FY17 Preliminary results

September 2017

Financial highlights

1. Reported revenue is for 53 weeks, (FY16 52 weeks). Revenue growth is for 52 weeks in constant currency on a pro forma basis (FY17 £104.2m, FY16 £93.1m). Hotel Chocolat Estates St Lucia (HCESL) was acquired by the group in April 2016, the pro forma includes the results for HCESL for the entirety of both periods. The impact of the 53rd week on reported EBITDA and profit is not material. 2. Underlying EBITDA is stated before share-based payments (FY17 £0.6m, FY16 £0.1m) and exceptional costs relating to the IPO (FY17 nil, FY16 £2.6m)

REVENUE

£105.2m(2016: £91.1m)

+12%YEAR-ON-YEAR1

PROFIT AFTER TAX

£8.8m(2016: £4.1m)

UNDERLYING EBITDA2

£16.3m(2016: £12.4m)

+32%YEAR-ON-YEAR

EARNINGS PER SHARE

7.8p(2016: 3.9p)

PROFIT BEFORE TAX

£11.2m(2016: £5.6m)

+100%YEAR-ON-YEAR

MAIDEN DIVIDEND

1.6p

‘15 ‘16 ‘17

£81.1m£91.1m

£105.2m

‘15 ‘16 ‘17

£7.8m

£12.4m

£16.3m

‘15 ‘16 ‘17

£2.0m

£5.6m

£11.2m

15

Operational highlights

GROWTH STRATEGY IS ON TRACK

1. Open stores & new shop+cafe format

2. Increase capacity and capture efficiencies from the

vertically integrated supply chain

3. New digital site to grow customer base and improve

gifting proposition

2 FRANCHISE STORES

IN HONG KONG

12NEW STORES

OPENED

6NEW WHOLESALE

ACCOUNTS FOR FY18

+30%MOBILE CONVERSION

ON NEW WEBSITE

1SUCCESFUL STORE

REFIT TEST

+20% FACTORY

CAPACITY GROWTH

OPERATIONAL HIGHLIGHTS

• Strong Seasonal ranges, product innovation and good availability

drove increases in existing store and online sales

• Opened 12 stores in UK, pipeline is strong. Now have 16 shop+cafe

format stores, with ability to flex offer for each location. Success of

new format suggests stores are viable in smaller catchments than

shop-only format

• Hong Kong franchise partner opened two stores in Q4 FY17, in

advance of peak winter gifting season

• 6 new wholesale accounts since period end, increasing customer

convenience

• New website increased mobile conversion by 30%, over half of site

traffic now comes from mobiles & tablets

• Factory investment: capacity increased by over 20%, gross margin

+110bps Year-on-Year

• Encouraging early results from refit of Milton Keynes store

2

3

53 weeks ended

2 July 2017

£000

52 weeks ended

26 June 2016

£000

Revenue 105,240 91,089 Revenue growth +12% Year-on-Year1

Cost of sales (33,758) (30,237) Gross margin increased by 110bps from 66.8% to 67.9%

Operating expenses (55,135) (48,457) Operating cost ratio reduced by 80bps from 53.2% to 52.4%

Underlying EBITDA 16,347 12,395EBITDA growth +32% Year on Year

EBITDA margin improved by 190bps from 13.6% to 15.5%

Exceptional costs - (2,642) Costs relating to flotation in May 2016

Share based payments (562) (65)

Depreciation & amortisation & loss on disposal (3,857) (3,322)

Operating profit 11,928 6,366

Finance income 3 172 Prior year interest from related party (HC Estates, St Lucia)

Finance expenses (726) (947) Includes £0.1m non-cash interest on FX derivatives (FY16: £0.1m)

Profit before tax 11,205 5,591

Tax expense (2,441) (1,507)

Profit for the period 8,764 4,084 Profit growth +115% Year on Year

EPS – basic and diluted 7.8 3.9Profit for the period divided by the weighted average number of shares in issue

(FY17 113m, FY16 103m). Number of shares in issue is unchanged since IPO.

