The Chairman’s and Group CEO’s address at the AGM

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CHAIRMANS ADDRESS TO SHAREHOLDERS ON 12 DECEMBER 2018
RESULTS FOR FULL YEAR ENDED 1 AUGUST 2018

Group sales for the 12 months to 1 August 2018 were $277.64 million, resulting in a very strong
increase of 16.2% over the corresponding period last year ($239.00 million). The audited net profit
after tax for the year was $27.36 million, an increase of 58.4% over the corresponding period last year
($17.27 million). An excellent result across the Group, with all three chains performing strongly. Well
done to all our people “in all our chains”.

The 2017/18 financial year has continued to build on the success of the previous year. The buying
strategy, investment in digital and the improvements in customer service and experience that were
implemented in 2017 have supported this sales and margin growth. Combined with tighter cost
control, this has in turn led to a significant lift in bottom line, net profit. Whilst the trading
environments remained tough in both New Zealand and Australia, our brands responded well and
adapted to these conditions to deliver this strong result.

Segment Results

Glassons New Zealand

Sales for the Glassons New Zealand chain for the financial year were $96.73 million, an increase of
8.1% on the prior year. The Glasson New Zealand chain made a pre-tax profit of $14.80 million, on
these sales. The prior year it made a pre-tax profit of $11.30 million. Key to this strong performance
over that period has been our focus on fashion, our speed to market and our customer service.

Significant investment was made in digital throughout the year, improving customer engagement with
our website, social media platforms, as well as our in store customer experience.

During the last financial year, we refitted the Glasson Queenstown and Queensgate stores to our new
concept design, and closed one underperforming store in Henderson, Auckland.

Also, our Dunedin Glassons store has just been refitted to reflect our new model store format.
Further planned store investment is planned in New Zealand after Christmas (i.e. 2019). Mark will talk
further on this shortly.

Currently there are thirty seven Glassons Stores spread throughout New Zealand, including three
clearance centres.

Glassons Australia

Sales for our Glassons Australia chain for the year were $78.42 million, an increase of 56.7% on the
prior year.

Its pre-tax profit was $11.16 million, compared to $1.93 million the year before.

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This was an outstanding result and a credit to all involved in the Glassons Australia business. We
continue to evolve our product offer in Australia, which is strongly focused on what our Australian
customer wants. This increased customer focus, together with our innovation in customer service,
investment in digital and speed to market drove sales in what remains an increasingly challenging retail
market, over there.

During the last financial year, two new stores, Melbourne Central and Charlestown, were opened and
a further two stores, Warringah and Chermside, were refurbished into our new concept.

Planned store investment will continue in Australia. We have refurbished three existing stores in the
new summer season in Bondi, Highpoint and Parramatta Malls to our new model store format, and
additional refurbishments are scheduled for next year. There have also been two new store openings
in The Glen (Melbourne) and Liverpool (Sydney) shopping centres and some other stores are currently
under consideration.

This brings the total Glassons stores in Australia to 32, of which 4 are clearance centres.
There is 13 Glasson Stores in Sydney, 13 in Melbourne, and 6 in Queensland (Brisbane and the Gold
Coast).

Hallenstein Brothers

Hallenstein Brothers also delivered a strong performance.

Sales for the menswear chain for the year were $96.89 million (including Australia), an increase of 6.4%
on the prior year. The chain made a pre-tax profit of $12.41 million, compared to $10.43 million the
year before. Hallenstein Brothers continues to build on its established market leading position in New
Zealand. In Australia, the three stores in Brisbane are steadily building turnover, and market presence.
We remain positive about the opportunity that exists for the brand in that market. Investment has also
continued in digital to help drive sales and improve customer engagement.

During the year, the Queenstown store in New Zealand was refurbished to its new format concept and
two small underperforming , non-strategic stores were closed. A new store will also be opened in
Frankton, Queenstown in the New Year.

Further investment in Hallenstein Brothers stores is planned for next year and an extension to the
Distribution Centre was completed in November that will accommodate the growth in throughput and
online sales.

The Hallenstein Brothers business currently has 42 stores in New Zealand, 3 of which are clearance
centres and 3 stores in Queensland, Australia.

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Storm

As previously advised The Storm business assets were sold on 30th April 2018 to Blackstar Holding
Limited. The Storm retail stores are now no longer part of the Hallenstein Glasson Group.

E-Commerce

As a result of the company’s ongoing investment in digital, online sales growth has improved
significantly. During the last financial year, just completed, it represented approximately 12.8% of
Group turnover. We will continue to invest in technology and resources to keep building momentum
and ensure it is properly integrated with each chains physical store customer offer.

