Briscoe Group Limited Annual Report 2010

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FY2010 Annual Report · Briscoe Group Limited

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Annual Report
for the period ended 31 January 2010

Contents

Key Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chairman’s Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Managing Director’s Review of Operations . . . . . . . . . . . . . . . . . . . 4

Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . 8

Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 13

Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

General Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Top 20 Holder List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Key Facts

Trading Results

Audited

Audited
period ending period ending
25 January
2009
$000

31 January
2010
$000

Audited
period ended
27 January
2008
$000

period ended

Audited

Audited
year ended
28 January 31 January
2006
$000

2007
$000

Sales Revenue

416,686

388,467

407,750

372,078

343,511

Gross profit margin

Earnings before interest and tax (EBIT)

Net profit after tax (NPAT)

Net cash flows from operating activities

39.9%

30,118

21,026

14,910

38 .6%

15,113

11,634

28,099

Financial Position and Statistics

Shareholders' funds

Total assets

127,621

173,707

121,550

177,184

EBIT per share

NPAT per share

Operating cashflow per share

Current ratio

14.2c

9.9c

7.0c

2.8:1

Shareholders' funds to total assets

73.5%

7 .1c

5 .5c

13 .2c

2 .3:1

68 .6%

Store Numbers

Homeware

Sporting Goods

Briscoe Group

Total Store Area (m2)

Homeware

Sporting Goods

40 .4%

31,774

22,441

22,672

117,979

180,389

15 .0c

10 .6c

10 .7c

2 .0:1

65 .4%

40 .8%

36,252

26,048

45,802

112,062

172,391

17 .1c

12 .3c

21 .6c

2 .0:1

65 .0%

40 .2%

34,579

24,772

29,331

103,207

142,128

16 .3c

11 .7c

13 .8c

2 .7:1

72 .6%

94,852

53,714

94,602

53,714

92,214

53,812

87,249

47,948

77,058

42,116

Briscoe Group

148,566

148,316

146,026

135,197

119,174

Chairman's Review

We are pleased to present the Directors’ Reports on the

we have a strong foundation in place from which the

financial and operational performance of Briscoe Group

Group can develop and prosper .

Limited for the 53 week period ended 31 January 2010 .

The Group remains in a strong financial position to

The 2009-10 year was one of substantial growth for the

weather the ongoing volatile economic environment .

Group, despite a continuation of the very challenging

Indeed with no debt and a strong cash balance it

and competitive retail environment that had adversely

continues to be favorably positioned to take advantage

affected retailers so severely the year before .

of investment opportunities should they present as well

Central to the strong recovery we have achieved

as maximising organic growth opportunities that we

were several significant structural, strategic and cost-

believe would improve shareholder wealth .

reduction initiatives we took leading into and during the

The Board is keen to pursue further growth initiatives for

recession, as well as huge commitment and much hard

the homewares and sporting goods operations, and to

work to deliver results .

extend the Group’s reach into new geographical areas .

The major restructuring of operational and

Opportunities for further expansion through acquisition

merchandising activities provided key managers with

or store rollout will continue to be evaluated on the

greater ownership of and accountability for their areas

basis of their potential to add value to Briscoe Group

of responsibility, and they responded with substantial

and its shareholders .

improvements in operating performance . The profit

centre structure for stores is enabling more flexibility

Financial performance

in the allocation of resources across brands and the

Sales revenue was $416 .69 million, compared with

“profit-sharing” arrangements that we put in place

$388 .47 million previously . On a same-store basis, sales

have certainly been a win-win for the high performing

increased for the year by 4 .7 percent .

managers as well as for the Group and its shareholders .

Gross profit increased 10 .9 percent, from $150 .09

Our investment in new technology in 2008 and 2009,

million to $166 .46 million, equating to a gross profit

has contributed to the success with increased ability

margin of 39 .9 percent compared with 38 .6 percent for

to control inventories and refine product ranges .

the previous year . Net profit after tax (NPAT) was $21 .03

Complementing these has been the streamlining of

million, 80 .7 percent higher than the $11 .63 million

our marketing operations and a drive to improve the

earned in the previous year .

shopping experience for customers .

The results were for the 53 week period from 26 January

Notwithstanding numerous changes we have made

2009 to 31 January 2010 .

to Living & Giving, these stores continued to struggle

Inventories were $63 .35 million at 31 January 2010, a

under the pressure of continued low levels of

$5 .89 million increase on the previous year-end total,

discretionary spending . Eight Living & Giving stores and

reflecting the realignment of inventory levels for the

the brand as a whole failed to reach the standards we

increased consumer demand experienced during the

had set to justify their book values, and consequently

second half of 2009-10 as stronger sales trends for the

we made an impairment adjustment for the year of

Group emerged .

$1 .86 million .

Net cash inflows from operating activities were $14 .91

While we are proud of what has been achieved,

million, $13 .19 million below the previous year,

your directors and senior management are far from

primarily as a result of increased payments made in

complacent . There is still much to do, but we believe

relation to GST and to suppliers, arising from the later

financial year-end date .

the Group . The holders have until 16 October 2010 to

Net cash outflows from investing activities were $6 .68

exercise them . Disclosures will continue to be made in

million reflecting investment made during the year, primarily

relation to the share options issued by the Group as and

in relation to property purchased in Palmerston North .

when options are exercised or lapse .

Dividend

Further details of the Executive Share Options Plan

can be found in Note 21 (page 43) of the financial

The directors have resolved to pay a final dividend of

statements contained within this Annual Report .

5 .00 cents per share (cps), fully imputed . When added

to the interim dividend of 2 .00 cps, this brings the total

Community Sponsorship

dividend for the year to 7 .00cps, representing 71% of

At Briscoe Group we continue to be aware of the need

the Group’s tax paid earnings . During the last four years

to be a responsible and socially aware employer . We

the Group has paid out 72% of tax paid earnings .

have continued our support of Cure Kids as our charity

The directors approved a final dividend payment date of

of choice as we continue to believe it is a cause that

31 March 2010, earlier than in previous years, to take

best fits our values .

advantage of the ability to impute the final dividend at

During the year Alaister Wall, Deputy Managing

33% rather than the reduced 30% rate that will apply

Director of Briscoe Group was appointed to the

for any dividends paid after 31 March 2010 . The share

Board of Cure Kids, reinforcing our commitment to

this incredible charity as it strives to find cures for every

at 5 pm on 24 March 2010 .

disease affecting kiwi children (and their families) and

improve their quality of life along the way .

Executive Share Option Plan

In addition to our alignment with Cure Kids we support

The Board is of the view that all shareholders benefit

a wide variety of local community based charities,

from the issue to key senior executives of long-term,

sports clubs and other initiatives by donating product

appropriately-priced share options that crystallise only

to support fundraising efforts .

on delivery of increased shareholder value . In 2003 the

Group established an Executive Share Option Plan to

Directors, Management and Staff

issue options to selected senior executives and, subject

In addition to participating in formal monthly Board

to shareholder approval, to Executive Directors . The

meetings throughout the year, the directors attended

Board intends to issue up to a further 1,505,000 options

other meetings of directors and regular meetings of the

in the current 2010-11 financial year . This will result in

Board’s Audit and Human Resources Committees .

the total number of share options issued under the scheme

On behalf of my fellow directors, I wish to acknowledge

since its inception and still exercisable being equivalent

the enormous contributions of all managers, profit

to 3 .1% percent of the current issued share capital .

partners and other employees to the Group’s

The first three tranches of options, issued in 2003, 2004

performance during the year . Their contributions are

and 2005, have now lapsed with no options being

sincerely appreciated .

exercised . The fourth tranche became exercisable at

a price of $1 .48 each from 16 October 2009 . Of the

1,090,000 options issued in that tranche, 1,020,000

are still exercisable as the holders remain employed by

Rosanne Meo, CHAIRMAN

Managing Director's Review of Operations

Introduction
During the 2009-10 financial year, Briscoe Group

Ultimately these improvements have resulted in higher

sales and margin .

continued to drive benefits from improved cost and

For members of the merchandise team the opportunity

inventory management initiatives put in place during the

to share in incremental gross profit dollars generated

second half of the 2008-09 financial year .

has resulted in much clearer focus on range reviews,

Against a tough economic background it was more

product availability, sell through and final margins .

important than ever to tailor product ranges and

The merchandise team and the store profit partners have

promotional offers in all retail brands to provide our

the common goal of creating incremental profit and

customers with value for money . To achieve this goal

through the ‘Buying Steering Committee’ process the

every promotion was scrutinised to ensure that the offers

most passionate and experienced store operators have

presented to potential customers showcased excellent

met with the merchandise team throughout the year

deals as clearly as possible .

with the sole purpose of improving the product ranges

By better utilising the data available through our SAP

on offer to our customers .

merchandise system improvements to starting margins

The quality of communication between operations and

were made in many categories . The benefit of a stronger

merchandise has improved throughout the year and

New Zealand dollar also helped to boost margins on

improvements driven by the Buying Steering Committees

imported products . While much of this margin was

are seen as a key method to continue to improve

re-invested to enable more aggressive promotions, an

performance during the coming year .

improvement in margin performance year on year was

For the senior management team the change has helped

still achieved against a tough trading background .

By controlling costs and enhancing margins while

to create a much clearer focus on the elimination of non-

productive costs and the optimisation of every dollar spent .

growing sales through aggressive promotion the Group

The senior executive group directly affects the performance

has produced a significantly better profit result than the

of every function and the way they have driven and

previous year .

supported the team throughout the year has been a

A key contributor to the improved performance has

major contributor to the Group’s improved performance .

been the positive way management in stores and

The amount and quality of analysis that happens on

support office have accepted and responded to the profit

a day to day basis has increased in every area of our

centre structure implemented at the start of the year .

business, resulting in better visibility of issues and

The opportunity for management to create and share

opportunities .

incremental profit has changed the way managers view

As part of the half year result we reported that our

their areas of responsibility .

marketing team had been significantly reduced . We

For the ‘Senior Profit Partners’ responsible for the store

are pleased to report that this change has continued

profit centres this change has driven true ownership of

to produce positive results . By necessity, the senior

sales, margin and costs within their areas of control .

managers involved in the marketing process stay

We have been encouraged by improved sales driven

clearly focused on getting the best result from every

by initiatives taken to share best practice across stores .

promotional event . The cooperation between marketing,

By making better use of the best experts across all

stores in a profit centre improvements in costs and

merchandise and operations ensures that all promotions

are supported by the stores and the merchandise team to

operational standards have been achieved . Better use of

deliver optimum results .

all resources has resulted in improved customer service,

Our business is promotionally focused and under this

better product presentation and product availability .

structure every promotion is evaluated to ensure we

are getting the biggest ‘bang’ for the money invested to

The performance of the distribution centre continued to

promote the business .

improve enabling a smoother flow of significantly higher

All of the initiatives outlined in last year’s report and

volumes of directly imported product into stores . We are

those mentioned in the half year report will continue to

confident of being able to make further improvements in

improve our business in this financial year and beyond .

the coming year .

The clear and common focus on creating incremental

No new Briscoes Homeware stores were opened during

EBIT has aligned the goals of the entire management

the year as we concentrated on getting the best from our

team at Briscoe Group . Our people are empowered to

existing locations .

make decisions and are comfortable taking ownership of

The tough market conditions continued to make trading

the outcomes .

Homeware
Improved value for money and aggressive promotions

difficult for our specialty homeware stores, Urban Loft

and Living & Giving . As part of the reported first half

result an impairment adjustment of $0 .83 million was

made for under-performing assets associated with these

offering our customers outstanding deals were our drive

stores, and we have included in the full year result a

throughout the year for Briscoes Homeware .

further impairment adjustment of $1 .03 million .

All of our competitors continued to discount and

During the year we incorporated the Living & Giving

promote heavily and it was important for Briscoes

product range into the Urban Loft site at Britomart

Homeware to retain or grow market share . Management

(Downtown Auckland) . This allowed us to regularly promote

believe this goal has been achieved .

the Britomart site through the Living & Giving promotional

Successful promotions are central to the success of

programme and helped to improve performance at this site

Briscoes Homeware and the team has worked hard

while allowing us to significantly reduce marketing costs .

to refresh the promotional programme to ensure

We will continue to focus our energies on reducing

that promotions stand out in a crowded market . By

costs wherever possible while continuing to experiment

constantly reviewing the creative treatments and by

with product range and promotions to drive specialty

maximising the use of Tammy (the ‘face’ of Briscoes)

store sales .

successful promotional events have been created to

which customers have responded enthusiastically .

