m Year to Feb 2012 £m Gross Trade Receivables 561.6 529.8 551.1 Opening Bad Debt Provision 49.3 45.1 45.1 Bad Debt Charge 30.5 26.8 58.0 Debtors Written Off (27.8) (27.9) (53.8) Closing Bad Debt Provision 52.0 44.0 49.3 Bad Debt Provision % 9.3% 8.3% 8.9% Bad Debt Charge % 8.0% 7.4% 7.7% Average Balance 359 345 354

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N Brown Group

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BAD DEBT PERFORMANCE

6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50%

Charge % Turnover Provision % Receivables

Policy reversed to

recruitment

Arrears stable
Cash collect strong
Recovery rates stable

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SLIDE 33

N Brown Group OPERATING CASHFLOW

26 weeks to 1 September 2012 2012 £m 2011 £m Operating Profit 45.7 47.0 Depreciation & Amortisation/Share Option Charge 10.3 9.1 Decrease/(increase) in Stock 1.1 (6.0) Increase in Receivables (14.3) (17.0) Increase/(decrease) in Payables 13.1 (3.1) 55.9 30.0 Pension Obligation (2.3) (1.8) Cash Generated from Operations 53.6 28.2

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N Brown Group

2012 £m 2011 £m Cash Generated from Operations 53.6 28.2 Taxation Paid (12.4) (7.7) Dividends Paid (21.5) (20.3) Investing Activities (12.0) (12.7) Share Issue Proceeds/(Purchases) 0.3 (0.5) Finance Costs (net) (3.6) (2.8) Net Cash inflow/(outflow) 4.4 (15.8) Opening Borrowings (192.5) (180.9) Closing Borrowings (188.1) (196.7)

GROUP CASHFLOW

26 weeks to 1 September 2012

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SLIDE 35

N Brown Group GROUP BORROWINGS

At 1 September 2012 Facility £m Drawndown £m Securitisation Debt 250 220 Bilateral Loans 120 30 Overdraft 9

Gross Borrowings

379 250 Cash in Hand (62) Net Borrowings 188

All facilities in place until March 2016

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SLIDE 36

N Brown Group

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N Brown Group plc

ALAN WHITE CHIEF EXECUTIVE

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N Brown Group

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KEY AREAS OF FOCUS 2012/13

KEY AREAS OF FOCUS

CONTACT OPTIMISATION KEY VALUE INDICATORS PRODUCT DEVELOPMENT

TERMS OF TRADE ONLINE TRADING CUSTOMER SERVICE MULTI- CHANNEL – STORES INTERNATIONAL BRAND DEVELOPMENT

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N Brown Group

BRAND DEVELOPMENT

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Focused customer recruitment investment
Brand management strengthened
Brand charters established
Brand awareness increasing - 75% women
55% men
Brand profitability focus
Brand differentiation or rationalisation
36% of revenue
revamp catalogue & website presentation
make product more contemporary

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N Brown Group

ONLINE TRADING

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Endeca Pagebuilder
Product windows - customer reviews
choose multiple options
Product details - larger images
social media integrated
outfit building
Checkout rebuild
Service emails
order confirmation
order despatch
Contact optimisation
Tablet optimisation

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N Brown Group

CASH & CREDIT TERMS

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Tests underway
Orders not catalogue requests credit scored
Up front payment option if credit spurned
Market personal account advantages
Reduce marketing costs for high scorers
Benefits 2013/14 onwards

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N Brown Group

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CURRENT TRADING

Revenue

+10.1%

LFL

+9.4%

Favourable weather patterns
Stronger customer database
Lower input prices
Gross margin flat
Online sales +20%
Revenue comparatives get tougher
Margin comparatives get easier

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N Brown Group

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SUMMARY

Positive trends

– Revenue – Gross margin

Online trading opportunities
Stores and International progress