Half Year Results Announcement

BRISCOE GROUP LIMITED Results for announcement to the market Reporting Period: Half-Year 28 January 2019 to 28 July 2019 Previous Reporting Period: Half-Year 29 January 2018 to 29 July 2018 Currency: New Zealand Dollars Amount (000s); Percentage change Total revenue $302,984 +3.3% Net profit $28,272 -3.6% Interim Dividend Amount per share: 8.50 cents Imputed amount per share: 8.50 cents Record date: 1 October 2019 Payment date: 8 October 2019 Net tangible assets per share Current period: 109.32 cents Prior comparable period: 131.77 cents Half Year Review Highlights for the 26 week period ended 28 July 2019: o Total sales $302.98 million, +3.34% o Same store sales growth, +2.74% o Gross profit $122.88 million, +2.40% o Gross profit margin 40.56% vs 40.93% last year o NPAT before impact of NZ IFRS 16, $29.41 million, +0.22% o NPAT including impact of NZ IFRS 16, $28.27 million o Interim Dividend 8.50 cps increase from 8.00 cps last year, +6.25% The directors of Briscoe Group Limited (NZX/ASX code: BGP) announce a net profit after tax (NPAT) before the impact of NZ IFRS 16 of $29.41 million for the half-year ended 28 July 2019 compared to $29.34 million achieved for last year's first half. The half-year results are unaudited. Rod Duke, Group Managing Director, said: "Overall we are pleased with the Group's performance for this first six months. To achieve a profit (before the impact of NZIFRS 16) in line with last year despite the ongoing competitiveness of the retail environment, the impact on winter-dependent categories with the late start to the colder months, and continued cost pressures, is a very satisfactory start to this financial year." "We've seen a gradual improvement in trading through this first half with the slight decline in profit reported for the first quarter more than compensated for during the second quarter. We are also very pleased with trading in August producing strong increases over the previous year for both homewares and sporting goods. Reported NPAT will be $28.27 million and includes a $1.14 million impact from the introduction of NZ IFRS 16, the new accounting standard in relation to the treatment of leases. Due to its January balance date, Briscoe Group is one of the first companies to adopt the new leasing standard which will significantly impact all businesses with sizable portfolios of leased properties. It is important to note that the impact of NZ IFRS 16 has no cash effect to the Group and is for financial reporting purposes only. See tables attached for more detail in relation to the impacts of the new standard. The directors have resolved to pay an interim dividend of 8.50 cents per share (cps). This compares to last year's interim dividend of 8.00 cps. Books will close to determine entitlements at 5pm on 1 October 2019 and payment will be made on 8 October 2019. The earnings were generated on sales revenue of $302.98 million compared to the $293.20 million generated for the same period last year. On a same-store basis the Group's sales for the half year ended 28 July 2019 were 2.74% ahead of the same period last year. Gross margin dollars has increased 2.40% for the period with gross margin percentage decreasing from 40.93% to 40.56%. The decrease in gross margin percentage reflects the continued intensity of competition across the retailing environment. Trading patterns for seasonal product, particularly in homewares, were impacted by the very late start to winter. As a result, the successful winter clearance programme which closed out trading for the first half, boosted sales but did come at the expense of gross profit percentage. In the period under review, homeware sales increased 2.57% from $186.70 million to $191.50 million and sporting goods sales increased 4.68% from $106.50 million to $111.48 million. On a same store basis, homeware sales increased by 2.72%, while sporting goods sales increased by 2.76%. Inventory levels as at 28 July 2019 were $88.83 million, up from $85.01 million at the same time last year, predominantly reflecting increased stock holdings to satisfy the new Rebel Sport store operating at Papanui in Christchurch, as well as the new Rebel Sport store in Newmarket, Auckland which opened at the end of August. "Rod Duke said: "We were delighted to welcome Andrew Scott to our senior executive team in July as Chief Operating Officer. His former roles include Head of Merchandise Planning & Supply Chain for Big W in Australia and Chief Executive Officer of Torpedo7. Andrew brings a set of skills and experience that we can already see will both complement and enhance the knowledge and capabilities that exist in the business. "We have progressed a number of projects during this first half. Following earthquake strengthening works at the Briscoes Homeware and Rebel Sport stores in New Plymouth both these stores have undergone full refurbishments. We have added an online fulfilment facility to our Briscoes Homeware and Rebel Sport stores in Whangarei as well as to our Rebel Sport store in Hamilton. "Significant progress was made in the construction of the Group's new Support Office in Taylors Road, Auckland with the full support team relocated by the end of August. It's a brilliant space and wonderful to have the full support team together in one location. "Our projects programme continues at pace into the second half of the year with the opening of a new Rebel Sport store in Newmarket, Auckland as part of the exciting new Westfield retail redevelopment. This store reflects a contemporary fit-out and design, parts of which we will look to replicate in future new and refurbished Rebel Sport stores. In September we will relocate the existing Briscoes Homeware store in Taylors Road, Auckland, to retail space on the ground floor of the new Support Office building to allow for a complete rebuild on the existing site. "October will see progress to a number of projects. The relocation of the existing Briscoes Homeware store at Riccarton, in Christchurch to a new site on Riccarton Road which will also include a fulfilment facility, the opening of new Briscoes Homeware and Rebel Sport stores - including online fulfilment centres, in Mt Roskill, Auckland, and an extension and full refurbishment of the Briscoes Homeware store in Tauranga. "During the six months we received a dividend of $1.71 million from our investment in Kathmandu Holdings Limited. We are comfortable with our position as that company's largest shareholder and note its continued improvement in operating performance. "We continue to experience strong growth through our online channels which are now approaching 11% of total Group sales. Continuing to increase the number of fulfilment stores has helped to improve online capacity with further additions planned for later in the year. During August we launched our new web platform which will make it easier for customers to shop online with us. We have also commenced the roll out of our 'Click and Collect' offering to a selection of non-fulfilment trading stores. "The economic outlook for the second half remains uncertain with subdued consumer and business confidence, increased wage and other cost pressures and a lower New Zealand dollar, all of which will make it difficult for retailers to maintain margins. We are confident that we have the right programmes in place to ensure that we continue to be the first choice for homeware and sporting goods in New Zealand across our store network and online." Tuesday 17 September 2019 Contact for enquiries: Rod Duke Group Managing Director Tel: + 64 9 815 3737 End CA:00341070 For:BGP Type:HALFYR Time:2019-09-17 11:02:00