Briscoe Group Full Year Profit

Friday 19th March 2004

Briscoe Group Full Year Profit for Year Ending 31 January 2004

The directors of Briscoe Group Limited are pleased to announce an audited net profit after tax (NPAT) of $23.62 million for the year ending 31 January 2004. The result is marginally ahead of the $23.56 million achieved for the previous year.

The result is also ahead of the revised profit estimate included in the directors’ advice to the market on 4th February, when they advised of an expected profit decline of approximately 4% for the year. The earlier advice was based on unduly conservative estimates of year end provisions.

The directors have resolved to pay a final dividend of 4.25 cents per share (cps). The dividend is fully imputed, and when added to the interim payment of 2.75 cps gives a total dividend for the year of 7.00 cps. This is consistent with Briscoe Group’s policy of paying at least 60% of the Group’s tax paid earnings as dividend.

The final dividend will be paid on 7 May 2004. The share register will close to determine entitlements to the dividend at 5 pm on 16 April 2004.

The earnings were generated on operating revenue of $317.34 million, up 6.6% on the $297.63 million reported in the previous year.

The Group’s gross profit increased 8.2% from $92.87 million to $100.53 million for the year, equating to a gross profit margin of 31.9% compared to 31.4% for the 2003 year.

Earnings before interest and taxation (EBIT) rose 4.1% from $33.33 million in 2003 to $34.68 million in the 2004 year.

While operating revenue, gross profit and EBIT were all ahead of last year’s results, NPAT did not achieve equivalent gains because of the impact of lower interest income for 2003-04 and the provisioning of a $0.45 million taxation expense in respect of the amortisation of the final Rebel Sport franchise fee payment.

Group gross profit margin increased over last year. Contributing factors to this achievement included increased focus in stock management, additional investment in the area of loss prevention as well as the increasing strength of the NZ currency.

The opening of Briscoes Homeware stores in Lower Hutt and Cambridge increased the total floor space of Briscoes Homeware by 6.3% to 59,922 sq.m. Rebel Sport’s floor space increased by 38.0% to 35,417 sq.m with the opening of five new stores in Nelson, Hastings, Lower Hutt, Porirua and Tauranga.

The results are for the period from 1 February 2003 to 31 January 2004. Because of a move to calendar month-end reporting from the beginning of the 2002-03 year, the 2003-04 year comprised four fewer trading days than for the previous year. Adjusting for these four days and on a same store basis, the Group’s sales growth was 3.4%.

On a same-store, same days basis, Briscoes Homeware achieved sales growth of 6.2% whilst Rebel Sport declined by 2.9%.

During the year $11.36 million of capital investment was made in the construction of Rebel Sport stores in Nelson and Hastings, the fit-out of the two new Briscoes Homeware stores and the five new Rebel Sport stores, and the upgrade and refurbishment of selected existing stores. In April 2003 the Group sold its Invercargill property on which the Rebel Sport store is located and entered into a long term lease of the premises.

Inventories totalled $50.33 million at year-end, being a $3.73 million increase on last year. This reflects the opening of seven new stores and the opening, in August 2003, of a dedicated warehousing facility in Manukau City. Additional focus was placed on controlling stock during the 2003-04 financial year in terms of tighter category management.

Cash and bank balances as at 31 January 2004 were $33.65 million, up from $31.98 million at 31 January 2003. Net cash inflows from operating activities were $25.40 million, being significantly ahead of last year’s $9.52 million. This reflects increased operating revenue, improved inventory management and the impact last year of one-off creditor payments as a result of changing to calendar month-end closing dates from the beginning of the 2002-03 year. Net cash outflows from investing activities were $8.74 million below that of the previous year, largely as a result of the sale of the Invercargill property and reduced expenditure on strategic properties during the year ending 31 January 2004.

New store openings planned during the current 2004-05 year are three Rebel Sport stores, in Rotorua, Whangarei and Riccarton, and a Briscoes Homeware store in Riccarton. This will bring the store numbers to 20 for Rebel Sport and 31 for Briscoes Homeware. The Group also intends to relocate existing Briscoes Homeware stores in Hastings, Rotorua, Whangarei and Tauranga to new sites in these areas, during the year.

ENDS

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