Briscoe Group Limited Annual Report 2019

← All annual reports

FY2019 Annual Report · Briscoe Group Limited

Loading PDF…

ANNUAL REPORT

for the period ended 27 January 2019

Contents

Key Facts .....................................................................5

Chairman’s Review .....................................................6

Managing Director’s Review
of Operations ...............................................................9

Group Financial Statements

Introduction ....................................................................................... 12

Contents ...............................................................................................13

Directors’ Approval .............................................................................14

Consolidated Income Statement ........................................................15

Consolidated Statement of Comprehensive Income ........................ 15

Consolidated Balance Sheet ..............................................................16

Consolidated Statement of Cash Flows .............................................17

Consolidated Statement of Changes in Equity ....................................19

Notes to the Group Financial Statements ..........................................20

Independent Auditor’s Report ..................................49

Corporate Governance Statement ...........................54

General Disclosures .................................................64

Top 20 Holder List......................................................66

Directory ....................................................................67

Calendar ....................................................................67

Key Facts

Audited
period ending
27 January
2019
$000

Audited
period ending
28 January
2018
$000

Audited
period ending
29 January
2017
$000

Audited
period ending
31 January
2016
$000

Audited
period ending
25 January
2015
$000

Trading Results

Sales Revenue 1.

Gross profit margin 1.

Earnings before interest and tax (EBIT)2.

Net profit after tax (NPAT)

Net cash flows from operating activities

Financial Position and Statistics

Shareholders’ funds

Total assets

EBIT per share

NPAT per share

Operating cashflow per share

Current ratio

Shareholders’ funds to total assets

Store Numbers

Homeware

Sporting Goods

Briscoe Group

Total Store Area (m2)

Homeware

Sporting Goods

Briscoe Group

631,919

40.1%

85,995

63,393

65,720

273,541

365,352

38.8c

28.6c

29.7c

1.8:1

74.9%

109,241

60,084

169,325

605,136

40.0%

83,364

61,325

69,528

248,428

338,571

37.8c

27.8c

31.5c

1.7:1

73.4%

108,155

57,388

165,543

585,905

40.6%

79,827

59,420

85,984

205,153

298,238

36.4c

27.1c

39.2c

1.5:1

68.8%

555,526

40.1%

65,935

47,137

39,898

164,424

235,418

30.3c

21.7c

18.3c

1.5:1

69.8%

508,736

38.6%

53,122

39,302

45,051

155,559

234,754

24.5c

18.2c

20.8c

2.2:1

66.3%

104,122

57,490

161,612

100,085

56,394

156,479

95,787

53,993

149,780

1. Updated to reflect impact of new accounting standard NZIFRS 15: Revenue from contracts with customers (refer Note. 6.5).
2. Earning before interest and tax (EBIT) is a non-GAAP measure. Refer to the Consolidated Income Statement on Page 15.

Chairman’s Review

Overview
On behalf of your Directors’ we are pleased to report to you on
another successful year with the company’s further growth in sales
and earnings enabling increased dividends. We have reported to
you in recent years of our continued emphasis to adapt and ready
ourselves in the ever-changing retail environment and on the
imperative for us to build on the already strong foundations in place
for future success.

The New Zealand retail sector continues to change, with key trends
of increasing competition from overseas specialty and online players
and with changes in the traditional patterns of retail demand across
the year. We are very conscious of evolving customer demographics
and preferences for both our product offerings and technology. These
trends have tested even the most seasoned operators.

In 2018-19 the challenges were magnified by factors such as fuel
price spikes, Auckland property market easing and industrial action
which seemed to take the edge off consumer sentiment and
spending. In that context, our increase in sales and earnings was a
noteworthy achievement.

It isn’t easy to maintain a successful balance between meeting
the challenges arising in a relatively difficult year and building for
the future. I believe we have managed to do so, enhancing the
fundamentals of the business through attention to our people, our
systems and processes, our store network and online presence, and
the needs of our customers. That reflects the leadership of our senior
management team and the support and dedication of employees in
every part of the Group. The Board acknowledges all those efforts
and wishes to record its appreciation.

The Managing Director’s review of operations (below) outlines a
range of measures under way in support of our goal to be
New Zealand’s best listed retailer. We also remain alert to
opportunities to expand into new markets and new products.

Our investment in Kathmandu Holdings Limited returned an
increased dividend for the latest year. We are comfortable with our
position as Kathmandu’s largest shareholder and note its continued
improvement in operating performance and shareholder returns.

Financial Performance
Briscoe Group’s sales revenue grew by 4.43% to $631.92 million in
the year ended 27 January 2019. Gross margin dollars increased by
4.74% to $253.36 million, while gross margin percentage rose from
39.97% to 40.09%.

Earnings before interest and taxation (EBIT) were $86.00 million, an
increase of 3.16%.

of cash flows. Rent expense will be replaced by amortisation and
interest expense in the income statement.

Net profit after tax (NPAT) was $63.39 million, up by 3.37%.
NPAT included dividends totalling $6.40 million from our 18.9%
shareholding in Kathmandu, compared with $5.21 million for the
previous year.

This year’s result also includes a $2 million accrual for amounts that
will be payable to past and present employees in relation to issues
concerning the calculation of employee annual leave entitlements.
These issues appear to affect numerous businesses across many
sectors and like a number of other companies we are working
through the necessary exercises to ensure we align our calculations
with the guidance received from the Ministry of Business, Innovation
and Employment (MBIE) with whom we are working.

The Group’s balance sheet remains strong, with cash and bank
balances of $80.78 million and no term debt, compared to $78.19
million as at 28 January 2018. Approximately $26 million of
creditor payments included in the trade payables balance were paid
subsequently, on 31 January 2019.

Accounting Standards

NZ IFRS 15

The introduction of accounting standard NZ IFRS 15: Revenue from
contracts with customers now means that sales revenue reported
by the Group includes delivery fees charged to online customers for
the delivery of products purchased directly online. The corresponding
cost incurred for delivery of product to customers is included in the
total cost of goods sold. These amounts were previously offset and
the net cost shown as a store expense.

The reclassification has the effect of increasing sales revenue and
cost of goods sold, while decreasing gross profit and store expenses.
There is no impact on net profit after tax. Further details can be
found in Note 6.5 (page 45) of the financial statements within this
Annual Report.

NZ IFRS 16

For several years we have been advising shareholders of the change
to the accounting standard in relation to the treatment of leases.
These changes take effect for financial periods beginning on or
after 1 January 2019, under NZ IFRS 16: Leases. While the accounts
presented in this Annual Report are not affected, our accounts for
future years will be significantly impacted.

Like a number of other retailers, we lease many of our stores. The
new standard requires lessees to recognise nearly all leases on the
balance sheet which will reflect their right to use an asset for a period
of time and the associated liability for payments.

The new standard will therefore change the presentation of the
balance sheet as well as the income statement and the statement

It is important to note that the changes have no cash effect to the
Group and the change is for financial reporting purposes only.

Further details can be found in Note 6.5 (page 47) of the financial
statements within this Annual Report.

Dividend

The directors have resolved to pay a final dividend of 12.00 cents
per share (cps), bringing the total dividend for the year to 20.00 cps,
compared with 19.00 cps for the previous year. The dividend is fully
imputed. The share register will close to determine entitlements to
the final dividend at 5 pm on 26 March 2019 and the dividend will be
paid on 29 March 2019.

Corporate Governance
Briscoe Group is committed to the highest standards of governance
and management, based on implementing best practice structures
and policies. It has always been a strong feature of this company
that the Board and Management team work effectively together and
aligned around the business objectives.

As a Board there has also been considerable activity in reviewing
and refreshing our policies and governance statements. It is
important that they are practical and applicable to all employees,
executives and directors as well as meeting our NZX and ASX
compliance obligations.

We welcomed the Corporate Governance Code (NZX Code)
published by the NZX during 2017 and we continue to seek to
ensure that our policies and charters are available, and have
relevance, to the whole Briscoe Group team. They are wide-ranging
in scope, covering issues including ethical behaviour, diversity
and risk management. It is important that they reflect today’s
operating environment, our changed customer and our employee
demographics and their, and our, expectations. There is a strong
recognition of the diversity of our community and we as a Company
need to reflect this. There is also heightened emphasis on risk and
performance, associated with our increased reliance on technology
and innovation.

There is more detail presented in our Corporate Governance
Statement contained in this Annual Report on pages 54-63 and a
number of the Group’s policies and charters are available on our
website, www.briscoegroup.co.nz.

We are a small Board by many companies’ standards and we believe
it to be effective for the Company. Tony Batterton and Andy Coupe
are chairing our Board committees most effectively.

We are most disappointed to be fare welling our long serving and
highly competent Director, Mary Devine. There are few directors in
New Zealand with Mary’s knowledge and experience in retail in particular
but also with a broad scope of governance and management skills.

Executive Share Option Plan
In 2003, the Group established an Executive Share Option Plan
to issue options to selected senior executives and, subject to
shareholder approval, to Executive Directors. The total number of
share options still exercisable would represent 1.0% of the current
issued share capital.

Briscoe Group Scholarship
The Briscoe Group Education Foundation was established to
provide employees and their children the opportunity to up-skill
and fulfil their education ambitions – a helping hand that can
make an amazing difference to their ability to contribute to family,
community and the wider society.

Further details of the Executive Share Options Plan can be found
in Note 6.2 (page 43) of the financial statements within this Annual
Report.

Subsequent to a review conducted with independent external
advisors, engaged by the Board, changes have been recommended
in relation to the Company’s incentive schemes. This has resulted
in extensive changes to the long-term incentive (LTI) scheme
including a change in vehicle (from options to performance rights),
quantum and participation. The first issue of performance rights
under the updated LTI scheme will be made during the 2019-20
financial year.

Community Sponsorship
Briscoe Group has been a key partner since 2004 of Cure Kids, a
charity set up to find cures and better treatments for serious illnesses
and diseases that affect thousands of children in New Zealand.

Our generous customers, staff and suppliers support the Group’s
efforts to raise funds for this great charity. In our 15 years as a
partner, the combined efforts have raised more than $7.2 million,
including $620,000 in the past year. The 2018-19 contributions
assisted Cure Kids to support 52 projects worth more than
$10 million including; mental health research, prevention of late
still births and a precision medicine clinical trial for children with
difficult to treat cancers.

In supporting Cure Kids’ vision of a healthy childhood for everyone,
we are also realising our shared values and strengthening our own
team culture.

In 2013, supported by the generosity of the RA Duke Trust, the Group
began its partnership with First Foundation, which brings together
sponsors, schools and talented young scholars with limited financial
resources in a proven four-year programme that includes paid work
experience, financial support and advice, and guidance from personal
mentors. The aim is to assist the recipients to achieve their goals and
aspirations.

