Unbound Group Plc

Investor Presentation • Dec 2, 2021

INVESTOR PRESENTATION

2 December 2021

Gavin Manson: Chief Financial and Operating Officer, Electra Private Equity PLC Ian Watson: Chief Executive Hotter Shoes and CEO Designate Unbound Group Dan Lampard: Chief Financial Officer Hotter Shoes and CFO Designate Unbound Group

Today's Presenters

Ian Watson Chief Executive Officer

• CEO at Hotter shoes since March 2019
• Previously CEO at Start-Rite Shoes
• European Managing Director at Britax Childcare
• Senior Vice President at Newell Brands

Daniel Lampard Chief Finance Officer

• Joined Hotter August 2021
• Previously CFO D2C Glanbia Performance Nutrition and FD at AO World Plc
• 11 years at Manchester Airport Group

Gavin Manson Chief Finance and Operating Officer Electra

• Currently Chief Financial and Operating Officer of Electra Private Equity
• Previously Finance Director at Thomas Cook Group and Finance Director at Premier Farnell (5 years)

Agenda for Today to go here

Q&A

1	Interim results and transaction update	Gavin Manson
2	The Hotter Business - A profitable foundation for growth	Ian Watson
3	Introduction to Unbound	Ian Watson
4	Closing Remarks	Ian Watson

Important notice

This document has been prepared by Electra Private Equity PLC (the "Company"). The information and opinions contained in this document and any other material discussed verbally in connection with it are provided as at the date of this document and no person undertakes to update or correct them. The information includes forward-looking statements and statements of opinion which are based on the Company's current expectations and projections about future events, but are subject to various risks and assumptions, and actual events or circumstances may differ materially from those indicated in these statements; none of these statements should be taken as forecasts or promises. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any other person as to the accuracy, completeness, fairness or correctness of the information or opinions contained in this document or any other material discussed verbally; no reliance should be placed on such information and no responsibility or liability is accepted for it.

This document does not constitute, or form part of, any offer to sell or issue, or invitation to sell, purchase or subscribe for, or any solicitation of any offer to sell, purchase or subscribe for, any securities of the Company or of any other entity. Neither this document nor any part of it should be relied on in connection with any contract or investment decision, nor does it constitute a recommendation regarding the securities of the Company or any other investment advice. Shareholders and prospective investors should make their own independent evaluation of any investment in the Company.

The securities of the Company have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state in the United States and may not be offered or sold in the United States, except in reliance on an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

By attending the presentation or meeting to which this document relates or by being in possession of this document you accept and agree to comply with the contents of this notice.

Chairman, Neil Johnson's quote

"Following the successful demerger of Hostmore plc on 1 November 2021, we are now entering the final stage of our value realisation strategy that has now seen us return over £2.2 billion to shareholders from a starting market capitalisation of £1.1 billion. We will shortly be starting the formal process that we intend will lead early in 2022 to the transition of Electra from the FTSE main market listing to AIM as Unbound Group PLC – a company that will build on the solid foundation of Hotter Shoes to grow value through a digital platform supporting the active lifestyles of the 55 plus demographic with a range of products and services."

Group Highlights

As reported as at 30 September 2021 - including demerger transaction risk

£million	Electra	Hostmore	Unbound
Hostmore equity value*	176.0*	176.0*	-
Hotter equity value*	33.5*	-	33.5*
Management shareholding	(15.9)	(12.7)	(3.2)
Assets being realised**	1.3	-	1.3
Assets being retained***	2.2	-	2.2
Cash	8.2	-	8.2
Other net liabilities****	(0.3)	-	(0.3)
NAV attributable to Electra shareholders as at 30 September	205.0	163.3	41.7
NAV per share (Electra)	525.9p	418.9p	107.0p
NAV per share (Hostmore)	-	129.5p	-
*Reflects transaction execution/liquidity discounts of 33% (Fridays) and	35% (Hotter)
Assets expected to be realised prior to transition to Unbound *An illiquid property investment expected to be retained with annual income of approx. £0.3 million
****includes accrual for operating costs prior to transition to Unbound