Proforma revenue includes results of HC Estates Ltd, Saint Lucia in both years, whereas

statutory basis above excludes for part of the prior year. HC Estates was acquired by the

Group in April 2016. The impact of the 53rd week on EBITDA and profit is not material

1) Revenue on Pro forma basis in constant currency

Revenue for 52 weeks ended 25 June 2017 104,169 93,139

Group income statement

5

As at

2 July 2017

£000

As at

26 June 2016

£000

Non-current assets

Intangible assets 2,338 1,857

Property, plant and equipment 31,398 26,111 Capital investments in factory and new stores

Derivative financial assets - 85

Prepayments 7 7

Deferred tax asset 214 -

33,957 28,060

Current assets

Derivative financial assets 307 439

Inventories 9,878 6,604 More efficient production plan; 12 weeks forward stock cover (FY16 9 weeks)

Trade and other receivables 6,021 5,535

Cash and cash equivalents 8,470 6,475 53rd week in FY17 included £4m of payments, comparable week £12.5m vs £6.5m FY16

24,676 19,053

Total assets 58,633 47,113

Current liabilities

Trade and other payables 16,633 16,334 53rd week included £4m of payments, comparable week £20.6m vs £16.3m

Corporation tax payable 1,105 611

Derivative financial liabilities 137 -

Borrowings 3,371 433 £3.4m of chocolate bonds potentially repayable June 2018

Provisions - -

21,246 17,378

Non-current liabilities

Other payables and accruals 1,934 1,485

Derivative financial liabilities 34 -

Deferred tax liabilities - 79

Borrowings 3,504 6,643 £3.5m of chocolate bonds potentially repayable July 2018

Provisions 751 464

6,223 8,671

Total liabilities 27,469 26,049

NET ASSETS 31,164 21,064

6

Group balance sheet

4

5

53 weeks

ended

2 July 2017

£000

52 weeks

ended

26 June 2016

£000

Profit before tax for the period 11,205 5,591

Adjusted by:

Depreciation, amortisation & impairment 3,745 3,194

Net interest expense 723 775

Other non-cash expenses 674 193

Operating cash flows before movements in working capital 16,347 9,753 68% increase driven by sales growth & cost control

Changes in working capital (3,020) (1,088) 53rd week impact

Cash inflow generated from operations 13,327 8,665

Income tax paid (1,832) (549)

Interest paid (440) (690)

Cash flows from operating activities 11,055 7,426

Cash flows used in investing activities (8,384) (5,957)

Cash flows from/(used in) financing activities (828) 10,583 IPO proceeds in prior year

Net change in cash and cash equivalents 1,843 12,052

Cash and cash equivalents at beginning of period 6,475 (5,697)

Foreign currency movements 152 120

Cash and cash equivalents at end of period 8,470 6,475 53rd week in FY17 included £4m of payments

5

Group cash flow

Source: 1) Mintel 2) Canadean 3) Allegra 6

Positioned for growth

LARGE AND GROWING MARKETS

• £20bn UK gifting market1

• £6bn UK chocolate market2

• £8bn UK cafe market3

• HC has significant headroom in each

• Consumer research shows perceived “lack of

access” is the main barrier to purchase

DIFFERENTIATED BRAND & PRODUCTS

• Core brand ethos of:

ORIGINALITY, AUTHENTICITY AND ETHICS

• Differentiated taste “More cocoa, less sugar”

• Accessible luxury: prices from £1 to £300

• High rate of product innovation within

disciplined range architecture

• Consumer research shows high advocacy

STRONG PLATFORM

• Vertical integration is responsive whilst

also protecting intellectual property

• Now leveraging top line growth

• Further economies of scale available

• Ability to increase capacity at factory and

distribution centre

GROWTH FROM PROVEN FORMATS

• Shop+cafe format

• Website growth of +18%

• Subscriptions 2.0 coming soon

• New digital wholesale partners

Operational progress

UK & Ireland Store portfolio growth:

Opened 12 stores in FY17, further 8 stores will open in H1 FY18

Less than 20% of store estate currently features the additional café offering

5

New Sites in FY17 FY18 Openings & Signed Leases

SHOP+CAFE

Worcester

Chelmsford

Bury St Edmunds

Cheshire Oaks Designer outlet

Euston station

Covent Garden Piazza

Glasgow Buchannan Street

Belfast Donegall Square

Peterborough

SHOP ONLY

Clapham Junction Station

Crawley

Wandsworth

OPENED:

