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Owens Group Statement To Nz Stock Exchange

Owens Group Statement To Nz Stock Exchange

Owens Group Limited (Owens) advises that it has reviewed its 2002 / 03 financial statements in light of the audit qualification regarding the deferred tax asset for Australian subsidiaries carried on its balance sheet. The board has now decided to write off that asset in accordance with the audit opinion.

In taking this action, Owens wishes to explain why it did not do this previously. Owens points out that it planned to report its result for the 2002 / 03 year after a board meeting on Monday 26 May. Only on Friday 23 May did its auditors advise that they felt there was not virtual certainty over utilisation of the deferred tax asset relating to the Australian subsidiaries of the group. A submission regarding the future operations of those Australian subsidiaries was made to the auditors and the board passed a resolution that the Company has virtual certainty over utilisation of the deferred tax asset. The auditors advised that they wished to further consider this matter.

On Wednesday 28 May Owens signed the agreement for the sale of Hirepool and Mainfreight also announced the purchase of 10.1% of the shares in Owens. In those circumstances the board felt that there was no alternative but for it to announce, in conjunction with the sale of Hirepool, the year’s result so as the market could be informed, in the interests of all shareholders and in case Mainfreight was intending to take its acquisition of shares in Owens further. The board wished the market to be fully informed.

As a result, Owens requested the auditors to provide final sign off of its accounts. Owens was notified by the auditors that their audit opinion would be qualified on the basis that the auditors needed further time to be able to finally review the company’s submissions regarding the deferred tax asset and the virtual certainty of its future utilisation. As this is a technical issue the board decided that it was more important, in the light of the continuous disclosure regime now prevailing, to ensure that the market was informed given that a significant acquisition of shares had been made.

Having further considered the auditors’ qualification the board has decided that it is pragmatic to accept that situation, even though it believes there is virtual certainty over use of the tax asset by the Australian subsidiaries, so the Company’s 2002 / 03 financial statements can be filed without qualification. Owens has accordingly made a write-off of the $3.4 million tax asset. That means that it has shown a loss of $636,000 for the year rather than the $2.8 million profit previously announced. The write-off of the tax asset also has an effect on the statement of financial position of the company. However, as of now that position can be considered very conservative due to the already announced profit of $17 million from the sale of Hirepool (subject to shareholder approval), which is an event which took place after balance date and will therefore not be shown until the next reported financial statements. The cash flow position of the Company is not affected by the write-off of the tax asset.

The final dividend of 2.00 cents per share payable on 30 July 2003 announced by the Company on 28 May is also unaffected by the changes noted above to the Company’s 2002 / 03 financial statements.

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