HY to 29/07/2018 $29.34M ($28.58M) +2.7% Int Div 8.00cps

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NZBGRE0001S4
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RETAINED EARNINGS BRISCOE GROUP LIMITED
$0.0800
09 815 373709 815 373820092018
Briscoe Group Limited Ordinary Shares
EMAIL: announce@nzx.com
Notice of event affecting securities
Briscoe Group Limited
Geoffrey Peter ScowcroftDirectors Resolution

---

BRISCOE GROUP LIMITED
Results for announcement to the market
Reporting Period Half-Year 29 January 2018 to 29 July 2018
Previous Reporting Period Half-Year 30 January 2017 to 30 July 2017

Amount (000s) Percentage change
Sales revenue from
ordinary activities

$293,200

+4.3%
Profit from ordinary
activities after tax
attributable to shareholders


$29,342


+2.7%
Net Profit attributable to
shareholders.

$29,342

+2.7%

Interim Dividend Gross amount per share Imputed amount per share

8.00 cents 8.00 cents

Record Date 4 October 2018
Dividend Payment Date 11 October 2018

Audit The abridged financial statements attached to this report
have not been audited.

Comments: Refer to the section “Half Year Review” for commentary.
Earnings before interest and tax (EBIT) is a non-GAAP
measure.

Half Year Review

Highlights for the 26 week period ended 29 July 2018:
• Total sales $293.20 million, +4.31%
• Same store sales growth, +2.46%
• Gross profit $120.00 million, +5.21%
• Gross profit margin 40.93% vs 40.58% last year
• EBIT $40.62 million, +3.80%
• NPAT $29.34 million, +2.68%
• Interim Dividend 8.00 cps increase from 7.50 cps last year, +6.67%

The directors of Briscoe Group Limited (NZX/ASX code: BGP) announce a record net
profit after tax (NPAT) of $29.34 million for the half-year ended 29 July 2018. This
compares to last year’s $28.58 million half year result. The half-year results are
unaudited.

The directors have resolved to pay an interim dividend of 8.00 cents per share (cps).
This compares to last year’s interim dividend of 7.50 cps. Books will close to determine
entitlements at 5pm on 4 October 2018 and payment will be made on 11 October 2018.

The earnings were generated on sales revenue of $293.20 million compared to the
$281.08 million generated for the same period last year. On a same store basis the
Group’s sales for the half year ended 29 July 2018 were 2.46% ahead of the same
period last year.

Earnings before interest and tax (EBIT) of $40.62 million were generated for the six
months to 29 July 2018. This compares to $39.13 million for the same period last year
and represents an increase of 3.80%.

Gross margin dollars has increased 5.21% for the period with gross margin percentage
increasing from 40.58% to 40.93%.

The increase in gross margin percentage reflects improvements in stock-loss
measurements as a result of improved loss prevention initiatives as well as operational
strategies focused on optimising inventory availability in relation to online fulfilment
stores and promotional programmes.

In the period under review, homeware sales increased 4.58% from $178.53 million to
$186.70 million and sporting goods sales increased 3.85% from $102.55 million to
$106.50 million.

On a same store basis, homeware sales increased by 2.28%, while sporting goods sales
increased by 2.80%.

The recent introduction of accounting standard NZ IFRS 15: Revenue from contracts
with customers now means sales revenue reported by the Group will include delivery
fees charged to online customers for the delivery of products purchased directly online.
The corresponding cost incurred by the Group for delivery of product to customers will
be included in the total cost of goods sold. Previously these amounts were offset and the
net-cost shown as a store expense. The reclassification will have the effect of increasing
sales revenue and cost of goods sold, while decreasing gross profit and store expenses.

There is no impact on the Group’s reported net profit after tax. The table below shows
the effect of the reclassification on selected Group reported amounts for the first half of
both this year and last year.