The merchandise team continued to review their ranges

Sporting goods
This has been a year of recovery for Rebel Sport .

every quarter with non-performing product marked

Our goal for the year was to source better merchandise

down and cleared quickly from stores .

ranges while improving the in-store availability of the

By continuing to improve the quality and quantity of the

most popular size and colour options for customers .

merchandise imported directly by the Group, we were

The SAP merchandise system has been invaluable in

able to present customers with better quality products at

supporting the achievement of this goal .

better prices while retaining or enhancing margins .

By using automated replenishment to order stock on a

weekly basis for stores we have consistently achieved

performance in all areas .

improved availability of top selling product . Regular

In addition to the initiatives already in place we will

range reviews have forced slow moving product out of

invest resource to more accurately challenge the use

store ranges .

of retail store space . To do this, the Group has recently

The promotional programme for Rebel Sport has been

purchased leading edge software, which will enable us

refreshed to try to enhance the market positioning and

to create better plans to optimise the space allocations,

presence of the Rebel Sport brand . Our continued

layouts and product adjacencies within stores . This

sponsorship of the Rebel Sport Super 14 along with

initiative will initially focus on Briscoes Homeware

the use of high profile sports people like Sebastian

stores but will quickly flow into Rebel Sport and Living

Chabal and David Tua have helped to keep Rebel Sport’s

& Giving . By undertaking this work we aim to improve

awareness high in the minds of our target market .

returns per square metre . Profit partners will use this

People and Performance
This has been a year of change for most of the managers

information to quickly make changes to the physical

layout of the stores within their profit centres to improve

the shopping experience for customers .

in stores and support functions and we are delighted

The Group’s store opening / refurbishment programme

with the way they have positively responded to the

for 2010-11 will see a step up from last year’s rather

challenges we have set them . Having tasted success

subdued level as the storm of economic downturn was

we are confident they will continue to relish new

weathered . By the end of this year the existing Briscoes

challenges in the years ahead .

Homeware and Rebel Sport stores at Palmerston

Through the store profit centre structure there is now a

North will be relocated to our newly purchased site

smaller number of our most experienced retailers with

and full refurbishments are planned for Rebel Sport

responsibility for our stores . Their support structure of

stores at Botany and Wellington City as well as for

‘Junior Profit Partners’ and ‘Department Managers’ provides

Briscoes Homeware stores at Botany and Salisbury

an excellent training ground to develop future leaders .

Street, Christchurch . We will also continue to look for

The formal training programmes available support this

opportunities in the main centres to establish large

profit centre structure and help to build entrepreneurial

format Briscoes Homeware stores, to build on the

expertise .

successes we are achieving at Panmure .

Our focus remains on improving returns to our shareholders .

Priorities and outlook for 2010-11
The economic indicators are still difficult to read and

The changes we have made to the business over the last

year have started to deliver positive results and many of

we are cautious about the year ahead but hopeful that

the people responsible for driving these changes have

conditions will start to improve .

started to reap the financial rewards that accompany

With an uncertain economic outlook it remains

this success .

important that the Group continues to focus on

We believe that our profit centre structure will continue

maximising the return from every resource employed

to drive benefits for the business throughout the coming

within the business . Our goal remains to offer customers

years .

excellent value for money across the best ranges of

quality branded products that we can source .

We believe that the structure now in place and the

strong relationships maintained with our supply partners

Rod Duke

give us a solid base to continue to analyse and improve

GROUP MANAGING DIRECTOR

Financial Statements

The Board of Directors is pleased to present the Financial Statements for Briscoe Group Limited for the 53 week period

ended 31 January 2010 . The Financial Statements presented are signed for, and on behalf of, the Board, and were

authorised for issue on the date below .

Rosanne Meo

CHAIRMAN

Rod Duke

GROUP MANAGING DIRECTOR

9 March 2010

Income Statements

For the 53 week period ended 31 January 2010

Group

Parent

Period ended
31 January 2010
$000

Notes

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Sales revenue
Cost of goods sold

Gross profit

Other operating income
Store expenses
Administration expenses

Operating profit
Net finance income

Profit before income tax
Income tax expense

416,686
(250,227)

388,467
(238,380)

166,459

150,087

116
(86,805)
(49,652)

30,118
1,187

31,305
(10,279)

121
(84,188)
(50,907)

15,113
1,644

16,757
(5,123)

– –
– –

– –

23,200

– –
(10,484)

12,716
945

13,661
(702)

5
6

Net profit attributable to shareholders

21,026

11,634

12,959

Period ended
25 January 2009
$000

22,689

(10,018)

12,671
1,466

14,137
(827)

13,310

Earnings per share for profit attributable
to shareholders:
Basic earnings per share (cents)
Diluted earnings per share (cents)

7
7

9.9
9.7

5 .5
5 .4

6.1
6.0

6 .3
6 .2

The above income statements should be read in conjunction with the accompanying notes.

Statements of Comprehensive Income

For the 53 week period ended 31 January 2010

Group

Period ended
31 January
2010
$000

Period ended
25 January
2009
$000

Parent
Period ended Period ended
25 January
2009
$000

31 January
2010
$000

Notes

Net Profit attributable to shareholders

21,026

11,634

12,959

13,310

Other comprehensive income:

Fair value loss/(gain) recycled to income statement

Fair value (loss)/gain taken to the cashflow hedge reserve

Deferred tax on fair value hedge taken to income statement

Deferred tax on fair value transfers to cashflow hedge reserve

1,454

(6,515)

(436)

1,954

(1,337)

6,143

397

(1,843)

Total other comprehensive income

(3,543)

3,360

–

– –

Total comprehensive income attributable to shareholders

17,483

14,994

12,959

13,310

The above statements of comprehensive income should be read in conjunction with the accompanying notes.

Statements of Changes in Equity

For the 53 week period ended 31 January 2010

Group

Notes

capital

Share Cashflow
hedge
reserve
$000

$000

Share
options
reserve
$000

Retained
earnings

Total
equity

$000

Balance at 27 January 2008

40,625

(99)

440

77,013

117,979

Net profit attributable to shareholders
Other comprehensive income:
Fair value loss/(gain) recycled to income statement
Fair value (loss)/gain taken to the cashflow hedge reserve
Deferred tax on fair value hedge taken to income statement
14
Deferred tax on fair value transfers to cashflow hedge reserve 14

Total comprehensive income for the period
Dividends paid
Share options charged to income statement
Transfer for share options lapsed and forfeited

Balance at 25 January 2009

Net profit attributable to shareholders
Other comprehensive income:
Fair value loss/(gain) recycled to income statement
Fair value (loss)/gain taken to the cash hedge reserve
Deferred tax on fair value hedge taken to income statement
Deferred tax on fair value transfers to hedge reserve

Total comprehensive income for the period
Dividends paid
Share options charged to income statement
Transfer for share options lapsed and forfeited

20
21
21

14
14

20
21
21

–

–
–
–
–

–

(1,337)
6,143
397
(1,843)

3,360
–
–
–

–

–
–
–
–

–

1,454
(6,515)
(436)
1,954

(3,543)
–
–
–

–
–
245
(199)

11,634
(11,668)
–
199

–

–
–
–
–

–

–
–
–
–

11,634

–
–
–
–

(1,337)
6,143
397
(1,843)

14,994
(11,668)
245
–

1,454
(6,515)
(436)
1,954

17,483
(11,668)
256
–

–
–
256
(162)

21,026
(11,668)
–
162

40,625

3,261

486

77,178

121,550

21,026

Balance at 31 January 2010

40,625

(282)

580

86,698

127,621

Parent

Notes

capital

Share Cashflow
hedge
reserve
$000

$000

options
reserve
$000

Share Retained
earnings

Total
equity

$000

Balance at 27 January 2008

40,625

Net profit attributable to shareholders

Total comprehensive income for the period
Dividends paid
Share options charged to income statement
Transfer for share options lapsed and forfeited

Balance at 25 January 2009

Net profit attributable to shareholders

Total comprehensive income for the period
Dividends paid
Share options charged to income statement
Transfer for share options lapsed and forfeited

–

–
–
–
–

40,625

–

–
–
–
–

20
21
21

Balance at 31 January 2010

40,625

–

–
–
–
–

–

–
–
–
–

–

440

6,357

47,422

–

13,310

–
–
245
(199)

13,310
(11,668)
–
199

13,310
(11,668)
245
–

486

8,198

49,309

–

12,959

–
–
256
(162)

12,959
(11,668)
–
162

12,959
(11,668)
256
–

580

9,651

50,856

The above statements of changes in equity should be read in conjunction with the accompanying notes.

Balance Sheets

As at 31 January 2010

Group

Parent

31 January 2010
$000

25 January 2009 31 January 2010
$000

$000

25 January 2009
$000

Notes

EQUITY
Share capital
Cashflow hedge reserve
Share options reserve
Retained earnings

19
3(c),8
21

40,625
(282)
580
86,698

40,625
3,261
486
77,178

40,625

– –

580
9,651

40,625

486
8,198

TOTAL EQUITY

127,621

121,550

50,856

49,309

LIABILITIES
Non-current liabilities
Employee benefits

Total non-current liabilities

Current liabilities
Trade and other payables
Provisions
Employee benefits
Due to related parties
Taxation payable
Derivative financial instruments

Total current liabilities

TOTAL LIABILITIES

15
16
17
22
14
3(c)

461

33,230
53
7,716
–
3,873
753

45,625

46,086

427

50,426
49
3,937
–
795
–

55,207

55,634

957

– –

1,782
–
13

– –

2,752

2,825

992

716
373
258

2,339

2,405

TOTAL EQUITY AND LIABILITIES

173,707

177,184

53,681

51,714

ASSETS
Non-current assets
Investments in subsidiaries
Property, plant and equipment
Intangible assets
Deferred tax

Total non current assets

Current assets
Cash and cash equivalents
Trade and other receivables
Due from related parties
Inventories
Derivative financial instruments

Total current assets

TOTAL ASSETS

11
12
13
14

8
9
22
10
3(c)

–
44,096
1,412
2,691

48,199

59,250
2,310
–
63,353
595

–
46,330
2,797
381

49,508

63,291
2,629
–
57,460
4,296

125,508

127,676

173,707

177,184

2,783

– –
–
183

2,966

37,669
629
12,417
–
–

50,715

53,681

2,783

–
186

2,969

48,227
518
–
–
–

48,745

51,714

The above balance sheets should be read in conjunction with the accompanying notes.

Statements of Cash Flows

For the 53 week period ended 31 January 2010

OPERATING ACTIVITIES
Cash was provided from
Receipts from customers
Rent received
Dividends received
Interest received
Management fees received
Net GST received

Cash was applied to
Payments to suppliers
Payments to employees
Interest paid
Net GST paid
Income tax paid

Group

Parent

Period ended

31 January 2010 25 January 2009 31 January 2010 25 January 2009

Notes

$000

417,099
111

5 5

1,251
–
–

389,191
116

1,711
–
–

418,466

391,023

(338,936)
(43,617)
(5)
(13,006)
(7,992)

(306,344)
(45,486)
(7)
(8,933)
(2,154)

– –
– –

11,668
1,005
11,455
318

24,446

(3,475)
(5,697)
(5)
– –
(944)

11,668
1,530
10,907
407

24,512

(3,613)
(5,812)
(7)

(387)

(403,556)

(362,924)

(10,121)

(9,819)

Net cash inflows from operating activities

14,910

28,099

14,325

14,693

INVESTMENT ACTIVITIES
Cash was provided from
Proceeds from sale of property, plant and equipment

Cash was applied to
Purchase of property, plant and equipment
Purchase of intangible assets

12
13

Net cash (outflows) from investment activities

FINANCING ACTIVITIES
Cash was provided from
Repayment of advances from subsidiaries

(6,358)
(335)

(6,693)

(6,677)

–

(2,372)
(579)

(2,951)

(2,900)

–

– –

– –
–

–

Cash was applied to
Advances to subsidiaries
Dividends paid

–
(11,668)

(13,215)
(11,668)

–

7,725

–
(11,668)

(11,668)

(24,883)

(11,668)

Net cash (outflows) from financing activities

(11,668)

(24,883)

(3,943)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Foreign cash balance cash flow hedge adjustment

(3,435)
63,291
(606)

Cash and cash equivalents at period end

59,250

13,531
49,361
399

63,291

(10,558)
48,227

– –

10,750
37,477

37,669

48,227

Statements of Cash Flows continued

For the 53 week period ended 31 January 2010

Group

Parent

Period ended
31 January 2010
$000

RECONCILIATION OF NET CASH FLOWS FROM
OPERATING ACTIVITIES TO REPORTED NET PROFIT

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009

$000

Reported net profit attributable to shareholders

21,026

11,634

12,959

13,310

Items not involving cash flows

Depreciation and amortisation expense
Adjustment for fixed increase leases
Asset impairment adjustment
Bad debts written off and movement in doubtful debts
Amortisation of executive share options cost
Loss on disposal of assets

Impact of changes in working capital items

Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Increase (decrease) in taxation payable
Increase (decrease) in trade payables
Increase (decrease) in other payables and accruals

8,435
187
1,857
28
256
3

10,766

291
(5,893)
3,078
(14,523)
165

(16,882)

14,910

8,975
187
–
33
245
55

9,495

1,198
10,366
2,854
(6,087)
(1,361)

6,970

28,099

– –
–
–
– –

256
–

256

(111)
– –
(245)
(228)
1,694

1,110

14,325

–
–

245
–

245

186

508
(5)
449

1,138

14,693

The above statements of cash flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

1. Summary of significant accounting policies

These consolidated financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting

Practice (NZ GAAP) . They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) . The

financial statements also comply with International Financial Reporting Standards (IFRS) .

