UNAUDITED CONSOLIDATED RESULTS Q1:FY18 18 AUGUST 2017 EDGARS 0 - PowerPoint PPT Presentation

UNAUDITED CONSOLIDATED RESULTS Q1:FY18 18 AUGUST 2017 EDGARS 0

AGENDA 1. Q1:FY18 OVERVIEW 2. MACRO ECONOMIC ENVIRONMENT 3. FINANCIAL REVIEW 4. STRATEGY AND TURNAROUND INITIATIVES 5. WAY FORWARD 1

Q1:FY18 OVERVIEW • Edcon Group trading profit up 165.4% to R89 million from a loss of R136 million • Pro-forma adjusted EBITDA increased by 12.7% to R354 million • Like-for-like retail sales decreased by 1.4% while Edgars like-for-like sales rose 1.6% over the quarter • Improved results delivered despite retail credit sales decreasing by 7.4% and cash sales down 8.0% • Gross profit margin up 60 bps from 38.3% to 38.9% • Overall sales performance impacted by the removal of certain international brands , sale of Legit and closure of stores and trading environment • Compared to this time last year, Edcon traded with 219 less stores and a 4% reduction in square meterage • Once off costs removed from the system following the exit of 27 international brands , non-productive space and the clearance of aged stock EDGARS 2

Q1:FY18 OVERVIEW • Stock disciplines resulting in inputs and clearance shifts into a normal retail cycle • Strategy implementation well underway in Jet and Edgars , with improved sales performance • Merchandise strategy of range rationalisation , focused supplier management , fresher stock and more competitive pricing • Business model ‘ test and learn’ process completed in CNA and Active • The R1.5 billion investment in IT is underway to halve the IT costs by year three, and transform the Edcon IT infrastructure • Staff retention improved with the stabilisation of the balance sheet and strategic transformation process • Transition of company leadership progressing seamlessly • Results validates turnaround strategy EDGARS JET 3

EDCON HAS UNDERGONE A RESTRUCTURE TO STREAMLINE OPERATIONS ON CORE BUSINESS We have made the strategic decision to re-align corporate divisions in order to streamline operations and optimise scale efficiencies found in the larger Edcon Brands. PREVIOUS STRUCTURE: NEW STRUCTURE Boardmans & Red Square have moved into the Edgars SPECIALTY division Edgars Active has moved SPECIALTY into the Jet division International Brands Cellular* International Brands Cellular *Cellular is allocated to chains for reporting purposes 4

2. MACRO ECONOMIC ENVIRONMENT RICHARD VAUGHAN - CFO 5

6 MACRO BACKDROP (1) 1 2 3 4 5 6 7 8 9 - PRIVATE SECTOR CREDIT EXTENSION (Y-O-Y %) 06-2016 06-2016 GDP GROWTH AND UNEMPLOYMENT RATE 07-2016 07-2016 08-2016 08-2016 09-2016 09-2016 Real GDP (y-o-y %) 10-2016 10-2016 11-2016 11-2016 12-2016 12-2016 01-2017 01-2017 02-2017 02-2017 03-2017 Unemployment rate (%) 03-2017 04-2017 04-2017 05-2017 05-2017 06-2017 06-2017 22 23 24 25 26 27 28 11.5 5.5 8.5 10 4 7 06-2015 06-2016 08-2015 07-2016 10-2015 08-2016 12-2015 09-2016 REPO AND PRIME RATE EXCHANGE RATES EXCHANGE RATES 02-2016 10-2016 04-2016 11-2016 12-2016 06-2016 01-2017 08-2016 USDZAR 02-2017 10-2016 03-2017 12-2016 Source: SARB & StatsSA 04-2017 02-2017 EURZAR 05-2017 04-2017 06-2017 06-2017

7 -10% MACRO BACKDROP 10% 15% -5% 0% 5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 03-2016 Q3:2015 Retail trading sales 04-2016 Q4:2015 05-2016 06-2016 Q1:2016 07-2016 RETAIL SALES Q2:2016 08-2016 INFLATION Q3:2016 09-2016 Textiles, footwear and leather goods 10-2016 Q4:2016 11-2016 Q1:2017 12-2016 Q2:2017 01-2017 02-2017 Q3:2017 03-2017 Q4:2017 04-2017 Q1:2018 05-2017 -20 -15 -10 HOUSEHOLD DEBT TO GROSS DISPOSABLE INCOME RATIO -5 71 72 73 74 75 76 77 78 79 80 0 12-2014 Q1:2016 FNB/BER CONSUMER CONFIDENCE INDEX 02-2015 Q2:2016 04-2015 06-2015 Q3:2016 08-2015 Q4:2016 10-2015 Q1:2017 12-2015 02-2016 Q2:2017 04-2016 Q3:2017 06-2016 Source: SARB & StatsSA Q4:2017 08-2016 10-2016 Q1:2018 12-2016