Management Shareholding in Hotter will be converted into a 7.8% shareholding in Electra / Unbound through the issuance of new shares on admission to AIM

Pro-forma as at 30 September 2021 - assuming demerger and unwind of transaction execution risk reflected as at 30 September

£million	Electra	Hostmore	Unbound
Hostmore equity value*	278.2*	278.2*	-
Hotter equity value*	59.4*	-	59.4*
Management shareholding	(25.3)	(20.2)	(5.1)
Assets being realised**	4.0	-	4.0
Assets being retained***	2.2	-	2.2
Cash	8.2	-	8.2
Other net liabilities****	(1.2)	-	(1.2)
NAV attributable to Electra shareholders as at 30 September	325.5	258.0	67.5
NAV per share (Electra)	835.2p	662.0p	173.2p
NAV per share (Hostmore)	-	204.6p	-
*Reported values adjusted to take out the transaction risk and	liquidity discount reflected	in 30 September	valuation

**Assets expected to be realised prior to transition to Unbound. Includes 1.6% shareholding in Hostmore plc ***An illiquid property investment expected to be retained with annual income of approx. £0.3 million

****includes accrual for operating costs prior to transition to Unbound

Management Shareholding in Hotter will be converted into a 7.8% shareholding in Electra / Unbound through the issuance of new shares on admission to AIM

The Hotter Business - A profitable foundation for growth

Business Transformation

2019 Transformation Strategy

1.Alignment and refocus of brand and product

2.Drive to best cost

3.Optimal route to Consumer

4.People, Processes and Systems

Digitally-led direct to consumer model, with a growing, loyal database

Repurposed profitable retail proposition

Product range with sustainable competitive advantage - anchored in comfort

Brand re-anchored in comfort

Technology enabled to aid the consumer experience

Supply chain flexibility at best cost

Transformation timeline to a digitally-led business

Financial Performance Six months to July 2018 vs July 2021

				Six Months to July 2018					Six Months to July 2021
				Revenue		EBITDA		Revenue		EBITDA
			Share	Growth	£	Margin %		Share	£	Growth £	Margin %
	UK Direct	Online						54%
		Offline						17%
			35%	-5%	3.4	21%		71%	4.8	1.4	27%
	Retail		45%	-8%	0.2	1%		12%	0.5	0.4	17%
	US		14%	-22%	-0.8	-12%		10%	0.0	0.8	0.0
Digitial Partnerships & Wholesale		6%		0.5	22%		7%	0.4	-0.1	22%
	Head Office Costs				-3.1				-3.3	-0.1
		Company	100%	-8%	0.1	0.20%		100%	2.5	2.4	10%
		Fixed costs		£16.8m				£6.2m
		Operating cashflow		£-1.2m				£3.2m

Performance in H1 2018, prior to arrival of the new management team:

• Hotter was retail focussed
• Revenue was in decline across all channels
• Breaking even at EBITDA level loss making overall
• US business was rapidly shrinking and loss making
• High fixed costs
• Negative operating cash flow

Following the transformation activities before and during lockdown:

• Hotter is a direct to consumer focussed business with growth coming from its rapidly developing e-commerce channel
• All channels / segments profitable at EBITDA level
• US business no longer loss making with investment minimised to focus on UK growth in short term
• Fixed costs halved
• Positive operating cashflow with strong EBITDA conversion
• Overall EBITDA margin of 10% with fast growing direct to consumer EBITDA margin of 27%

	Em			Variance
	Q322	-Q3 21	£	%
Revenue	12.7	11.6.	-1.1	9.2%
Gross Margin %	8.4 65.8%	6.5 56.2%	1.8 9.7%	27.9%

Q3 Trading Update :

• Continued strong revenue growth of £1.1m (9.2%) and £1.8m (27.9%) growth in gross margin YoY
• Gross margin at 65.8% continuing the YTD trend with growth over the prior year of 9.7pp

Black Friday update (not included in above numbers)

• Strong performance during the Black Friday trading weekend with over 11% revenue growth YoY

