DUSK GROUP LIMITED — Investor Presentation 2021

Aug 26, 2021

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FY21 RESULTS PRESENTATION

27 August 2021 Peter King (CEO) & Kate Sundquist (CFO)

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FY21 Summary

RECORD SALES PERFORMANCE

• Sales of $148.6m +47.4%

• Total LFL[1] sales +32.7%

OMNI-CHANNEL STRATEGY DELIVERING

• Online sales $11.2m +27.0%

• Represents 7.5% of total sales

EXCEPTIONAL GROSS MARGIN

• Gross margin up 54.4% to $101.3m (up 308 bps to 68.2%)

PRO FORMA EBIT[2] +224.7% TO $38.4m, and NPAT to $26.8m

▪ Driven by:

• Operating leverage from LFL sales growth and higher GM%

• New store performances

• Disciplined cost management

OUTSTANDING CASHFLOW GENERATION

• Net cash position of $21.4m at period end (no debt)

• Fully franked final dividend of 10 cents per share has been declared, taking total FY21 dividends to 25 cents per share

• LFL sales calculation excludes stores closed for refurbishment or COVID-19 related closures

• Proforma EBIT is unaudited and excludes IPO related costs, the net benefit of JobKeeper, rental concessions and is pre-AASB 16

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Profit and Loss

RECORD SALES AND PROFIT

• Total sales +47.4%

• LFL sales growth of +32.7%

• Significant periods of store closures across multiple States (especially Victoria) due to COVID-19

• 10 new stores opened during the year

• Gross profit up 54.4% with gross profit rate up +308 bps driven by tightening pricing and promotional management strategies

• Strong operating leverage delivered through disciplined cost management

• Pro forma EBIT of $38.4m up by $26.6m, +224.7%

• Pro forma NPAT[1] of $26.8m up by $18.6m,

• +225.5%

PRO FORMA RESULTS

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$M FY20 FY21 % Change
Revenue 100.8 148.6 47.4%
Gross profit 65.6 101.3 54.4%
Gross profit % 65.1% 68.2% +308 bps
CODB (50.8) (59.9) 18.0%
CODB % 50.4% 40.3% -1006 bps
EBITDA 14.8 41.4 179.2%
EBITDA % 14.7% 27.8% +1314 bps
EBIT 11.8 38.4 224.7%
EBIT % 11.7% 25.9% +1412 bps
NPAT 8.2 26.8 225.5%
NPAT % 8.2% 18.0% +987 bps
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2

1. See Appendix for pro forma adjustments and reconciliation to statutory NPAT

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Sales

Record sales underpinned by strong LFL sales growth and new stores opened and annualising

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SALES ($M) AND LFL SALES GROWTH
6.0% 12.7% 7.9% 17.5% 32.7%
148.6
100.8
86.1
74.4
64.8
FY17 FY18 FY19 FY20 FY21
Instore ($m) Online ($m) LFL Sales Growth (%)
GROWING STORE NETWORK [1]
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122
112
106
96
89
FY17 FY18 FY19 FY20 FY21
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COMMENTARY

• Outstanding LFL sales growth – +32.7% total LFL sales growth

• – +32.9% store LFL sales growth

• – +27.0% online sales growth

• Approximately two-thirds of LFL sales growth was driven by increasing transaction numbers, whilst pleasingly, average transaction value (ATV) grew the balance

▪ dusk Rewards members remain the ‘engine room’ of both our total sales and sales growth

• New stores are performing well with the pipeline for new store opportunities healthy

• Payback and ROCE metrics remain compelling

• Store count includes online store

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Sales Growth by Category

dusk is growing strongly across all categories and increasing mix towards high-margin ‘consumable products’

