Half Year Results Announcement

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Ex Date:
Commence Quoting Rights:Security Code:
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1 October, 20198 October 2019
$$0.005903$0.033056
$
NZD$0.015000
$18,875,058
Date Payable
8 October, 2019
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NZBGRE0001S4
In dollars and cents
RETAINED EARNINGS BRISCOE GROUP LIMITED
$0.0850
09 815 373709 815 373817092019
Briscoe Group Limited Ordinary Shares
EMAIL: announce@nzx.com
Notice of event affecting securities
Briscoe Group Limited
Geoffrey Peter ScowcroftDirectors Resolution

---

Results for announcement to the market
Name of issuer BRISCOE GROUP LIMITED
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
Revenue from continuing operations $302,984 3.3%
Total Revenue $302,984 3.3%
Net profit/(loss) from continuing
operations
$ 28,272* -3.6%
Total net profit/(loss) $ 28,272* -3.6%
Interim Dividend
Amount per Quoted Equity Security $ 0.085
Imputed amount per Quoted Equity
Security
$ 0.085
Record Date 1 October 2019
Dividend Payment Date 8 October 2019
Current period Prior comparable period
Net tangible assets per Quoted Equity
Security
$ 1.0932 $1.3177
A brief explanation of any of the figures
above necessary to enable the figures
to be understood
* $28,272 above represents NPAT after the impact of the new
NZ IFRS 16 accounting standard.
Refer tables below for further detail in relation to the impacts of
NZ IFRS 16 on income statement and balance sheet.
Refer to the section below “Half Year Review” for commentary.
Earnings before interest and tax (EBIT) is a non-GAAP measure.
For reporting period commencing 28 January 2019 the Group has
elected to apply the modified retrospective transition method. Under
this method the Group has not restated comparatives therefore
reclassifications and adjustments are recognised in the opening
balance sheet.
Authority for this announcement
Name of person

authorised to make this
announcement
Geoff Scowcroft
Contact person for this announcement Rod Duke
Contact phone number + 64 9 815 3737
Contact email address rod.duke@briscoegroup.co.nz
Date of release through MAP

17/09/2019

Unaudited abridged financial statements accompany this announcement.

Half Year Review

Highlights for the 26 week period ended 28 July 2019:
• Total sales $302.98 million, +3.34%
• Same store sales growth, +2.74%
• Gross profit $122.88 million, +2.40%
• Gross profit margin 40.56% vs 40.93% last year
• NPAT before impact of NZ IFRS 16, $29.41 million, +0.22%
• NPAT including impact of NZ IFRS 16, $28.27 million
• 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 below 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

TABLE 1: INCOME STATEMENT – IMPACTS OF NZ IFRS 16
HALF YEAR JULY 2019

HY JULY
2018

VARIANCE
ACTUAL

ACTUAL

July 2019 vs July 2018

Previous
classification Adjustments under NZ IFRS 16
NZ IFRS 16
classification



Previous
classification
NZ IFRS 16
classification

Back out
rental
expense
Include
lease
amortisation
Include
lease
finance cost




$000 $000 $000 $000 $000

$000

$000 $000
Sales revenue

302,984

- -

-

302,984


293,200


9,784

9,784
Cost of goods sold

(180,102)

- -

-

(180,102)


(173,196)


(6,906)

(6,906)
Gross profit

122,882

- -

-

122,882


120,004


2,878

2,878
Other income

1,790

- -

-

1,790


2,108


(318)

(318)
Store expenses

(51,927)

13,985

(8,589)

-

(46,531)


(49,532)


(2,395)

3,001
Administration expenses

(32,133)

625

(306)

-

(31,814)


(31,965)


(168)

151
Earnings before interest and tax

40,612

14,610

(8,895)

-

46,327


40,615


(3)

5,712
Finance income

477

- -

-

477


419


58

58
Finance costs

(67)

- -

(7,293)

(7,360)


(67)

-

(7,293)
Net finance income / (costs)

410

- -

(7,293)

(6,883)


352


58

(7,235)
Profit before income tax

41,022

14,610

(8,895)

(7,293)

39,444


40,967


55

(1,523)
Income tax expense

(11,614)

(4,091)

2,491

2,042

(11,172)


(11,625)


11

453
Net profit attributable to
shareholders

29,408

10,519

(6,404)

(5,251)

28,272


29,342


66

(1,070)

