TRADING UPDATE

For the 52 weeks ended 28 March 2015

2

CONTEXT

2

This trading update is presented in advance of possible capital structure initiatives and the annual financial

statements to keep stakeholders updated on operational and strategic initiatives, to the extent possible.

Progress on capital structuring initiatives:

• Appointed Houlihan Lokey and Goldman Sachs

• Entered into discussions with lenders as well as certain 2019 noteholders regarding potential debt

exchanges, new debt raises and/or transactions involving our existing debt

• Discussions are proceeding constructively

Management is unable to answer questions relating to possible capital structure initiatives.

Toon ClerckxCFO

Jürgen SchreiberCEO

Jürgen SchreiberCEO

AGENDA

Strategic and

operational update Looking forwardFinancial review

3

STRATEGIC AND OPERATIONAL UPDATE

VISION

Creating unique

experiences

Focused customer

groupings

Exceptional value

proposition and

choice of product

Distinctive retail

formats

5

Retail sales(1) Credit extension(1,2)

6

1) Stats SA and SARB

2) Credit extended to the domestic private sector: Other loans and advances

77.0%

77.5%

78.0%

78.5%

79.0%

79.5%

80.0%

80.5%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Other loans & advances Debt-to-Household income

TRADING ENVIRONMENT

• Consumer sentiment weakened in the 1Q2015, with the FNB/BER Consumer Confidence Index falling

to ‐4 from 0 in 1Q2014

• Consumers concerned about the outlook for the economy due to escalating electricity load shedding, tax increases

and a weaker exchange rate

• Confidence levels declined in high and middle income groups, but increased slightly in the low income group

• Total private sector credit extension growth driven by credit to companies while extension to

households remains weak

Total retail sales CTF sales

KEY STRATEGIC LEVERS

• Store enhancement and portfolio management

• Continuous store optimisation

• Assortment: brands and improved private label

• Leverage growing loyalty programme

Comparable

store growth

• Sourcing

• Pricing management

• Continue to drive group efficiencies

• Margin

expansion

• Grow existing format footprint

• Rollout of tested new formats

• Expand into rest of Africa

• Right sizing of stores

New space

growth

• Second look credit providers and other solutions

• Broaden financial services and insurance offeringCredit

Working capital management

7

TRADING HIGHLIGHTS – Q4:FY2015

Sales growth Profitability Space

8

• Q4 makes up 21.5% of FY15

retail sales

• Retail sales declined 0.7%

• Cash sales growth 6.3%

• Credit sales decline of 9.6%

• Pro forma adjusted EBITDA

growth of 11.1%

• GP margin improvement of

240bps to 37.3%

• Average space growth of 4.5%

• Capex spend of R198 million

• Increase of 31.1% compared to

Q4:FY14

• Bulk of capex spend on Edgars

division and IT

PERFORMANCE AGAINST STRATEGIC LEVERS

Sales growth Margin

9

Credit and cash sales growth New space growth

• GP Margin improved to 37.2% (36.5% in FY14)

• Sustained margins in both Edgars and Discount

• Better pricing

• Lower clearance activity

• Average space growth of 4.9% in line with

strategy

• Meaningful space growth in Edgars including mono-

branded stores

• Continued right-sizing of existing CNA stores

All numbers include Edgars Zimbabwe. All quarters refer to FY15

1.9

5.1

2.0

5.7

2.9

0.5-0.7

0.3 0.5 -1.6 2.6 -1.0 -2.6 -3.9

FY13 FY14 FY15 1Q 2Q 3Q 4Q

Retail Sales (%) Comp Sales (%)

3.0 -4.3 -8.0 -3.3 -3.8 -12.1 -9.6

0.7

15.3

11.015.1

8.7 11.76.3

FY13 FY14 FY15 1Q 2Q 3Q 4Q

Credit sales (%) Cash Sales (%)

Retail

sales

LFL

EDGARS DIVISION – OPERATIONAL PERFORMANCE

• Strong cash sales growth of 13.6%

• Credit sales reduced 8.2%

• Contribution of 48.9% from 54.3% in

prior year

• Solid performance in speciality and

mono-branded stores

• Margin sustained through

• Sourcing improvements

• Pricing initiatives

• Lower clearance activity

Sales growth Margin

1.8%

2.6%

GP

margin

39.5%

0.9pts

10

EDGARS DIVISION – CAPITAL INVESTMENT

• Total of R577 million spent in the year

• Spend in Q4:FY15 of R73 million

• Limited expansion outside South Africa for now

• 44 stores opened (and 15 closures)

• Edgars store chains

• 17 Edgars, 19 Edgars Active, 4

Boardmans, 1 Red Square, 1 Edgars

Shoe Gallery, 1 Cosmetics Emporium

and 1 Edgars Sales store

• 29 mono-branded stores opened in

malls (and 3 closures)