Dividend

The Directors have declared a final dividend of 24 cents per share (fully imputed) to be paid on 17th
December 2018. Together with the interim dividend of 20 cents per share that was paid on 13th April
2018, the full year dividend is 44 cents per share, (compared to 31.5cents per share the previous
year).This increase in dividend payment comes as a result of the company’s strong trading
performance, its inventories being well controlled, and its strong balance sheet and cash position.

Future Outlook

While the trading environment in both New Zealand and Australia remains challenging, the sales for
first 18 weeks of the new financial year (from 2 August 2018 to 9 December 2018) are 4% ahead of the
same period last year. However, because the December and January key trading months, which
contribute such a large proportion of sales and profit for the season, are largely still ahead of us, it is
not possible to reliably forecast our results.

The outlook for the second half of the year remains uncertain as increasing costs (such as fuel, freight,
electricity etc) and the lower New Zealand and Australian dollar puts pressure our trading margins.
We will however remain focused on improving our market share and customer experience in the New
Zealand and Australia fashion apparel markets in which we operate, and keep a tight control over our
operating costs. We will also work to ensure our Glassons and Hallenstein Brothers brands remain
market leaders in their respective market segments.

We will provide a further trading update at the end of the summer season, which ends on 1 February
2019, when actual summer season results will be known in late February 2019.
In closing I would like to thank the Hallenstein Glasson Executive Team and all our staff, for the
excellent 2018 trading result that they delivered. It was a tremendous effort by everyone.


Warren Bell
Chairman
12 December 2018

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CEO’s address to Shareholders on 12 December 2018
Results for the full year to 1 August 2018.

I am extremely proud of the excellent performance that the Group has delivered through the Financial
Year ended 1 August 2018. The results follow an impressive performance in Glassons Australia and
strong growth in New Zealand across Glassons and Hallenstein Brothers. Both brands, in both
countries, are operating in increasingly challenging retail conditions, which makes the results achieved
even more pleasing – they are a credit to the amazing teams we have in place across the Group.

Our success last financial year is attributable to several key strengths - the continued improvement of
our buying strategies, our focus on being fashion forward, our investment and engagement in digital
and an unwavering emphasis on customer service. These, together with our agility and increasing
ability to accelerate change, and our willingness to challenge ourselves to be different, set us apart
from our competition.


Our strength is our people and teams

We are very proud and protective of our culture that values empowerment, creativity, innovation and
agility. Our passion and drive comes from a shared belief in an entrepreneurial spirit, and one that
values and believes in the power of the team. Whether in our offices, our distribution centres or in our
stores, we know each person plays a key and an important role – their passion, dedication and
commitment is directly reflected in the financial results delivered for the year.

Building the skills of our people and teams and their future leadership development is a priority. The
board and management are absolutely committed to this. Within each business, the management
teams continue to work on skills development, coaching and succession planning of their teams.
Additionally, to support this, we also send key team members on development courses to some of the
top international business schools.


Across the Group, we are customer obsessed

Over the last twelve months, we have continued investment in improving service to our customers. We
continue to differentiate ourselves from our competition in our service levels, particularly in the
quality of our store teams and our in-store environment. Whilst our online sales continue to grow in
both volume and as a percentage of our sales, we recognise the importance of our physical stores and
the exciting role they play in our current and future growth plans.

I continue to spend considerable time in our stores across New Zealand and Australia. No matter how
many times I visit stores, I find them an exciting and vibrant experience, there is always tremendous
amounts to learn, and of course, most importantly, I get to spend time with our store teams. I am
incredibly impressed with our store teams and their passion for our customers, our products and our
service. Their input is invaluable in shaping our business.

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Brand experience and engagement is increasingly important

As a Group, and within each brand, we continue to invest in unlocking and supporting future growth.

We have seen our investment in technology and digital continue to drive and support growth in both
countries, and whilst online grows and represented 12.8% of our sales in the last financial year, it is
particularly pleasing to see that our physical stores grew last financial year despite the challenging
markets that they are in. This supports our view that the use of technology, digital and our online
presence is about engaging with our customers and connecting them to our brands, and our stores, as
much as it is about online sales.

Like last year, we have continued working to improve the customer experience and how we engage
with our customers, both in store and online.

We have introduced two new “virtual” team members who have and will continue to add a new
dimension to the ways we can assist and serve our customers online. Charlie, who works for Glassons,
and Benny, who works for Hallenstein, are two “conversational chat bots” using the latest artificial
intelligence and natural language processing platforms. With their help, we can now answer many
typical customer questions immediately, online, 24/7.

Additionally we have a number of new and innovative customer facing technologies in store. “Be the
D.J.” where customers can choose their own music whilst they shop. Interactive and service-focused
fitting rooms in our new and recently refurbished stores and we are currently trialling “mobile hand
held” payment devices that negate the need for the customer to go to a counter, and enables the
team member who has served the customer to complete the transaction straight away.