Channels of distribution and our consumer base

Channels of distribution

The Hotter business model has transformed from being retail-centric to a digital first, direct to consumer omni-channel brand

UK D2C Retail U.S. Other

Source: July Management Accounts

Customer Database

A large and growing customer database with an increasing focus on digital channels

• Consumer database is a direct driver of value, with 4.6m identifiable contacts
• 29% of UK 55+ females are currently registered within our database
• Driving email database growth, with email contacts now >1m, both organically and through converting analogue and physical retail customers to digital.
• Email database growth accelerated through:
• Cultural shift to digital
• Technology to identify anonymous site visitors, stimulating on-site email capture
• Footprint data capture
• App downloads
• Rewards loyalty programme

App Download Growth

• Continuous development of app, with launch of Android app and Virtual Try-On augmented reality feature.
• Further innovation to launch in Q4, including Fitting solutions

Differentiated retail experience

Leveraging technology to create a personalised customer experience and stimulate email data capture

Footprint 3D foot scanning:

Scans the foot to provide exact foot measurements and customised product recommendations to the user.

Digital touch screen kiosks: For content display, browsing the website and self-serve purchasing

Interactive projection mapping table

To create retail theatre, brand engagement and present product technology in an interactive way.

Hotter Growth Plan

DIGITAL GROWTH

• Mobile commerce
• Digital marketplace expansion
• Mobile commerce, new payment methods
• Provide credit proposition to stretch appeal

CHANNEL SHIFT TO DIGITAL DIRECT

• Customer migration online through Personalisation and targeting
• New customer acquisition fuelled by digital marketing and Loyalty programme

PRODUCT IMPROVEMENT SUPPORTED BY SCIENCE

• Increased volume with existing & new customers
• Leverage ASP with reduced discounting and "worth -more"

MULTI -DROP STRATEGY

• Accelerate and capitalise on 10 drops PA
• Strong and tight inventory management through trial and online exclusives

DEVELOP MENS PROPOSITION

• Development of men's category to reflect appropriate market weighting

OCCUPATIONAL FOOTWEAR RANGE

• Launch occupational styles in AW21, building into a specialist range in AW22
• Focussed on consumers shopping through existing channels
• Designs to support specific specialist requirements

INTERNATIONAL EXPANSION

• Leverage existing, proven playbook to grow US presence
• Mature and expand into new geographies

RANGE AND STYLE BREADTH

• Adjacent opportunities exist in active lifestyle and sustainable product ranges
• Opportunity exists to create customized comfort outside of PU construction

UK AND INTERNATIONAL DIGITAL PARTNERSHIPS

• Headroom for partnership distribution growth internationally, new and existing markets
• UK opportunities for growth and expansion driven by strategic specialist partners

APP

• App enhancing consumer journey

Introduction to Unbound

Market Drivers

Cultural and demographic shifts provide a robust and supportive market backdrop for an ecommerce proposition targeted at the over 55 demographic

1	Ageing population	- An ageing population combined with increasing life expectancy will continue to increase Unbound's addressable market and the proportion of population with acute comfort needs - Older demographic is the fastest growing demographic of the UK population
2 2	High concentration of UK wealth with 55+	- The UK's wealth is concentrated in the 55+ demographic with approximately 57% of household wealth within this group against a population composition of 38% - Increase in discretionary spend for 50+ demographic is 3x that of under 50s
3	Increasing digital literacy and online penetration	- Older generations have rapidly become digitally literate with the COVID pandemic accelerating this trend - Over 30% of internet users in the UK are over 55, broadly in line with their proportion of the UK demographic - Online shopping participation amongst over 65s has increased 20 percentage points since 2017, the largest increase of any age group
4	Increasing focus on health and wellbeingin older demographic	- Older generations are increasingly becoming more active with largest percentage increase in exercise participation coming from the over 55 segment - This will be further boosted by more active older generations who are increasingly likely to seek more comfort-oriented products
5	Materially underserved online	- The majority of ecommerce businesses are focused on younger demographics with a product suite and marketing campaigns that are inappropriate for 55+ - When combined with the retrenchment of department stores this is resulting in a materially underserved demographic with an opportunity to build a targeted business