Capex (R millions) New space growth

11

Average

809m2

533 stores

6.6%

Refurbishment

307; 53%

Expansion

270; 47%

Retail

sales

LFL

DISCOUNT DIVISION – OPERATIONAL PERFORMANCE

• Cash sales growth of 10.0%

• Credit sales reduced 8.5%

• Contribution of 36.4% from 40.7% in

prior year

• Solid performance from ladieswear,

menswear and footwear categories

• Continued expansion

• Margin improvement due to

• Pricing architecture

• Improved buying and sourcing

Sales growth Margin

2.5%

0.3%

GP

margin

34.9%

0.8pts

12

DISCOUNT DIVISION – CAPITAL INVESTMENT

• Total of R180 million spent in the year

• Spend in Q4:FY15 of R23 million

• 56 stores opened (and 22 closures

or conversions)

• 34 Jet

• 20 Legit

• 2 Jet Mart

Capex (R millions) New space growth

13

Refurbishment

91; 51%

Expansion

89; 49%

Average

633m2

719 stores

3.9%

CNA DIVISION

• Sales growth

impacted by

• Product mix

• Continued right-

sizing of CNA

stores

• Credit a much

smaller part of the

business

• Increased digital

sales

• Space decrease in

line with right

sizing strategy

• Cumulative capex

spend of R14m for

the year

• Q4:FY15 spend of

R4 million

Sales growth New space growth Margin

• Margin decline due

to

• Mix change

• Increased

promotions

Retail

sales

LFL

5.6%

7.5%

Average

84m2

195 stores

4.5%

GP

margin

30.5%

0.6pts

14

FINANCIAL REVIEW

KEY CONSIDERATIONS FOR FY2015

• Credit: Cash sales ratio of 42.7%* from 47.3% in

FY14

• Initiated testing of a 2nd look credit option during

Q3:FY15, small but performing well

• Finding a long-term partner remains a priority

• Margin management improvements

• Good progress on gross margin

• Working capital initiatives continue to deliver

results and improve financial performance

• Sustained progress in both inventory and accounts

payable management

• Continued overhead cost improvements

16

Pro forma adjusted EBITDA stabilising

*Including Edgars Zimbabwe

-6.6%1.0%

4.2%

11.1%

1.4%

Q1:FY15 Q2:FY15 Q3:FY15 Q4:FY15 FY15

% change on previous year

STATEMENT OF COMPREHENSIVE INCOME

Q4:FY14 Q4:FY15 % change (R millions) FY14 FY15 % change

5 965 5 925 (0.7) Retail sales 26 974 27 510 2.0

2 083 2 212 6.2 Gross profit 9 842 10 245 4.1

34.9 37.3 2.4pts Gross profit margin 36.5 37.2 0.7pts

288 319 10.8 Other income 1 031 1 125 9.1

(1 507) (1 569) 4.1 Store costs 5 700 6 277 10.1

(1 233) (1 377) (11.7) Other operating costs 4 613 4 605 (0.2)

205 233 13.7Share of profits from insurance

business739 747 1.1

(164) (182) 11.0 Trading (loss)/profit 1 299 1 235 (4.9)

279 310 11.1 Pro forma adjusted EBITDA 2 687 2 725 1.4

17

PRO FORMA ADJUSTED EBITDA

Q4:FY14 Q4:FY15 % change (R millions) FY14 FY15 % change

(164) (182) 11.0 Trading (loss)/profit 1 299 1 235 (4.9)

289 296 Depreciation & amortisation 1 137 1 079

7 10 Net asset write off(1) 11 37

(50) 12Profit/(loss) before tax from discontinued

operations(2) (86) 15

139 167 Non-recurring costs(3) 266 360

221 303 37.1 Adjusted EBITDA 2 627 2 726 3.8

52 (3)Net (loss)/income from previous card

programme (4) 29 (23)

6 10 Net income from new card programme (5) 31 22

279 310 11.1 Pro forma adjusted EBITDA 2 687 2 725 1.4

4.7% 5.2% Pro forma adjusted EBITDA margin 10.0% 9.9%

18

1) Relates to assets written off in connection with store conversions, net of related proceeds.

2) The results of discontinued operations are included before tax.

3) Relates to FY2014 costs relating to the sale of the trade receivables book of R116 million, restructure costs of R93 million and post retirement liability buyout of R57 million and FY2015 costs

relating to the sale of the trade receivables book of R73 million, restructure costs of R69 million, post retirement liability buyout credit of R23 million, once-off lease adjustment of R49 million ,

onerous lease charges of R137 million and R55 million related to various strategic initiatives.

4) Net income derived from 100% of the trade receivables including finance charges revenue, bad debts and provisions.

5) Pro forma fee earned by Edcon under the new arrangement with Absa, based on 100% of the trade receivables book.

UPDATE ON COST PROGRAMME

(R millions) FY15

LTM pro forma adjusted EBITDA (reported) 2 725

Permanent adjustments:

Corporate and operational overhead reductions 356

Renegotiation of contracts 17

LTM pro forma adjusted EBITDA (incl. adjustments) 3 098

Normalised pro forma net debt (1)/LTM pro forma adjusted EBITDA (times) 7.6

• Overhead operational efficiency improvements

19

(1) Net debt has been adjusted by trade receivables still to be sold of R369 million in FY15.