We have continued to expand our “click and collect service” and “endless aisles” strategies, which are
available in all our stores and ensure all our customers, have access to our full range regardless of
where they shop. We have also introduced for customers a number of new delivery options for online
orders including weekend and evening delivery.

And whilst we have invested in customer facing and engaging technologies, we have looked to
technology to help our store teams become less operationally focused allowing them more time to do
what they do so well, focus on customer service.

Our Digital and IT team has been outstanding in its execution in the last twelve months.
However, we live in a dynamic and highly competitive market where technology is changing the way
customers and retailers interact and engage. The pace of change and disruption is increasingly fast and
transparent, and there is a need for continuous innovation.

As exciting as the developments I have outlined are, we continue to develop a strong pipeline for the
future, ensuring we continue to innovate and develop a global class online and digital environment, as
well as engagement, ensuring it is achieved, and achieved at pace.

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Our physical stores have an exciting role in our current and future growth plans

Warren has already highlighted the investment we have made in new stores and refurbishments
during the 2018 financial year, as well as this year to date. As you can see, the stores look fantastic.
These plans continue for the balance of the financial year, reflecting a strong and steady investment in
our physical stores.

Following the success of the store concept in Glassons Australia, we are bringing the design to more of
our stores in New Zealand. In the first half of next calendar year, we currently have plans for new
stores to replace our old formats in both Bayfair and Palmerston North and we will refurbish
Newmarket and Te Rapa. Ensuring we continue to bring the New Zealand stores up to date.

Hallenstein Brothers, which continues to evolve and innovate it’s in store experience, will have new
store openings in Frankton, Queenstown, an improved site in Bayfair and a refurbishment of the
Botany Downs Store.

Importantly though as strong as our new concept stores are, we are not standing still. We are
constantly looking for ways to improve, innovate and evolve our stores, ensuring we deliver the most
exciting and engaging experience for our customer.


Supply Chain. Serving our Stores and Customers

As has already been discussed, we continue to invest in our supply chain. The expansion of the
Hallenstein Brothers Distribution Centre in Auckland is complete, adding additional capacity to support
our growing online business. This was our first step.

Looking forward we are reviewing options for Glassons Distribution Centres in New Zealand and
Australia to ensure that they will allow us to meet customer demand, online, and in store, well into the
future.



Sustainability and Ethical Sourcing

As a Group, we are committed to delivering better outcomes for our customers, communities and the
environment. Whilst there is much more to do, we are proud of the achievements so far.
In April 2018, we were pleased to receive a B+ rating from Baptist, however many challenges remain
and we understand our ability to drive and maintain change is critical to our future success.
As a business, we are working to improve sustainability in everything we do. In November this year, we
introduced paper bags into stores, and we intend to eliminate plastic shopping bags by early 2019.
The impact we have on the world around us will continue to be a focus as we strive to integrate
initiatives and policies into our everyday business.

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Each Individual Business

Last year I spent time speaking about each individual business, as you have just heard, the Group, and
each business within it, has similar strategies and have executed those well, ensuring that the
opportunity to benefit from the developments, synergies and talent across the Group have been
maximised, particularly in our investment areas of technology and online.

However, and importantly, each brand continues to work on its own respective and unique market and
customer proposition and identity.


Glassons

Glassons continues to build its fashion forward credentials within Australia and New Zealand. Our
model of bringing to market the products our customers want, when they want, is constantly evolving
and improving, as does the ability to respond to market conditions with speed and agility.

Glassons continues to innovate in digital marketing with its influencer events engaging and connecting
our customers to their influencers in fashion.


Hallenstein Brothers

Hallenstein Brothers continues to build on its market leadership position in New Zealand. Focus in the
last twelve months has been on driving key categories of brand ownership through the business.

The Team continue to work on innovative product, offering value, backed with engaging marketing
campaigns that take menswear to a far more exciting position in the market.

And in Australia, we are encouraged with the progress being made in the three stores in Queensland,
and remain positive about the opportunity that exists and will review their performance following the
busy Christmas and New Year trading period.


Outlook

Whilst the new financial year started well, the outlook for the balance of this season and into the new
calendar year remains unpredictable. Australia and New Zealand continue to be increasingly
challenging retail markets. Consumers on both sides of the Tasman face ever-increasing pressures and
challenges on their discretionary spend, and businesses in both countries are experiencing legislative
change as well as challenging exchange rates and cost increase pressures.

However, as a Group, we remain focused on those things that are within our control. Our inventory
levels are well controlled. We continue to build and develop our teams, to focus and build on our
customer experience and service, and to develop and deliver the best product, whilst closely managing

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our cost base. With these strategies and our team in place, we are striving for continuous
improvement across our business.

I would like to take this opportunity to thank the team that I work with, for their and their team’s
outstanding contribution to the business over the last twelve months, the results as outlined are a
credit to them and theirs to be proud of.


Mark Goddard
Group CEO
12 December 2018