(a) Basis of preparation of financial statements

The principal accounting policies adopted in the preparation of the financial report are set out below . These policies have been

consistently applied to all the periods presented, unless otherwise stated .

Entities reporting

Briscoe Group Limited (‘Company’ or ‘Parent’) and its subsidiaries together are referred to in these financial statements as

the Group or the consolidated entity . The Company and its subsidiaries are designated as profit-oriented entities for financial

reporting purposes .

The financial statements of the Parent are for the Company as a separate legal entity .

Reporting period

These financial statements are in respect of the 53 week period 26 January 2009 to 31 January 2010 and provide balance

sheets as at 31 January 2010 . The comparative period is in respect of the 52 week period 28 January 2008 to 25 January 2009 .

Statutory base

Briscoe Group Limited is a company incorporated and domiciled in New Zealand, registered under the Companies Act 1993

and is an issuer in terms of the Securities Act 1978 . The Company is also listed on the New Zealand Stock Exchange (NZSX) .

The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and the

Companies Act 1993 .

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial

assets and liabilities (including derivative instruments) at fair value through profit or loss .

Critical accounting estimates, judgements and assumptions

The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates .

It also requires management to exercise its judgement in the process of applying the Company’s accounting policies . The

Directors regularly review all accounting policies and areas of judgement in presenting the financial statements .

Estimates

The Group tests annually whether intangible assets have suffered any impairment, in accordance with the accounting

policy stated in Note 1(h) and as disclosed in Note 13 .

The Group also reviews at each reporting date, whether the provisions for inventory obsolescence and store shrinkage

calculated in accordance with the accounting policy stated in Note 1(k), are adequate .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Judgements

The Group assesses whether there are indications for certain trigger events which may indicate that an impairment in

property, plant and equipment values exist .

(b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Briscoe Group Limited as at

balance date of 31 January 2010 and the results of all subsidiaries for the 53 week period then ended .

Subsidiaries are all those entities over which the Company has the power to govern the financial and operating policies,

generally accompanying a shareholding of more than one-half of the voting rights . The existence and effect of potential voting

rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity .

Subsidiaries are fully consolidated from the date on which control is transferred to the Company . They are deconsolidated from

the date that control ceases .

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group . The cost of an

acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the

date of exchange, plus costs directly attributable to the acquisition . Identifiable assets acquired and liabilities and contingent

liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective

of the extent of any minority interest . The excess of the cost of acquisition over the fair value of the Group’s share of the

identifiable net assets acquired is recorded as goodwill . If the cost of acquisition is less than the fair value of the net assets of

the subsidiary acquired, the difference is recognised directly in the income statement .

Intercompany transactions, balances and unrealised gains on transactions between subsidiary companies are eliminated .

Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred .

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted

by the Company .

An operating segment is a component of an entity that engages in business activities which earns revenue and incurs expenses

and for which the chief operating decision maker (CODM) reviews the operating results on a regular basis and makes decisions

on resource allocation . The Group has determined its CODM to be the group of executives comprising the Managing Director,

Chief Operating Officer and Chief Financial Officer on the basis that it is this group which determines the allocation of

resources to segments and assesses their performance .

The reportable operating segments of the Group have been determined based on the components of the Group that the CODM

monitors in making decisions about operating matters . Such components have been identified on the basis of internal reports

that the CODM reviews regularly in order to allocate resources and to assess the performance of the entity .

The Group is organised into two reportable operating segments, namely homeware and sporting goods, reflecting the different

retail sectors solely in New Zealand, within which the Group operates . The corporate structure of the Group also reflects these

segments with its two trading subsidiaries, Briscoes (NZ) Limited and The Sports Authority Limited . Financial details of these

segments are outlined in Note 4 .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(d) Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s operations are measured using the currency of the primary

economic environment in which it operates (‘the functional currency’) . The financial statements are presented in New Zealand

dollars, which is the Company’s functional currency and the Group’s presentation currency .

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of

the transactions . Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation

at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income

statement, except when deferred in other comprehensive income as qualifying cash flow hedges .

(e) Revenue recognition

Revenue comprises the fair value for the sale of goods and services, net of Goods and Services Tax (GST), rebates and

discounts and after eliminating sales within the Group . Revenue is recognised as follows:

Sales of goods – retail

Sales of goods are recognised when a Group entity sells a product to a customer . Retail sales are usually in cash or by credit card .

Interest income

Interest income is recognised on a time-proportion basis using the effective interest method .

(f) Income tax

The income tax expense for the period is the tax payable on the current period’s taxable income based on the income tax rate

adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets

and liabilities and their carrying amounts in the financial statements, and to unused tax losses .

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance

sheet date in the country where the company’s subsidiaries operate and generate taxable income . Management periodically

evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation .

It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities .

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets

are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted . The relevant tax

rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset

or liability . An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability .

No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other

than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss .

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future

taxable amounts will be available to utilise those temporary differences and losses .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of

investments in operations where the Group is able to control the timing of the reversal of the temporary differences and it is

probable that the differences will not reverse in the foreseeable future .

Deferred tax is not recognised in relation to brands where they are deemed to have an indefinite life .

(g) Leases

The Group is the lessee

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating

leases . Payments made under operating leases (net of any incentives received from the lessor) are charged to the income

statement on a straight-line basis over the period of the lease .

The Group is the lessor

Assets leased to third parties under operating leases are included in property, plant and equipment in the balance sheet .

They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment .

Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the period of the lease .

(h) Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment . Assets that are

subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances indicate

that the carrying amount may not be recoverable . For the purposes of assessing impairment, assets are grouped at the lowest

levels for which there are separately identifiable cash flows (cash generating units) . An impairment loss is recognised for the

amount by which an asset’s carrying amount exceeds its recoverable amount . The recoverable amount is the higher of an

asset’s fair value less costs to sell or value in use .

(i) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term, highly

liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and

which are subject to an insignificant risk of changes in value .

(j) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for

impairment . Trade receivables arise from sales made to customers on credit or through the collection of purchasing rebates

from suppliers not otherwise deducted from suppliers’ payable accounts .

Trade receivable balances are reviewed on an ongoing basis . Debts known to be uncollectible are written off . A provision for

impaired receivables is established when there is objective evidence that the Group will not be able to collect all amounts due

according to the original terms of receivables . Significant financial difficulties of the debtor, probability that the debtor will

enter bankruptcy and inconsistency in timing of payments are considered indicators that the collection of a particular trade

receivable is doubtful . The amount of the provision is the difference between an asset’s carrying amount and the present value

of estimated future cash flows, discounted at the effective interest rate . The amount of the provision is recognised in the income

statement . When a trade receivable is uncollectible, it is written off against the provision . Subsequent recoveries of amounts

previously written off are credited against the income statement .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(k) Inventories

Inventories are stated at the lower of cost or net realisable value . Cost is determined using a weighted average method and

includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition . Net

realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses .

(l) Financial assets

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market . They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the

receivable . Loans and receivables are recognised initially at fair value plus transaction costs and are subsequently measured at

amortised cost . They are included in current assets, except for those with maturities greater than 12 months after the balance

date, which are classified as non-current assets . Loans and receivables are included in receivables in the balance sheet . An

assessment is made at each balance date as to whether there is objective evidence that a financial asset or group of financial

assets is impaired . Impairment testing of trade receivables is described in Note 9 .

(m) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently

re-measured to their fair value . The method of recognising the resulting gain or loss depends on whether the derivative is

designated as a hedging instrument, and if so, the nature of the item being hedged . The Group designates certain derivatives

as either: (1) hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge); or (2) hedges of

highly probable forecast transactions (cash flow hedges) .

Certain subsidiaries document at the inception of a transaction the relationship between hedging instruments and hedged

items, as well as its risk management objective and strategy for undertaking various hedge transactions . These subsidiaries

also document their assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in

hedging transactions have been and will continue to be effective in offsetting changes in fair values or cash flows of hedged items .

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income

statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk .

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in

other comprehensive income . The gain or loss relating to the ineffective portion is recognised immediately in the income statement .

Amounts accumulated in other comprehensive income are recycled in the income statement in the periods when a hedged

item will affect profit or loss (for instance when the forecast purchase that is hedged takes place) . However, when a forecast

transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability,

the gains and losses previously deferred in other comprehensive income are transferred from other comprehensive income and

included in the measurement of the initial cost or carrying amount of the asset or liability .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge

accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive

income and is recognised when a forecast transaction is ultimately recognised in the income statement . When a forecast

transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is

immediately transferred to the income statement .

Derivatives that do not qualify for hedge accounting

Hedge accounting has not been adopted for some hedges including certain derivative instruments that do not qualify for hedge

accounting . Changes in the fair value of these derivative instruments are recognised immediately in the income statement .

(n) Fair value estimation

The fair value of financial assets and financial liabilities is estimated for recognition, measurement and disclosure purposes .

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives)

is determined using valuation techniques . The fair value of forward exchange contracts is determined by mark to market

valuations using forward exchange market rates at the balance date .

(o) Derecognition of financial assets and liabilities

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been

transferred and the Group has transferred substantially all risks and rewards of ownership . Financial liabilities are derecognised

when the obligations for payment of cash flows have expired or have been transferred and the Group has transferred

substantially all of the obligations .

(p) Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciation and any impairment adjustments . Historical cost

includes expenditure that is directly attributable to the acquisition of property, plant and equipment .

Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when

it is probable that future economic benefits associated with an item will flow to the Group and the cost of an item can be

measured reliably . All other repairs and maintenance are charged to the income statement during the financial period in which

they are incurred .

Land is not depreciated . Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of

their residual values, over their estimated useful lives, as follows:

• Freehold Buildings

• Plant and equipment

33 years

2 – 15 years

• Furniture, fittings and office equipment

8 – 15 years

Assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date .

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its

estimated recoverable amount .

Gains and losses on disposals are determined by comparing proceeds with carrying amounts . These gains and losses are

included in the income statement .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(q) Intangible assets

Brands

Brands are valued independently as part of the fair value of a business acquired from third parties where the brand has a value

which is substantial and long-term and where the brand can be sold separately from the rest of the business acquired . Brands

are amortised over their estimated lives, except where it is considered that the economic useful life is indefinite .

Indefinite life brands are subject to an annual impairment review .

Software

Software costs have a finite useful life . Software costs are capitalised and amortised over the estimated useful economic life of

2 to 5 years .

(r) Trade and other payables

Trade and other payable amounts represent liabilities for goods and services provided to the Group prior to the end of a

financial period, which are unpaid . The amounts are unsecured and are usually paid within 60 days of recognition . They are

initially recognised at fair value then subsequently recognised at amortised cost using the effective interest method .

(s) Goods and Services Tax (GST)

The income statement, statement of comprehensive income and statement of cash flow have been prepared exclusive of GST .

All items in the balance sheet are stated net of GST, with the exception of trade receivables and trade payables, which include

GST invoiced .

(t) Provisions

Provisions are recognised when:

• the Group has a present legal or constructive obligation as a result of past events;

• it is more likely than not that an outflow of resources will be required to settle the obligation; and

•

the amount can be reliably estimated.

Provisions are not recognised for future operating losses .

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by

considering the class of obligations as a whole .

(u) Share capital

Ordinary shares are classified as capital .

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,

from the proceeds .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(v) Deferred landlord contributions

Landlord contributions to fit-out costs are capitalised as deferred contributions and amortised to the income statement over

the period of the lease .

(w) Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non monetary benefits, annual leave and accumulating sick leave expected to

be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to

the reporting date and are measured at the amounts expected to be paid when the liabilities are settled . Liabilities for non-

accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable .

Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of

expected future payments to be made in respect of services provided by employees up to the reporting date using the projected

unit credit method . Consideration is given to expected future wage and salary levels, history of employee departure rates and

periods of service . Expected future payments are discounted using market yields at the reporting date on government bonds

with terms to maturity that match, as closely as possible, the estimated future cash outflows .