TABLE 2: BALANCE SHEET - IMPACTS OF NZ IFRS 16

HALF YEAR JULY 2019

Previous
classification

NZ IFRS 16
classification

Difference
$000

$000

$000
ASSETS




Current assets




Cash and cash equivalents 55,529

55,529

-
Trade and other receivables 2,659

2,659

-
Inventories 88,827

88,827

-
Held-for-sale assets 5,521

5,521

-
Derivative financial instruments 924

924

-
Total current assets 153,460

153,460

-
Non-current assets




Property, plant and equipment 94,763

94,763

-
Intangible assets 2,634

2,634

-
Right-of-use assets -

211,426

211,426
Deferred tax 3,112

11,770

8,658
Investment in equity securities 90,467

90,467

-
Total non-current assets 190,976

411,060

220,084
TOTAL ASSETS 344,436

564,520

220,084
LIABILITIES




Current liabilities




Trade and other payables 74,737

73,488

(1,249)
Lease liabilities -

14,988

14,988
Taxation payable 2,398

2,398

-
Derivative financial instruments 192

192

-
Total current liabilities 77,327

91,066

13,739
Non-current liabilities




Trade and other payables 808

808

-
Lease liabilities -

227,360

227,360
Total non-current liabilities 808

228,168

227,360
TOTAL LIABILITIES 78,135

319,234

241,099
NET ASSETS 266,301

245,286

(21,015)
EQUITY




Share capital 60,074

60,074

-
Cashflow hedge reserve 538

538

-
Equity-based remuneration reserve 994

994

-
Other reserves 16,216

16,216

-
Retained earnings 188,479

167,464

(21,015)
TOTAL EQUITY 266,301 245,286 (21,015)

BRISCOE GROUP LIMITED
CONSOLIDATED INCOME STATEMENT
for the 26 week period ended 28 July 2019 (unaudited)


Period ended
28 July 2019
Period ended
29 July 2018
$000 $000
Sales revenue 302,984 293,200
Cost of goods sold (180,102) (173,196)
Gross profit
122,882 120,004
Other income
1,790 2,108
Store expenses (46,531) (49,532)
Administration expenses (31,814) (31,965)
Earnings before interest and tax 46,327 40,615

Finance income 477 419
Finance costs (7,360) (67)
Net finance income (6,883) 352

Profit before income tax 39,444 40,967
Income tax expense (11,172) (11,625)
Net profit attributable to shareholders 28,272 29,342

Comparative figures in the above consolidated income statement have not been restated to reflect the impact of NZ IFRS 16

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 26 week period ended 28 July 2019 (unaudited)


Period ended
28 July 2019
Period ended
29 July 2018
$000 $000
Net Profit attributable to shareholders 28,272 29,342
Other comprehensive income:
Items that will not be subsequently reclassified to profit or loss:
Change in value of investment in equity securities (11,522) 37,266
Items that may be subsequently reclassified to profit or loss:
Fair value gain recycled to income statement (1,025) (631)
Fair value gain taken to the cashflow hedge reserve 1,439 4,421
Deferred tax on fair value gain taken to income statement 287 177
Deferred tax on fair value gain taken to cashflow hedge reserve (403) (1,238)
Total other comprehensive income (11,224) 39,995
Total comprehensive income attributable to shareholders 17,048 69,337


Comparative figures in the above consolidated statement of comprehensive income have not been restated to reflect the impact of
NZ IFRS 16

BRISCOE GROUP LIMITED
CONSOLIDATED BALANCE SHEET
As at 28 July 2019 (unaudited)


28 July 2019 29 July 2018
$000 $000
ASSETS
Current assets
Cash and cash equivalents 55,529 46,230
Trade and other receivables 2,659 2,540
Inventories 88,827 85,005
Held-for-sale assets 5,521 -
Derivative financial instruments 924 2,459
Total current assets 153,460 136,234

Non-current assets
Property, plant and equipment 94,763 88,598
Intangible assets 2,634 2,116
Right-of-use assets 211,426 -
Deferred tax 11,770 3,045
Investment in equity securities 90,467 138,261
Total non-current assets 411,060 232,020
TOTAL ASSETS 564,520 368,254

LIABILITIES

Current liabilities

Trade and other payables 73,488 70,785
Lease liabilities 14,988 -
Taxation payable 2,398 3,253
Derivative financial instruments 192 6
Total current liabilities 91,066 74,044

Non-current liabilities
Trade and other payables 808 735
Lease liabilities 227,360 -
Total non-current liabilities 228,168 735
TOTAL LIABILITIES 319,234 74,779

Net assets 245,286 293,475

EQUITY
Share capital 60,074 57,429
Cashflow hedge reserve 538 1,814
Equity-based remuneration reserve 994 1,163
Other reserves 16,216 64,010
Retained earnings 167,464 169,059