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SALES BY CATEGORY SALES GROWTH BY CATEGORY
45% 54% 30% 32% 69%
67% 55.00 49.2
47.6
non-candle sales
10.3% 45.00
33.8
13.4% 33.1% 35.00 30.8
25.00
11.2% 19.9
16.6 15.4
15.00 12.7 11.7 11.8
32.0% 5.00
Candles Diffusers & Homewares Mood Reeds Other
Candles Diffusers and Consumables Consumables
Homewares Other
FY20 FY21 Growth
Mood Reeds
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- GROWTH OF CONSUMABLES ESSENTIAL OIL AND MOODMIST FRAGRANCE SALES ($M)

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69%
20.5
growth
12.1
7.3
4.2
3.3
FY17 FY18 FY19 FY20 FY21
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• Strong growth in scented consumable refills now representing 13.8% of total sales

▪ Scented consumable refills are becoming a key driver of repeat customer visitation

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Online Channel

Another step change in the performance of dusk’s online channel – sales +27% on pcp

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ONLINE SALES ($M)
18.0 67% CAGR 27%
16.0 growth
14.0
11.2
12.0
10.0 8.8
8.0
6.0 4.5
4.0 3.1
1.5
2.0
-
FY17 FY18 FY19 FY20 FY21
ONLINE PENETRATION (% OF SALES)
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8.7%
7.5%
5.2%
4.2%
Inflated by period of national
2.3% physical store closures
FY17 FY18 FY19 FY20 FY21
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COMMENTARY

• Online sales $11.2m, up 27.0%

• Online penetration at 7.5%

• Key initiatives underway and upcoming:

• Web platform upgrade went live in August 2021. New web platform is faster, more flexible, and more engaging

• Replatforming will enable a number of key initiatives including Click & Collect, Click & Despatch, more payment options and potentially a subscription model

• Significant enhancement in data analytics, segmentation and personalisation

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Loyalty Rewards Membership Growth

Significant growth in dusk Rewards membership, transactions and sales

- ’ DUSK REWARDS NEW SIGN UPS/RENEWALS (000 S)[1]

DUSK REWARDS SALES ($M)

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~688k 49%
450
413
members growth
at period end 400350
300 278
250
200
150
100
50
Total
FY20 FY21
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55%
growth
100
89
90
80
70 57
60
50
40
30
20
10
0
FY20 Total FY21
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DUSK REWARDS TRANSACTIONS (000’S)

COMMENTARY

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44%
growth
1,534
1,067
FY20 Total FY21
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• ‘Active’ database now over 688k members vs 525k pcp

• dusk Rewards members now account for 60% of total sales, up from 56.5% in pcp

• Expiring members are renewing at strong rates

• New member sign-ups grew strongly, up 59%

• Frequency and ATV of members metrics sharply higher

• Omni-channel engagement (customers who shop both channels) continues to grow in importance

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1. Includes new and renewal signups. Members pay $10 for a 2 year membership

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Gross Margin and Gross Margin Drivers

dusk is generating more transactions at higher values with stronger gross margins

COMMENTARY

AVERAGE TRANSACTION VALUE (ATV) ($)

Gross margin drivers include:

• Our ability to positively manage pricing and promotional strategies

• COGS were closely managed and benefitted from strong supplier relationships and our vertical business model

• 12% increase in ATV vs FY20, driven by reduced promotional discounting activities and growth in Home Fragrance (particularly higher price point products like electronic diffusers)

• ▪ Strong growth in higher margin product categories

Growth driven by dusk Rewards and the introduction of the higher price point Diffusers and Consumables product category

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51
46
41
39
FY18 FY19 FY20 FY21
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INCREASED GROSS MARGIN[1]

• Managing frequency, duration and depth of promotional discounting remains a key strategy for management

• AUD appreciation provided tailwinds to GM$ in 2H, partially dampened by rising input costs, impact of FX hedging and rising freight costs

• ▪ Ongoing product innovation particularly in the growing Home Fragrance category

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68.2%
66.6%
65.1%
64.5%
$0.78
$0.75
$0.72
$0.67
¥5.0 ¥4.9 ¥4.7 ¥4.9
FY18 FY19 FY20 FY21
Gross Margin % AUD / USD AUD / RMB
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1. Reserve Bank of Australia historical Exchange Rates – Financial Period Averages