1
st
Half 2018/19 1
st
Half 2017/18
Before
Reclassification
After
Reclassification
Before
Reclassification
After
Reclassification
Sales ($000) 292,237 293,200 280,257 281,080
Sales growth (%) 4.27% 4.31%
Same-store-sales growth % 2.42% 2.46%
Gross profit ($000) 121,101 120,004 114,992 114,058
Gross profit (%) 41.44% 40.93% 41.03% 40.58%
Store expenses ($000) 50,629 49,532 48,804 47,870
Earnings before interest and tax ($000) 40,615 40,615 39,129 39,129
Net profit after tax ($000) 29,342 29,342 28,576 28,576


Inventory levels have been well controlled and as at 29 July 2018 were $85.01 million,
only slightly higher than the $84.95 million at the same time last year. This total includes
the impact of three additional stores opened by the Group since July last year – the
Briscoes Homeware stores in Rangiora (September 2017) and Glenfield (December
2017), a Rebel Sport Store in Kerikeri (February 2018) and the closure of the Living &
Giving store at Riccarton in March 2018.

Rod Duke, Group Managing Director, said: “Despite the ongoing competitiveness of the
retail environment and increasing negative economic indicators testing consumer
confidence, overall we are satisfied with the record sales and profit achieved for the first
six months.

“We’re delighted to welcome Fiona Stewart to our senior executive team as GM
Marketing and Strategy. Fi has a strong marketing background and will definitely help us
to improve the way we focus on, and communicate with, our customers.

“We have progressed and completed a number of store projects during this first half.
February saw the opening of a new Rebel Sport store in Kerikeri. Situated alongside our
Briscoes Homeware store the new store was well received by the local community and
has performed well since opening.

“During this half we completed a full refurbishment of our Briscoes Homeware store in
Rotorua. This included online fulfilment capability which was also established at the
Rotorua Rebel Sport store and the Glenfield Briscoes Homeware store in Auckland.

“Work continued on some major Group owned property projects during the half.
Excellent progress is being made on the build to replace the Group’s Support functions
in Taylors Road, Auckland. The new offices and retail space are on track for the support
office to relocate by September 2019 before the temporary relocation of the existing
Briscoes Homeware store to allow for its complete rebuild.

“Resource Consent has been obtained for our project to establish Briscoes Homeware
and Rebel Sport stores at Silverdale, north of Auckland. A building consent has been
lodged and we are hopeful of being able to open for trade early in 2020.

“During the second half of the year the existing Briscoes Homeware store at Northlands
in Christchurch will relocate to the new North Link Retail Centre at Papanui where a new
Rebel Sport store will also open before Christmas 2018.

“A lease agreement has been signed to establish new Briscoes Homeware and Rebel
Sport stores on a site in Mt Roskill, Auckland. We anticipate these stores opening by the
end of 2019.

“During the six months we received a dividend of $1.71 million from our investment in
Kathmandu Holdings Limited. An additional tax expense has been incurred for this half
compared to last year as a result of this interim dividend not being fully imputed for New
Zealand shareholders.

As a result of our participation in the recent equity raising and the subsequent share
purchase plan, our investment in Kathmandu now represents a shareholding of 18.90%.
As the largest single shareholder we continue to note the significant improvement in
Kathmandu’s trading performance, in particular its most recent full year result.

“We remain focused on initiatives which we believe will continue to ensure we are the
first choice for homeware and sporting goods in New Zealand. Several examples of
these include; an innovative research project to help us better understand the rapidly
changing markets in which we operate and the customer behaviour within those
markets, continuing to build the knowledge base of our teams and ensuring we
continually offer a safe working environment for our staff and customers, and the
extended trial of the ‘Click and Collect’ initiative to ensure customers can shop with us
however they choose to.

“We continue to experience excellent growth through our online channels which are now
approaching 9% of total Group sales. Continuing to increase the number of fulfilment
stores has helped to improve online capacity and further additions are planned for later
in the year. We are excited with our initiative to replace our online platform this year and
we are progressing well to have this completed by the end of our financial year. This is a
major project for the business which will deliver improved online process, functionality
and customer experience as we look to maintain the impressive sales growth currently
being achieved.