Equity settled share based compensation

The Executive Share Option Plan allows Group employees to be granted options to acquire shares of the Parent . The fair value

of options granted is recognised as an employee expense in the income statement with a corresponding increase in the share

options reserve . The fair value is measured at grant date and spread over the vesting periods . The fair value of the options

granted is measured using the Black Scholes valuation model, taking into account the terms and conditions upon which the

options are granted . When options are exercised the amount in the share options reserve relating to those options, together

with the exercise price paid by an employee, is transferred to share capital .

(x) Dividends

Provision is made for the amount of any dividend declared on or before the balance date but not distributed at balance date .

(y) Earnings per share

Basic earnings per share is computed by dividing net profit attributable to shareholders by the weighted average number of

ordinary shares on issue during the period .

Diluted earnings per share is computed by dividing net profit attributable to shareholders by the weighted average number of

ordinary shares on issue during the period, adjusted to include the potentially dilutive effect if share options to issue ordinary

shares were exercised and converted into shares .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(z) Statements of cash flows

The following are the definitions of the terms used in the statements of cash flows:

• Cash comprises cash and bank balances;

•

Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and

equipment and investments;

• Financing activities are those activities which result in changes in the size and composition of the capital structure of

the Group . This includes both equity and debt not falling within the definition of cash . Loans to and from the Parent

and subsidiaries are treated as financing cash flows . Dividends paid are included in financing activities; and

• Operating activities include all transactions and other activities that are not investing or financing activities.

2. Accounting standards

The following new standards and amendments to standards are mandatory and are required to be applied for the first time for

financial years beginning on or after 1 January 2009 .

• NZ IAS 1: Presentation of Financial Statements (revised)

The revised standard requires ‘non-owner changes in equity’ to be presented separately from owner changes in equity .

All ‘non-owner changes in equity’ are required to be shown in a performance statement .

Entities can choose whether to present one performance statement (the statement of comprehensive income) or two

statements (the income statement and statement of comprehensive income) .

The Group has elected to present two statements; an income statement and a statement of comprehensive income .

• NZ IFRS 8: Operating Segments

NZ IFRS 8 replaces NZ IAS 14 Segment reporting . It requires a ‘management approach’ under which segment

information is presented on the same basis as that used for internal reporting purposes . Application of NZ IFRS 8 did

not identify any new operating segments . Refer Note 4 for further information .

• NZ IFRS 7: Financial instruments – Disclosures (amendment)

The amendment requires enhanced disclosures about fair value measurement and liquidity risk . In particular, the

amendment requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),

•

Inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2),

•

Inputs for the asset or liability that are not based on observable market data (that is, unobservable

inputs) (level 3) .

This change in accounting policy results in additional disclosure only (refer Note 3 .1(c)) .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

The following are standards, amendments and interpretations to existing standards applicable to the Group but are not yet

effective and have not been early adopted by the Group:

• NZ IFRS 3: Business Combinations (Revised) and NZ IAS 27: Consolidated and Separate Financial Statements (Revised)

Effective for annual periods on or after 1 July 2009 . The amendment includes a number of updates including the

requirement that all costs relating to a business combination must be expensed and subsequent re-measurement of the

business combination must be put through the income statement . Both standards must be adopted at the same time .

Impact is dependent on acquisition activity .

This standard has been amended in a number of areas, of which the significant amendments are as follows;

•

Transaction costs incurred in connection with the business combination are expensed when incurred and

are no longer included in the cost of the acquisition .

•

An acquirer must recognise contingent consideration at fair value at the acquisition date. Subsequent

changes in the fair value of such contingent consideration will often affect the income statement .

•

The acquirer must recognise either the entire goodwill inherent in the acquiree, independent of whether

a 100% interest is acquired (full goodwill method), or only the portion of the total goodwill which

corresponds to the proportionate interest acquired (as currently the case under NZ IFRS 3) .

• NZ IAS 1: Presentation of financial statements (amendment)

The amendment is part of the IASB's annual improvements project published in April 2009 . The amendment provides

clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as

current or non-current . By amending the definition of current liability, the amendment permits a liability to be

classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash

or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be

required by the counterparty to settle in shares at any time . The Group will apply NZ IAS 1 (amendment) from 1

February 2010 . It is not expected to have a material impact on the Group's financial statements .

3. Financial risk management

3.1 Financial risk factors

The Group's activities expose it to various financial risks including, liquidity risk, credit risk and market risk (including

currency risk and cash flow interest rate risk) . The Group's overall risk management programme seeks to minimise potential

adverse effects on the Group's financial performance . The Group uses certain derivative financial instruments to hedge certain

risk exposures .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

(a) Liquidity risk

Liquidity risk is the risk that an unforeseen event or miscalculation in the required liquidity level will result in the Group

foregoing investment opportunities or not being able to meet its obligations in an orderly manner, and therefore gives rise to

lower investment income or to higher borrowing costs than otherwise . Prudent liquidity risk management includes maintaining

sufficient cash, and ensuring the availability of adequate amounts of funding from credit facilities .

The Group's liquidity exposure is managed by ensuring sufficient levels of liquid assets and committed facilities are maintained

based on regular monitoring of a rolling 3-month daily cash requirement forecast . Taking into account the present levels

of cash held by the business, this risk is considered by management to be low . The Group's liquidity position fluctuates

throughout the year, being strongest immediately after the end of year trading period . The months leading up to Christmas

trading put the greatest strain on Group cash flows due to the build up of inventory as well as the interim dividend payment .

The Group has an overdraft facility of $500,000 but to date this has not been utilised .

The table below analyses the Group's financial liabilities and gross-settled derivatives into relevant maturity groupings based

on the remaining period from the balance sheet date to the contractual maturity date . The cash flow hedge 'outflow' amounts

disclosed in the table are the contractual undiscounted cash flows liable for payment by the Group in relation to all forward

foreign exchange contracts in place at balance date . The cash flow hedge 'inflow' amounts represent the corresponding injection

of foreign currency back to the Group as a result of the gross settlement on those contracts, converted using the forward rate at

balance date . The carrying value shown is the net amount of derivative financial liabilities and assets as shown in the balance sheet .

Trade payables are shown at carrying value in the table . No discounting has been applied as the impact of discounting is not

significant .

Group
As at 31 January 2010

Less than
3 months
$000

3-5
months
$000

6-8
months
$000

9-12
months
$000

Total
$000

Carrying
Value
$000

Trade and other payables

(33,230)

–

(33,230)

Forward foreign exchange contracts
Cash flow hedges:
– outflow
– inflow

(8,748)
8,185

(5,913)
6,085

(8,413)
8,646

(145)
145

(23,219)
23,061

–
–

– Net

(563)

172

233

–

(158)

As at 25 January 2009

Less than
3 months
$000

3-5
months
$000

6-8
months
$000

9-12
months
$000

Total
$000

Carrying
Value
$000

Trade and other payables

(50,426)

–

(50,426)

Forward foreign exchange contracts
Cash flow hedges:
– outflow
– inflow

(5,193)
7,313

(4,030)
5,240

(4,967)
5,744

(3,665)
3,854

(17,855)
22,151

–
–

– Net

2,120

1,210

777

189

4,296

The cash flow hedges inflow amounts use the forward rate at balance date .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Parent
As at 31 January 2010

Less than
3 months
$000

3-5
months
$000

6-8
months
$000

9-12
months
$000

Carrying
Value
$000

Total
$000

Trade and other payables

(957)

–

(957)

As at 25 January 2009

Less than
3 months
$000

3-5
months
$000

6-8
months
$000

9-12
months
$000

Carrying
Value
$000

Total
$000

Trade and other payables

(992)

–

(992)

There are no financial derivative liabilities or assets in the name of the Parent .

(b) Credit risk

Credit risk refers to the risk of a counterparty failing to discharge an obligation . In the normal course of its business, Briscoe

Group incurs credit risk from trade receivables and transactions with financial institutions . The Group places its cash, short-

term investments and derivative financial instruments with only high credit quality financial institutions . Sales to retail

customers are settled predominantly in cash or by using major credit cards . Less than 1% of reported sales give rise to trade

receivables . The Group holds no collateral over its trade receivables . (Refer also to Notes 1 .(j) and 9) .

Foreign exchange risk

The Group is exposed to foreign exchange risk arising from currency exposures primarily to the US dollar, in respect of

purchases of inventory directly from overseas suppliers .

Management work to Board-approved Group Treasury Risk Management Policies to manage the Group’s foreign exchange

risk . The current policy requires hedging of both committed and forecasted foreign currency payment levels across the current

and subsequent three calendar quarters . The policy is to cover 100% of committed purchases but lower levels of coverage

for forecasted purchases depending on which quarter the forecasted exposure relates to . Hedging is reviewed regularly by

management and reported to the Board monthly .

The Group uses forward foreign exchange contracts and maintains short-term holdings of foreign currencies in denominated

foreign currency bank accounts, with major financial institutions only, to hedge its foreign exchange risk arising from

future purchases .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

The following table shows the fair value of forward foreign exchange contracts held by the Group as derivative financial

instruments at balance date:

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Current assets
Forward foreign exchange contracts

Total current derivative financial instrument assets

Current liabilities
Forward foreign exchange contracts

Total current derivative financial instrument liabilities

595

753

4,296

–

Forward foreign exchange contracts – cash flow hedges

Forward foreign exchange contracts are used for hedging committed or highly probable forecast purchases of inventory for

the ensuing financial year . The contracts are timed to mature when major shipments of inventory are scheduled to be

dispatched and the liability settled . The cash flows are expected to occur at various dates within one year from balance date .

Where forward foreign exchange contracts have been designated and tested as an effective hedge the portion of the gain

or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in other comprehensive

income . These gains or losses are released to the income statement at various dates over the subsequent financial year as the

inventory for which the hedge exists, is sold .

At balance date these contracts are represented by assets of $594,584 (2009: $4,295,583) and liabilities of $753,426

(2009: Nil) and together are included in equity as part of the cash flow hedge reserve, net of deferred tax, as a net loss of

$111,189 (2009: net gain $3,006,908) . The cash flow hedge reserve also consists of gains and losses, net of deferred tax, from

foreign currencies used as hedges, as a net loss of $170,354 (2009: net gain of $254,094), refer Note 8 .

When forward foreign exchange contracts are not designated and tested as an effective hedge, the gain or loss on the forward

foreign exchange contract is recognised in the income statement . At balance date there are no such contracts in place (2009: Nil) .

Fair value hierarchy

The only financial instruments held by the Group in relation to fair value measurements are over the counter derivatives .

These derivatives have all been determined to be within level 2 of the fair value hierarchy as all significant inputs required to

ascertain the fair value of these derivatives are observable (refer Note 1(n) and Note 2) .

Interest rate risk

The Group has no interest-bearing liabilities therefore its exposure to interest rate risk arises only from the impact on income

and operating cash flows as a result of interest-bearing assets, such as cash deposits . The Group’s short to medium liquidity

position is monitored daily by management and surplus funds placed on call or short-term deposit with major financial

institutions only .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Sensitivity analysis

Based on historical movements and volatilities and review of current economic commentary management believes that the

following movements are reasonably possible over the next 12 month period:

• Proportional foreign exchange rate movement of -10% (depreciation of NZD) and +10% (appreciation of NZD)

against the USD, from the year-end rate of 0 .7049,

• A shift of between +1% and -0.5% in market interest rates from the year-end deposit rate of 2.50%.

If these movements were to occur, the positive / (negative) impact on consolidated profit and on consolidated equity for each

category of financial instrument held at balance date is presented below .

Financial Assets:
Cash and cash equivalents1 .
Trade receivables2 .
Derivatives – designated as
cashflow hedges (Forward
foreign exchange contracts)3 .

Financial liabilities:
Trade and other payables4 .
Derivatives – designated as
cashflow hedges (Forward
foreign exchange contracts)3 .

Carrying
amount -0.5% +1% -10% +10%

Interest rate Foreign exchange rate

$000

Profit
$000

Equity
$000

Profit
$000

Equity
$000

Profit
$000

Equity
$000

Profit Equity
$000
$000

59,250
1,063

(296)
–

593
–

–
–

595

33,230

753

–

2,107

–

(1,703)

–

492

–

(406)

2,599

–

(2,109)

Total increase / (decrease)

(296)

593

1. Cash and cash equivalents include deposits at call which are at floating interest rates. The sensitivity to a +1% movement

in interest rates is $592,503. For a -0.5% movement in interest rates the sensitivity is ($296,252).

2. All trade receivables are denominated in NZD and are non-interest bearing.
3. Derivatives designated as cashflow hedges are foreign exchange contracts used to hedge against the NZD:USD foreign

exchange risk arising from foreign denominated future purchases. Based on outputs from a derivative valuation model, a
-/+10% shift in the NZD:USD foreign exchange rate has an impact of $2,598,819 / ($2,109,044) on derivative valuation.
There is no profit and loss sensitivity as the hedges are 100% effective.