13 scholarships have been awarded to date. The first year ‘Fee
Free’ approach to Tertiary Education introduced by the current
government means we can make the funds available go further. It is
our intention to work with First Foundation so that we maximise the
investment being made in a way that complements the changes to
the cost of engaging in tertiary education.

We continue to support our staff engaged in tertiary education.
We have established relationships with Massey University and
Auckland University of Technology to provide pathways for staff to
study at a range of levels, from certificates and diplomas through
to degrees and advanced degrees. We are particularly excited that a
number of our managers are continuing their studies via enrolment
in MBA degrees. It is our belief that this will enhance the skills and
capabilities of both the individuals and our organisation.

We recognise the benefits this can provide and we are now looking to
extend support for those who wish to participate.

On behalf on my fellow directors, I thank you all for your continued
support as shareholders in Briscoe Group.

We also provide funding to the Westpac Rescue Helicopter
and support the fund-raising activities of a wide variety of local
community-based charities, sports clubs and others.

Dame Rosanne Meo
Chairman

Managing Director’s Review of Operations

Introduction
We are pleased to have produced another record profit during
a period where challenges were plentiful and some in the retail
community have clearly struggled to meet them. The wider Briscoe
Group team, both at the Support Office and in stores, continued
to focus on the basic disciplines required for us to perform in the
modern retail environment…

•
•

Investing in the capability and growth of our people
Driving productivity gains through constant improvement
in systems and processes, with a strong focus on managing
inventory

• Optimising our network – the stores, the online platform

•

and the support services that sit behind them – to deliver an
enjoyable and rewarding experience to customers
An unrelenting focus on understanding what our customers
want and need from us, and how we can best respond to that
understanding.

These serve a strategy that has remained fundamentally consistent
over time – to make it easy for our customers to access the best
brands at the best prices through their chosen shopping method.

As indicated above, every year brings its challenges and 2018-19
was no different. Despite reasonably sound economic statistics,
consumer and business confidence remained patchy for a range of
reasons, making consumers more determined than ever to seek true
value for money.

The large spike in petrol prices during the year affected consumers
nationwide and had a predictably negative affect on retail spending.
Petrol prices eased a little in the latter part of the year, but the
overall impact was unmistakable; furthermore the imposition of the
Auckland regional fuel tax soaked up disposable income in the largest
populated area of the country.

Consumer sentiment was also affected by industrial action across
a number of sectors, including several highly-publicised strikes. In
our judgement, this negated the anticipated benefit to consumer
sentiment of the legislated increase to the minimum wage over the
years up to 2020.

The timing of shifts in retail spending continued to evolve. Summer
trading started very late in comparative terms, with a key feature
being a higher than normal concentration of sales into a smaller
number of promotional events, including Black Friday and Boxing

Day. While sales are always welcome, this change in the trading
pattern did put additional pressure on our store teams to maintain
store standards and product availability, and to fulfil online orders
to our normal service levels. Targeted operational and buying
strategies implemented through the year assisted us in dealing with
these issues. Along with improved loss prevention programmes
that reduced stock loss, they made a significant contribution
to the improvement in gross margin for the year in both dollar
and percentage terms. By learning from these experiences, and
anticipating a similar trading pattern in the coming year, we hope to
further improve our future performance.

Our Store Network
Same store sales were up by 3.43% and 2.51% for the homeware
and sporting goods segments respectively, yielding a 3.10%
improvement across the Group.

Our store development programme progressed well. By the end
of the year the homewares sector had 46 bricks and mortar stores
including 13 fulfilment hubs, and there were 38 stores in the
sporting goods sector including nine fulfilment hubs.

Our focus on adding fulfilment hubs is part of an ongoing drive to
optimise our total retail platform – our bricks and mortar store
network and our online presence. New fulfilment hubs improve
our service level and our cost-to-serve, as the online sales channel
grows at a rapid rate. We constantly review the size and location of
our fulfilment hubs and stores to ensure that they serve the needs
of our customers in the most economical fashion consistent with
our overall growth strategy.

The new Briscoes Homeware stores we opened in the 2017-18
financial year at Petone, Rangiora and Glenfield have now had a
full year of trade and settled well into the network, as have the
additional Rebel Sport stores at Petone and Kerikeri.

The 2018-19 financial year brought some frustrations, with planned
projects at Tauranga, Silverdale and Nelson delayed by factors
outside our control. Nevertheless, these projects are still alive and
will be completed when we are able to do so.

During the year, we completed a full refurbishment of Briscoes
Homeware Rotorua, which also established an online fulfilment
hub for Briscoes Homeware and Rebel Sport through a joint back-
of-house facility created as part of the project.

In Christchurch, Briscoes Homeware Northlands was relocated to a
new, purpose-built property in Papanui and a new Rebel Sport store
was opened on an adjacent site. This major development added
significant retail and stockroom space for Briscoes Homeware
and increased the presence of Rebel Sport in the Christchurch
catchment. The joint back-of-house area also contains a fulfilment
hub for both brands. The joint site opened successfully just prior
to the successful Black Friday promotion. This was a busy time to
launch new stores and their success is a credit to the set-up team
and the local store teams, who worked hard to achieve challenging
deadlines. Both stores have been well received by our Christchurch
customers and have traded well since launch.

Progress continued at pace to replace the Group’s support office in
Taylors Road, Auckland. The new building progressed to plan, with
relocation scheduled for September 2019.

In addition to planning work for major projects to be undertaken
during the 2019-20 financial year, we undertook a large number
of minor projects including relays, lighting upgrades and security
camera upgrades.

We are targeting to complete the following large projects during
the coming year:

•

The full refurbishment of Briscoes Homeware and Rebel Sport
in New Plymouth
The opening of a new Rebel Sport store in the redeveloped 277
complex at Newmarket, Auckland
The refurbishment of a Briscoes Homeware and Rebel Sport
site at Tauranga, along with the creation of an enlarged
common back-of-house facility

•

The relocation of Briscoes Homeware Riccarton to a new site
at Bush Inn, Christchurch
The opening of Briscoes Homeware and Rebel Sport at a new
site at Carr Road, Auckland.

Online Platform
Our online business grew by 27% and now represents around 10%
of the Group’s total sales revenue.

We are well under way with upgrades to our web platform that
will make it easier for people to shop online with us, and we have
continued to improve the way we assemble and deliver orders to
customers. We anticipate launching the new web platform during
the current year, and we will also continue to add new fulfilment
hubs to increase our capacity and capability in this area.

Our Click and Collect trial continues to show promise. We are
working to improve processes and procedures to support the roll-
out of more click and collect stores in the year ahead.

The continued development of our online business reflects our
strategy of offering customers the best range of brands at the best
prices across whatever channel they prefer, and we believe that
this is an effective method to counter competition from overseas
websites in this market.

The Year Ahead

As ever, we will continue to focus on improving our physical stores
and online offering to give our customers the most appropriate
shopping experience.

Our understanding of what our customers want improves as we
get better at analysing data and purchasing decisions. We will
continue to focus on building this understanding so we can base our
strategies on what our customers tell us. We will continue to use the
data and associated insights to ensure product offers, promotions,
store design and layouts continue to appeal to our customers.

In a market where media consumption is changing rapidly, the
continuous review of media and messages to reach our target
audiences is critical.

Our trademark promotions resonate with customers more than
ever, as evident from the success of our marketing programmes
during the lead-up and across the Christmas period. We look
forward to a further improvement in performance over the same
period in the current year.

We continue to focus on the Auckland market. Our developments
at Taylors Road, Carr Road and Newmarket are progressing well.
While frustrated with the delays experienced at Silverdale, we will
continue to progress the development of this important site in a
way that is economically viable.

Managing inventory effectively will remain a priority, building
further on the gains made in recent years. We will continue to
drive to get products from source to our customers as quickly and
efficiently as possible and continued supply chain analysis will help
us to identify potential improvements.

We will undertake further investment to improve our distribution
processes through our own distribution centres, third party
distributors and suppliers.

We continue to pursue a range of programmes to develop and
care for our people. Central to this is safety and wellbeing – the
ongoing improvement of our Health & Safety practices has been
a specific focus. We are pleased with the progress made in this
critically important area and have plans in place to continue to drive
improvement.

We will also remain strongly focused on training. Use of the online
Axonify platform has improved knowledge across the store and
support office teams. In the current year we will utilise this popular
form of learning to launch and embed some new initiatives around
important functions.

We will continue to support the development of key management
through appropriate tertiary study and through involvement in
other management development initiatives. We recognise that, in a
competitive retail market, building a strong talent pipeline is more
important than ever.

We remain committed to maintaining a positive differential to the
minimum wage and have factored the full cost of doing so into our
forecasts as the minimum rate increases each year.

In November, our Chief Operating Officer Pete Burilin made the
decision to retire. Pete has been with the business as a key part of
our team for more than 20 years. We wish him the best of luck in his
retirement and thank him for the part he has played within a strong
senior management team.

I commented last year that ‘retail is not dead’ and I am happy
to repeat that sentiment this year. When times are tough,
opportunities are created for those who are most determined and
best equipped to take on the challenges in a positive manner.

I believe our retail brands, driven by a dedicated team of
professionals, will continue to resonate with the New Zealand
customer; and this, in turn, will drive further success and
profitability for the Group.

Rod Duke
Group Managing Director

Group Financial Statements
Introduction

These financial statements have been presented in a style
which attempts to make them less complex and more relevant
to shareholders.

We have grouped the note disclosures into six sections:

1. Basis of Preparation
2. Performance
3. Operating Assets and Liabilities
4. Investments
5. Financing and Capital Structure
6. Other Notes

Each section sets out the accounting policies applied to the
relevant notes.

The purpose of this format is to provide readers with a clearer
understanding of the financial affairs of the Group.

Accounting policies have been shown in shaded
areas for easier identification.