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Cost of Doing Business

Track record of improving operating leverage

COMMENTARY

PRO FORMA COST OF DOING BUSINESS (CODB) (% OF SALES)

• CODB% decreased, reflecting strong sales growth achieved and benefits of fixed cost leverage

• Employee costs set out opposite are

normalised to remove the net benefit of the JobKeeper wage subsidy received in FY20. In FY21 there was no net benefit as this amount was voluntarily repaid to the ATO

40.0%

• Occupancy cost ratio was positively impacted by the outcomes of lease renewals and the performance of

new stores

50.4%

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9.7%
40.3%
8.0%
15.6%
10.9%
25.1%
21.4%
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FY20 FY21 Employee Expenses Occupancy Costs Other Expenses Total CODB %

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Capital Management

OPERATING CASH FLOW

• Cash conversion of earnings since IPO has been strong

• Terms of trade with suppliers continue to be refined delivering superior outcomes

• Repayment of $2.8m of JobKeeper was booked in 2H

• Transaction costs, pre-IPO dividend and option buyback economically funded from pre-IPO cash reserves

• Post-IPO dividends reflects board confidence in cash flow and

STRONG BALANCE SHEET

• Inventory position clean and stock levels restored to ‘normal’ trading levels

• Stock turns and GMROI materially improved

• Net cash at year end of $21.4m

• Balance sheet provides flexibility to respond to growth opportunities

• Bank facilities also available to support liquidity

• balance sheet

CAPEX

• ‘Capital lite’ business model with measured pace of store roll out and ‘lite infrastructure’ approach to distribution

• We continue to see significant landlord contribution to new sites

• FY21 capex includes website replatforming of approximately

• $0.4m

• Ongoing opportunity to convert 35 legacy stores to the Glow format with attractive and proven ROI

DIVIDEND

• A fully franked final dividend of 10 cents per share has been declared with a record date of September 10 and payable date of September 24

• In declaring this dividend dusk has been mindful of the elevated uncertainty associated with the duration of current COVID-19 lockdowns in NSW, Victoria and ACT

• The dusk Board is cautious about the potential duration and breadth of these store closures and has declared a dividend mindful of these persistent uncertainties

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Generating Sustainable Future Growth

Targeting long-term growth by leveraging core competencies to grow market share

KEY DRIVER	COMMENTARY
PAY-TO-PLAY LOYALTY MODEL ▪688,000 active dusk Rewards members and growing (525,000 vs pcp) ▪$10 fee maintained for a 2 year membership period ▪Members contribution represent 60% of sales ▪Increased frequency and monetisation ▪Transaction history delivering insights into purchase intent and cross sell/upsell opportunities
OMNI-CHANNEL ▪Digital sales channel increased +27% in FY21 and is now 7.5% of sales ▪Further management expertise added ▪Replatformed website went live in August 2021 ▪First steps executed for customised communications ▪Opportunities for recurring revenue models from growing consumables to be tested ▪New platform is a key enabler to accelerating our omni-channel capabilities
EXPANDING STORE NETWORK ▪Management track record for disciplined store rollout ▪10 new stores opened in FY21 despite COVID-19 disruptions ▪All stores profitable with increased store contribution from rental negotiations ▪Targeting outer suburban and larger regional cities / towns ▪ROCE < 12 months through increased landlord contributions to new stores ▪Focus upon converting remaining 35 legacy stores to new Glow 2.0 format
DUSK PROPRIETARY PRODUCT ▪Creating innovative products designed to enhance our customers’ sensory experience ▪Differentiated product offer unique to dusk ▪Bringing ‘affordable’ products to market (current ATV of $51) ▪Increasing the growth of consumables to drive customer visitations

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Trading Update and Outlook

YTD TRADING UPDATE

For the first seven weeks of FY22:

• Extensive disruptions have resulted in ~35% of potential trading days lost due to COVID-19 related restrictions and store closures