TOTAL EQUITY 245,286 293,475

Net Tangible Assets per Security (cents) 109.32 131.77

Comparative figures in the above consolidated balance sheet have not been restated to reflect the impact of NZ IFRS 16

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the 26 week period ended 28 July 2019 (unaudited)


Period ended
28 July 2019
Period ended
29 July 2018
$000 $000
OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 302,633 293,087
Rent received 6 401
Dividends received 1,707 1,707
Interest received 483 564
Insurance recovery 77 -
304,906 295,759
Cash was applied to:
Payments to suppliers & employees (254,641) (262,604)
Interest paid (7,361) (67)
Net GST paid (7,893) (9,062)
Income tax paid (15,896) (16,475)
(285,791) (288,208)

Net cash inflows from operating activities 19,115 7,551

INVESTING ACTIVITIES
Cash was provided from:
Proceeds from sale of property, plant and equipment - -
- -
Cash was applied to:
Purchase of property, plant and equipment (11,174) (8,348)
Purchase of intangible assets (489) (1,150)
Investment in equity securities - (5,568)
(11,663) (15,066)

Net cash outflows from investing activities (11,663) (15,066)

FINANCING ACTIVITIES
Cash was provided from:
Issue of new shares 1,017 845
Net proceeds from borrowings - -
1,017 845
Cash was applied to:
Dividends paid (26,613) (25,401)
Lease liabilities payments (7,132) -
(33,745) (25,401)

Net cash outflows from financing activities (32,728) (24,556)

Net decrease in cash and cash equivalents (25,276) (32,071)
Cash and cash equivalents at beginning of period 80,777 78,193
Foreign cash balance cash flow hedge adjustment 28 108

CASH AND CASH EQUIVALENTS AT END OF PERIOD 55,529 46,230



Comparative figures in the above consolidated statement of cash flows have not been restated to reflect the impact of NZ IFRS 16

BRISCOE GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 26 week period ended 28 July 2019 (unaudited)

Share Cashflow Equity-Based Other Retained Total
Capital Hedge Remuneration Reserves Earnings Equity



Reserve Reserve



$000 $000 $000 $000 $000 $000
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 fair 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
Net profit attributable to shareholders for the period

- - - - 34,051 34,051
Other comprehensive income:


Change in value of investment in equity securities

- - - (36,272) - (36,272)
Net fair value loss taken through cashflow hedge reserve

- (1,574) - - - (1,574)
Total comprehensive income for the period

- (1,574) - (36,272) 34,051 (3,795)
Transactions with owners:


Dividends paid

- - - - (17,689) (17,689)
Share options charged to income statement

- - 217 - - 217
Share options exercised

1,500 - (167) - - 1,333
Transfer for share options lapsed and forfeited

- - (116) - 116 -
Balance at 27 January 2019

58,929 240 1,097 27,738 185,537 273,541
Impact of adopting NZ IFRS 16

- - - - (19,930) (19,930)
Adjusted balance at 28 January 2019

58,929 240 1,097 27,738 165,607 253,611
Net profit attributable to shareholders for the period

- - - - 28,272 28,272
Other comprehensive income:


Change in value of investment in equity securities

- - - (11,522) - (11,522)
Net fair value gain taken through cashflow hedge reserve

- 298 - - - 298
Total comprehensive income for the period

- 298 - (11,522) 28,272 17,048
Transactions with owners:


Dividends paid

- - - - (26,613) (26,613)
Share options charged to income statement

- - 168 - - 168
Performance rights charged to income statement

- - 43 - - 43
Share options exercised

1,145 - (128) - - 1,017
Transfer for share options lapsed and forfeited

- - (198) - 198 -
Deferred tax on equity-based remuneration

- - 12 - - 12
Balance at 28 July 2019

60,074 538 994 16,216 167,464 245,286


Prior year figures in the above consolidated statement of changes in equity have not been restated to reflect the impact of
NZ IFRS 16

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 12.74 13.28
Diluted EPS 12.63 13.08

Dividends Paid / Payable

Date Paid / To be paid Cents per share (fully
imputed)
Final Dividend for the period ended
27 January 2019
29 March 2019 12.00
Interim Dividend for the period ended
26 January 2020
8 October 2019 8.50

Segment Information




For the period ended
28 July 2019

Homeware

$000


Sporting goods

$000

Eliminations /
Unallocated
$000


Total Group

$000

Sales Revenue


191,503

111,481

302,984


Earnings Before Interest
and tax



26,228

17,432

2,667

46,327





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

Comparative figures in the above segment information have not been restated to reflect the impact of NZ IFRS 16