Noni B Limited ABN 96 003 321 579

10 Garling Road Kings Park NSW 2148

PO Box 6006 Mail Deliver Centre, Blacktown NSW 2148

Tel 02 8822 5333 Fax 02 8822 5300

ASX/media release 27 August 2013

Noni B underlying NPAT $1.5 million

• Statutory after-tax loss of $3.5 million after impairment

• Sales up 1.5% despite one less week's trading

• Cash balance $9.9 million; no bank borrowings

• Number of stores up to 219 from 215

Noni B Limited (ASX:NBL), the retail fashion group, today announced an underlying after tax profit (i.e. excluding impairment of goodwill) of $1.5 million for FY2013 (52 weeks), compared with $2.7 million for FY2012 (53 weeks). The company gave guidance of $1.0 - $1.5 million in April 2013.
The company has written off the remaining goodwill created when it was listed on the ASX in 2000, resulting in a non-cash impairment charge of $5.0 million and a statutory after tax loss of $3.5 million.
Sales increased by 1.5% to $121.5 million from $119.7 million, notwithstanding one less week's trading. Comparative store sales decreased by 0.7%; when adjusted for the extra week in FY2012 they increased by
1.2%.
Gross margin was 59.4% of sales, compared with 59.6% in FY2012. Margins were affected by substantial discounting in the women's apparel sector and a write-off in respect of aged inventory. As all products are purchased in Australian dollars, margins are not affected by currency fluctuations.
At 30 June 2013 Noni B's cash balance was $9.9 million, compared with $9.3 million at 1 July 2012, and the company had no bank borrowings.
No final dividend will be paid. In March 2013, the company paid a fully franked interim dividend of 2.5 cents per share, representing 53% of full year earnings per share and in line with the board's payout ratio of 50-
75% of after-tax profit.

Results summary for the year

FY2013

(52 weeks) ($000)

FY2012

(53 weeks) ($000)

%

change

Sales

121,511

119,705

1.5%

Underlying EBITDA* (Earnings before interest, tax, depreciation and amortisation)

5,049

6,926

(27.1%)

Underlying EBIT* (Earnings before interest and tax)

2,054

3,648

(43.7%)

Underlying profit before tax*

2,229

3,883

(42.6%)

Underlying profit after tax*

1,527

2,682

(43.1%)

Impairment of goodwill

5,027

-

0.0%

Statutory profit/(loss) after tax

(3,500)

2,682

(230.5%)

Underlying earnings per share (cents)*

4.8

8.4

(42.9%)

Final dividend - fully franked (cents)

Nil

3.5

0.0%

Total dividends for the year - fully franked (cents)

2.5

6.0

(58.3%)

* Underlying figures are before the $5.0 million non-cash impairment of goodwill.

David Kindl, joint managing director, said: 'This is a disappointing result. Revenue increased despite one less week's trading, however; earnings were affected by lower margins and higher expenses in a year when spending on women's fashion was impacted by low consumer confidence.
'The 0.2% reduction in final margin included the effect of a one-off inventory write-off of $0.4 million.
Inventory was reduced towards the end of the year in view of the current weak market conditions and totalled
$13.5 million at 30 June 2013, 11.4% below 30 June 2012. We believe we can maintain this lower level during FY2014, reducing the need for price reductions at the end of seasons and leading to higher average margins.
'Total expenses increased by 3.8%. Sales expenses, including wage costs and marketing costs, increased by 4.7% to $33.9 million, due mainly to higher wage costs, staff training and the introduction of Sunday trading in Western Australia. Occupancy expenses, including rents and depreciation of store fit-outs, increased by 4.4% to $31 million due to increases in the number of stores and in store rents, partially offset by reductions negotiated on lease renewals. Administrative expenses fell by 1.7% to $8.3 million.

Maintaining high standards of service

'We have continued to differentiate Noni B by providing customers with high standards of personal, professional service, as well as our exclusive fashion ranges that have great quality and style. Despite the challenging market conditions, store staffing levels were maintained and all store managers and assistant managers completed a management diploma course.
'A further 95,000 names were added to our loyalty club database which now contains more than one million customers who receive special attention and new offers by email. Customers are encouraged to email comments to the executive management team, enabling us to respond quickly and to introduce new product lines to meet specific demands. During the year, we trialed our NONI+ (larger sizes) range following the successful launch of our Noni B travel range the previous year.

Fine-tuning the store network

'The number of stores increased during the year to 219 from 215. We opened eight stores - three each in New South Wales and Queensland and one each in Victoria and Western Australia - and closed four underperforming stores - two in New South Wales and one each in Victoria and Western Australia. Leases for three of the new stores were signed on the basis of a 12 month trial, and lease renewals depend on negotiating satisfactory terms which in many cases lead to rent reductions.
'Our webshop, launched less than two years ago, achieved its sales target for the year of $1.0 million. A
currency converter is being introduced to encourage further overseas sales.'

Outlook

David Kindl said: 'The women's fashion market remains challenging and sales throughout the sector have been impacted in July and August by pre-election caution. We are determined, however, to increase sales and earnings through the following initiatives:

• Increasing sales: New product ranges will be introduced; grow online sales especially internationally; and we have introduced recently a new customer relationship management system to enable us to target individual customers with offers that will appeal to them.

• Increasing margins: Lower inventory should enable us to reduce end-of-season price reductions; in- store promotional discounting is planned to reduce; and some supplier terms have been renegotiated.

• Reducing costs: All costs will remain under scrutiny; and we will increase our focus on securing favourable terms when renewing leases.

'We believe these initiatives - combined with our high standards of personal service, strong brands and exclusive, quality products - should enable Noni B to improve its performance. With our strong cash position, we are also positioned to take advantage of growth opportunities that increase shareholder value.'
Noni B Limited, founded in 1977, is one of Australia's leading fashion retailers, with 219 stores nationally and online at www.nonib.com.au. Noni B differentiates itself by focusing on superior service, style and fit. Our dedicated team is passionate about providing women with an instore experience where personalised advice is the basis of great customer service, and our styles are designed to make our customers look and feel good through day and evening, even when they travel. The exclusive Noni B and Liz Jordan designer collections offer classic and stylish contemporary fashion for today's woman.

For further details, please contact:

David Kindl, joint managing director, Noni B: 02 8822 5306

Media enquiries to Financial & Corporate Relations: Anthony Tregoning: (B) 02 8264 1000, (M) 0411 852 448

Ashley Rambukwella: (B) 02 8264 1004, (M) 0407 231 282

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