Unbound Group Strategy

Leverage

Proven Hotter proposition and capabilities, anchored in enabling version of comfort To

By

Creating a group that understands, connects with and sells to the 55+ target consumer on a broader and deeper basis

Tap into broader opportunities amplified by recent cultural and demographic shifts

Unbound Group strategy

From

A single brand footwear business serving mainly 55+ women

To

A multi brand, multi category group serving 55+ women and men with an own brand and third-party offer

Vision & Mission

Vision

"To help people move better, feel better and do more of what they love."

footwear business Mission

women "Develop technologies, products, experiences and partnerships rooted in digital excellence and unrivalled insight – to give people in their 50s and beyond the comfort and confidence to go further."

Personalisation through customer insight

Purchase behaviour and demographics

• Retail / catalogue / digital channels
• Ongoing customer feedback via 4m customer database
• Ongoing concept testing

Foot types and comfort needs

• Footprint 3D scan
• Biomechanical research programmes

Lifestyle, behavioural and attitudinal

• Unbound Insight annual study into UK 55+ consumers
• Qualitative and quantitative research

	CORE CATEGORIES		ADJACENT CATEGORIES
	FIT PROPOSITION & / OR ENABLING COMFORT PROPOSITION		PARTNERSHIP BRANDS PROVIDE OR ENABLE 'MORE OF WHAT YOU LOVE'
FOOTWEAR	APPAREL	WELLNESS	Detailed categories and partner brand offer being explored and refined as part of proprietary Unbound Insight Programme

Technologies, products and services that help people do more of what they love.

OVER-ARCHING CRITERIA FOR BRAND SELECTION

Aspirational / desirable brand with halo effect on Unbound

		. IN T
ш		v.

Relevant category and brand for 55+ comfort-driven male/female consumer

Bring expertise or specialism that adds to Unbound own-brand offering

RELEVANCY DESIRE SPECIALISM SUSTAINABILITY

Strong environmental credentials that amplify Unbound's sustainability story

The selection process steps

round pitching

Curated Partners

Brands that are specially curated for our 55+ target consumer

3 Phased Approach

	BRAND PARTNERSHIPS WITHIN FOOTWEAR / APPAREL CORE
PHASE ONE	Partner mapping – Completion Q3 Commercial agreements in place – Q1 22 Launch & first revenues- H1 22
	BRAND PARTNERSHIPS IN ADJACENT MARKETS PHASE TWO Partner mapping – Completion Q1 22 Commercial action plan development
	OWN BRAND COMFORT OFFER OUTSIDE OF FOOTWEAR PHASE THREE Opportunity to develop own brands to drive higher gross margins. We will incorporate the learnings from phases 1 and 2 to minimise executional risk. Timings TBD

Closing Remarks

1	The base Hotter Business is a digitally focused growth business, anchored in comfort, focused on its 55+ core demographic with a deep penetration within its database
2	Our financial guidance published on 15th September CMD presentation remains unchanged. Significant macro tailwinds are present and for future years
3	Opportunity exists in the model to become a true specialist in this demographic, enabling consumers to do more of what they love
4	New partnerships being put in place to sell other products and services to 55+ demographic, with a focus on active lifestyles, health and wellbeing
5	Medium term ambition to generate over 50% of EBIT from non-Hotter products
6	Multi-award winning digital and transformation leadership team in place

Appendix

The transformation of the Hotter business from H1 FY20 to H1 FY22 is apparent from the structural changes across sales channels. Investment and revenues are now focused on the online growth opportunity with an increasingly flexible cost base driving improving EBIT margins.