“The economic outlook for the second half remains uncertain with flagging consumer
confidence, increased industrial action, record-high fuel costs, increased wage pressures
and a lower New Zealand dollar, all factors which will test retailers’ ability to maintain
margins. We are obviously addressing any additional costs as they arise, including any
employee entitlements and provisioning appropriately. Despite these challenges we are
confident that we have the right programmes in place to continue to maintain market
share and to deliver the quality products, service and shopping experience to ensure
improved bottom line profit and returns to shareholders.”

BRISCOE GROUP LIMITED
CONSOLIDATED INCOME STATEMENT
for the 26 week period ended 29 July 2018 (unaudited)


Period ended
29 July 2018
Period ended
30 July 2017
$000 $000
Sales revenue 293,200 281,080
Cost of goods sold (173,196) (167,022)
Gross profit
120,004 114,058
Other operating income
2,108 2,183
Store expenses (49,532) (47,870)
Administration expenses (31,965) (29,242)
Earnings before interest and tax 40,615 39,129

Finance income 419 245
Finance costs (67) (75)
Net finance income 352 170
Profit before income tax 40,967 39,299
Income tax expense (11,625) (10,723)
Net profit attributable to shareholders 29,342 28,576

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 26 week period ended 29 July 2018 (unaudited)


Period ended
29 July 2018
Period ended
30 July 2017
$000 $000
Net Profit attributable to shareholders 29,342 28,576

Other comprehensive income:
Change in value of investment in equity securities 37,266 14,836
Fair value (gain)/loss recycled to income statement (631) 452
Fair value gain/(loss) taken to the cashflow hedge reserve 4,421 (1,972)
Deferred tax on fair value gain/(loss) taken to income statement 177 (127)
Deferred tax on fair value (gain)/loss taken to cashflow hedge
reserve (1,238) 552
Total other comprehensive income 39,995 13,741
Total comprehensive income attributable to shareholders 69,337 42,317

BRISCOE GROUP LIMITED
CONSOLIDATED BALANCE SHEET
As at 29 July 2018 (unaudited)


29 July 2018 30 July 2017
$000 $000
ASSETS
Current assets
Cash and cash equivalents 46,230 35,701
Trade and other receivables 2,540 2,930
Inventories 85,005 84,946
Held-for-sale assets - 5,928
Derivative financial instruments 2,459 2
Total current assets 136,234 129,507

Non-current assets
Property, plant and equipment 88,598 74,572
Intangible assets 2,116 1,104
Deferred tax 3,045 3,502
Investment in equity securities 138,261 91,418
Total non-current assets 232,020 170,596
TOTAL ASSETS 368,254 300,103

LIABILITIES

Current liabilities
Trade and other payables 70,785 69,994
Taxation payable 3,253 2,034
Derivative financial instruments 6 2,579
Total current liabilities 74,044 74,607

Non-current liabilities
Trade and other payables 735 747
Total non-current liabilities 735 747
TOTAL LIABILITIES 74,779 75,354

Net assets 293,475 224,749

EQUITY

Share capital 57,429 53,942
Cashflow hedge reserve 1,814 (1,911)
Share options reserve 1,163 1,124
Other reserves 64,010 22,735
Retained earnings 169,059 148,859

TOTAL EQUITY 293,475 224,749

Net Tangible Assets per Security (cents) 131.77 101.68

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the 26 week period ended 29 July 2018 (unaudited)


Period ended
29 July 2018
Period ended
30 July 2017
$000 $000
OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 293,087 279,624
Rent received 401 401
Dividends received 1,707 1,604
Interest received 564 291
Insurance recovery - 178
295,759 282,098
Cash was applied to:
Payments to suppliers & employees (262,604) (250,628)
Interest paid (67) (50)
Net GST paid (9,062) (10,118)
Income tax paid (16,475) (15,035)
(288,208) (275,831)

Net cash inflows from operating activities 7,551 6,267

INVESTING ACTIVITIES
Cash was provided from:
Proceeds from sale of property, plant and equipment - 5
- 5
Cash was applied to:
Purchase of property, plant and equipment (8,348) (7,067)
Purchase of intangible assets (1,150) (472)
Investment in equity securities (5,568) -
(15,066) (7,539)