3. FINANCIAL REVIEW BERNIE BROOKES – CEO RICHARD VAUGHAN - CFO 8

KEY FEATURES – GROUP Q1:FY18 • Retail Sales, excluding Legit, Edgars Shoe Q1:FY18 Q1:FY17 Gallery and non-profitable brands being exited, Retail sales ↓ 7.8% ↓ 8.1% decreased 3.8%. This was affected by weak SALES consumer demand, fierce price competition Cash sales ↓ 8.0% ↓ 2.7% from competitors, ongoing promotions and a warm winter marginally offset by an Easter shift Credit sales ↓ 7.4% ↓ 15.6% into April 2017 • LFL strengthening LFL sales ↓ 1.4 % ↓ 9.6% • GP improved by 60bps through renegotiated Q1:FY18 Q1:FY17 rebates and settlement discounts PROFITS • Promotional and clearance activity decreased Gross profit 38.9% 38.3% however, input costs increased and first margins were additionally impacted by better entry points introduced in fiscal 2017 Pro-forma adjusted R354m R314m • Pro-forma adjusted EBITDA up 12.7%, our best quarter since Q1:FY16 EBITDA Results demonstrate the initial indicators of our turnaround strategy which has: STRATEGY • Improved customer service scores • Improved retail sales performance • 12.7% increase in pro-forma adjusted EBITDA through cost out initiatives and markdown control EDGARS • Staff retention has improved 9

EDGARS DIVISION – Q1:FY18 219 stores* · LSM 6-10 • Retail sales decreased 2.9% *Includes 202 Edgars Stores, 1 - Improved customer experience, focused Q1:FY18 Q1:FY17 Edgars sales store ,16 Edgars Cosmetics Emporium category management, driving credit and financial services products and change Retail sales growth (%) (2.9) (8.5) management is starting to show benefits to our customers with a positive 1.6% - LFL sales growth in Q1:FY18 LFL sales growth (%) 1.6 (12.3) - Ladieswear, childrenswear, footwear and cosmetics had positive retail sales growth GP margin (%) 42.4 41.8 - Cash sales decreased 0.5% and credit 40 stores · LSM 7-10 sales decreased 5.5% - Easter shift to April 2017 Total number of stores 308 306 • Gross margin of 42.4% up from 41.8% Capex spend (R’m) 66 61 - Increased supplier discounts - Reduced markdown activity Av space (‘000sqm) 765 765 • 3 new Edgars stores and 3 new Edgars Cosmetics Emporium stores opened • 5 Edgars stores, 9 Edgars Cosmetics Emporium stores closed 49 stores · LSM 5-10 10

JET DIVISION – Q1:FY18 • Retail sales decreased 2.3% Q1:FY18 Q1:FY17 408 stores · LSM 4-7 - LFL sales growth decreased by 1.6% as strategic initiatives started to show benefits Retail sales growth (%) (2.3) (8.9) through improved in-store experience, re-freshed business model, lay-bye offers, customer service and merchandise LFL sales growth (%) (1.6) (8.4) assortment improvements - Cash sales decreased 2.6% and credit sales decreased by only 1.8% GP margin (%) 34.7 34.2 - Easter moved to April in 2017 from March last year 122 stores · LSM 4-7 Total number of stores 711 700 - Gross margin of 34.7% from 34.2% - Improved supplier rebates and discounts - Reduced markdown activity Capex spend (R’m) 34 24 • 20 new Jet stores and 2 Jet Mart stores opened Av space (‘000sqm) 652 657 • 4 Jet stores, 3 Jet Mart stores and 1 181 stores · LSM 4-7 Edgars Active Store closed 11

SPECIALTY DIVISION – Q1:FY18 • Includes CNA, mono-branded stores and Legit Q1:FY18 Q1:FY17 in Q1:FY18. Q1:FY17 additionally includes the 195* stores · LSM 7-10 entire Legit business and Edgars Shoe Gallery *Includes 11 Samsung stores • Excluding Legit, Edgars Shoe Gallery and Retail sales growth (%) (40.5) (6.9) unprofitable international brands, retail sales decreased 12.7% ( 37% reduction in meterage) - Cash sales decreased 40.8% (18.3% excl. Legit LFL sales growth (%) (10.6) (7.0) and Edgars Shoe Gallery) - Credit sales decreased 39.4% (12.6% excl. MONO-BRANDED STORES Legit and Edgars Shoe Gallery) GP margin (%) 38.7 37.9 • Margin improvement through: 71 stores · LSM 5-10 - Renegotiated supplier rebates and discounts Total number of stores 266 496 - Excluding Legit, Edgars Shoe Gallery and international brands being exited, gross margin % increased 340 bps to 39.5% from 36.1% Capex spend (R’m) 14 17 • 2 mono-branded opened • 5 stores closed Av space (‘000sqm) 97 156 - 1 CNA and 4 mono-branded stores 10* stores · LSM 5-8 • 10 Legit stores in Botswana disposed during *Stores in Botswana sold effective April 2017 the quarter 12

STATEMENT OF COMPREHENSIVE INCOME Q1:FY18 Q1:FY17 % change (R millions) Retail sales 5 508 5 973 (7.8) Gross profit 2 142 2 286 (6.3) Gross profit margin 38.9 38.3 0.6pts Other income (28.0) 327 454 Store costs (1 559) (1 703) (8.5) Other operating costs (1) (1 003) (1 169) (14.2) Share of profits of associates and insurance business 182 (4) Trading profit 89 (136) 165.4 PROFORMA ADJUSTED EBITDA 354 314 12.7 (1) Includes non-recurring costs of R10 million in Q1: FY18 (Q1: FY17 – R120 million). See cost analysis –Q1: FY18 13