Contents Consolidated Financial Statements

Consolidated Financial Statements

4. Investments

Directors’ Approval of Consolidated Financial Statements ...............14

4.1 Investment in Equity Securities ...........................................33

Consolidated Income Statement .........................................................15

5. Financing and Capital Structure

Consolidated Statement of Comprehensive Income ..........................15

5.1 Interest Bearing Liabilities ..................................................34

5.2 Financial Risk Management ................................................34

5.2.1 Derivative Financial Instruments ..............................35

5.2.2 Credit Risk ...............................................................35

5.2.3 Interest Rate Risk ....................................................35

5.2.4 Liquidity Risk ...........................................................36

5.2.5 Market Risk .............................................................37

5.2.6 Sensitivity Analysis ..................................................38

5.3 Equity ................................................................................39

5.3.1 Capital Risk Management .........................................39

5.3.2 Share Capital ...........................................................39

5.3.3 Dividends .................................................................40

5.3.4 Reserves and Retained Earnings ...............................40

6. Other Notes

6.1 Related Party Transactions .................................................41

6.1.1 Parent and Ultimate Holding Company ......................41

6.1.2 Key Management Personnel .....................................41

6.1.3 Directors’ Fees and Dividends ...................................42

6.2 Executive Share Options .....................................................43

6.3 Contingent Liabilities ..........................................................44

6.4 Events After Balance Date...................................................44

6.5 New Accounting Standards .................................................45

Consolidated Balance Sheet ...............................................................16

Consolidated Statement of Cash Flows ..............................................17

Consolidated Statement of Changes in Equity ....................................19

Notes to the Consolidated Financial Statements

1. Basis of Preparation

1.1 General Information ............................................................20

1.2 General Accounting Policies ................................................20

2. Performance

2.1 Segment Information .........................................................22

2.2 Income and Expenses ........................................................24

2.3 Taxation ............................................................................25

2.3.1 Taxation – Income Statement ...................................26

2.3.2 Taxation – Balance Sheet .........................................27

2.3.3 Imputation Credits ...................................................28

2.4 Earnings per Share .............................................................28

3. Operating Assets and Liabilities

3.1 Working Capital ..................................................................29

3.1.1 Cash and Cash Equivalents .......................................29

3.1.2 Trade and Other Receivables .....................................29

3.1.3 Inventories ...............................................................30

3.1.4 Trade and Other Payables .........................................30

3.2 Property, Plant and Equipment ...........................................31

3.3 Intangible Assets................................................................32

Directors’ Approval of Consolidated Financial Statements

Authorisation for Issue

The Board of Directors authorised the issue of these Consolidated Financial Statements on 12 March 2019.

Approval by Directors

The Directors are pleased to present the Consolidated Financial Statements for Briscoe Group Limited for the 52 week period ended
27 January 2019. (Comparative period is for the 52 week period ended 28 January 2018).

Rod Duke
GROUP MANAGING DIRECTOR

Dame Rosanne Meo
CHAIRMAN

12 March 2019
For and on behalf of the Board of Directors

Consolidated Income Statement

For the 52 week period ended 27 January 2019

Sales revenue
Cost of goods sold

Gross profit
Other operating income
Store expenses
Administration expenses

Earnings before interest and tax

Finance income
Finance costs

Net finance income / (costs)

Profit before income tax
Income tax expense

Net profit attributable to shareholders

1. Refer Note 6.5 for details of restatement.

Earnings per share for profit attributable to shareholders:

Basic earnings per share (cents)
Diluted earnings per share (cents)

Period ended
27 January 2019
$000

Notes

Restated1.
Period ended
28 January 2018
$000

631,919
( 378,564 )

253,355
6,994
( 103,202 )
(71,152 )

85,995

754
(142 )

612

86,607
(23,214 )

63,393

605,136
(363,242 )

241,894
6,260
(99,485 )
(65,305 )

83,364

567
(136 )

431

83,795
(22,470 )

61,325

28.7
28.3

27.8
27.3

2.2

5.1

2.3.1

2.4
2.4

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

Consolidated Statement of Comprehensive Income

For the 52 week period ended 27 January 2019

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

Notes

Net Profit attributable to shareholders

63,393

61,325

Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Change in value of investment in equity securities
4.1
Fair value (gain)/loss recycled to income statement from cashflow hedge reserve
Fair value gain/(loss) taken to the cashflow hedge reserve
Deferred tax on fair value gain/(loss) taken to income statement
from cashflow hedge reserve
Deferred tax on fair value (gain)/loss taken to cashflow hedge reserve

2.3.2
2.3.2

Total other comprehensive income

Total comprehensive income attributable to shareholders

994
(3,904 )
5,509

1,093
(1,543 )

2,149

65,542

18,845
484
(621 )

(136 )
174

18,746

80,071

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

Consolidated Balance Sheet

As at 27 January 2019

ASSETS

Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments

Total current assets

Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax
Investment in equity securities

Total non-current assets

TOTAL ASSETS

LIABILITIES

Current liabilities
Trade and other payables
Taxation payable
Derivative financial instruments

Total current liabilities

Non-current liabilities
Trade and other payables

Total non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITY
Share capital
Cashflow hedge reserve
Share options reserve
Other reserves
Retained earnings

TOTAL EQUITY

Notes

27 January 2019
$000

28 January 2018
$000

3.1.1
3.1.2
3.1.3
5.2.5

3.2
3.3
2.3.2
4.1

3.1.4
2.3.2
5.2.5

3.1.4

5.3.2
5.2.5
6.2
5.3.4

80,777
2,822
81,017
793

165,409

92,016
2,520
3,418
101,989

199,943

365,352

83,754
6,830
448

91,032

779

91,811

273,541

58,929
240
1,097
27,738
185,537

273,541

78,193
2,737
74,494
47

155,471

83,326
1,364
2,983
95,427

183,100

338,571

81,161
6,980
1,276

89,417

726

90,143

248,428

56,467
(915 )
1,045
26,744
165,087

248,428

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

Consolidated Statement of Cash Flows

For the 52 week period ended 27 January 2019

OPERATING ACTIVITIES

Cash was provided from
Receipts from customers
Rent received
Dividends received
Interest received
Insurance recovery

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

Period ended
27 January 2019
$000

Notes

Restated1.
Period ended
28 January 2018
$000

631,881
589
6,405
748
-

639,623

(458,458 )
(70,649 )
(142 )
(20,405 )
(24,249 )

(573,903 )

605,146
801
5,216
472
243

611,878

(431,567 )
(66,532 )
(129 )
(22,418 )
(21,704 )

(542,350 )

Net cash inflows from operating activities

65,720

69,528

INVESTING 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
Investment in equity securities

Net cash outflows from investing activities

FINANCING ACTIVITIES

Cash was provided from
Net proceeds from borrowings
Issue of new shares

Cash was applied to
Dividends paid

3.2

4.1

5.1
5.3.2

5.3.3

Net cash outflows from financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at period end

3.1.1

1. Refer Note 6.5 for details of restatement.

4,905

(19,632 )
(1,959 )
(5,568 )

(27,159 )

(22,254 )

-
2,178

2,178

(43,090 )

(40,912 )

2,554
78,193
30

80,777

(12,888 )
(1,116 )

(14,004 )

(13,998 )

-
3,282

3,282

(40,710 )

(37,428 )

18,102
60,066
25

78,193

Consolidated Statement of Cash Flows

For the 52 week period ended 27 January 2019

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

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

Reported net profit attributable to shareholders

63,393

61,325

Items not involving cash flows
Depreciation and amortisation expense
Adjustment for fixed increase leases / inducements
Bad debts and movement in doubtful debts
Inventory adjustments
Executive share option expense
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

6,784
13
128
(435)
483
56

7,029

(213 )

(6,088 )

(150 )
(350 )
2,099

(4,702)

6,233
29
110

(157)
632

116

6,963

(288)

4,594
696
(41 )
(3,721 )

1,240

Net cash inflow from operating activities

65,720

69,528

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

Consolidated Statement of Changes in Equity

For the 52 week period ended 27 January 2019

Balance at 29 January 2017

52,756

(816 )

957

7,899

144,357

205,153

Reserve Reserve
$000

$000

Notes

Share Cashflow

Other Retained
Hedge Options Reserves Earnings

Total
Equity

Capital

Net profit attributable to shareholders for the period

Other comprehensive income:

Change in value of investment in equity securities

4.1

Net fair value loss taken through cashflow hedge reserve

Total comprehensive income for the period

Transactions with owners:

Dividends paid

Share options charged to income statement

Share options exercised

Transfer for share options lapsed and forfeited

5.3.3

6.2

5.3.2,6.2

3,711

6.2

(99 )

632

(429 )

(115 )

61,325

18,845

(99)

18,845

61,325

80,071

(40,710 )

115

632

3,282

Balance at 28 January 2018

56,467

(915 )

1,045

26,744

165,087

248,428

Net profit attributable to shareholders for the period

Other comprehensive income:

Change in value of investment in equity securities

4.1

Net fair value gain taken through cashflow hedge reserve

Total comprehensive income for the period

Transactions with owners:

Dividends paid

Share options charged to income statement

Share options exercised

Transfer for share options lapsed and forfeited

5.3.3

6.2

5.3.2,6.2

2,462

6.2

1,155

483

(284 )

(147 )

63,393

994

1,155

994

63,393

65,542

(43,090 )

147

483

2,178

Balance at 27 January 2019

58,929

240

1,097

27,738

185,537

273,541

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

1. Basis of Preparation

For the 52 week period ended 27 January 2019

This section presents a summary of information considered relevant and material to assist the reader in understanding the
foundations on which the financial statements as a whole have been compiled. Accounting policies specific to notes shown
in other sections are included as part of that particular note.

1.1 General Information

Briscoe Group Limited (the Company) and its subsidiaries (together the Group) is a retailer of homeware and sporting goods. The Company
is a limited liability company incorporated and domiciled in New Zealand and is listed on the New Zealand Stock Exchange (NZX). Briscoe
Group Limited is registered under the Companies Act 1993 and is an FMC Reporting Entity under Part 7 of the Financial Markets Conduct
Act 2013. The address of its registered office is 36 Taylors Road, Morningside, Auckland. The Company is registered in Australia as a foreign
company under the name Briscoe Group Australasia Limited and is listed on the Australian Securities Exchange as a foreign exempt entity.
(NZX / ASX code: BGP).

The financial statements of the Group have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act
2013 and the NZX Main Board Listing Rules.
These audited consolidated financial statements have been approved for issue by the Board of Directors on 12 March 2019.

1.2 General Accounting Policies

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice (GAAP). They comply with
New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate
for for-profit entities. The consolidated financial statements also comply with International Financial Reporting Standards (IFRS).

The consolidated financial statements are presented in New Zealand dollars which is the Company’s functional currency and the Group’s presentation
currency. All financial information has been presented in thousands, unless otherwise stated.

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
The consolidated financial statements reported are for the consolidated Group which is the economic entity comprising Briscoe Group Limited and
its subsidiaries. The Group is designated as a for-profit entity for the purposes of complying with GAAP.

Reporting period
These consolidated financial statements are in respect of the 52 week period 29 January 2018 to 27 January 2019 and provide a balance sheet
as at 27 January 2019. The comparative period is in respect of the 52 week period 30 January 2017 to 28 January 2018. The Group operates on
a weekly trading and reporting cycle resulting in 52 weeks for most years with a 53 week period occurring once every 5-6 years.

1. Basis of Preparation

For the 52 week period ended 27 January 2019

Principles of consolidation
Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the 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.

Intercompany transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Accounting policies
of subsidiaries are changed when necessary to ensure consistency with the policies adopted by the Company.

Subsidiaries

Activity

2019 Interest

2018 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 are incorporated in New Zealand and have a balance date consistent with that of the Company as outlined in the
accounting policies.

Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain assets as identified
in specific accounting policies detailed throughout these financial statements.

Critical accounting judgements and estimates
In the process of applying the Group’s accounting policies and the application of accounting standards, a number of estimates and judgements
have been made. The estimates and underlying assumptions are based on historical experience and adjusted for current market conditions and
other factors, including expectations of future events that are considered to be reasonable under the circumstances. If outcomes within the next
financial period are significantly different from assumptions, this could result in adjustments to carrying amounts of the asset or liability affected.
Further explanation as to estimates and assumptions made by the Group can be found in the notes to the financial statements:

Areas of Estimation

Inventories

Note

3.1.3

Foreign currency translation
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 period-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in which case
they are recognised in other comprehensive income as qualifying cash flow hedges.

2. Performance

For the 52 week period ended 27 January 2019

This section reports on the results and performance of the Group, providing additional information about individual items,
including performance by operating segment, revenue, expenses, taxation and earnings per share.

2.1 Segment Information

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.

The Group is organised into two reportable operating segments, namely homeware and sporting goods, reflecting the different retail sectors
within which the Group operates. The Company is considered not to be a reportable operating segment. Eliminations and unallocated amounts
as shown below are primarily attributable to the Company. There were no inter-segment sales in the period (2018: Nil).

Information regarding the operations of each reportable operating segment is included below. Segment profit represents the profit earned by
each segment and is extracted from the income statements associated with the two trading subsidiary companies, Briscoes (NZ) Limited and
The Sports Authority Limited (trading as Rebel Sport). Earnings before interest and tax (EBIT) is a non-GAAP measure and used by CODM to
assess the performance of the operating segments.

Homeware

Sporting goods

$000

Eliminations /
Unallocated
$000

For the period ended 27 January 2019

INCOME STATEMENT

Total sales revenue

Gross profit

Earnings before interest and tax

Finance income

Finance costs

Net finance income / (costs)

Income tax expense

Net profit after tax

BALANCE SHEET ITEMS:

Assets

Liabilities

OTHER SEGMENTAL ITEMS:

Acquisitions of property, plant and equipment,
intangibles and investments

Depreciation and amortisation

1. Investment in equity securities
Intercompany eliminations
Other balances
Total

Total Group

$000

631,919

253,355

85,995

754

(142)

612

(23,214)

63,393

365,352

91,811

8,244

(142)

(102)

(1,109)

7,033

102,8771.

(3,875)

5,568

27,159

6,784

228,760

91,185

31,062

537

(8,849)

22,750

107,444

39,399

2,148

2,064

403,159

162,170

46,689

177

(13,256)

33,610

155,031

56,287

19,443

4,720

$000
101,989
(812 )
1,700
102,877

2. Performance

For the 52 week period ended 27 January 2019

For the period ended 28 January 2018

INCOME STATEMENT

Total sales revenue

Gross profit

Earnings before interest and tax

Finance income

Finance costs

Net finance income / (costs)

Income tax expense

Net profit after tax

BALANCE SHEET ITEMS:

Assets

Liabilities

OTHER SEGMENTAL ITEMS:

Acquisitions of property, plant and equipment,
intangibles and investments

Depreciation and amortisation

Investment in equity securities
Intercompany eliminations
Other balances
Total

Restated
Homeware
$000

Restated
Sporting goods
$000

Eliminations /
Unallocated
$000

Restated
Total Group
$000

219,919

87,807

30,225

337

(8,559)

22,003

93,218

39,078

2,923

1,964

7,019

(136)

(93)

(771)

6,155

96,4311.

362

605,136

241,894

83,364

567

(136)

431

(22,470)

61,325

338,571

90,143

14,006

6,233

385,217

154,087

46,120

187

(13,140)

33,167

148,922

50,703

11,083

4,269

$000
95,427
(863 )
1,867
96,431

2. Performance

For the 52 week period ended 27 January 2019

2.2 Income and Expenses

Revenue recognition
Revenue comprises the fair value of consideration received or receivable for the sale of goods and services, net of Goods and Services Tax (GST),
and discounts and after eliminating sales within the Group. Revenue is recognised as follows:

Sales of goods - retail
For all sales, control is considered to pass to the customer at the point when the customer can use or otherwise benefit from the goods
and services. For in-store sales, control passes to the customer at point of sale. For online sales, the order along with delivery to the
customer are considered to comprise a single performance obligation, therefore control is considered to pass to the customer on delivery
of the goods. Retail sales are predominantly by credit card, debit card or in cash.

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

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

Dividend income
Dividend income is recognised when the right to receive the dividend is established.

Rental and operating leases expense
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 leases various retail outlets under non-cancellable operating lease agreements. The leases reflect normal commercial arrangements
with varying terms, escalation clauses and renewal rights.

The future rental commitments on these leases are as follows:

Lease commitments expire as follows:

Within one year

One to two years

Two to five years

Beyond five years

Total operating lease rental commitments

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

28,604

25,938

48,295

38,558

141,395

28,483

23,307

44,097

29,807

125,694

2. Performance

For the 52 week period ended 27 January 2019

Profit before income tax includes the following specific income and expenses:

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

Income

Rental income

Dividends received

Insurance recovery

Expenses

Operating lease expense

Wages, salaries and other short term benefits

Share options expense (refer also Note 6.2)

Depreciation of property, plant and equipment

Amortisation of software costs

Amounts paid to auditors:

Statutory Audit1.

Half year review

Other services2.

589

6,405

33,624

72,905

483

5,981

803

128

134

801

5,216

243

31,299

64,611

632

5,521

712

115

1. Statutory Audit includes audit work performed in relation to new accounting standards.
2. Other services provided relates to financial and taxation due diligence services in relation to a possible acquisition ($93,000) and executive
remuneration review and advice ($41,000).

2.3 Taxation

Current and deferred 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.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in
New Zealand, being the country where the Group operates and generates taxable income. The Group 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 income tax is provided in full, using the liability method, on temporary differences arising between tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset when the entity has a
legal enforceable right to offset and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Goods and Services Tax (GST)
The income statement, statement of comprehensive income and statement of cash flows have been prepared so that all components
are stated 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.

2. Performance

For the 52 week period ended 27 January 2019

2.3.1 Taxation – Income statement

The total taxation charge in the income statement is analysed as follows:

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

(a) Income tax expense

Current tax expense:

Current tax

Adjustments for prior periods

Deferred tax expense:

Decrease in future tax benefit current period

Adjustments for prior periods

Total income tax expense

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

Profit before income tax expense

Tax at the corporate rate of 28% (2018: 28%)

Tax effect of amounts which are either non-deductible or
non-assessable in calculating taxable income:

Tax effect of disposal of buildings

Prior period adjustments
Total income tax expense

The Group has no tax losses (2018: Nil) and no unrecognised temporary differences (2018: Nil).

23,376

723

24,099

(142)

(743)

(885)

23,214

86,607

24,250

(1,016)

(20)

23,214

21,539

861

22,400

882

(812)

22,470

83,795

23,463

(1,042)

22,470

2. Performance

For the 52 week period ended 27 January 2019

2.3.2 Taxation – Balance sheet

(a) Deferred Taxation

The following are the major deferred taxation liabilities and assets recognised by the Group and movements thereon during the
current and prior period:

At 29 January 2017

Credited / (charged) to the income statement

Net credited to other comprehensive income

At 28 January 2018

Credited to income statement

Net charged to other comprehensive income

At 27 January 2019

Depreciation
$000

Provisions
$000

Derivative
financial
instruments
$000

103

(297)

(194)

(162)

2,594

227

2,821

853

3,674

318

381.

356

(450)1.

(94)

Total
$000

3,015

(70)

2,983

885

(450)

3,418

1. Net credited to other comprehensive income comprises deferred tax on fair value gain taken to income statement of $1,093,249 (2018: deferred
tax on fair value loss of $135,519) and deferred tax on fair value gain taken to cash flow hedge reserve of $1,542,469 (2018: deferred tax on fair
value loss of $173,830).

(b) Taxation payable

The following is the analysis of the movements in the taxation payable balance during the current and prior period:

Movements:

Balance at beginning of period

Current tax

Tax paid

Foreign investor tax credit (FITC)

Balance at end of period

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

(6,980)

(24,099)

23,932

317

(6,830)

(6,284)

(22,400)

21,412

292

(6,980)

2. Performance

For the 52 week period ended 27 January 2019

2.3.3 Imputation credits

Imputation credits available for use in subsequent accounting periods

Period ended
27 January 2019
$000

85,445

Period ended
28 January 2018
$000

77,128

The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted for:
•
•
•

Imputation credits that will arise from the payment of the provision for income tax,
Imputation debits that will arise from the payment of dividends recognised as liabilities at the reporting date, and
Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.

The consolidated amounts include imputation credits that would be available to the Company if subsidiaries paid dividends.

2.4 Earnings per share

Earnings per share (EPS) is the amount of post-tax profit attributable to each share.

Basic EPS is computed by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares on issue during
the period.

Diluted EPS adjusts for any commitments the Group has to issue shares in the future that would decrease the Basic EPS. These are in the form
of share options. Diluted EPS is therefore computed by dividing the 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.

Net profit attributable to shareholders

Basic

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

Diluted

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

Diluted earnings per share

Period ended
27 January 2019
$000

63,393

221,130

28.7 cents

Period ended
28 January 2018
$000

61,325

220,227

27.8 cents

224,207

28.3 cents

224,452

27.3 cents

3. Operating Assets and Liabilities

For the 52 week period ended 27 January 2019

This section reports the assets used to generate the Group’s trading performance and the liabilities incurred as a result.
Liabilities relating to the Group’s financing activities are addressed in note 5. Assets and liabilities in relation to deferred
taxation and taxation payable are shown in note 2.3. The carrying amounts of financial assets and liabilities are equivalent
to their fair value unless otherwise stated.

3.1 Working Capital

Working capital represents the assets and liabilities the Group generates through its trading activity. The Group therefore defines working
capital as cash, trade and other receivables, inventories and trade and other payables.

3.1.1 Cash and cash equivalents

Cash and cash equivalents include 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 that are subject to an insignificant risk of
changes in value.

Cash at bank or in hand

Period ended
27 January 2019
$000

80,777

Period ended
28 January 2018
$000

78,193

As at 27 January 2019 the Group held foreign currency equivalent to NZ$1.820 million (2018: NZ$1.725 million) which is included in the table
above. The foreign currency in which the Group deals primarily is the US Dollar.

3.1.2 Trade and other receivables

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 receivables are recognised initially at the value of the invoice sent to the customer (fair value) and
subsequently at the amounts considered recoverable (amortised cost). Trade receivable balances are reviewed on an on-going basis.

Trade receivables

Prepayments

Other receivables

Total trade and other receivables

No interest is charged on trade receivables.