4. All trade and other payables are denominated in NZD and are non-interest bearing. Product imported directly by the

Group is prepaid before inventory is receipted and therefore does not give rise to a foreign currency liability.

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

As at 31 January 2010

Group

Loans and Derivatives
used for
receivables
hedging
$000

$000

Total

$000

Parent

Loans and Derivatives
used for
receivables
hedging
$000

$000

Assets as per balance sheet
Cash and cash equivalents
Trade receivables
Due from related parties
Derivative financial instruments

59,250
1,063
–
–

–
–
–
595

59,250
1,063
–
595

Total

60,313

595

60,908

37,669
–
12,417
–

50,086

–
–
–
–

–

Other financial Derivatives
used for
hedging
$000

liabilities at
amortised cost
$000

Total

$000

Other financial Derivatives
used for
hedging
$000

liabilities at
amortised cost
$000

Liabilities as per balance sheet
Trade and other payables
Derivative financial instruments

33,230
–

–
753

33,230
753

Total

33,230

753

33,983

As at 25 January 2009

Group

Loans and Derivatives
used for
receivables
hedging
$000

$000

Total

$000

957
–

957

–
–

–

Parent

Loans and Derivatives
used for
receivables
hedging
$000

$000

Total

$000

37,669
–
12,417
–

50,086

Total

$000

957
–

957

Total

$000

Assets per balance sheet
Cash and cash equivalents
Trade receivables
Derivative financial instruments

63,291
1,642
–

–
–
4,296

63,291
1,642
4,296

Total

64,933

4,296

69,229

48,227
–
–

48,227

–
–
–

–

48,227
–
–

48,227

Other financial Derivatives
used for
hedging
$000

liabilities at
amortised cost
$000

Total

$000

Other financial Derivatives
used for
hedging
$000

liabilities at
amortised cost
$000

Liabilities as per balance sheet
Trade and other payables
Due to related parties

Total

50,426
–

50,426

–
–

–

50,426
–

50,426

992
373

1,365

–
–

–

Total

$000

992
373

1,365

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

3.2 Capital risk management

The Group’s objectives when managing capital are to maximise shareholder wealth whilst ensuring that the Group continues

to safeguard its ability to continue as a going concern . In order to meet these objectives the Group may adjust the amount

of dividend payment made to shareholders . There are no specific banking or other arrangements which require the Group to

maintain specified equity levels .

4. Segment information

The Group has two reportable operating segments that are defined by the retail sectors within which the Group operates,

namely homeware and sporting goods . The following is an analysis of the Group’s revenue and results by operating segment .

Revenue reported below is generated purely in New Zealand from sales to external customers and due to the nature of the

retail businesses there is no reliance on any individual customer . There were no inter-segment sales in the period . (2009: Nil) .

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1 .

Information regarding the operations of each reportable operating segment is included over the page . Segment profit represents

the profit earned by each segment and reflects the income statements associated with the two trading subsidiary companies,

Briscoes (NZ) Limited and The Sports Authority Limited .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

For the period ended 31 January 2010

Homewares

INCOME STATEMENT
Total sales revenue

Gross profit

Earnings before interest and tax

Finance income
Income tax expense

Net profit after tax

BALANCE SHEET

Assets

Liabilities

Other segmental items:
Acquisitions of property, plant and equipment,
intangibles and investments

Depreciation and amortisation

Impairment of property, plant and equipment,
intangibles and investments

$000

286,149

115,221

23,399

84
(7,728)

15,755

88,830

40,747

6,293

5,530

1,857

For the period ended 25 January 2009

Homewares

INCOME STATEMENT
Total sales revenue

Gross profit

Earnings before interest and tax

Finance income
Income tax expense

Net profit after tax

BALANCE SHEET

Assets

Liabilities

Other segmental items:
Acquisitions of property, plant and equipment,
intangibles and investments

Depreciation and amortisation expense

$000

267,398

104,421

14,403

65
(4,341)

10,127

86,128

38,335

2,644

5,901

Sporting
goods
$000

Eliminations/
Unallocated
$000

Total Group

$000

130,537

51,238

5,670

158
(1,849)

3,979

47,160

15,696

400

2,905

–

1,049

945
(702)

1,292

416,686

166,459

30,118

1,187
(10,279)

21,026

37,716

173,706

(10,358)

46,085

–

6,693

8,435

1,857

Sporting
goods
$000

Eliminations/
Unallocated
$000

Total Group

$000

388,467

150,087

15,113

1,644
(5,123)

11,634

–

1,003

1,466
(827)

1,642

121,069

45,666

(293)

113
45

(135)

43,526

15,936

307

3,074

47,530

177,184

1,363

55,634

–

2,951

8,975

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Group

Parent

Period ended
25 January 2009
$000

11,668

11,021

1,474

160

245

6,341

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

116

–

1,652

26,026

119

–

160

245

46,005

2,192

7,729

1,246

–

– –

11,668

11,532

950

– –

6 –

160

256

6,771

– –

5 8

– –

5. Income and expenses

Profit before income tax includes the

following specific income and expenses:

Income

Rental income

Dividends received

Management fees

Finance income

Expenses

Period ended
31 January 2010
$000

111

–

1,192

Operating lease rental expense

28,409

Bad debts written off

Amounts paid to auditors:

Statutory Audit

Half year review

Other assurance services

Directors' fees

Share options expense

Wages, salaries and other short term benefits

Loss on disposal of property, plant and equipment

Inventory writedown expense

Finance expense

Depreciation of property, plant and equipment

Amortisation of software costs

Fixed asset impairment adjustment

Intangible asset impairment adjustment

160

256

47,430

1,361

7,153

1,282

1,424

433

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Group

Parent

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

6. Income tax expense

(a) Income tax expense

Current tax expense:

Current tax

Adjustments for prior years

Period ended
31 January 2010
$000

10,157

914

11,071

Deferred tax expense:

(Increase) / Decrease in future tax benefit current year

(97)

Reduction in tax rate

Adjustments for prior years

–

(695)

(792)

Total income tax expense

10,279

5,123

(b) Reconciliation of income tax expense to tax rate applicable to profits

4,610

398

5,008

422

(398)

115

521

178

699

160

–

(157)

702

781

114

895

(112)

(68)

827

Profit before income tax expense

31,305

Tax at the corporate rate of 30% (2009: 30%)

9,392

16,757

5,027

13,661

4,098

14,137

4,241

Tax effect of amounts which are either non-deductible

or non-assessable in calculating taxable income:

Income not subject to tax

Expenses not deductible for tax

Prior period adjustments

(17)

685

219

(18)

114

–

Total income tax expense

10,279

5,123

(3,500)

702

827

The Group has no tax losses (2009: Nil) and no unrecognised temporary differences (2009: Nil) .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

7. Earnings per share

Basic earnings per share is computed by dividing net profit attributable to shareholders by the weighted average number of

ordinary shares on issue during the period .

Diluted earnings per share is computed by dividing net profit attributable to shareholders by the weighted average number of

ordinary shares on issue during the period, adjusted to include the potentially dilutive effect if share options to issue ordinary

shares were exercised and converted into shares .

Group

Parent

Period ended
31 January 2010

Period ended

Period ended
25 January 2009 31 January 2010

Period ended
25 January 2009

Net profit attributable to shareholders ($000)

21,026

11,634

12,959

13,310

Basic
Weighted average number of ordinary shares
on issue (thousands)

212,150

Basic earnings per share

9.9 cents

5 .5 cents

6.1 cents

6 .3 cents

Diluted
Weighted average number of ordinary shares
on issue adjusted for share options issued
but not exercised (thousands)

216,545

215,736

216,545

215,736

Diluted earnings per share

9.7 cents

5 .4 cents

6.0 cents

6 .2 cents

8. Cash and cash equivalents

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Cash at bank or in hand

59,250

63,291

37,669

48,227

The carrying amount for cash and cash equivalents equals the fair value .

At 31 January 2010 the Group had purchased foreign currency equivalent of NZD 3 .626 million (2009: NZD 1 .441 million)

which is included in the table above . The foreign currency in which the Group primarily deals is the US dollar .

Foreign currency cash – cash flow hedges (cash flow hedge reserve)

These cash balances are used for hedging committed or highly probable forecast purchases of inventory for the ensuing

financial year . The foreign currency purchases are held and allocated by calendar quarter to the highly probable forecast

purchases which are timed to mature when major shipments of inventory are scheduled to be dispatched and the liability

settled . The cash flows are expected to occur at various dates within one year from balance date .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Where foreign currency balances have been designated and tested as an effective hedge, the portion of the gain or loss on the

hedging instrument that is determined to be an effective hedge is recognised directly in other comprehensive income . These

gains or losses are released to the income statement at various dates over the subsequent financial year as the inventory for

which the hedge exists, is sold . At balance date foreign currency losses of $243,363 (2009: gains of $362,892) in relation to

foreign currency balances, were included in equity as part of the cash flow hedge reserve, net of deferred tax, as a net loss of

$170,354 (2009: net gain of $254,094) . The cash flow hedge reserve also consists of gains and losses, net of deferred tax, from

forward foreign exchange contracts used as hedges, as a net loss of $111,189 (2009: net gain of $3,006,908), refer note 3(c) .

When foreign currency balances are not designated and tested as an effective hedge, the gain or loss as at balance date is

recognised in the income statement . At balance date there are no such balances (2009: Nil) .

9. Trade and other receivables

Group

Parent

Trade receivables
Provision for impaired receivables

Net trade receivables
Other receivables

Period ended
31 January 2010
$000

1,069
(6)

1,063
1,247

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

1,668

(26)

1,642
987

2,629

–
–

–
629

629

–
–

–
518

518

Total trade and other receivables

2,310

The fair value of trade and other receivables approximates their carrying value .

No interest is charged on trade receivables .

As at 31 January 2010, trade receivables of $180,807 (2009: $177,171) were past due but not considered impaired . These relate

to a number of accounts for which there is no recent history of default . The aging analysis of these receivables is shown below:

Receivables past due not impaired

Group

Parent

Months past due:
0-3
4-6
6 +

Total

Period ended
31 January 2010
$000

180
1
–

181

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

171
3
3

177

– –
– –
– –

– –

There are no receivables that would otherwise be past due or impaired whose terms have been renegotiated .

Period ended
25 January 2009
$000

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

As at 31 January 2010, trade receivables of $6,072 (2009: $25,960) were considered impaired . The amount of the provision

is $6,072 (2009: $25,960) . The individually impaired receivables mainly relate to debtors who are experiencing financial

difficulties . The aging of these impaired receivables which have been provided for is shown below:

Receivables impaired

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Months past due:
0-3
4-6
6 +

Total

4
–
2

7
15
4

–
–
–

–

Movements in the provision for impaired receivables are shown below:

Group

Parent

Opening balance
Provision for impaired receivables
Receivables written off during the year
Unused amounts reversed

Closing balance

Period ended
31 January 2010
$000

26
6
(21)
(5)

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

60
80
(68)
(46)

–
–
–
–

–

–
–
–
–

–

The creation and release of provision for impaired receivables have been included in ‘store expenses’ in the income statement .

Amounts charged to the provision are generally written off when there is no expectation of recovering additional cash .

The maximum exposure to credit risk at the reporting date is the fair value of receivables mentioned above . The Group does

not hold any collateral as security .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

10. Inventories

Finished goods
Inventory adjustments

Net inventories

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

66,727
(3,374)

63,353

60,006
(2,546)

57,460

–
–

–

–
–

–

Inventory adjustments are provided at period end for stock obsolescence and store inventory shrinkage .