COST ANALYSIS FOR FY2015

• Store costs increased 10.1%, impacted mainly

by a 12.0% increase in rental costs

• Rental and manpower constituted 59.6% of total

costs for FY15

Other operating costs Store costs

• Good progress made in controlling overhead costs

• Store card cost improvements

• Non-recurring costs include restructure costs and

once-off lease adjustment

20

(R millions) FY14 FY15

%

change

Other operating costs 3 791 3 804 0.3

Store card administration* 556 441

Non-recurring costs 266 360

Total other operating costs 4 613 4 605 (0.2)

* Excluding Edgars Zimbabwe

CAPEX INVESTMENT

• Total capex, excluding leases, of R1, 037m for

the year

• 146 new stores opened

• Investment weighted towards expansion

• Capex expected to normalise in FY16

21

Total capex breakdown (R millions)

577

180

14

223

33

Edgars Discount CNA IT Zimbabwe

Store capex mix* (R millions)

407

364

Refurbishment Expansion

* Excluding Edgars Zimbabwe

CASH FLOW ANALYSIS FOR Q4:FY201522

171

117

Net

financing

costs

Opening

cash

balance

1 282

23

10

Operating

activities

1 517

Capex &

investments

1 288

Net

financing

& other

Working

capital

1 443

2 563

Closing

cash

balance

Tax Currency

adjustments

150

Proceeds

on sale of

the book

42

Trade and

other payables

Inventories

169

Trade and

other

receivables

1 466

855573

410

Closing cash

balance

1 288

Net

financing &

other

1 898

Net

financing

costs

3 103

Tax

137

Capex &

investments

Working

capital

Operating

activities

2 502

Opening

cash balance

CASH FLOW FOR FY201523

(1) Includes R1 million relating to intangible assets and R2 million relating to a business combination

Working capital

(1)

35681

Trade

and other

payables

396

Trade and

other

receivables

260

Inventories Proceeds

on sale of

the book

(R millions)FY14

Drawn (1)

FY15

Drawn (1)

Super senior secured

Revolving credit facility in ZAR(2) 1 210 2 865

2016’s ZAR notes – J+625bps 1 010 1 005

Senior secured

2017 ZAR Term loan – J+700bps 4 008 4 083

2018’s € Fixed rate – 9.5% 8 691 7 881

2018’s $ Fixed rate – 9.5% 2 603 2 981

Deferred option premium 1 102 1 076

Lease liabilities 273 364

Senior

2019’s € Fixed rate – 13.375% 5 948 5 381

2015’s € Floating rate – E+550bps

Other loans(3) 173 254

Gross debt 25 018 25 890

Derivatives (1 930) (640)

Cash and cash equivalents (410) (1 288)

Net debt 22 678 23 962

LIQUIDITY AND CAPITAL RESOURCES24

1) FX rates at end FY2014; were R10.56:$ and R14.54:€ and were R12.04:$ and R13.12:€ at end FY2015.

2) The total limit under the super senior revolving credit facility is R3,717 million which matures on 31 December 2016. The maximum utilisation of the revolving credit facility during Q4:FY15 was R2,906 million. At the end of the period R465 million of the facilities

were indirectly utilised for guarantees and LC’s.

3) The portion of this debt relating to Zimbabwe was R170m in FY2014 and R234m in FY15.

• March is peak of working capital cycle

• Actively monitoring future liquidity

• RCF availability of R387 million (R2,311 million in

FY14), including LC and other utilisations

• High cash balance to manage liquidity

• Potential sale of non-core assets, including remaining

trade receivables book

• Additional capacity in super senior bucket,

securitization and general debt

• All principal amounts hedged, except 10% of 2018

fixed rate notes and all of the 2019 fixed rate notes

• Edcon continues to assess ways to improve the

capital structure, advisors appointed

36%

12%

27%

24%

1%

ZAR USD (hedged)

EURO (hedged) EURO (unhedged)

Other loans

Hedging of gross debt

LOOKING FORWARD

26

LEADERSHIP CHANGE

26

• Following succession discussions with the chairman in advance of contract which ends in April 2016

• Move to a new role as Vice Chairman of Edcon Holdings Limited from 15 August 2015

• Ensure smooth transition

• Give active commitment to support the company towards its next phase of growth.

• A search for a successor CEO is well underway

27

OUTLOOK

• Consider opportunities to improve the capital structure

• Solution to declining credit sales

• Capitalise on further gross margin opportunities

• Maintain store and overhead cost efforts

• Normalise capex

THANK YOU

For more information

Our website: www.edcon.co.za

Edcon contacts for more information:

Executive Investor Relations and Media:

Debbie Millar 011 495 4086 / dmillar@edcon.co.za