Placement Investor Presentation

• Nick Scali Limited is acquiring 100% of Anglia Home Furnishings Limited (AHFL), trading as Fabb Furniture, for £2.00 million (A$3.82 million).
• Nick Scali will also acquire Fabb Furniture's secured debt for £3.5 million (A$6.7 million).
• The company intends to pay £0.5 million (A$1.0 million) to exit Fabb Furniture's existing distribution center arrangement.
• An additional £6.0 million (A$11.5 million) will be provided for net working capital.
• Fabb Furniture operates 21 stores across the UK and is forecasted to deliver £34.0 million of revenue, £14.1 million of gross profit, and £2.0 million of post-IFRS-16 EBITDA in FY24.
• The acquisition and UK growth strategy will be funded by a A$46.0 million underwritten institutional placement and a A$4.0 million conditional placement to Anthony Scali, subject to shareholder approval.
• Eligible shareholders will be offered a non-underwritten share purchase plan (SPP) to raise up to A$10.0 million.
• The offer price for the Institutional Placement and Conditional Placement is A$13.25 per share, a 5.8% discount to the last traded price on April 23, 2024.
• The acquisition is expected to be completed in mid-May.
• The UK business is expected to return to profitability on a run rate basis within 18 months, with temporary losses expected in FY25 due to transition costs.

Score: 7

Explanation: The sentiment is moderately positive. While there are risks associated with the acquisition and expansion, the company is taking steps to mitigate these risks and has a clear strategy for achieving profitable growth in the UK market. The acquisition provides immediate access to a new market and the potential for long-term value creation.

• The acquisition provides immediate entry into the large UK furniture market with an existing 21-store network.
• There is an opportunity to introduce Nick Scali's quality/value product offering to the UK market.
• The company expects to drive profitable growth in the medium term by leveraging shared expertise in procurement, logistics, and marketing.
• Fabb Furniture has a committed and long-tenured local management team to support the UK growth strategy.
• The acquisition is expected to return to profitability within 18 months.

• Fabb Furniture reported a £2.8 million loss pre-IFRS-16 EBITDA in FY24.
• Losses are expected to increase temporarily in FY25 during the transition period due to store refurbishments and rebranding.
• The company will incur costs to exit the existing distribution center arrangement.
• The acquisition requires additional capital investment for store refurbishments, a new distribution center, and future store openings.

• The acquisition is subject to customary conditions, and completion is not guaranteed.
• The financial information provided by AHFL may be inaccurate or incomplete.
• The integration of AHFL may face unforeseen difficulties.
• The expansion into the UK market may not be successful.
• The company faces risks related to the retail environment, competition, supply chain disruptions, and reliance on key personnel.
• There are risks associated with the underwriting agreement, including potential termination by the lead manager.
• The company faces risks related to the share market conditions, force majeure events, and changes to tax laws.

The UK business is expected to return to profitability on a run rate basis within 18 months, although losses are expected to increase temporarily in FY25 during the transition period.

This announcement reflects a trend of Australian retailers expanding into international markets to diversify their revenue streams and capitalize on growth opportunities. The UK furniture market is large and attractive, but also competitive, requiring Nick Scali to effectively leverage its expertise and adapt to local market conditions.

• Nick Scali's revenue per store is approximately A$4.7 million, while Fabb Furniture's revenue per store is approximately A$3.1 million.
• Nick Scali has 107 stores (including Plush) in Australia and New Zealand, while Fabb Furniture has 21 stores in England.
• The average retail space per store for Nick Scali is approximately 1,650 m2, while for Fabb Furniture it is approximately 1,866 m2.

• Shareholders will be impacted by the equity raising, which may dilute their ownership.
• Employees of Fabb Furniture will be impacted by the integration into Nick Scali, which may involve changes to their roles and responsibilities.
• Customers in the UK will have access to Nick Scali's product range and brand.
• Suppliers may benefit from increased sales volume as Nick Scali expands its operations in the UK.
• Creditors of Fabb Furniture will be impacted by the acquisition of the company's debt by Nick Scali.

• Complete the acquisition of Fabb Furniture in mid-May.
• Refurbish and re-brand existing Fabb Furniture stores to the Nick Scali brand.
• Re-set the existing offering to include Nick Scali's product range.
• Establish a new distribution center in Peterborough.
• Seek shareholder approval for the conditional placement to Anthony Scali at the 2024 AGM.

• Tuesday, 23 April 2024: Record date for participation in the SPP (7:00pm Sydney time)
• Wednesday, 24 April 2024: Trading halt and announcement of Acquisition, Placement and SPP
• Wednesday, 24 April 2024: Institutional Placement bookbuild
• Friday, 26 April 2024: Announcement of outcome of Institutional Placement
• Friday, 26 April 2024: Trading halt lifted trading resumes on the ASX
• Tuesday, 30 April 2024: Settlement of Institutional Placement shares
• Wednesday, 22 May 2024: SPP offer closes (5.00pm Sydney time)
• Wednesday, 29 May 2024: Announcement of results of SPP
• Wednesday, 29 May 2024: SPP allotment date
• Thursday, 30 May 2024: Normal trading of SPP shares and dispatch of holding statements
• October 2024: Expected date of Company's AGM where shareholder approval for Anthony Scali's Conditional Placement will be sought