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Bendon Half Year To 30 September 2000


Bendon Group Limited

Preliminary Announcement

Half Year To 30 September 2000

A 38% increase in the EBIT result for its core Bendon intimate apparel business is the significant feature in the interim result of Bendon Group Limited announced by the Directors today.

Despite difficult retail conditions for the apparel industry, Bendon raised its EBIT result from $1.179 million to $1.633 million for the six months to 30 September 2000.

The Bendon result, together with non-recurring items associated with the disposal of the New Zealand China Clays business and the re-organisation of the Group saw Bendon Group Limited post an overall surplus after tax of $21.899m (last year $1.642m).

A summary of the Group's result is outlined below:

NZ$ NZ$ NZ$
Millions Millions Millions
6 months 6 months 12 months
Sep 2000 Sep 1999 Mar 2000
Continuing Business - Apparel
Operating earnings from continuing activities
(EBIT) b/f non-recurring items and taxation 1.633 1.179 6.213
_____________________________________________________________________

Plus: non-recurring:
- Continuing Operations - Apparel - - (9.009)
- Discontinued Operations
- Minerals 1.682 1.894 4.074
- Corporate - (0.902) (0.713)
- Sale of Minerals Division 28.351 - (1.119)
- Provision for Re-organisation (9.000) - (0.338)
____________________________________________________________________

Total non-recurring 21.033 0.992 (7.105)
____________________________________________________________________

Surplus/(Deficit) Before Taxation 22.666 2.171 (0.892)

Less: - Interest Costs 0.007 0.164 0.259
- Taxation Charge 0.760 0.365 0.280
____________________________________________________________________

Net Surplus/(Deficit) for the Period After Taxation 21.899 1.642 (1.431)
_____________________________________________________________________
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The Directors note that $7.1m of the $9.0m provided for the re-organisation of the Group relates to taxation on prior years' earnings and the figures released to the Stock Exchange and ultimately to shareholders in the full interim results package will show this $7.1m as a tax expense rather than in "non-recurring discontinued".


BENDON

Bendon's result of $1.633 million before interest and tax was achieved on steady revenues. The focus for the business has been on retaining quality turnover and maintaining market share in the Company's target markets. The deflationary business environment in Australia and New Zealand has demanded continuing innovation in both product range and customer relationships.

The Bennett & Bain stores in New Zealand have helped to maintain market share while contributing to profit and the relaunch of the Fayreform brand under Bendon ownership will see that brand make a significant contribution to second half sales.

Continuing emphasis on containment of costs and the strategy of sourcing product from offshore at the best possible price, consistent with Bendon’s quality standards, has enabled Bendon to maintain margins and to generate a better bottom line result.

Overseas sourcing and tight inventory control has enabled stock levels to be reduced - $19.708 million at 30 September 2000 compared to $23.319 million at same time last year.


UK VENTURE

As announced at the special meeting of shareholders on 1 June 2000 Bendon has identified the United Kingdom market as being the next target for its intimate apparel range. Directors are pleased to confirm that considerable work has been done in this area. While it is premature to announce full details at this point, Directors note that discussions for partnership arrangements in the United Kingdom are close to being finalised. Further announcements in respect of this important strategy will be made early in the New Year.


SALE OF NEW ZEALAND CHINA CLAYS

After approval from shareholders, the business of New Zealand China Clays was sold on 1 July 2000. Trading for the three months to 30 June produced an EBIT result of $1.682 million (1999 $1.894 million for 6 months) and the net profit on sale of the business was $28.351 million.


NAME CHANGE

Following the shareholders' Special Meeting on Thursday 1 June 2000 the name of the company was changed from Ceramco Corporation Ltd to Bendon Group Ltd. The name change better reflects the focus of the company going forward.
3

RESTRUCTURING OF BENDON GROUP LTD

As previously announced, Directors will rationalise the structure of Bendon Group Limited to create a situation whereby the operating company Bendon is the sole remaining company in the Group. Work continues on this process and Directors envisage details of the final re-organisation process may be announced in May/June 2001, some months earlier than previously communicated to shareholders. In the interim, as detailed to shareholders previously, a non-recurring re-organisation provision of $9.0 million has been set aside to cover the costs of crystallising certain liabilities (such as tax on prior earnings of overseas subsidiaries) which would not otherwise be incurred by an ongoing business. All costs and income for the period which were previously associated with the Corporate Office have been absorbed within the provision, the balance of which stands at $8.6 million as at 30 September 2000.


BALANCE SHEET

Shareholders' funds totalled $52.153 million ($46.964 million at 31 March 2000) representing an equity ratio of 70.7% (79.6%) on total assets of $73.796 million ($58.955 million).

Consequent to the sale of the business of New Zealand China Clays the company cancelled 1 in every 4 shares held by shareholders resulting in 10,275,644 shares being cancelled and $16.338m paid to shareholders.

During the period 693,000 options to acquire shares in the company were exercised, resulting in the issued capital being 30,861,165 shares as at 30 September 2000.

An agreement to sell the East Tamaki property has been signed post 30 September and it is anticipated that there will be no significant profit or loss effect on the Company resulting from the sale.


DIVIDEND

While the overall profit for the six months shows an after tax return of $21.899 million, the ability of Directors to pay a large tax efficient dividend is limited. Reasons for this were communicated to shareholders when the restructuring was announced. Directors do note however that the current policy of Bendon Group is to pay dividends equating to 75% of normalised tax paid profits subject to the capital requirements of the Group.

After reviewing the results of the Bendon operation for the six months to 30 September 2000 and management projections for the next six months, and taking into account the strong equity ratio and imputation credits arising from the re-organisation process, Directors have resolved to pay an interim dividend of 5.0 cents per share fully imputed. The total cost of the dividend will be $1.543 million and will be paid on 20 December 2000 to shareholders on the register at the close of business on 15 December 2000. A supplementary dividend of 0.8824 cents will be paid to non-resident shareholders.
4


NEW DIRECTOR

The Board appointed Mr Trevor Kerr as a Director on the 5 September 2000. Mr Kerr works in the merchant banking area and has a background associated with the apparel industry.


OUTLOOK

Trading in the six months to 30 September 2000 reflect the benefits of sourcing the intimate lingerie range from offshore and the result for the period shows good improvement over previous years.

While Directors would like to see this improvement continuing, the economic uncertainties of the past months in the Australasian markets and in particular, the failure of the Australian market to recover post the introduction of GST, together with the weakness in the USD:NZD cross rate will create pressures for the business.

Bendon continues to maintain its hard won market shares in both Australia and New Zealand and the fundamentals of the business in terms of sourcing and expense containment are sound. However sales in October and November have not been up to expectation. After carefully reviewing the market place Directors do not see an early turnaround for this trend.

For the reasons indicated above Directors are forecasting that the earnings for the second half of the year will be similar to last year.

Notwithstanding the softening of the profit projections, Bendon will continue to focus on generating profitable, quality growth, both within its existing markets and new markets, through its ability to ensure the continued supply of exciting, innovative intimate apparel ranges at market sensitive prices.

On behalf of the Board of Directors

I M Parton
CHAIRMAN

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