• Total sales are down 28% versus pcp (-$4.4m in $ terms)

• Total LFL sales are down 11%, comprising stores down 17%, partly offset by online sales being up 26%

• We are currently cycling exceptionally strong trading in the FY21 pcp, where total LFL sales growth was +62%

▪ In open markets and channels (e.g. where stores are open or have re-opened, and our online channel), we continue to see strong customer conversion rates and elevated average transaction value – this tells us that our offer continues to appeal to our customers

• Our inventory position is well balanced, and we have ample liquidity to support our dividend and the inventory build ahead of Christmas

• We are managing our costs carefully in markets where stores are

closed

FY22 OUTLOOK

• While the duration of the current lockdowns is unknown, we expect it to ultimately represent a temporary disruption to our business

• Our FY20 and FY21 results demonstrate that when stores reopen after significant closure periods, sales ‘boom’, especially in periods where the importance of our customers homes as personal sanctuaries remains elevated, and spending on travel, experiences and services remains suppressed

• We have already committed to 7 new stores to open in FY22 – 6 in 1H and 1 more in 2H

• Due to seasonality, our 1H and FY22 earnings will be most determined by how we trade in November and December, and therefore the prevailing trading conditions at this time (not today)

• Our strategy and focus on strong execution and remaining nimble is unchanged

• Given the uncertainty that persists due to COVID-19, the Board does not have a reasonable basis to provide FY22 sales and

earnings guidance at this time

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Questions ?

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Appendix

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National Store Network

STORE NETWORK

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122
Stores
1
30
1
17
7
33
3
26
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Physical stores 4

Online store

▪ Opened 10 new stores in FY21 – 3 in QLD, 2 in WA, 2 in NSW, and 1 in VIC, SA and Tasmania

▪ Secured 7 new stores for FY22 – 2 in VIC, 2 in NSW, and 1 in QLD, WA and SA

NET STORE OPENINGS

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11
10 10
9
(1) (1)
(3) (3)
FY17 FY18 FY19 FY20 FY21
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Openings Closures

• COVID-19 has delayed scoping the NZ market opportunity

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Like for Like Sales Performance

duskhas delivered 17 consecutive quarters of LFL sales growth from Q4 FY17 to Q3 FY21

– QUARTERLY LFL SALES FY18 to FY21

FY18 FY19 FY20 FY21 12.7% 7.9% 17.5% 32.7%

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- Cycling +70.8%
70.8% - NSW Bondi cluster
64.8% emerging
- VIC snap lockdown
again
44.5%
43.2%
Average quarterly LFL sales
growth of 9.6% across 11
quarters (pre-COVID-19)
16.9%
13.1% 13.7%
10.9%
6.7% 8.6% 8.5% 6.8% 7.3% 8.6%
4.6%
“LFL” becomes less meaningful in periods where we cycle significant store closure periods
and ‘re-open boom’, especially where the periods are relatively short
-17.1%
Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21
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Pro Forma Profit and Loss

PRO FORMA[1] RESULTS

$M	FY20	FY21
Revenue	100.8	148.6
Cost of sales	(35.2)	(47.3)
Gross profit 65.6 101.3
Employee expenses	(25.3)	(31.7)
Occupancy expenses	(15.7)	(16.3)
Other expenses	(9.8)	(11.9)
Cost of doing business (CODB)	(50.8)	(59.9)
EBITDA	14.8	41.4
Depreciation (2.8) (2.8)
Amortisation	(0.1)	(0.1)
EBIT	11.8	38.4
Net finance expense	(0.1)	(0.1)
Profit before tax	11.8	38.3
Income tax expense	(3.5)	(11.6)
Net profit after tax	8.2	26.8

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1. Proforma results are unaudited and excludes IPO related costs, the net benefit of JobKeeper, rental concessions and is pre-AASB 16