Beverley

Clarks Designer Outlet

LEASE SIGNED

Oxford Westgate Centre

Teeside Retail park

Birmingham

Dublin, Dundrum Centre

Shrewsbury

Colchester

8

Store portfolio growth

‘16 ‘17 ‘18

80

91

99Including signed

leases

Shop+cafe format: Full retail range with the

addition of:

• Drinks-led cafe: Hot Chocolat, coffee

and ‘Ice Cream of the Gods’

• Reduced capex cost per square foot without

compromising premium feel

• Chocolate the majority of sales, with higher

sales & profit for a given catchment

Can flex to make best use of available space:

• Small/Travel

Euston Station: shop+takeaway only cafe

• Large

Glasgow Buchanan St: shop + 50 seat cafe

• Designer Outlets

Cheshire Oaks & Clarks Village

Capital investment in new stores

9

• Ice Cream of the Gods rolled out to 40 stores for

Summer 2017, counter-seasonal trading

• In-house School of Chocolate diploma gives staff

the knowledge to deliver Chocolate Lock-ins;

paid-for tasting events after trading hours. Events

are profitable and increase brand affinity, now in

38 stores

• Refit of an existing store (Milton Keynes) in

Summer 2017, initial results encouraging

suggesting scope to roll out cafe retrofits

Investment in existing stores

10

Website Results

• Sales +18%

• New site launched in H2

New Features:

• Improved content

• Mobile & tablet compatible (conversion

increased 29%)

• Majority of traffic is now from mobiles

• Build your own gift hamper tool

In Development

Mobile app launches in 2018:

• Easiest gift sending

• Enables a loyalty rewards programme

11

Digital growth opportunity

12

Tasting Club subscriptions

Results

• Sales -5% Year-on Year

• Profit increased as result of operational & web

synergies

Progress in FY17

• Single customer account

• Distribution in-sourced to improve customer service

• Tested a new weekly format “Mbox”

In Development

Phase I (2017)

• Improve gift subscriptions

• Develop & test more new subscription formats

• Test new acquisition routes (digital, video)

Phase II (2018 and beyond)

• Invest in profitable new customer acquisition

• Test new club products and price points

• Mbox weekly subscription launches 2018

513

Production capacity & capability

FY17 GROSS MARGIN IMPROVED

+110 bps+70% Truffle making capacity

MAIN PRODUCTION LINE UPGRADED ON TIME, ON BUDGET, +20% TOTAL FACTORY CAPACITY.

FY18

• Increase existing asset utilisation; reduce downtime &

material wastage, longer production runs

• Capital project to increase liquid chocolate capacity

• Commence planning & consent process to extend factory

(target completion 2020)

Longer-term capacity and margin drivers

• Partial automation of packing (completion 2019)

• New production line for solid shapes (2020)

Highlights

• Gift event focus continues, including new Birthday grand slab

and occasion sleeves including Simply Thanks,

Congratulations, Eid, Diwali, and tourist souvenirs

• Wider Vegan range

• Supermilk Pure, the first milk chocolate bar with no added

sugar at all

Children’s - HC Quality without compromise, with cute

designs

• Halloween

• Advent

• Portion controlled

• Prices from £2 to £10

514

Key new products

Our largest ever Christmas range over 100 products

Strong differentiated brand with “accessible luxury” price points

• Occasion-driven purchasing and relatively modest average spend per visit relative to demographics

• Vertical integration increases flexibility

Well positioned to capitalise on consumer trends

• Wellness (more cocoa less sugar)

• Experiences (rollout of Shop+cafe format to more locations)

• Mobile (new website provides platform, app in development)

Current trading is encouraging

• New stores performing well, strong pipeline for sites

• Cafe retrofit into existing store delivering encouraging early uplift

• Test and learn approach to new opportunities, including wholesale,

international and new subscriptions

16

Outlook

THANK YOU