Period ended
27 January 2019
$000

513

1,612

697

2,822

Period ended
28 January 2018
$000

571

1,451

715

2,737

3. Operating Assets and Liabilities

For the 52 week period ended 27 January 2019

3.1.3 Inventories

Inventories are stated at the lower of cost and 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.

The Group assesses the likely residual value of inventory. Stock provisions are recognised for inventory which is expected to sell for less than cost
and also for the value of inventory likely to have been lost to the business through shrinkage between the date of the last applicable stocktake and
balance date. In recognising the provision for inventory, judgement has been applied by considering a range of factors including historical results,
current trends and specific product information from buyers.

Finished goods

Inventory provisions and adjustments

Net inventories

3.1.4 Trade and other payables

Period ended
27 January 2019
$000

84,816

(3,799)

81,017

Period ended
28 January 2018
$000

78,894

(4,400)

74,494

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.

Trade payables
Trade payables are recognised at the value of the invoice received from a supplier (fair value). The carrying value of trade payables is considered
to approximate fair value as the amounts are unsecured and are usually paid within 60 days of recognition.

Employee entitlements
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. The liability for employee entitlements is carried at the present value of the estimated future cash flows.

Bonus plans

A liability is recognised for bonuses payable to employees where a contractual obligation arises for an agreed level of payment dependent on
both company and individual performance criteria.

Long service leave

The liability for long service leave is recognised as a non-current liability 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.

Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions relate to returns in relation to sales of goods directly imported by the Group and are expected to be fully utilised within the next
twelve months. Provisions relating to inventory, receivables and employee benefits have been treated as part of those specific balances. There
are no other provisions relating to these financial statements.

3. Operating Assets and Liabilities

For the 52 week period ended 27 January 2019

Trade payables

Employee entitlements1.

Other payables and accruals

Provisions

Period ended
27 January 2019
$000

57,509

12,344

14,562

118

Period ended
28 January 2018
$000

57,859

10,089

13,838

101

Total trade and other payables

84,533

81,887

Shown in balance sheet as:

Current liabilities

Non-current liabilities

Total trade and other payables

83,754

779

84,533

81,161

726

81,887

1. Includes accrual for annual leave entitlements in relation to Ministry of Business, Innovation and Employment (MBIE) audit $2.05 million (2018: Nil).

3.2 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. 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.

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 of assets are determined by comparing proceeds with carrying amounts. These gains and losses are included in the
income statement.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of their estimated
residual values, over their estimated useful lives, as follows:

- Freehold buildings
- Plant and equipment

33 years
3 - 15 years

Property, plant and equipment is reviewed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
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.

The Group assesses whether there are indications, for example loss-making stores, for certain trigger events which may indicate that an impairment
in property, plant and equipment values exist at balance date.

3. Operating Assets and Liabilities

For the 52 week period ended 27 January 2019

At 29 January 2017

Cost

Accumulated depreciation

Accumulated impairment

Net book value

Period ended 28 January 2018

Opening net book value

Additions

Disposals

Depreciation charge
Closing net book value

At 28 January 2018

Cost

Accumulated depreciation

Accumulated impairment
Net book value

Period ended 27 January 2019

Opening net book value

Additions

Disposals

Depreciation charge

Closing net book value

At 27 January 2019

Cost

Accumulated depreciation

Net book value

Capital commitments

Land and
buildings
$000

60,636

(3,995)

56,641

5,412

(784)

61,269

66,047

(4,778)

61,269

16,113

(4,894)

(1,075)

71,413

77,115

(5,702)

71,413

Plant and
equipment
$000

76,846

(57,402)

(4)

19,440

7,476

(122)

(4,737)

22,057

78,582

(56,523)

(2)

22,057

3,519

(67)

(4,906)

20,603

79,556

(58,953)

20,603

Period ended
27 January 2019
$000

Total
$000

137,482

(61,397)

(4)

76,081

12,888

(122)

(5,521)

83,326

144,629

(61,301)

(2)

83,326

19,632

(4,961)

(5,981)

92,016

156,671

(64,655)

92,016

Period ended
28 January 2018
$000

Capital commitments in relation to property, plant and equipment at
balance date not provided for in the financial statements

7,8301.

18,7891.

1. $7.3 million relates to a building contract for the development and construction of new retail and office premises at Taylors Road, Auckland
(2018: $18.3 million).

3.3 Intangible Assets

Intangible assets are non-physical assets used by the Group to operate the business. Software costs have a finite useful life. Software costs are
capitalised and amortised on a straight-line basis over the estimated useful economic life of 2 to 5 years.

Software is the only intangible asset recorded in the financial statements. All software has been acquired externally.

4. Investments

For the 52 week period ended 27 January 2019

This section explains how the Group records investments made in listed securities.

4.1 Investment in equity securities

In June 2015 Briscoe Group Limited acquired 40,095,432 shares in Kathmandu Holdings Limited (Kathmandu) for a value of $68,682,734.
During March and April 2018, as part of capital raising programmes initiated by Kathmandu, Briscoe Group Limited acquired a further 2,577,870
shares for a cost of $5,568,198. The holding represented an 18.87% ownership in Kathmandu Holdings Limited as at 27 January 2019. These
shares are equity investments, quoted in the active market, which the Group has elected to designate as a financial asset at fair value through
other comprehensive income (FVOCI). This designation has been made because the investment meets the definition of an equity instrument
and is not held for trading. An adjustment was made at period end to reflect the fair value of these shares as at 27 January 20191..

Until 28 January 2018, the Group classified its equity investment as an available-for-sale financial asset. Available-for-sale financial assets were
investments that did not have fixed maturities and fixed or determinable payments, and that were intended to be held for the medium to long-term.

Available-for-sale financial assets were initially recognised at fair value and subsequently carried at fair value. Changes in the fair value of available-
for-sale financial assets were recognised in other comprehensive income. To determine if an available-for-sale financial asset was impaired, the
Group evaluated the duration and extent to which the fair value of the asset was less than its cost, and the financial health of and short-term
outlook for the business (including factors such as industry and sector performance, changes in technology, operational and financing cash flows,
public disclosures by the business and published independent external analysis). When available-for-sale financial assets were sold or impaired,
the accumulated fair value adjustments recognised in equity were included as gains or losses in the income statement. Dividends on available-
for-sale financial assets were recognised in the income statement as part of ‘Other operating income’ when the right to receive the payment was
established.

Classification under FVOCI will not affect the previous measurement of these equity instruments, however cumulative gains or losses realised on the
sale of equity instruments at FVOCI will no longer be transferred to profit or loss on sale, but instead will be transferred to retained earnings.

At 29 January 2017

Additions

Change in value credited to other reserves

At 28 January 2018

Additions

Change in value credited to other reserves

At 27 January 2019

$000

76,582

18,845

95,427

5,568

994

101,989

1. Fair value determined to be $2.39 per share as per NZX closing price of Kathmandu Holdings Limited as at 27 January 2019 (2018: $2.38) (Level 1
in the fair value hierarchy).

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

This section reports on the Group’s funding sources and capital structure, including its balance sheet liquidity and access to
capital markets.

5.1 Interest Bearing Liabilities

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of
the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet date.

The Group has an unsecured facility with the Bank of New Zealand for $40 million. Any drawdowns are repayable in full on expiry date of the
facility being 20 September 2019. Interest is payable based on the BKBM rate plus applicable margin. The facility is sufficiently flexible that the
amounts can be drawn down and repaid to accommodate fluctuations in operating cash flows within overall limits, without the need for prior
approval of the bank. The maximum drawdown made under the facility during the period was $10 million.

The covenants entered into by the Group require specified calculations of Group’s earnings before interest, tax, depreciation and amortisation
(EBITDA) plus lease rental costs to exceed total fixed charges (net interest expense and lease rental costs) at the end of each half during the
financial period. Similarly EBITDA must be no less than a specified proportion of total net debt at the end of each half. The Group was in
compliance with the covenants throughout the period.

There were no amounts repayable under the facility as at 27 January 2019. (2018: Nil).

Net finance income / (costs)

Interest income

Interest expense

Other finance costs

Period ended
27 January 2019
$000

754

(10)

Period ended
28 January 2018
$000

567

(23)

(132)

(113)

Net finance income / (costs)

612

431

5.2 Financial Risk Management
The Group’s activities expose it to various financial risks including credit risk, liquidity risk, credit risk and market risk (such as currency
risk, interest rate risk and equity price 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.

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

5.2.1 Derivative financial instruments

Derivatives are recognised initially 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 hedges of highly probable forecast transactions (cash flow hedges).

At the inception of a transaction the economic relationship between hedging instruments and hedged items, and the risk management objective
and strategy for undertaking various hedge transactions, are documented. An assessment is also documented, both at hedge inception and on an
on-going 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.

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 within cost of goods
sold.

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

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 the 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 within cost of goods sold.

Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of these derivative instruments are recognised
immediately in the income statement within administration expenses.

5.2.2 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-rated, Board-approved 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.

5.2.3 Interest rate risk
The Group has no long-term interest-bearing liabilities but does have interest rate risk exposure from periodic short-term drawdowns of
established funding facilities and placements of short term deposits, as operating cash flows necessitate. The Group’s short to medium
term liquidity position is monitored daily and reported to the Board monthly.

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

5.2.4 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 a timely 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. The Group’s liquidity position fluctuates throughout the period,
being strongest immediately after the end of the 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 operates well within its available funding
facilities.

The table below analyses the Group’s financial liabilities and gross-settled forward foreign exchange contracts 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. Changes in
the carrying value affect profit when the underlying inventory to which the derivatives relate, is sold.

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

As at 27 January 2019

3 months
or less
$000

3 – 6
months
$000

6 – 9
months
$000

9 – 12
months
$000

Total
$000

Carrying
Value
$000

Trade and other payables

(83,755)

Forward foreign exchange contracts

Cash flow hedges:

- outflow

- inflow

- Net

As at 28 January 2018

(16,808)

(14,538)

(22,450)

17,338

530

14,367

(171)

22,434

(16)

(365)

367

(54,161)

54,506

345

3 months or
less
$000

3 – 6
months
$000

6 – 9
months
$000

9 – 12
months
$000

Total
$000

Carrying
Value
$000

Trade and other payables

(81,161)

Forward foreign exchange contracts

Cash flow hedges:

- outflow

- inflow

- Net

(15,778)

15,352

(426)

(15,481)

15,358

(123)

(19,010)

18,441

(569)

(5,572)

5,461

(111)

(55,841)

54,612

(1,229)

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

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

5.2.5 Market risk

Equity price risk
The Group is exposed to equity price risk arising from the investment held in Kathmandu Holdings Limited, classified in the balance sheet as investment
in equity securities. (Refer note 4.1).

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.