11. Investments in subsidiaries

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

(a) Investments

Shares in subsidiaries

Total Investments

(b) Principal subsidiaries

Name

–

2,783

Activity

2010 Interest

2009 Interest

Briscoes (New Zealand) Limited
The Sports Authority Limited (trading as Rebel Sport)
Rebel Sport Limited
Living and Giving Limited

Homeware retail
Sporting goods retail
Name protection
Name protection

100%
100%
100%
100%

All companies above were incorporated in New Zealand and have a balance date consistent with that of the Parent as outlined

in the accounting policies .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

12. Property, plant and equipment

Group

Freehold
land
$000

Freehold
buildings
$000

Plant and
equipment
$000

At 27 January 2008
Cost
Accumulated depreciation
Accumulated impairment

Net book value

Period ended 25 January 2009
Opening net book value
Additions
Disposals
Depreciation charge

Closing net book value

At 25 January 2009
Cost
Accumulated depreciation
Accumulated impairment

Net book value

Period ended 31 January 2010
Opening net book value
Additions
Disposals
Depreciation charge
Impairment adjustment

Closing net book value

At 31 January 2010
Cost
Accumulated depreciation
Accumulated impairment

Net book value

9,324
–
–

9,324

9,324
–
–
–

9,324

9,324
–
–

9,324

9,324
3,722
–
–
–

13,046

13,046
–
–

13,046

Total
$000

94,604
(42,717)
(148)

11,016
(1,755)
–

74,264
(40,962)
(148)

9,261

33,154

51,739

9,261
39
–
(340)

8,960

11,055
(2,095)
–

33,154
2,333
(52)
(7,389)

28,046

75,555
(47,368)
(141)

51,739
2,372
(52)
(7,729)

46,330

95,934
(49,463)
(141)

8,960

28,046

46,330

8,960
1,170
–
(354)
–

9,776

12,225
(2,449)
–

28,046
1,466
(15)
(6,799)
(1,424)

21,274

76,989
(54,234)
(1,481)

46,330
6,358
(15)
(7,153)
(1,424)

44,096

102,260
(56,683)
(1,481)

9,776

21,274

44,096

The Parent has no property, plant and equipment .

The Directors, having taken into consideration purchase offers, independent and government valuations and other known

factors, have assessed the fair market value of freehold land and buildings to be $31 .90 million (2009: $28 .76 million) .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Impairment tests

For the purposes of assessing impairment, a cash generating unit (‘CGU’) is defined as the property, plant and equipment that

can be grouped at the lowest level for which there are separately identifiable cash flows . Typically a CGU will represent a

group of assets directly attributable to a specific store . An impairment loss is recognised for the amount by which an asset’s

carrying amount exceeds its recoverable amount .

Impairment testing is performed when certain trigger events indicate that an impairment in asset values may exist . The primary

impairment indicator is the significant underperformance of a CGU in relation to management’s expectations . During this

financial period the economic downturn has resulted in a number of CGUs significantly underperforming . For these CGUs,

value-in-use is calculated using pre-tax cash flow projections based on financial forecasts and assumptions prepared by

management covering a five year period . A terminal growth rate in perpetuity is adopted to take account of cash flows beyond

the five year period . The key assumptions used for the value-in-use calculations are as follows:

• Revenue growth

3.0% to 9.9%

(2009: 2.7% to 16.1%)

• Pre-tax discount rate

15.6%

(2009: 13.0%)

• Terminal growth rate

2.5%

(2009: 3.0%)

The revenue growth rates adopted reflect management’s expectations . The discount rate used reflects management’s estimate of

the company’s weighted average cost of capital and the terminal growth rate reflects management’s estimate of the future rate

of inflation .

Based on the indicators and assumptions outlined above, eight CGUs associated with Living & Giving stores were determined

to have asset carrying values in excess of the greater of either the CGU’s value-in-use calculation or the fair value less costs

to sell of the CGU’s assets . Therefore an impairment adjustment equal to each of the impaired CGU’s asset carrying values,

totaling $1,424,016 (2009: Nil) has been recognised in the income statement and is included within ‘store expenses’ .

As part of the impairment testing process management have considered reasonably possible changes to key assumptions and

believe that no further impairment adjustment to any other CGU is required .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Computer
Software
$000

Brands
$000

4,552
(1,467)

3,085

3,085
579
(54)
(1,246)

2,364

4,853
(2,489)

2,364

2,364
335
(5)
(1,282)
–

1,412

5,107
(3,695)
–

1,412

433
–

433

433
–
–
–

433

433
–

433

433
–
–
–
(433)

–

433
–
(433)

–

Total
$000

4,985
(1,467)

3,518

3,518
579
(54)
(1,246)

2,797

5,286
(2,489)

2,797

2,797
335
(5)
(1,282)
(433)

1,412

5,540
(3,695)
(433)

1,412

13. Intangible assets

Group

At 27 January 2008
Cost
Accumulated amortisation

Net book amount

Period ended 25 January 2009
Opening net book amount
Additions
Disposals
Amortisation charge

Closing net book amount

At 25 January 2009
Cost
Accumulated amortisation

Net book amount

Period ended 31 January 2010
Opening net book amount
Additions
Disposals
Amortisation charge
Impairment adjustment

Closing net book amount

At 31 January 2010
Cost
Accumulated amortisation
Accumulated impairment

Net book amount

The Parent has no intangible assets .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Impairment tests for indefinite life brands

For the purposes of assessing impairment in relation to a brand value with an indefinite life, the carrying amount of the brand

is compared to its recoverable amount . An impairment loss is recognised for the amount by which the carrying value exceeds

its recoverable amount .

On an annual basis, the recoverable amount of a brand is determined based on value-in-use calculations specific to the cash

generating unit (CGU) associated with that brand . The defined CGU for the Living & Giving brand incorporates all Living

& Giving stores . These calculations use pre-tax cash flow projections based on financial budgets and forecasts prepared by

management covering a five year period . A terminal growth rate in perpetuity is adopted to take account of cash flows beyond

the five year period . The key assumptions used for the value-in-use calculations for this brand are as follows:

• Revenue growth rate:

3.0% to 9.9%

(2009: 2.7% to 16.1%)

• Pre-tax discount rate:

15.6%

(2009: 13.0%)

• Terminal growth rate:

2.5%

(2009: 3.0%)

The growth rates adopted reflect management’s expectations . The discount rate used reflects management’s estimate of the

company’s weighted average cost of capital and the terminal growth rate reflects management’s estimate of the future rate of

inflation .

Based on the indicators and assumptions outlined above, the Living & Giving brand value was determined to have a carrying

value in excess of the CGU’s value-in-use calculation . Therefore an impairment adjustment of $433,130 (2009: Nil) has been

recognised in the income statement and is included within ‘store expenses’ .

14. Taxation

(a) Deferred tax benefit
Group

At 27 January 2008
Credited/(charged) to the income statement
Charged to other comprehensive income

At 25 January 2009
Credited to the income statement
Credited to other comprehensive income

At 31 January 2010

Depreciation
$000

Provisions
$000

296
33
–

329
769
–

1,098

1,597
(148)
–

1,449
23
–

1,472

Deritative
financial
instruments
$000

49
–
(1,446)

(1,397)
–
1,518

121

Total
$000

1,942
(115)
(1,446)

381
792
1,518

2,691

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Parent

At 27 January 2008
Credited to the income statement

At 25 January 2009
Charged to the income statement

At 31 January 2010

Depreciation
$000

Provisions
$000

–
–

–

118
68

186
(3)

183

Derivative
financial
instruments
$000

–
–

–

Total
$000

118
68

186
(3)

183

Net deferred tax asset / (liability)

Group Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Deferred tax assets
– to be recovered within 12 months
– to be recovered after more than 12 months

Deferred tax liabilities
– to be settled within 12 months
– to be settled after more than 12 months

Deferred tax asset (net)

1,062
1,811

2,873

(182)
–

(182)

2,691

927
851

1,778

(1,397)
–

(1,397)

381

Period ended
25 January 2009
$000

186

161
22 –

183

– –
– –

– –

183

186

(b) Taxation payable

Group Parent

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

2,059
(5,008)
2,044
110

(795)

(258)
(699)
828
116

(13)

250
(895)
277
110

(258)

Movements:
Balance at beginning of period
Current tax
Tax paid
Foreign investor tax credit (FITC)

Balance at end of period

Period ended
31 January 2010
$000

(795)
(11,071)
7,877
116

(3,873)

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

15. Trade and other payables

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Trade payables
Other payables and accruals

Total trade and other payables

22,472
10,758

33,230

36,995
13,431

50,426

60
897

957

288
704

992

The fair value of trade and other payables approximates their carrying value . No interest is paid on payables .

16. Provisions

Balance at beginning of period
Charged to income statement
Used during the period

Balance at end of period

Group

Parent

Period ended
31 January 2010
$000

49
53
(49)

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

35
49
(35)

–
– –
– –

–

The returned inventory provision relates to sales made to customers for goods directly imported by the Group, which are

subsequently returned by customers .

17. Employee benefits

Employee benefits include provision for annual leave, long service leave, sick leave and bonuses .

Group

Parent

(a) Non-current liabilities

Balance at beginning of period
Charged to income statement
Used during the period

Balance at end of period

(b) Current liabilities

Balance at beginning of period
Charged to income statement
Used during the period

Balance at end of period

Period ended
31 January 2010
$000

427
82
(48)

461

3,937
8,639
(4,860)

7,716

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

349
141
(63)

427

3,741
4,996
(4,800)

3,937

66
7
–

716
1,758
(692)

1,782

39
48
(21)

459
632
(375)

716

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

18. Imputation credits

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Imputation credit account balance

39,671

37,332

5,051

4,169

Imputation credit account movements:
Balance at beginning of period
Tax payments, net of refunds
Credits attached to dividends received
Distributed and disposed

37,332
7,968

2 2
(5,631)

40,936
2,027

(5,633)

Balance at end of period

39,671

37,332

4,169
766
5,747
(5,631)

5,051

3,742
313
5,747
(5,633)

4,169

19. Share capital

Group and Parent
No. of authorised shares

Share capital

Period ended
31 January 2010
Shares

Period ended

Period ended
25 January 2009 31 January 2010
$000

Period ended
25 January 2009
$000

Opening ordinary shares

212,150,000

Balance at end of period

212,150,000

40,625

All shares on issue are fully paid . All ordinary shares rank equally with one vote attached to each fully paid ordinary share and

have equal dividend rights .

No shares were issued during the period ended 31 January 2010 (2009: Nil) .

20. Dividends

Group and Parent

Period ended
31 January 2010
Cents per share

Period ended

Period ended
25 January 2009 31 January 2010
$000
Cents per share

Period ended
25 January 2009
$000

Interim dividend for the period ended 31 January 2010
Final dividend for the period ended 25 January 2009
Interim dividend for the period ended 25 January 2009
Final dividend for the period ended 27 January 2008

2.00
3.50
–
–

5.50

–
–
1 .00
4 .50

5 .50

4,243
7,425
–
–

–
–

2,121
9,547

11,668

All dividends paid were fully imputed . Supplementary dividends of $116,280 (2009: $110,314) were provided to shareholders

not tax resident in New Zealand, for which the Group received a Foreign Investor Tax Credit entitlement .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

21. Executive share options

On 25 July 2003 the Board approved an Executive Share Option Plan to issue options to selected senior executives and,

subject to shareholder approval, to Executive Directors . Options may be exercised in part or in full by the holder three years

after the date of issue, and lapse after four years if not exercised . Each option entitles the holder to one ordinary share in the

capital of the Company . The exercise price is determined by the Board but is generally set by reference to the weighted average

market price of ordinary shares in the Company for the period of five business days before and five business days after, as the

Board in its discretion sees fit, either:

(a) the date on which allocations are decided by the Board; or

(b) the date on which allocations are made .

Payment must be made in full for all options exercised on the dates they are exercised .

During the financial year the Company issued 1,560,000 options (2009: 1,430,000) to senior executives .

The fair value of these options is estimated at $564,876 (2009: $229,658) under the Black Scholes valuation model using the

following inputs and assumptions:

• Risk free interest rate

4.77%

(2009: 5.32%)

• Expected dividend yield

5.07%

(2009: 5.07%)

• Expected life (years)

3.38

(2009: 3)

• Expected share volatility

41.00%

(2009: 34.50%)

• Share price at grant date

$1.18

(2009: $0.74)

• Exercise price

$0.95

(2009: $0.74)

The estimated fair value for each tranche of options issued is amortised over the vesting period of three years, from the grant

date . The Company has recognised a compensatory expense in the income statement of $256,159 (2009: $245,237) which

represents this amortisation .

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

Balance at beginning of year
Issued
Forfeited
Exercised
Lapsed

Balance at end of year

Period ended
31 January 2010

Period ended
25 January 2009

Average
exercise price
$ per share

Options
000

Average
exercise price
$ per share

1.16
0.95
1.38
–
1.24

1.09

4,159
1,560
(2)
–
(615)

5,102

1 .39
0 .74
1 .41
–
1 .38

1 .16

Options
000

3,634
1,430
(95)
–
(810)

4,159

Of the 5,102,000 outstanding options, 1,020,000 are currently exercisable (2009: 615,000) .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Share options outstanding at the end of the year have the following expiry dates, exercise dates and exercise prices:

Expiry Month

Exercise Month

Exercise Price

November 2009
October
2010
December 2011
December 2012
November 2013

November
October
December
December
November

2008
2009
2010
2011
2012

Total share options outstanding

$1 .24
$1 .48
$1 .38
$0 .74
$0 .95

Period ended
31 January 2010
000

Period ended
25 January 2009
000

–
1,020
1,092
1,430
1,560 –

5,102

615
1,020
1,094
1,430

4,159

Share options reserve

Group

Parent

Period ended
31 January 2010
$000

Period ended

25 January 2009 31 January 2010 25 January 2009
$000

$000

Balance at beginning of year
Current year amortisation
Options forfeited and lapsed transferred
to retained earnings

Balance at end of year

486
256

(162)

580

440
245

(199)

486

486
256

(162)

580

440
245

(199)

486

22. Related party transactions

During the period the Company advanced and repaid loans to its subsidiaries by way of internal current accounts . In

presenting the financial statements of the Group, the effect of transactions and balances between fellow subsidiaries and those

with the Parent have been eliminated . All transactions with related parties were in the normal course of business and provided

on commercial terms .