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Pro Forma Adjustments

PRO FORMA ADJUSTMENTS TO THE STATUTORY RESULTS

$M FY20	FY21
Statutory EBITDA 30.7 48.6
Impact of AASB16 (12.6) (13.6)
Rental concessions received (1.0) (0.3)
Net JobKeeper benefit (2.3) -
Public company costs (0.7) -
IPO costs 0.7 6.6
Pro forma EBITDA 14.8 41.4
Statutory NPAT 9.5 21.9
Impact of AASB16 1.4 0.8
Rental concessions received (1.0) (0.3)
Net JobKeeper benefit (2.3) -
Public company costs (0.7) -
IPO costs 0.7 6.6
Total Pro forma adjustments (1.9) 7.1
Net tax effect adjustments of above at 30% 0.6 (2.1)
Pro forma NPAT 8.2 26.8

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Pro Forma Cash Flows

PRO FORMA[1] RESULTS

$M FY20	FY21
Pro forma EBITDA 14.8 41.4
Capex (4.4) (3.8)
Change in Inventory 3.4 (5.8)
Change in Trade Creditors 2.6 (2.5)
Change in Other Working Capital Items 0.3 4.8
Net Cashflow before financing and tax 16.7 34.1
Cashflow : EBITDA Conversion % 113% 82%

Comments:

• Capex remains reflective of capital lite approach

• Working capital normalised through FY21 as inventory and trade creditors adjusted as anticipated from an abnormally low position as at June 2020 as described in the Prospectus

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1. Proforma results are unaudited and excludes IPO related costs, the net benefit of JobKeeper, rental concessions and is pre-AASB 16

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Balance Sheet

BALANCE SHEET AS AT 27 JUNE 2021

$M	2020	2020	2021
Statutory Pro Forma1 Statutory
Current assets Cash 28.4 5.0 21.4 Trade and other receivables 2.9 2.9 0.7 Inventories 8.6 11.2 14.4 Right of return assets 0.3 0.3 0.4 Prepayments 0.7 0.7 1.0
Total current assets 40.9 20.1 37.9 Non-current assets Property, plant and equipment 8.2 8.2 9.2 Right of use assets 31.0 31.0 28.4 Intangibles 1.8 1.8 1.8 Deferred taxassets 4.2 6.4 7.2
Total non-current assets 45.2 47.4 46.6 Current liabilities Trade and other payables 16.7 14.3 8.7 Provisions 4.5 3.1 2.9 Employee benefit liabilities 0.9 0.9 1.2 Lease liabilities 10.2 10.2 13.2 Income taxpayable 3.0 3.0 6.1
Total current liabilities 35.3 31.4 32.0 Non-current liabilities Provisions 0.6 0.6 1.1 Employee benefit liabilities 0.3 0.3 0.4 Lease liability 24.8 24.8 20.7
Total non-current liabilities 25.7 25.7 22.2
Net assets 25.1 10.4 30.2

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1. As per page 72 of the Prospectus

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Disclaimer

This presentation has been prepared by Dusk Group Limited (‘dusk’). It is general information on dusk and its subsidiaries (‘dusk Group’) current as at 27 August 2021. It is in summary form and is not necessarily complete. It should be read together with the company’s consolidated financial statements lodged with the ASX on 27 August 2021. The information in this presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account your financial objectives, situation or needs. Investors should obtain their own professional advice in connection with any investment decision.

To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this presentation. Past performance is not indicative of future performance.

Forward looking statements

This presentation contains forward looking statements. These are based on dusk’s current expectations about future events and is subject to risks and uncertainties which may be beyond the control of the dusk Group. Actual events may differ materially from those contemplated in such forward looking statements. Forward looking statements are not representations about future performance and should not be relied upon as such. dusk does not undertake to update any forward-looking statement to reflect events or circumstances after the date of this presentation, subject to its regulatory and disclosure requirements.

Financial data

All figures in the presentation are in Australian dollars ($ or A$) unless stated otherwise. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation.

Financial Information

The pro forma financial information provided in this presentation is for illustrative purposes only and does not represent a forecast or expectation as to dusk’s future financial condition and/or performance.

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