						Var H1 22	vs H1 20
£'000	H1 20	H2 20	H1 21	H2 21	H1 22	£	%
Direct - On-line UK Consumer to	10 206 ,	9 974 ,	10 090 ,	12 714 ,	13 365 ,	3 160 ,	31%
- Off-line UK Direct Consumer to	6 539 ,	4 810 ,	2 751 ,	4 333 ,	4 462 ,	(2 077) ,	-32%
Direct Consumer - Total UK to	16,744	14,784	12,841	17,047	17,827	1,083	6 %
Retail - Retained	6,625	6,671	1,327	2,389	2,944	(3,681)	-56%
Direct US to consumer	4,652	5,090	2,674	2,581	2,389	(2,263)	-49%
Digital partnerships	1 090 ,	1 332 ,	963	1 588 ,	1 234 ,	144	13%
Wholesale & other	1 922 ,	1 617 ,	837	790	633	(1 289) ,	-67%
Other revenue	3,012	2,949	1,800	2,378	1,867	(1,145)	-38%
Total Revenue	31,034	29,495	18,642	24,395	25,028	(6,007)	-19%
Retail - Closed	12 666 ,	12 333 ,	1 384 ,	64	0	(12 666) ,	-100%
Reported Revenue	43,700	41,828	20,026	24,459	25,028	(18,673)	-43%

• Significant growth online as consumers have switched coupled with database growth
• Offline to online transition accelerated through covid with variable cost base able to flex with demand
• Gradual recovery of retained retail to pre covid levels – Q2 22 run-rate is c63% of pre covid levels. Entire residual estate profitable.
• US investment minimized as focus on UK online growth
• Growth in digital partnerships as new partner agreements have been established
• Wholesale reduction as shift away from independents to digital partnerships

Hotter P&L

Significant growth in EBIT, both in absolute terms and as percentage of revenue

						Var H1 22	H1 20 vs
£'000	20 H1	H2 20	21 H1	H2 21	22 H1	£	%
Revenue	43,700	41,828	20 026 ,	24 ,459	25 028 ,	(18 673) ,	-43%
profit Gross	27 012 ,	26 ,448	10 ,149	13,060	15,418	(11 ,595)	-43%
	62%	63%	51%	53%	62%
Semi variable costs	(10 933) , 25%	(9 927) , 24%	(6 777) , 34%	(8 605) , 35%	(7 631) , 30%	3 302 ,	-30%
Fixed costs	(14 825) ,	(15 637) ,	(8 213) ,	(5 078) ,	(6 198) ,	8 628 ,	-58%
	34%	37%	41%	21%	25%
EBIT - IFRS	1,254	884	(4 841) ,	(623)	1,589	335	27%
	3%	2 %	-24%	-3%	6 %
EBITDA - FRS	2 ,394 5%	1,603 4%	(3 ,711) -19%	848 3%	2 ,519 10%	125	5%

• Over 27% growth in EBIT and doubling of margin percentage from 3% to 6% with the shift to online and right sizing of the retail estate
• Semi-variable costs increasing as a % of revenue over the two year period driven from increasing marketing spend as channels shift to online, with a positive downward trajectory occurring in H1 22.
• The reduction in fixed costs in both absolute numbers and as percentage of revenue reflecting the closure of unprofitable retail outlets and restructuring of the cost base reflecting the channel shift.
• Note for comparative purposes the EBITDA under FRS has been included

Hotter Medium Term Guidance

Continued growth within on-line and off-line channels, with Retail stores recovering to pre-COVID levels by the end of 2022. Improved gross margin and continued management of costs driving improving EBITDA margin over medium term.

UK Direct to Consumer	On-line: Mid teen % annual growth expected
	Off-line: Mid single digit % annual growth expected
UK Retail	Recovers to FY20 levels by end of FY23 and then stable
US Direct to Consumer	Undergoing strategic review, short term maintained at current levels
Hotter Digital Partnerships	Double digit % annual growth
Wholesale	Maintained at current levels
Gross Margin	Approximately 2% above pre-covid levels from FY23 as covid disruption diminishes and positive impact of differentiated product drives margin
EBIT Margin	Levels to reach mid teen % over medium term
Cash Conversion	Operating cashflow (pre-exceptionals) in line with EBITDA
Capital Expenditure	Annual capital expenditure spend of c£2.5m. No material one-off spends required in the medium term with plan spend exceeding current depreciation levels
Working capital	No structural change with stable conversion of EBITDA to cash
Net Debt/(Cash)	Targeted to be maintained below 2x maintainable EBITDA in short term, in the medium term a net cash position without future strategic spend