Material transactions between the Company and its subsidiaries were:

Period ended
31 January 2010
$000

Period ended
25 January 2009
$000

Management fees charged by the Company to:

Briscoes (NZ) Limited
The Sports Authority Limited

Total management fees

7,825
3,707

11,532

Dividends received by the Company from Briscoes (NZ) Limited

11,668

7,554
3,467

11,021

11,668

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

Material amounts outstanding between the Company and its subsidiaries at year end were:

Loan (to) / from the Company (from) / to Briscoes (NZ) Limited
Loan (to) / from the Company (from) / to The Sports Authority Limited

Total loans (to) / from the Company (from) / to subsidiaries

Period ended
31 January 2010
$000

10,808
1,609

12,417

Period ended
25 January 2009
$000

(300)
(73)

(373)

In addition the Group undertook transactions with the related interests of the majority shareholder as detailed below:

• The RA Duke Trust, of which Mr RA Duke and Mr AJ Wall are trustees, as owner of the Rebel Sport premises at

Panmure, Auckland, received rental payments of $547,999 (2009: $535,479) from the Group, under an agreement to

lease premises to The Sports Authority Limited .

• The RA Duke Trust received dividends of $8,750,225 (2009: $8,749,275).

• Patricia Duke, spouse of the Managing Director, received payments of $65,000 (2009: $65,000) in relation to her

employment as an overseas buying specialist with Briscoe Group Limited .

• The Hualian Trust, of which Patricia Duke is a trustee, received dividends of $69,575 (2009: $69,228)

Directors received directors’ fees and dividends in relation to their personally held shares as detailed below:

Executive Director

Mr RA Duke

Mr AJ Wall

Non Executive Directors

Mr SH Johnstone

Ms RP Meo

Mr RJ Skippen

Period ended
31 January 2010

Period ended
25 January 2009

Directors’ Fees
$000

Dividends
$000

Directors’ Fees
$000

Dividends
$000

–

160

–

160

–

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

The following Directors received dividends in relation to their non-beneficially held shares as detailed below:

Executive Director
Mr RA Duke1 .
Mr AJ Wall2 .

Non Executive Directors

Mr SH Johnstone
Ms RP Meo3 .
Mr RJ Skippen

Period ended
31 January 2010
$000

Period ended
25 January 2009
$000

8,750

8,749

– –

6 6

– –

8,824

8,823

1. The RA Duke Trust, of which Mr RA Duke and Mr AJ Wall are trustees, received dividends of $8,750,225 during the

period (2009: $8,749,275)

2. The Tunusa Trust, of which Mr AJ Wall is a trustee, received dividends of $67,650 during the period (2009: $67,650).

3. Shares previously personally held by Ms RP Meo are now held in trust.

Key management compensation was as follows:

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Salaries and other short term employee benefits
Share options benefit
Directors’ fees

Total benefits

2,673
111
160

2,944

1,924
114
160

2,198

2,673
111
160

2,944

1,924
114
160

2,198

Key management includes the Directors of the Company and those employees who the Company have deemed to have

disclosure obligations under Section 19T of the Securities Markets Act 1988 . The amounts disclosed reflect the changes made

to Section 19T effective from 9 October 2008 . Comparatives have been amended to also reflect this .

In the 2009 Annual Report Directors’ fees were disclosed separately from key management compensation in the related party

transactions note .

Key management did not receive any termination benefits during the period (2009: Nil) . In addition key management did not

receive and are not entitled to receive any post employment or long term benefits (2009: Nil) .

Notes to the Financial Statements

For the 53 week period ended 31 January 2010

23. Capital expenditure commitments

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Commitments at the end of the period not
provided for in the financial statements

185

– –

24. Operating lease rental commitments

Group

Parent

Period ended
31 January 2010
$000

Period ended

Period ended
25 January 2009 31 January 2010
$000

$000

Period ended
25 January 2009
$000

Lease commitments expire as follows:
Within one year
One to two years
Two to five years
Beyond five years

24,837
21,464
39,808
15,050

24,247
21,036
43,381
23,827

Total operating lease rental commitments

101,159

112,491

– –
– –
– –
– –

– –

The Group leases various retail outlets under non-cancellable operating lease agreements . The leases reflect normal

commercial arrangements with varying terms, escalation clauses and renewal rights .

25. Contingent liabilities

There were no contingent liabilities as at 31 January 2010 (2009: Nil) .

26. Events after balance date

On 9 March 2010 the Directors resolved to provide for a final dividend to be paid in respect of the year ended 31 January

2010 . The dividend will be paid at a rate of 5 .00 cents per share on issue as at 24 March 2010, with full imputation credits

attached .

Auditors’ Report

Auditors’ Report
To the shareholders of Briscoe Group Limited

We have audited the financial statements on pages 7 to 47. The financial statements provide information about the past
financial performance and cash flows of the Company and Group for the period ended 31 January 2010 and their financial
position as at that date. This information is stated in accordance with the accounting policies set out on pages 13 to 21.

This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205 (1) of the Companies Act
1993. Our audit has been undertaken so that we might state to the Company’s shareholders those matters we are required
to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for
this report or for the opinion we have formed.

Directors’ Responsibilities
The Company’s Directors are responsible for the preparation and presentation of the financial statements which give a true and
fair view of the financial position of the Company and Group as at 31 January 2010 and their financial performance and cash
flows for the period ended on that date.

Auditors’ Responsibilities
We are responsible for expressing an independent opinion on the financial statements presented by the Directors and reporting
our opinion to you.

Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements.
It also includes assessing:
(a)
the significant estimates and judgements made by the Directors in the preparation of the financial statements; and
(b) whether the accounting policies are appropriate to the circumstances of the Company and Group, consistently applied

and adequately disclosed.

We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed
our audit so as to obtain all the information and explanations which we considered necessary to provide us with sufficient evidence
to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or
error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as auditors and
providers of other assurance services.

Unqualified Opinion
We have obtained all the information and explanations we have required.

In our opinion:
(a) proper accounting records have been kept by the Company as far as appears from our examination of those records; and
(b)

the financial statements on pages 7 to 47:
(i)
(ii)
(iii) give a true and fair view of the financial position of the Company and Group as at 31 January 2010 and their

comply with generally accepted accounting practice in New Zealand;
comply with International Financial Reporting Standards; and

financial performance and cash flows for the period ended on that date.

Our audit was completed on 9 March 2010 and our unqualified opinion is expressed as at that date.

Chartered Accountants

Auckland

Corporate Governance

Role of the Board
The Board of Directors (“the Board”) of Briscoe Group

operational reports summarising the Company’s

activities including key performance indicators . In

Limited (“the Company”) is elected by shareholders

addition, the Board receives regular briefings from the

to oversee the management of the Company and its

management team on key strategic and performance

subsidiaries and to direct performance in the long term

issues either as part of regular Board meetings or in

best interests of the Company and its shareholders .

specific briefing sessions .

The focus of the Board is the creation of company

and shareholder value and ensuring the Company is

managed in accordance with best practice . Corporate

Board Membership
The Company’s constitution sets out policies and

governance is continually reviewed and updated in

procedures on the operation of the Board including

accordance with good business practice .

the appointment and removal of Directors . The NZSX

Listing Rules and the Company’s constitution provide

The principal responsibilities of the Board are to:

that a minimum of three Directors is required, of whom

• establish the Company’s objectives and review the

at least two shall be independent . Currently the Board

major strategies for achieving these objectives;

comprises five Directors, being an independent Non-

• establish an overall policy framework within which

Executive Chairman, the Group Managing Director, the

the Company conducts its business;

Deputy Managing Director and two independent Non-

• review management’s performance including

Executive Directors .

approval of and monitoring against budget;

The Board acknowledges the importance of independent

• ensure that Group financial statements are prepared and

Directors in ensuring an optimal balance between Board

presented to give a true and fair view of the Group’s

members who are able to bring a wide range of business

financial position, financial performance and cash flows;

experience and skills and those with direct company

• ensure effective policies and procedures are in place

knowledge and operational responsibility .

to safeguard the integrity of the Company’s financial

Under the constitution, one third of Directors must retire

reporting;

by rotation at the Annual Meeting each year but, if eligible,

• ensure that any significant risks facing the Company

may offer themselves for re-election . The Group Managing

are identified and that appropriate risk management

Director, in his capacity as an executive director, is

programmes are in place to control and report on

exempt from the requirement to retire by rotation .

these risks;

Pursuant to NZSX Listing Rule 3 .3 .5, the Company

• ensure that the Group operates in accordance

is required to make an announcement to the market

with New Zealand laws, regulations, the listing

advising the closing date for Director nominations . That

rules (including the continuous disclosure regime),

announcement must be no less than 10 business days

professional standards and contractual obligations;

prior to the closing date and the closing date must be

and

not more than 2 months prior to the Annual Meeting .

• report to shareholders and other key stakeholders.

The Board undertakes to meet at least ten times during

the financial year . For the year ending 31 January 2010

The Board has delegated day-to-day management of

the Board met twelve times .

the Company to the Group Managing Director and

Profiles of the current Directors appear on page 52 of

other executives of the Company . Operational and

this report .

administrative policies relative to the Company’s

business are in place and the Company has an internal

audit system for monitoring the Company’s operational

policies and practices .

Board Review
The Board annually reviews its performance, and that

of Board committees, to ensure that the Board and its

The Chairman, Managing Director and Deputy

committees are performing satisfactorily and meeting

Managing Director determine the agenda for Board

their respective objectives . In addition, the performance

meetings . On a monthly basis, the Board receives

of individual Directors is also subject to review with a

particular emphasis on those Board members who are

including for ensuring that the Company’s business

due to retire by rotation and wish to seek re-election .

divisions provide the auditors with timely and accurate

The review process also assists with the process of

information and full access to the Company’s records . In

identifying the training needs, if any, of Board members

addition, the auditors are able to communicate directly

to ensure that they remain current on how to best

with the chairman of the Audit Committee at any time .

perform their duties as a director .

Board Committees
There are two formally constituted committees to

Human Resources Committee
The Human Resources Committee comprises two

independent Directors – Rosanne Meo (Chairman)

provide specific input and guidance to particular areas

and Stuart Johnstone, as well as the Group Managing

of corporate governance; the Audit Committee and the

Director, Rod Duke .

Human Resources Committee .

The Committee is responsible for ensuring the Company

The committees meet as required and operate under

has a sound remuneration policy framework and that

specific charters which are reviewed and approved by

there is an environment within which management talent

the Board annually, setting out committees’ roles and

and potential can be identified, assessed and developed .

responsibilities . In order to fulfil its responsibilities,

each committee is empowered to seek any information

it requires from employees and to obtain such

Nominations and Governance
Briscoe Group does not have a formally constituted

independent legal or other professional advice it may

Nominations and Governance Committee . The Board

deem necessary . The proceedings of the committees are

views the responsibilities usually associated with this

reported to the Board . These charters are published on

committee as a collective responsibility and those

our website at www .briscoegroup .co .nz .

matters are included as part of its primary role of

Audit Committee
The Audit Committee comprises three independent

overseeing the management and performance of the

Company . Each director undertakes to ensure they have

the necessary time and resources required to enable

Directors – Stuart Johnstone (Chairman), Rosanne Meo

them to meet the responsibilities associated with their

and John Skippen . The Committee assists the Board

directorship . Specific requirements of governance are

in fulfilling its responsibilities for Company financial

addressed at Board meetings during the course of the

statements and external financial reporting .

year . These specific requirements include ensuring

The Committee is responsible to the Board for reviewing

the Board contains an appropriate mix of skills and

the Company’s accounting policies and financial

experience, making recommendations to the Board

statements, promoting integrity in financial reporting,

on new Directors for nomination, determining the

reviewing the adequacy and effectiveness of the

independence of Directors, and ensuring the Company

Company’s internal controls and recommending the

maintains a high level or corporate governance .

appointment of, as well as reviewing the performance

and recommendations of the external auditors . In turn,

the Company’s management team makes representations

Independent Directors
Under the Corporate Governance requirements of NZX

to the Audit Committee and the Board, as to the

Limited (“NZX”), a listed company must identify which

completeness and accuracy of the Company’s financial

of its Directors are determined by the Board to be

statements .

independent .