The Group’s foreign exchange risk is managed in accordance with Board-approved Group Treasury Risk Management Policies. 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 and lower levels of forecasted purchases depending on which quarter the forecasted exposure relates
to. Hedging is reviewed regularly and reported to the Board monthly.

The Group uses forward foreign exchange contracts and maintains short-term holdings of foreign currencies in foreign denominated currency bank
accounts, with major financial institutions only, to hedge its foreign exchange risk in anticipation of future purchases.

The following table shows the fair value of forward foreign exchange contracts held by the Group as derivative financial instruments at balance date:

Current assets

Forward foreign exchange contracts

Total current derivative financial instrument assets

Current liabilities

Forward foreign exchange contracts

Period ended
27 January 2019
$000

793

Period ended
28 January 2018
$000

448

1,276

Total current derivative financial instrument liabilities

448

1,276

The contracts are subject to an enforceable master netting arrangement, which allows for net settlement of the relevant assets and liabilities.
For financial reporting purposes these are not offset.

Forward foreign exchange contracts – cash flow hedges

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 period as the inventory for which the hedge exists, is sold.

The fair value of these contracts is determined by using valuation techniques as they are not traded in an active market. The valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. The fair value is
determined by mark-to-market valuations using forward exchange. These derivatives have been determined to be within level 2 of the fair value
hierarchy as all significant inputs required to ascertain their fair value are observable.

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

Forward foreign exchange contracts are used for hedging committed or highly probable forecast purchases of inventory for the ensuing financial
period. 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.

At balance date these contracts are represented by assets of $793,395 (2018: $47,375) and liabilities of $448,000 (2018: $1,276,338) and
together are included in equity as part of the cash flow hedge reserve, net of deferred tax, as a net gain of $248,677 (2018: net loss $884,854).
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 $8,543
(2018: net loss of $30,151). The total of these net gains and losses amount to a net loss of $240,134 (2018: net loss $915,005).

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 (2018: Nil).

5.2.6 Sensitivity analysis

Based on historical movements and volatilities and review of current economic commentary the following movements are considered
reasonably possible over the next 12 month period:

• A shift of -10% / +5% (2018: -10% / +5%) in the NZD against the USD, from the period-end rate of 0.6761 (2018: 0.7321),
• A shift of -0.25% / +0.25% (2018: -0.25% / +0.50%) in market interest rates from the period-end weighted average deposit rate of

2.27% (2018: 2.26%).

• A shift of -10% / +20% (2018: -10% / +20%) in the NZX share price of Kathmandu Holdings Ltd from the period-end closing share

price of $2.39 (2018: $2.38).

If these movements were to occur, the positive / (negative) impact on consolidated profit after tax and consolidated equity for each category of
financial instrument held at balance date is presented below.

As at 27 January 2019

Financial assets:

Interest rate

Foreign
exchange rate

Equity price

-0.25%

+0.25%

-10%

+5%

-10%

+20%

Profit
$000

Equity
$000

Profit
$000

Equity
$000

Carrying
amount
$000

Cash and cash equivalents1.

80,777

(142)

142

146

(62)

Derivatives – designated as
cashflow hedges (Forward
foreign exchange contracts)2.
Investment in equity securities3.

793
101,989

Financial liabilities:

Derivatives – designated as
cashflow hedges (Forward
foreign exchange contracts)2.

448

-
-

2,565
-

(1,050)
-

-
-
(10,199) 20,398

1,844

(761)

Total increase /(decrease)

(142)

142

4,555

(1,873)

(10,199) 20,398

Receivables and payables have not been included above as they are denominated in NZD and are non-interest bearing and therefore not subject
to market risk.

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

As at 28 January 2018

Interest rate

Foreign
exchange rate

Equity price

Carrying
amount
$000

-0.25%

+0.50%

-10%

+5%

-10%

+20%

Profit
$000

Equity
$000

Profit
$000

Equity
$000

Financial assets:

Cash and cash equivalents1.

78,193

(138)

275

138

(59)

449

(178)

(9,623)

19,246

Derivatives – designated as
cashflow hedges (Forward
foreign exchange contracts)2.

Investment in equity securities3.

95,427

Financial liabilities:

Derivatives – designated as.
cashflow hedges (Forward
foreign exchange contracts)2.

Total increase /(decrease)

1,276

(138)

275

4,614

(1,850)

(9,623)

19,246

4,027

(1,613)

Receivables and payables have not been included above as they are denominated in NZD and are non-interest bearing and therefore not
subject to market risk.

1. Cash and cash equivalents include deposits at call which are at floating interest rates.
2. 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. There is no profit or loss sensitivity as the hedges are 100% effective.
Investment in equity securities represents shares held in Kathmandu Holdings Ltd.. There is no profit or loss sensitivity as impacts from changes
in KMD’s share price are accounted for through equity.

5.3 Equity
5.3.1 Capital risk management

The Group’s capital comprises contributed equity, reserves and retained earnings.

The Group’s objective when managing capital is to achieve a balance between maximising shareholder wealth and ensuring the Group is able
to operate competitively with the flexibility to take advantage of growth opportunities as they arise. In order to meet these objectives the
Group may adjust the amount of dividend payments made to shareholders and/or seek to raise capital through debt and/or equity. There are no
specific banking or other arrangements which require the Group to maintain specified equity levels.

5.3.2 Share Capital

Share capital comprises ordinary shares only. 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.

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 and no par value.

5. Financing and Capital Structure

For the 52 week period ended 27 January 2019

Contributed equity – ordinary shares

No. of authorised shares

Share capital

Period ended
27 January 2019
Shares

Period ended
28 January 2018
Shares

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

Opening ordinary shares

220,794,500

219,516,500

56,467

52,756

Issue of ordinary shares arising from
the exercise of options

805,000

1,278,000

2,4621.

3,7111.

Balance at end of period

221,599,500

220,794,500

58,929

56,467

1. When options are exercised the amount in the share options reserve relating to those options exercised, together with the exercise price paid by the employee,
is transferred to share capital. The amounts transferred for the 805,000 shares issued during the period ended 27 January 2019 were $284,059 and $2,178,550
respectively (2018: $428,612 and $3,281,940 respectively for the 1,278,000 shares issued).

5.3.3 Dividends

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

Interim dividend for the period ended 27 January 2019

Final dividend for the period ended 28 January 2018

Interim dividend for the period ended 28 January 2018

Final dividend for the period ended 29 January 2017

Period ended
27 January 2019
Cents per share

Period ended
28 January 2018
Cents per share

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

8.00

11.50

19.50

7.50

11.00

18.50

17,689

25,401

43,090

16,558

24,152

40,710

All dividends paid were fully imputed (refer also to Note 2.3.3 for imputation credits available for use in subsequent periods). Supplementary
dividends of $316,690 (2018: $291,572) were provided to shareholders not tax resident in New Zealand, for which the Group received a Foreign
Investor Tax Credit entitlement.

On 12 March 2019 the Directors resolved to provide for a final dividend to be paid in respect of the period ended 27 January 2019. The dividend
will be paid at a rate of 12.00 cents per share for all shares on issue as at 26 March 2019, with full imputation credits attached.

5.3.4 Reserves and Retained Earnings

Cashflow hedge reserve
The hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in other
comprehensive income, as described in the accounting policy in section 5.2. The amounts are recognised as profit or loss when the associated
hedged transaction affects profit or loss. (Refer also to the consolidated statement of changes in equity).

Share options reserve
The share options reserve is used to recognise the fair value of share options granted but not exercised, lapsed or forfeited. Amounts are
transferred to share capital when vested share options are exercised by an option holder. (Refer also to the consolidated statement of changes
in equity, and note 6.2).

Other reserves
Other reserves represents the adjustment made at balance date to reflect the fair value of the investment in Kathmandu Holdings Limited.
(Refer also to the consolidated statement of changes in equity and note 4.1).

6. Other Notes

For the 52 week period ended 27 January 2019

6.1 Related Party Transactions
6.1.1 Parent and Ultimate Controlling Party

Briscoe Group Limited is the immediate parent, ultimate parent and controlling party for all companies in the Group.

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 Company have been
eliminated. No interest is charged on internal current accounts. All transactions with related parties were in the normal course of business
and were provided on normal commercial terms.

The Group undertook transactions with the following related parties as detailed below:

• The RA Duke Trust, of which RA Duke is a trustee, as owner of the Rebel Sport premises at Panmure, Auckland, received rental payments
of $645,000 (2018: $640,166) from the Group, under an agreement to lease premises to The Sports Authority Limited (trading as Rebel
Sport).

• Kein Geld (NZ) Limited, an entity associated with RA Duke, received rental payments of $535,164 (2018: $535,164) as owner of the

Briscoes Homeware premises at Wairau Park, Auckland, under an agreement to lease premises to Briscoes (NZ) Limited.

• The RA Duke Trust received dividends of $33,283,012 (2018: $31,523,225).
• P Duke, spouse of the Managing Director, received payments of $65,000 (2018: $65,000) in relation to her employment as an overseas
buying specialist with Briscoe Group Limited, and rental payments of $825,000 (2018: $825,000) as owner of the Briscoes Homeware
premises at Panmure, Auckland under an agreement to lease premises to Briscoes (NZ) Limited.

6.1.2 Key Management Personnel

Key management includes the Directors of the Company and those employees who the Company has deemed to have disclosure
obligations under subpart 6 of the Financial Markets Conduct Act 2013, namely the Chief Financial Officer, the Chief Operating Officer
and the General Manager Human Resources.

Key management compensation was as follows:

Salaries and other short-term employee benefits

Share options benefit

Directors’ fees

Total benefits

Period ended
27 January 2019
$000

2,748

117

357

3,222

Period ended
28 January 2018
$000

2,657

148

333

3,138

Key management did not receive any termination benefits during the period (2018: Nil).
Key management did not receive and are not entitled to receive any post-employment or long-term benefits (2018: Nil).
Executives included in key management received dividends of $250,812 (2018: $232,502) in relation to Briscoe Group shares held.

6. Other Notes

For the 52 week period ended 27 January 2019

6.1.3 Directors’ Fees and Dividends

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

Executive Director

RA Duke

Non-Executive Directors

RPO’L Meo

MM Devine

AD Batterton

RAB Coupe

Period ended
27 January 2019

Period ended
28 January 2018

Directors’ fees
$000

Dividends
$000

Directors’ fees
$000

Dividends
$000

128

357

107

333

6
-

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

Executive Director

RA Duke

Non-Executive Directors

RPO’L Meo

MM Devine

AD Batterton

RAB Coupe

Period ended
27 January 2019
$000

Period ended
28 January 2018
$000

33,283

31,523

6. Other Notes

For the 52 week period ended 27 January 2019

6.2 Executive Share Options

Equity-settled, share-based compensation

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

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)
(b)

the date on which allocations are decided by the Board; or
the date on which allocations are made.

