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Half Year Profit $6.72 million

Half Year Profit $6.72 million

The directors of Briscoe Group Limited announce a net profit after tax (NPAT) of $6.72 million for the six months ending 31 July 2004. This compares to $9.86 million for the corresponding period a year ago, and is consistent with the guidance provided to the market on 6 August 2004. The half year results are unaudited.

The directors have declared a fully imputed interim dividend of 2.75 cents per share. Books will close to determine entitlements at 5pm on 20 September 2004 and payment will be made on 27 September 2004.

The earnings were generated on sales of $138.66 million, down 1.59% on the $140.90 million generated in the same period last year. Gross margin percentage rose from 31.34% to 33.20%, reflecting the previously-reported reduction in the frequency and depth of discount events, as well as operational improvements with regard to stock levels and product ranging.

The improvement in margin, on the lower sales levels, was not enough to offset the impact of higher operating costs resulting from the opening of nine new stores since the beginning of last year.

The Group NPAT result for the first half was $3.14M below that of last year. Of this shortfall $2.34M occurred in the first quarter to 30 April and $0.80M in the second quarter.
Group Managing Director, Rod Duke has reaffirmed his statement of 6 August 2004 that, “given that it is in the second half of the year that we generate approximately 60% of our sales and an even larger share of our annual profit, we continue to expect a satisfactory increase in sales for the full year and to recover most of the profit shortfall experienced in the first half of this year.”

In the period under review, sales at Briscoes Homeware decreased 6.01% from $98.43 million to $92.51 million and sales at Rebel Sport increased 8.65% from $42.47 million to $46.15 million.

On a same store basis, Briscoes Homeware sales decreased by 8.47%, while Rebel Sport sales decreased by 9.77%.

The relocation of the Briscoes Homeware stores in Rotorua and Hastings to new premises in April and June respectively, and a new store opening in the Coastlands Shopping Centre in Paraparaumu at the end of July, brought the number of Briscoes Homeware stores to 31 and increased total store area to 62,915 sq.m.

Rebel Sport store numbers increased by one to 18, with a new store opening in Rotorua in April, bringing total store area to 37,174 sq.m.

Rod Duke, Group Managing Director, said: “Opening nine new stores in just over a year, in a difficult trading environment, has had a negative impact on the bottom line in the short term. We expect, however, that this expansion programme will be very good for the Group’s future growth and success.”

The store opening programme has continued into the current year. Rebel Sport opened a new store in Whangarei at the end of August, and a new store in Riccarton, Christchurch is expected to open in November. Briscoes Homeware will relocate its Whangarei store to new premises in September, and will open new stores in Takanini and Riccarton by the end of November.

Since July 2003, the Group’s financial position has remained strong and at 31 July 2004 there was cash in the bank or on deposit of $33.3 million, and no borrowings.

Inventory levels at 31 July 2004 were $46.25 million, representing a decrease of $2.09 million on the same time last year. The decrease is a reflection of the significant operational focus on improved stock management during the past year, and was achieved despite the difficult trading conditions and the increase in the number of stores.

ENDS

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