Net cash outflows from investing activities (15,066) (7,534)

FINANCING ACTIVITIES
Cash was provided from:
Issue of new shares 845 1,064
Net proceeds from borrowings - -
845 1,064
Cash was applied to:
Dividends paid (25,401) (24,152)
(25,401) (24,152)

Net cash outflows from financing activities (24,556) (23,088)

Net decrease in cash and cash equivalents (32,071) (24,355)
Cash and cash equivalents at beginning of period 78,193 60,066
Foreign cash balance cash flow hedge adjustment 108 (10)

CASH AND CASH EQUIVALENTS AT END OF PERIOD 46,230 35,701

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 26 week period ended 29 July 2018 (unaudited)

Share Cashflow Share Other Retained Total
Capital Hedge Options Reserves Earnings Equity



Reserve Reserve



$000 $000 $000 $000 $000 $000
Balance at 29 January 2017

52,756 (816) 957

7,899

144,357 205,153
Net profit attributable to shareholders for the period

- - - - 28,576

28,576
Other comprehensive income:


Change in fair value of investment in equity securities

- - - 14,836 - 14,836
Net fair value loss taken through cashflow hedge reserve

- (1,095) - - - (1,095)
Total comprehensive income for the period

- (1,095) - 14,836 28,576 42,317
Transactions with owners:


Dividends paid

- - - - (24,152) (24,152)
Share options charged to income statement

- - 367 - - 367
Share options exercised

1,186 - (122) - - 1,064
Transfer for share options lapsed and forfeited

- - (78) - 78 -
Balance at 30 July 2017

53,942

(1,911)

1,124

22,735
148,859 224,749
Net profit attributable to shareholders for the period

- - - - 32,749 32,749
Other comprehensive income:


Change in value of investment in equity securities

- - - 4,009 - 4,009
Net fair value gain taken through cashflow hedge reserve

- 996 - - - 996
Total comprehensive income for the period

- 996 - 4,009 32,749 37,754
Transactions with owners:


Dividends paid

- - - - (16,558) (16,558)
Share options charged to income statement

- - 265 - - 265
Share options exercised

2,525 - (307) - - 2,218
Transfer for share options lapsed and forfeited

- - (37) - 37 -
Balance at 28 January 2018

56,467 (915)

1,045

26,744 165,087 248,428
Net profit attributable to shareholders for the period

- - - - 29,342 29,342
Other comprehensive income:


Change in value of investment in equity securities

- - - 37,266 - 37,266
Net fair value gain taken through cashflow hedge reserve

- 2,729 - - - 2,729
Total comprehensive income for the period

- 2,729 - 37,266 29,342 69,337
Transactions with owners:


Dividends paid

- - - - (25,401) (25,401)
Share options charged to income statement

- - 266 - - 266
Share options exercised

962 - (117) - - 845
Transfer for share options lapsed and forfeited

- - (31) - 31 -
Balance at 29 July 2018

57,429 1,814 1,163 64,010 169,059 293,475

Earnings per Security (EPS)

Calculation of basic and fully diluted EPS in accordance with IAS 33: Earnings Per Share


Current half-year
(cents per share)
Previous corresponding
half-year (cents per share)
Basic EPS 13.28 13.00
Diluted EPS 13.08 12.73

Dividends Paid / Payable

Date Paid / To be paid
Cents per share (fully
imputed)
Final Dividend for the period ended
28 January 2018
29 March 2018 11.50
Interim Dividend for the period ended
27 January 2019
11 October 2018 8.00

Segment Information




For the period ended
29 July 2018

Homeware

$000


Sporting goods

$000

Eliminations /
Unallocated
$000


Total Group

$000

Sales Revenue


186,701

106,499

293,200


Earnings Before Interest
and tax



23,694

14,330

2,591

40,615





For the period ended
30 July 2017

Homeware

$000


Sporting Goods

$000


Eliminations /
Unallocated
$000


Total Group

$000


Sales Revenue


178,526

102,554

281,080


Earnings Before Interest
and tax


22,399

14,008

2,722

39,129