Payment must be made in full for all options exercised within 5 days of the date they are exercised.

The Company did not issue options during the financial period (2018: Nil).

The estimated fair value for each tranche of options issued is expensed over the vesting period of three years, from the grant date. The Company
has expensed in the income statement $482,575 (2018: $632,186).

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

Period ended
27 January 2019

Period ended
28 January 2018

Weighted average
exercise price
$ per share

Options
$000

Weighted average
exercise price
$ per share

Options
$000

Balance at beginning of period

2.98

3,547

2.86

5,035

Issued

Forfeited

Exercised

Lapsed

3.10

2.71

2.64

(40)

(805)

(230)

2.85

2.57

2.43

(135)

(1,278)

(75)

Balance at end of period

3.09

2,472

2.98

3,547

Weighted average share price for options exercised during the period $3.41 (2018: $3.87).
Of the 2,472,000 outstanding options at balance date (2018: 3,547,000), 952,000 were exercisable (2018: 550,000).

6. Other Notes

For the 52 week period ended 27 January 2019

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

Expiry month

Exercise month

Exercise price

July

2018

July

2017

November

2019

November

2018

August

2020

August

2019

Total share options outstanding

$2.64

$2.75

$3.31

Period ended
27 January 2019
000

Period ended
28 January 2018
000

952

1,520

2,472

550

1,452

1,545

3,547

The weighted average remaining contractual life of options outstanding at the end of the period was 1.21 years (2018: 1.88).

Share options reserve

Balance at beginning of period

Current period amortisation

Options forfeited and lapsed transferred to retained earnings

Options exercised transferred to share capital

Balance at end of period

Period ended
27 January 2019
$000

Period ended
28 January 2018
000

1,045

483

(147)

(284)

1,097

957

632

(115)

(429)

1,045

Since balance date and up to the date of these financial statements a further 50,000 ordinary shares have been issued under the
Executive Share Option Plan as a result of executives exercising share options.

6.3 Contingent Liabilities

There were no contingent liabilities as at 27 January 2019 (2018: Nil).

6.4 Events After Balance Date

Since balance date and up to the date of these financial statements a further 50,000 ordinary shares have been issued under the Executive
Share Option Plan as a result of executives exercising share options issued to them in 2015 (refer Note 6.2).

6. Other Notes

For the 52 week period ended 27 January 2019

6.5 New Accounting Standards

There were two new standards adopted during the period.

• NZ IFRS 9: Financial Instruments (effective for annual periods beginning on or after 1 January 2018). This standard addresses the
classification, measurement and recognition of financial assets and liabilities, introduces new rules for hedge accounting and a
new impairment model for financial assets.

The Group notes the following impacts from the adoption of the new standard on 29 January 2018. In accordance with the

transitional provisions in NZ IFRS 9, comparative figures have not been restated.

The Group has assessed which business models apply to its financial assets and classified these into the appropriate categories
under NZ IFRS 9. The only reclassification arising is for the investment in equity securities which was previously classified under
NZ IAS 39 as an available for sale financial asset, and for which a fair value through other comprehensive income (FVOCI)
election is available under NZ IFRS 9. The Group has taken this election. The new standard will not affect the measurement of
these equity instruments . However, cumulative gains or losses realised on the sale of equity instruments at FVOCI will no longer
be transferred to profit or loss on sale, but instead will be reclassified from Other Reserves to Retained Earnings.

There is no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for
financial liabilities that are designated at fair value through profit or loss and the Group does not have such liabilities. The
derecognition rules have been transferred from NZ IAS 39 Financial Instruments: Recognition and Measurement and have not
been changed.

The new hedge accounting rules align the accounting for hedging instruments more closely with the Group’s risk management
practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more
principles-based approach. The Group’s risk management strategies and hedge documentation were updated to align with the
requirements of NZ IFRS 9 from 29 January 2018, and these relationships are treated as continuing hedges. The Group’s current
hedge relationships qualify as continuing cash flow hedges upon the adoption of NZ IFRS 9. Under NZ IFRS 9, the Group’s
forward foreign exchange contracts are accounted for using the forward rate approach, whereby the hedged risk is designated as
being changes in the forward rate, with changes in the full fair value of the forward contracts being accounted for through other
comprehensive income (to the extent the hedge is effective). Accordingly, the Group does not have a significant impact on the
accounting treatment for its hedging relationships. The nature and extent of the Group’s disclosure note in relation to its hedging
relationships has been changed and been incorporated into these consolidated financial statements for the period ended 27
January 2019.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than
only incurred credit losses as was the case under NZ IAS 39. The standard applies to the Group in relation to financial assets
classified at amortised cost, being the Group’s trade receivables. Based on the Group’s assessment of historical provision rates and
forward-looking analysis, there is no material financial impact on the impairment provisions.

• NZ IFRS 15: Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2018)

This standard addresses recognition of revenue. It replaces the current revenue recognition guidance in NZ IAS 18 Revenue and
NZ IAS 11 Construction Contracts. The new standard is based on the principle that revenue is recognised when control of a good
and service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the
adoption. The Group has taken a full retrospective approach and no practical expedients have been applied.

6. Other Notes

For the 52 week period ended 27 January 2019

Adoption of NZ IFRS 15 has given rise to the reclassification of both delivery fees charged to customers and the corresponding

cost incurred by the Group for these customer deliveries. Delivery fees charged to customers are considered to be part of the same
performance obligation as the sale of the goods, as control of the goods passes to customers when they physically receive the goods.
Previously, the delivery fees charged to customers and the corresponding cost incurred by the Group have been offset and the net
cost shown under store expenses. Under NZ IFRS 15, it has been determined that control of the goods does not pass to the customer
until delivery, because the customer cannot use or otherwise benefit from the goods until obtaining possession of the goods, which
occurs on delivery. The reclassification has the following effects in the period ended 27 January 2019:

- increases sales revenue and receipts from customers by the amount of the delivery fees charged by the Group to customers by
$2.31 million,
- increases the cost of goods sold by the amount of the cost incurred by the Group for the deliveries by $5.04 million, and
- decreases store expenses by $2.73 million
- increases payments made to suppliers by $2.31 million.

The Group’s income statement for the comparative period shown in these consolidated financial statements has been restated to
reflect the reclassification outlined above. A reconciliation showing the adjustments made to the income statement to restate the
prior period comparatives is shown below:

Sales revenue

Cost of goods sold

Gross profit

Other operating income

Store expenses

Administration expenses

Earnings before interest and tax

Finance Income

Finance Costs

Net finance income/(costs)

Profit before income tax

Income tax expense

Net profit attributable to shareholders

Period ended
28 January 2018
Before Restatement
$000

603,086

(358,914)

244,172

6,260

(101,763)

(65,305)

83,364

567

(136)

431

83,795

(22,470)

61,325

Adjustments

$000

2,050

(4,328)

(2,278)

2,278

Period ended
28 January 2018
After Restatement
$000

605,136

(363,242)

241,894

6,260

(99,485)

(65,305)

83,364

567

(136)

431

83, 795

(22,470)

61,325

As a result of the above reclassification the statement of cashflows for the period ended 28 January 2018 has been restated to

increase receipts from customers and payments made to suppliers by $2.05 million.

6. Other Notes

For the 52 week period ended 27 January 2019

There were no other material impacts on revenue recognition or material impact on opening retained earnings or the comparative
balance sheet as a result of the adoption of NZ IFRS 15. There was no impact on basic or diluted earnings per share as a result of
adopting NZ IFRS 15.

Certain new standards, amendments and interpretations of existing standards have been published that are mandatory for later
periods and which the Group has not early adopted. These will be applied by the Group in the mandatory periods listed below. The key
items applicable to the Group are:

• NZ IFRS 16: Leases (effective from annual periods beginning on or after 1 January 2019)

This standard replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under NZ IAS
17, a lessee was required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance
sheet). NZ IFRS 16 now requires a lessee to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’
for virtually all lease contracts. The income statement will also be impacted by the recognition of an interest expense and a
depreciation expense and the removal of the current rental expense.

This standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non-
cancellable operating lease commitments of $141 million (refer note 2.2). On adoption, NZ IFRS 16 will have a significant impact
on the Group’s consolidated balance sheet and consolidated income statement.

Management has developed a model to calculate the full quantitative impact of their current operating leases under NZ IFRS 16
as at 28 January 2019, being the date of adoption. The model requires management to make some key judgements including:

• the incremental borrowing rate used to discount lease assets and liabilities; and
• the lease term including potential rights of renewals.

Management’s process to date highlights that the potential impact based on the current lease arrangements is expected to be
material to the consolidated balance sheet on the date of adoption (being 28 January 2019), with impacts on the following line
items:

• Recognition of a right of use asset of approximately $218 million;
• Recognition of a lease liability of approximately $246 million; and
• Decrease in opening retained earnings of approximately $28 million.

Management is in the process of assessing the deferred tax implications on the date of adoption. In addition to the above and
subject to issuance of specific guidance from the accounting standard setters, it is expected that a deferred taxation asset of
approximately $7.8 million will be recognised at 28 January 2019. The decrease in opening retained earnings referred to above
would consequently reduce to approximately $20.2 million.

The impact on the consolidated income statement for the period ending 26 January 2020 is expected to be:

• Decrease in store expenses (operating lease rental expense) of approximately $29.3 million;
• Decrease in administration expenses (operating lease rental expense) of approximately $1.3 million;
• Increase in depreciation and amortisation expense of approximately $18.8 million; and
• Increase in finance costs (interest expense) of approximately $15.1 million.

The above has no cash effect to the Group and the change is for financial reporting purposes only.

Current estimates are likely to change for the period ending 26 January 2020, mainly due to:
• Finalisation of management’s judgements and subsequent movements in the inherent borrowing rate (interest rates);
• New lease contracts entered into by the Group;
• Any changes to existing lease contracts; and
• Change in management’s judgement to exercise rights of renewals under lease arrangements.

6. Other Notes

For the 52 week period ended 27 January 2019

The Group will adopt the simplified transition approach under NZ IFRS 16 in the period ending 26 January 2020 and will not
restate comparative amounts for the period prior to first adoption.

The Group will apply the following practical expedients in adopting NZ IFRS 16:

• The use of hindsight, in relation to stores’ previous performance, to determine the lease term where the lease contains
options to exercise rights of renewal out to the final term of the lease; and
• Non-capitalisation of leases that expire within twelve months from adoption date. Costs relating to these leases will be
continue to be recognised in the income statement within store expenses and administration expenses.

