PRESENTATION OF CONSOLIDATED RESULTS For the 52 weeks ended 29 March - PowerPoint PPT Presentation

PRESENTATION OF CONSOLIDATED RESULTS For the 52 weeks ended 29 March 2014

AGENDA 2 Strategic and operational update Financial review Looking forward Jürgen Schreiber Toon Clerckx Jürgen Schreiber CEO CFO CEO

STRATEGIC AND OPERATIONAL UPDATE

VISION 4 Distinctive retail Focused customer formats groupings Creating unique experiences Exceptional value proposition and choice of product

TRADING ENVIRONMENT 5 Retail sales 1 Credit extension 1,2 Total retail sales CFT Sales Credit extension Debt-to-Household Income 14.0% 20.0% 76.5% 12.0% 18.0% 76.0% 16.0% 10.0% 8.9% 75.5% 14.0% 8.0% 12.0% 6.0% 75.0% 3.2% 10.0% 4.0% 74.5% 8.0% 2.0% 6.0% 74.0% 0.0% • CFT sales growth consistently outperforming total retail sales • GDP growth slowing to 1.9% in 2013 (vs 2.5% in 2012), contracted by 0.6% in Q1 of the 2014 calendar year • Worsening trends in household disposable income growth (average growth 7.7% in 2013 vs 9.9% in 2012) and slower credit growth, both negative for spending • April CPI of 6.1% y-o-y, driven by higher food and fuel prices • USDZAR and EURZAR depreciated 15.3% and 23.4% respectively between March 2013 and March 2014 Stats SA and SARB – May 2014 1) 2) Other Loans and advances

KEY STRATEGIC LEVERS 6 • Revamp stores and service • Store optimisation Comparable • Assortment: brands and improved private label store growth • Leverage loyalty programme • Sourcing • Margin • Pricing management expansion • Group efficiencies • Grow existing format footprint • Rollout of tested new formats New space • Expand into rest of Africa growth • Right size CNA • Implement a second look credit provider Credit • Broaden financial services offering Working capital management

PERFORMANCE AGAINST STRATEGIC LEVERS 7 Sales growth Margin Retail Sales (%) Comp Sales (%) • GP Margin relatively flat at 36.5% (36.7% in FY13) 9.2 9.1 • 5.9 Product cost inflation due to weaker ZAR 5.1 7.9 3.2 3.3 • Negatively impacted by increased clearance activity 1.9 in Edgars 3.0 1.2 • 0.5 Pleasing Discount Division performance due to 0.3 -0.3 -1.5 changes implemented in previous years FY12 FY13 FY14 1Q 2Q 3Q 4Q Credit and cash sales growth New space growth Credit sales (%) Cash Sales (%) • Average space growth of 5.2% in line with strategy 4.5 • Meaningful space growth in Edgars due to 17.3 acquisitions and refurbishment project 16.4 15.3 14.0 0.7 14.2 12.2 • Discount space increase driven mainly by -3.7 -4.3 -4.2 3.0 -6.8 expansion outside of South Africa -1.9 • Right-sizing of existing CNA stores FY12 FY13 FY14 1Q 2Q 3Q 4Q:FY14 All numbers include Edgars Zimbabwe. All quarters refer to FY14

EDGARS DIVISION – OPERATIONAL PERFORMANCE 8 Sales growth Margin • Diversity between cash and credit • Improved sourcing negatively Retail GP sales growth reflecting both Sales impacted by higher level of Margin 2.7% opportunity and challenges promotional activity required due to 38.6% declining credit sales and • Cash sales growth of 16.4% refurbishment initiative • Credit sales decline of 6.4% • Cost inflation (due to weaker ZAR) LFL • LFL impacted by negative credit 1.1pts 2.7 % not able to be passed on sales growth and exacerbated by refurbishment program • Sound brand rollout and performance Retail Sales (%) Comp Sales (%) 7.4 3.4 2.7 1.2 0.7 0.6 -1.6 -2.7 -3.0 -4.8 Q1 Q2 Q3 Q4 FY14 All quarters refer to FY14

EDGARS DIVISION – CAPITAL INVESTMENT 9 Capex FY14 (R millions) New space growth • Total of R873m spent in the year • 53 stores opened (16 closures and Average conversions) • Spend in Q4:FY14 of R82 million 759.3m 2 • 31 Edgars Active, 10 Edgars, • Edgars refurbishment project completed 3 Boardmans, 5 Red Square, 4 Edgars 478 stores • Cumulative spend of R542 million at end of FY14 Shoe Gallery including expansion capex for those stores • Strong rollout of standalone stores 6.1 % • Future capex to be spent more on expansion • 39 Inglot, La Senza and Accessorize • 13 new mono-branded stores Refurbishment Expansion • 10 new stores outside of SA 602; 69% 271; 31%

DISCOUNT DIVISION – OPERATIONAL PERFORMANCE 10 Sales growth Margin • Diversity between cash and credit • Buying and pricing strategies Retail GP sales growth reflecting both Sales continue to yield positive results Margin 7.4% opportunity and challenges • Cost inflation (due to weaker ZAR) 34.1% • Cash sales growth of 16.9% well managed • Credit sales decline of 3.9% LFL • All merchandise groups performed 3.2 % 1.1pts well Retail Sales (%) Comp Sales (%) 10.3 7.8 7.4 7.0 5.4 4.7 3.2 3.1 2.8 1.7 Q1 Q2 Q3 Q4 FY14 All quarters refer to FY14