The Audit Committee is responsible for determining whether

The current board and committee memberships

potential engagements of the auditors are appropriate in

are detailed below together with the independence

the context of seeking to prevent audit independence from

classification as determined by the Board, in accordance

being impaired (or being seen to be impaired) .

with the guidelines issued by NZX . As a relatively small

The Chief Financial Officer is responsible for the

board, there is a clear understanding of the required

Company’s day to day relationship with the auditors,

roles and expectations of the Independent Directors .

Board Composition as at April 2010
Director

Classification

Committee membership

Rosanne Meo

Rod Duke

Stuart Johnstone

John Skippen

Alaister Wall

Independent (Chair)

Executive

Independent

Executive

Audit
committee

Member

–

Chair

Member

–

Human Resources
committee

Chair

Member

–

Board Remuneration
Shareholders are asked to approve the level of Director’s

• Accuracy of records;

• Compliance with any applicable laws, regulations

fees from time to time . In keeping with its views in

and rules; and

relation to nominations, rather than have a separate

• Fair dealing with customers, employees, suppliers

Remuneration Committee (governed by a charter), the

and competitors .

Board as a whole takes responsibility for monitoring

developments in the New Zealand market and

The Board is responsible for reviewing the Code of

recommending remuneration packages for Directors to

Conduct and adherence to it .

the Company’s shareholders . Fees are established to be

in line with those of New Zealand based organisations

of a similar scope and size to the Company .

Trading in Briscoe Group Securities
The Company has adopted a formal procedure

governing the sale and purchase of the Company’s

Code of Conduct
The Board has adopted a corporate Code of Conduct,

securities by Directors and employees . All Directors and

employees must act in accordance with this procedure

available on our website www .briscoegroup .co .nz . The

and the requirements of the Securities Markets Act 1988 .

Code of Conduct defines the levels of ethical business

The procedure requires employees to obtain the written

practice expected of the Board and within the Company

consent of a Director, or in the case of a Director,

(including employees and contractors) . The Company

of the Chairman of the Board, prior to trading in the

ensures that all new employees are aware of the Code

Company’s shares . Generally, this consent will only

of Conduct and are provided with relevant training . In

be given in respect of trading in the 60 day period

addition, the Code of Conduct addresses compliance

following the announcement of the Company’s half year

standards and procedures, provides mechanisms

and annual results .

for reporting unethical behaviour and ensures that

disciplinary measures are available to address any

violations . It covers:

• Conflicts of interest;

• Confidentiality;

• Payments, gifts and entertainment;

• Trading in company securities;

• Workplace principles;

• Use of company information and assets;

Risk Management
As an integral part of its role of overseeing the

management of the Company and its subsidiaries,

the Board approves the Company’s risk management

policies and receives regular reports to monitor the

Company’s risk management performance relative to

these policies, with particular emphasis on the following

categories of risk:

• Obligations to act honestly and in the best interests

• Operating Risks: risks associated with the Company’s

of the Company as required by law;

• Delegation of authority;

business operations and the personnel conducting

those operations;

General Disclosures

• Business Risks: risks associated with the markets

Board of Directors

and business activities conducted by the Company

(including compliance with regulatory requirements);

Rosanne Meo: Chairman (Non-Executive)

and

Director of AMP Life Limited, Overland Footwear Limited

• External Risks: risks associated with external forces

and Kelliher Charitable Trust . Chairman of the Auckland

such as interest rate and foreign exchange exposure .

Philharmonia Orchestra .

Effective Communication
The Board places great importance on effective

Rod Duke: Group Managing Director and

Deputy Chairman

communications to the Company’s shareholders and

Group Managing Director since 1991 .

employees and the market generally . As a result, in

addition to making the required release of annual and

Alaister Wall: Deputy Managing Director

half-yearly results, the Company makes quarterly sales

Executive of Group since 1982 . Director of Cure Kids .

releases . The Company regularly reviews its practices to

ensure it clearly communicates its goals, strategies and

performance . This information is made available to the

NZX and also to a variety of media, including by means

Stuart Johnstone: Director (Non-Executive)

Investment Banker and Company Director .

of the Company’s website .

John Skippen: Director (Non-Executive)

The Board encourages shareholder attendance at the

Non-Executive Director of Australian listed companies,

Company’s Annual Meeting and welcomes shareholder

Flexi Group Limited and Super Cheap Auto Group Limited .

debate on all matters of significance affecting the

Company and its business .

NZX Corporate Governance Best Practice Code
The Company’s corporate governance practices

Subsidiary Companies
Rod Duke and Alaister Wall are Directors of the following

subsidiaries: Briscoes (NZ) Limited, The Sports Authority

Limited trading as Rebel Sport, Rebel Sport Limited,

conform with the guidelines set down in the NZX

Living and Giving Limited . Stuart Johnstone is a Director

Corporate Governance Best Practice Code in almost all

of The Sports Authority Limited .

respects . The areas in which the Company’s practices

depart from that Code are confined to the absence

of specific training requirements for Directors, the

Financial Statements
The financial statements for the Parent and Group for the

lack of a Nominations Committee and the absence of

year ended 31 January 2010 are shown on pages 7 to 47

Director remuneration by means of a performance-

in this report .

based equity remuneration plan . The Board as a whole

takes responsibility for monitoring developments in the

New Zealand market and recommending remuneration

Changes in Accounting Policies
In preparing these financial statements the accounting

packages for Directors to the Company’s shareholders

policies outlined in Note 1 to the financial statements

rather than delegating this function to a Remuneration

have been applied .

Committee pursuant to a written charter .

There were no significant changes in accounting policies

during the year .

Principal Activities of the Group
Briscoe Group Limited is a non-trading holding company,

B. Shareholdings

Beneficially Held

but provides management services to its subsidiaries .

SH Johnstone

Limited . There were no changes in company structure

RJ Skippen

The principal trading subsidiaries are Briscoes (New

Zealand) Limited, a specialist homeware retailer selling

leading branded products, and The Sports Authority

Limited, trading as Rebel Sport, New Zealand’s largest

retailer of most leading brands of sporting goods .

The subsidiaries are 100% owned by Briscoe Group

during the year .

Review of Operations

A. Results for the Year Ended 31 January 2010

Sales Revenue

Group

$000

416,686

Parent

$000

–

AJ Wall

As at 12 March 2010

1,000,000

220,000

Non-Beneficially Held

As at 12 March 2010

RA Duke and AJ Wall as Trustees

of the RA Duke Trust

159,095,000

AJ Wall

RP Meo

SH Johnstone

C. Share dealings

–

1,230,000

100,000

5,000

During the year the Directors did not acquire or dispose

of any shares in the Company .

Profit Before Income Tax

31,305

13,661

Income Tax

(10,279)

(702)

D. Interests in contracts

Profit After Income Tax

21,026

12,959

During the year the following Directors have declared

B. Dividends

pursuant to Section 140 (1) of the Companies Act

1993 that they be regarded as having an interest in the

Subsequent to balance date, the Directors have declared

following transactions:

a final dividend of 5 .00 cents per share payable

• Payment of rental of $547,999 (2009: $535,479) on the

31 March 2010 . Non resident shareholders of the Group

retail property of which the RA Duke Trust is the owner .

will also receive a supplementary dividend of 0 .8824

(Refer to Note 22 of the financial statements) .

cents per share . Dividends are fully imputed to New

Zealand resident shareholders .

E. Interests in Executive Share Options

Executive Share Options Plan (refer to Note 21 of the

financial statements) . Options outstanding as at balance

date are as follows:

Expiry

Exercise

No.

Date

Price

AJ Wall: Oct 2010 Oct 2009

$1 .48 150,000

Dec 2011 Dec 2010 $1 .38 150,000

Dec 2012 Dec 2011 $0 .74 150,000

Directors
A. Remuneration and all other benefits relating to the

year ending 31 January 2010 ($000)

Non Executive Directors

RP Meo

SH Johnstone

RJ Skippen

Executive Directors

RA Duke (Managing Director)

AJ Wall (Deputy Managing Director)

631

432

Executive Directors do not receive Directors’ fees .

F. Directors’ Insurance

As provided by the Group’s Constitution and in

Remuneration to Auditors
The fee for the audit of the Group and subsidiaries paid to

accordance with Section 162 of the Companies Act 1993

PricewaterhouseCoopers was $80,000 (2008: $78,000) .

the Group has arranged Directors’ and Officers’ Liability

Fees paid to the auditors for other services provided

Insurance which ensures Directors will incur no monetary

amounted to $26,000 (2009: $18,500) .

loss as a result of actions undertaken by them as Directors

provided they act within the law .

Shareholders Information

G. Directors’ and Officers’ use of Company Information

Holding Range at 12 March 2010

During the period the Board received no notices pursuant

to Section 145 of the Companies Act 1993 relating to use

of Company information .

State of Affairs
The Directors are of the opinion that the state of affairs

No. Investors

Total Holdings

1-1,000

977

706,244

0 .33

1,001-5,000

1,322

3,846,052

1 .81

5,001-10,000

10,001-100,000

340

244

2,779,204

1 .31

6,569,753

3 .10

of the Group is satisfactory . Details of the period under

100,001 and over

198,248,747

93 .45

2,912

212,150,000

100%

Substantial Security Holders
The following information is given pursuant to

section 26 of the Securities Markets Act 1988 .

The persons who, according to the records of the

company maintained pursuant to section 25 of the

Securities Markets Act 1988, are substantial security

holders of the Company as at 12 March 2010 are

as follows:

Substantial

Security Holders

No. of shares

Percentage

RA Duke and AJ Wall

as Trustees of the

RA Duke Trust

159,095,000

75 .0%

review are included in the Chairman’s Review, the

Managing Director’s Review of Operations and the

audited financial statements .

Employee Remuneration
The number of employees within the Group (other than

Directors) receiving remuneration and benefits above

$100,000, relating to the period ending 31 January 2010,

are indicated in the following table:

Number of Employees

$100,000 – 109,999

$110,000 – 119,999

$120,000 – 129,999

$130,000 – 139,999

$140,000 – 149,999

$150,000 – 159,999

$160,000 – 169,999

$200,000 – 209,999

$220,000 – 229,999

$230,000 – 239,000

$250,000 – 259,000

$280,000 – 289,999

$290,000 – 299,000

$320,000 – 329,999

$360,000 – 369,999

$480,000 – 489,000

$510,000 – 519,000

Top 20 Holder List

As at 12 March 2010

Rank

Holder’s Name

Total

Portfolio Custodian Limited (RA Duke Trust) . . . . . . . . . . . . . . . . . . . . 159,095,000 . . . . . . . . 74 .99

New Zealand Central Securities Depository Limited . . . . . . . . . . . . . . . 11,557,001 . . . . . . . . . 5 .45

Portfolio Custodian Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,964,239 . . . . . . . . 3 .28

Gerald Harvey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,250,000 . . . . . . . . . 2 .47

Harvey Norman Properties (NZ) Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,250,000 . . . . . . . . 2 .47

Portfolio Custodian Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,265,000 . . . . . . . . . 0 .60

Alaister John Wall, Beverley Ann Wall and Benedict Douglas Tauber

as Trustees of the Tunusa Trust established for the benefit of the

family of AJ and BA Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,230,000 . . . . . . . . 0 .58

Custodial Services Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,000 . . . . . . . . . 0 .48

Stuart Hamilton Johnstone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 . . . . . . . . . 0 .47

Hugh Green Investments Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 . . . . . . . . . 0 .47

FNZ Custodians Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 761,167 . . . . . . . . . 0 .36

Gemscott Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 . . . . . . . . 0 .24

Investment Custodial Services Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . 397,096 . . . . . . . . . 0 .19

Keith Arthur William Brunt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 . . . . . . . . . 0 .14

Invia Custodian Pty Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,997 . . . . . . . . . 0 .14

Alaister John Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 . . . . . . . . 0 .10

Advertising Works Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,833 . . . . . . . . . 0 .10

Jontee Farms Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,684 . . . . . . . . 0 .09

19=

Douglas Gordan Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 . . . . . . . . 0 .09

19=

Keith A W Brunt and Glenda Brunt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 . . . . . . . . 0 .09

A number of the registered holders listed above hold shares as nominees for, or on behalf of, other parties.

Calendar

Annual Balance Date . . . . . . . . . . . . January

Preliminary Profit Announcement . . . March

Annual Report Published . . . . . . . . April

Final Dividend . . . . . . . . . . . . . . . . . 31 March 2010

Annual Meeting . . . . . . . . . . . . . . . . 20 May 2010

Half Year Results . . . . . . . . . . . . . . . September

Interim Dividend . . . . . . . . . . . . . . . October