Unbound Group Financial Development

Digital growth building on the profitable Hotter platform

	Strategy	Framework
Unbound Partnership Model	• Unbound will add digital partnerships to build on and further develop the focussed consumer database already in place through Hotter • Developing on the digital platform already in place for Hotter, building in a scalable manner	• Commission based partnership model for non-Hotter sales • First revenues from H1 calendar 2022 • Profit generated from non-Hotter revenues targeted at 25% of group profit in 3 years and 50% in 5 years • Unbound partnerships will be EBITDA and cash generative from the outset but with reinvestment in growth in short term • No investment required in inventory in the short / medium term

Unbound Capital allocation framework

Reinvestment in the business to drive future growth

	Strategy	Framework
Capital Expenditure	• Re-invest in the business to drive long term growth • Focus on scaling the digital platform	• Hotter capital expenditure of c.£2.5m per year • Unbound capital expenditure of £3m by end of calendar year 2022
Dividend Policy	• No dividends planned in medium term	• Focus on capital appreciation
Net Debt	• Focus on investment for growth	• Targeted to be below 2x EBITDA in short term, in medium term a net cash position without future strategic spend

Unbound Strategy Summary and Implementation Update

• 1. Hotter sells its products to over 29% of the UK 55 plus female population through its direct-to-consumer channels. Building on the strong brand, customer trust and customer loyalty enjoyed by Hotter, and reflected in its already rapidly growing range of digital partnerships selling Hotter products on other leading online platforms, the group is now building a similar, Unbound platform to offer a range of selected non-Hotter products and services that will enhance the enjoyment and wellbeing of customers in the 55 plus demographic.
• 1. Cultural and demographic shifts provide a significant opportunity for Unbound to address a customer audience that is materially under-served online with the characteristics of:
• rapidly increasing digital literacy 55 plus demographic now generating over 30% of overall internet participation;
• long term structural growth in older demographics, significantly in excess of growth in younger demographics;
• focus on health, wellbeing, leisure and recreation with a more acute need for comfort over performance; and
• high concentration of UK wealth in the demographic results in focus for product selection being on value rather than price.
• 1. The digital platform being built by Unbound allows the development of a low risk, mutually beneficial arrangement with select partners which will provide customers in the targeted 55 plus demographic not only with relevant and lifestyle enhancing products and services but ultimately also a community platform;
• 1. Initially targeted Unbound brand partners have been identified and commercial negotiations are in progress; and
• 1. First Unbound revenues from sales on its own platform of products other than Hotter footwear expected in Q2 2022, with medium-term ambition to generate more than half of Unbound's profit from non-Hotter products.

Hotter Shoes Operational Progress and Trading Update

• 1. Strong trading in light of market-wide supply chain issues and other headwinds facing ecommerce businesses, with trading performance remaining consistent with medium-term guidance given at the Unbound Group Capital Markets Day on 15 September 2021;
• 1. EBITDA of £2.5 million generated from revenue of £25 million for H1 FY22 (six months ending July 2021);
• 1. Sales in the third quarter to October were up 9% on prior year with gross margin increased from 56.2% to 65.8%;
• 1. Trading over the key "Black Friday" period was up over 10% on the same period last year;
• 1. Continuation of Hotter's key financial performance trends including direct-to-consumer driven revenue growth, gross margin expansion and rapidly accelerating capture of email addresses taking its database to over one million, up from 850,000 in September 2021;
• 1. Effective management of supply chain disruption, with UK manufacturing facility providing some resilience and the reopening of supplier factories following Covid-19 lockdowns in India and Vietnam allowing product availability to recover in October 2021, however planning assumes disruption continues into 2022;
• 1. High product demand remained during this period of disruption, and the direct-to-consumer focused model has allowed some level of back-orders to be accumulated for later fulfilment as components and finished goods become available;

• Increased supply chain costs primarily in relation to incoming air freight costs, so represent a future opportunity for cost