DISCOUNT DIVISION - INVESTMENT 11 Capex FY14 (R millions) New space growth • Total of R212 million spent in the year • 65 stores opened (32 closures and Average conversions) • R5 million in Q4:FY14 608.5m 2 • 41 Jet • Well balanced expansion, mainly outside South 685 stores • 7 Jet Mart Africa, and refurbishment • 17 Legit 4.9 % • 22 new stores outside of South Africa Refurbishment Expansion • Portfolio management key 102; 48% 110; 52%

CNA DIVISION 12 Sales growth New space growth Margin • Sales driven by • Space decrease in • Margin decrease Retail Average GP continued growth Sales line with right due to mix Margin 3.2% 88.0m 2 in digital sizing strategy changes as well as 31.1% merchandise sales increased • Cumulative capex 191 stores promotions • Credit a much spend of R16m for LFL smaller part of the the year 3.1 % 1.7 % 1.3pts business • Trading density improvements Retail Sales (%) Comp Sales (%) 5.2 4.7 4.5 3.6 3.6 3.2 3.1 1.6 0.8 0.3 Q1 Q2 Q3 Q4 FY14

FINANCIAL REVIEW

KEY CONSIDERATIONS FOR FY14 14 During the financial year Events after the reporting period • Credit: Cash sales ratio of 47.3%* as cash sales • Negotiations underway to establish African Bank grow 15.3% while credit sales decline 4.3% as a secondary credit provider • Currency devaluation • relationship with primary credit provider, Absa not affected • Implementation of Absa scorecard • Covenant changes EURZAR USDZAR • Permanent cost savings 14.54 11.78 10.56 9.16 2013-03-01 2013-04-01 2013-05-01 2013-06-01 2013-07-01 2013-08-01 2013-09-01 2013-10-01 2013-11-01 2013-12-01 2014-01-01 2014-02-01 2014-03-01 FY13 FY14 • Easter shift, half of Easter in FY15 • Refinancing impact *Including Edgars Zimbabwe

STATEMENT OF COMPREHENSIVE INCOME 15 Q4:FY13 Q4:FY14 % change FY13* FY14 % change (R millions) Retail sales 5 468 5 965 9.1 25 670 26 974 5.1 1 898 2 083 9.7 Gross profit 9 431 9 842 4.4 34.7 34.9 0.2 pts Gross profit margin 36.7 36.5 (0.2) pts 256 288 12.5 Other income 763 1 031 35.1 (1 265) (1 507) 19.1 Store costs (5 076) (5 700) 12.3 (946) (1 233) 30.3 Other operating costs (4 427) (4 613) 4.2 184 205 11.4 Income from joint operation 666 739 11.0 Trading profit 127 (164) (229.1) 1 357 1 299 (4.3) 367 279 (24.0) Pro forma adjusted EBITDA 2 760 2 687 (2.6) * Restated for the 2013 financial period for the consolidation of Edgars Stores Limited Zimbabwe and re-presented for the discontinued operations

PRO FORMA ADJUSTED EBITDA 16 Q4:FY13 Q4:FY14 % change FY13 FY14 % change (R millions) 127 (164) Trading profit 1 357 1 299 263 289 Depreciation & amortisation 1 056 1 137 Net asset write off (1) 1 7 22 11 Profit/(loss) before tax from discontinued 17 (50) 351 (86) operations Non-recurring costs (2) (19) 139 545 266 389 221 (43.2) Adjusted EBITDA 3 331 2 627 (21.1) Net income from previous card (36) 52 (738) 29 programme (3) Net income from new card programme (4) 14 6 167 31 367 279 (24.0) Pro forma adjusted EBITDA 2 760 2 687 (2.6) 6.7% 4.7% (2.0) pts Pro forma adjusted EBITDA margin 10.8% 10.0% (0.8) pts 1) Relates to assets written off in connection with store conversions, net of related proceeds. 2) Relates to a) FY2013 costs relating to Project Rugby R516 million, transitional costs R83 million, refinancing costs R87 million and Master card income of R141 million and b) FY14 costs relating to Project Rugby R116 million, restructure cost R93 million and post retirement liability of R57 million. 3) Net income derived from 100% of the trade receivables including finance charges revenue, bad debts and provisions. 4) Pro forma fee earned by Edcon under the new arrangement with Absa, based on 100% of the trade receivables book.

UPDATE ON COST PROGRAMME 17 FY14 (R millions) LTM pro forma adjusted EBITDA (reported) 2 687 Permanent adjustments: Corporate and operational overhead reductions 143 Renegotiation of contracts 89 LTM pro forma adjusted EBITDA (incl. adjustments) 2 919 Normalised pro forma net debt (1) /LTM pro forma adjusted EBITDA (times) 7.6 • Benefit of approx R185 million included in the year’s profit • New cost savings initiatives well advanced and make up R191 million of R232 million LTM savings anticipated (1) Net debt has been adjusted by trade receivables still to be sold of R618 million R22 678 m (net debt) - R618 m = R22 060 m (normalised pro forma net debt )