Briscoe Group Full Year Profit for Year Ending

31 January 2005

Briscoe Group Full Year Profit for Year Ending

The directors of Briscoe Group Limited announced today an audited net profit after tax (NPAT) of $18.73 million for the year ending 31 January 2005.

The result exceeds the market guidance given on 17 December and follows a satisfactory end to the financial year.

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, brings the total dividend for the year to 7.00 cps. This is the same rate as paid for the 2003-04 year.

The final dividend will be paid on 6 May 2005. The share register will close to determine entitlements to the dividend at 5 pm on 15 April 2005.

The earnings were generated on operating revenue of $320.58 million, up 1.0% on the $317.34 million reported in the previous year.

The Group’s gross profit increased 5.65% from $100.53 million to $106.22 million for the year, equating to a gross profit margin of 33.4% compared to 31.9% for the 2003-04 year.

Earnings before interest and taxation (EBIT) declined 21.2% from $34.68 million for 2003-04 to $27.34 million for the 2004-05 year.

While operating revenue and gross profit were ahead of last year’s results, the Group’s sales increase of only 0.92% was not sufficient to cover increases in operating costs, including those associated with the opening of six new stores.

Group Managing Director, Rod Duke, said “The 2004-05 year proved to be difficult for the Group. The change in strategy employed early last year in relation to the number of, and depth of discounting for sale events, has continued to be ‘fine-tuned’ throughout the year and competition particularly within the homewares market, has remained intense. Deflationary pressures have also impacted our ability to grow sales at a satisfactory level.

“Even so, we had some great successes during the year. Store inventory is down by an average of $170,000 per store, gross profit margin has increased to a level which we believe is both at our desired level and sustainable moving forward and achieved in a period in which we opened six new stores across the Group.

“The increase in gross profit margin was due to a combination of factors including, a decrease in the number of sale events and the depth of discounting used in those events, optimising stock on hand in stores and greatly improved shrinkage results through increased focus on loss prevention initiatives. We have also benefited from the increased strength of the New Zealand currency.”

The opening of Briscoes Homeware stores in Coastlands, Takanini and Riccarton increased the total floor space of Briscoes Homeware by 14.6% to 68,693 sq.m. Rebel Sport’s floor space increased by 15.7% to 40,985 sq.m. with the opening of three new stores in Rotorua, Whangarei, and Riccarton.

On a same-store basis, Briscoes Homeware sales declined 4.8% while Rebel Sport declined by 10.6%.

The Group made capital investments totaling $10.91 million in the construction of the new Briscoes Homeware store in Hastings, the fit-out of the three new and four relocated Briscoes Homeware stores and the three new Rebel Sport stores, and the upgrade and refurbishment of selected existing stores. In July 2004 the Group sold its Nelson property on which the Rebel Sport store is located and entered into a long term lease of the premises.

The operational focus on stock reduced inventories by $2.98 million to $47.35 million at year-end, despite the opening of the six news stores.

Cash and bank balances as at 31 January 2005 were $45.34 million, up from $33.65 million at 31 January 2004.

Net cash inflows from operating activities were $31.69 million, $6.29 million ahead of last year’s $25.40 million.

Net cash outflows from investing activities were $2.12 million below that of the previous year, largely as a result of the sale of the Nelson property.

The results are for the period from 1 February 2004 to 31 January 2005.

Rod Duke said, “We are positive about the 2005-06 year and looking forward to the Group performing significantly better than for 2004-05. Early indications are that like-for-like sales have started the financial year positively. Stock levels and gross margins are in the best shape they have been for some time, and there is considerable operational and marketing focus this year to drive like-for-like sales back to acceptable levels.”

ENDS

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