Independent auditor’s report
To the shareholders of Briscoe Group Limited

the consolidated balance sheet as at 27 January 2019;
the consolidated income statement for the period then ended;

We have audited the consolidated financial statements which comprise:
•
•
•
•
•
•

the consolidated statement of cash flows for the period then ended; and

the consolidated statement of changes in equity for the period then ended;

the consolidated statement of comprehensive income for the period then ended;

the notes to the consolidated financial statements, which include the general accounting policies

Our opinion
In our opinion, the accompanying consolidated financial statements of Briscoe Group Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 27 January 2019, its financial performance and its cash flows for the period
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

Our firm carries out other services for the Group comprising of a review of the interim consolidated
financial statements, financial and tax due diligence in relation to a possible acquisition and executive
remuneration benchmarking services. The provision of these other services has not impaired our
independence as auditor of the Group.

PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz

Our audit approach

Overview

An audit is designed to obtain reasonable assurance whether the
consolidated financial statements are free from material misstatement.

Overall Group materiality: $4.3 million, which represents 5% of profit
before tax.

We chose profit before tax as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most commonly
measured by users, and is a generally accepted benchmark.

We have determined that there is one key audit matter for the period
ended 27 January 2019, being inventory existence and valuation.

Materiality
The scope of our audit was influenced by our application of materiality.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the consolidated financial statements as a whole.

Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial
statements and our application of materiality. As in all of our audits, we also addressed the risk of
management override of internal controls including among other matters, consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

PwC

Key audit matter
Inventory existence and valuation

At 27 January 2019, the Group held
inventories of $81.0 million. Given the
size of inventory relative to the total assets
of the Group, the number of stores and
judgement applied in valuation, inventory
is a key audit matter.

As described in note 3.1.3 of the
consolidated financial statements,
inventories are stated at the lower of cost
and net realisable value.

The Group has sophisticated systems and
processes, including an inventory
scanning system, to accurately record
inventory movement and costing.

Cyclical counts of inventory are performed
at various times throughout the period
ensuring that all inventory at stores is
counted twice a year.

Management pays particular attention in
ensuring the Group has the right levels of
inventory as well as applying judgement
over inventory adjustments, in particular
the level of provisions for inventory which
is expected to sell for less than cost, stock
obsolescence and inventory likely to have
been lost through shrinkage since the last
stocktake.

How our audit addressed the key audit matter

We performed a number of audit procedures to
address inventory existence and valuation:
• Observed management’s stocktake process at
selected locations throughout the period and
undertook our own test counts. For those locations
not visited, on a sample basis, inspected the results
of stock counts and confirmed stock count
variances were correctly accounted for. We also
validated all stores had been counted twice during
the period.

• Gained an understanding of inventory processes

and tested the effectiveness of certain key
inventory controls over inventory movement,
purchasing and costing.

• On a sample basis, tested inventory costing to

supplier invoices and contracts.

• Held discussions with management, including
merchandising personnel, to understand and
corroborate the assumptions applied in estimating
inventory provisions.

• Tested the aging of inventory based on purchase
date to supplier invoices to ensure slow moving
inventory has been adequately identified. We
evaluated the assumptions made by management
in assessing inventory obsolescence provisions
through an analysis of inventory items by category
and age and the level of inventory write downs in
categories during the period.

• Tested that period-end inventory is carried at lower
of cost and net realisable value by testing a sample
of inventory items to the most recent retail price
less costs to sell.

• Assessed the inventory shrinkage provision by

reviewing the level of inventory write downs during
the period. We tested the shrinkage rate used to
calculate the provision for each store since the last
stocktake by comparing it to the actual shrinkage
rates previously observed.

• Compared all inventory provisions as a percentage

of gross inventory to the prior period.

From the procedures performed we have no matters to
report.

PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz

Information other than the consolidated financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial
statements does not cover the other information included in the annual report and we do not and will
not express any form of assurance conclusion on the other information. At the time of our audit, there
was no other information available to us.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact.

Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:

https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.

PwC

Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
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 opinions we have formed.

The engagement partner on the audit resulting in this independent auditor’s report is Jonathan
Freeman.

For and on behalf of:

Chartered Accountants
12 March 2019

Auckland

PwC

Corporate Governance
Statement

Corporate Governance

Briscoe Group is committed to maintaining the highest standards of
governance by implementing best practice structures and policies.
This Corporate Governance Statement sets out the corporate
governance polices, practices, and processes adopted or followed
by Briscoe Group (including the guiding principles, authority,
responsibilities, membership and operation of the Board of Directors)
as at 27 January 2019 and has been approved by the Board.

The best practice principles (and underlying recommendations)
which Briscoe Group has had regard to in determining its governance
approach, are the principles set out in the NZX Corporate
Governance Code 2017 (‘NZX Code’). The Board’s view is that Briscoe
Group’s corporate governance policies, practices and processes
generally follow the recommendations set by the NZX Code. This
Corporate Governance Statement includes disclosure of the extent
to which Briscoe Group has followed each of the recommendations
in the NZX Code (or, if applicable, an explanation of why a
recommendation was not followed and any alternative practices
followed in lieu of the recommendation).

Briscoe Group Limited is a company incorporated in New Zealand
and is also registered in Australia as a foreign company under the
name Briscoe Group Australasia Limited. It is listed on the NZX
Main Board and also the Australian Securities Exchange as a foreign
exempt entity. As such Briscoe Group is exempt from complying
with most of the ASX’s Listing Rules and must undertake to comply
with the listing rules of its home exchange (NZX). Briscoe Group
also supports the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations.

Further information about Briscoe Group’s corporate governance
framework (including the Board and Board committee charters, and
codes and selected policies referred to in this section) is available to
view at www.briscoegroup.co.nz.

Principle 1 – Code of Ethical Behaviour

Principle 2 – Board Composition and Performance

Directors should set high standards of ethical
behaviour, model this behaviour and hold
management accountable for these standards
being followed throughout the organisation.

To ensure an effective Board, there should be
a balance of independence, skills, knowledge,
experience and perspectives.

Code of Values and Conduct and Related Policies
Recommendation 1.1: The Board should document minimum
standards of ethical behaviour to which the issuer’s Directors and
employees are expected to adhere (a code of ethics) and comply with
the other requirements of Recommendation 1.1 of the NZX Code.

Briscoe Group expects its Directors, senior management and
employees to maintain the highest standards of honesty, integrity
and ethical conduct in day to day behaviour and decision making.
The Board has adopted a Code of Conduct which incorporates
the requirements set out in Recommendation 1.1, forms part of
the induction process for all new employees and is available on
Briscoe Group’s website. All Directors and employees must provide
acknowledgement that they have read and understood the content.
In addition, it is the intention of the Company to incorporate training
in relation to the Code of Conduct into its online training modules.

Trading in Company Securities Policy
Recommendation 1.2: An issuer should have a financial product
dealing policy which applies to employees and Directors.

The Trading in Company Securities Policy sets out Briscoe Group’s
requirements for all Directors and employees in relation to trading
Briscoe Group shares, and is available on Briscoe Group’s website. The
policy incorporates all trading restraints. In general, Directors and
employees are allowed to trade in Briscoe Group shares during two
‘trading windows’. Trading windows commence on the day after the
half-year and full-year results are announced to the market and run
for a period of 60 days. Trading outside these windows is generally
prohibited. Proposed transactions by Directors and employees during
the trading windows require approval. The policy also provides that
no Directors or employees can trade shares if they are in possession
of price sensitive information that is not publicly available. The policy
also outlines the requirements around the exercise of share options
issued by the Company.

Board Charter
Recommendation 2.1: The Board of an issuer should operate under
a written charter which sets out the roles and responsibilities of the
Board. The Board charter should clearly distinguish and disclose the
respective roles and responsibilities of the Board and management.

The Board has adopted a formal Board Charter which sets out
the respective roles, responsibilities, composition and structure
of the Board and senior management, and this is available on
Briscoe Group’s website. The Board is responsible for overseeing
the management of the Company and its subsidiaries and to
direct performance by optimising the short-term and long-term
best interests of the Company and its Shareholders. This includes
approving the Company’s objectives, reviewing the major strategies
for achieving them and monitoring the Company’s performance.
The focus of the Board is the creation of company and shareholder
value and ensuring the Company is committed to best practice.
Responsibility for the day-to-day management of Briscoe Group
has been delegated to the Managing Director and other senior
management. Management are responsible for implementing the
objectives and strategies approved by the Board, within the ambit
of risk set by the Board. The Company Secretary provides company
secretarial services to the Board and is accountable to the Board
through the Chair.

Nomination and Appointment of Directors
Recommendation 2.2 and 2.3: Every issuer should have a procedure
for the nomination and appointment of Directors to the Board.
An issuer should enter into written agreements with each newly
appointed Director establishing the terms of their appointment.

The Board collectively considers the nomination of Directors. In
doing this, the Board’s procedure involves careful consideration of
the composition of the Board in relation to the Company’s needs
and operating environment to ensure relevant skills and experience.
This also applies to the consideration of additional or replacement
Directors, subject to the constitutional limitation of the number
of Directors. In so doing, as noted above, the priority must be on
ensuring the skills, experience and diversity on the Board, and
the skills that are necessary or desirable for the Board to fulfil
its governance role and to contribute to the long-term strategic
direction of the company. The Board may engage consultants to
assist in the identification, recruitment and appointment of suitable
candidates.

When appointing new Directors, the Board ensures that the
constitutional requirements in respect of Directors will continue to
be satisfied. There must be at least three and no more than five, at
least two of whom are resident in New Zealand and also at least two
Directors must be determined by the Board to be independent.

The constitution provides that all Directors are elected by
Shareholders. Directors may be appointed by the Board to fill
vacancies, but they are then subject to re-election at the next
annual Shareholder meeting. In addition to Directors retiring by
rotation, and eligible for re-election, nominations may be made by
Shareholders. All new Directors enter into a written agreement with
Briscoe Group setting out the terms of their appointment.

Directors
Recommendation 2.4: Every issuer should disclose information
about each Director in its Annual Report or on its website, including
a profile of experience, length of service, independence and
ownership interests.

The Board currently comprises four Directors; three Non-Executive
and one Executive Director. The Board has considered which of its
Directors are deemed to be independent for the purposes of the NZX
Listing Rules and has determined that as at 27 January 2019, four
Directors were independent Directors, including the Chair and the
Chair of the Audit and Risk Committee. As at the date of this annual
Report, the Directors are:

Dame Rosanne Meo

Chair,
Independent

Rod Duke

Executive Director

Tony Batterton

Independent

Andy Coupe

Independent

Mary Devine1.

Independent

Appointed in
May 2001

Appointed in
March 1992

Appointed in
June 2016

Appointed in
October 2016

Appointed in
August 2013

A profile of experience for each Director is available on Briscoe
Group’s website.

Directors disclosed the following relevant interests in shares as at 27
January 2019:

Director

Dame Rosanne Meo

Rod Duke

Tony Batterton

Andy Coupe

Mary Devine1.

Number of shares in which
a relevant interest is held

100,000 shares

170,878,656 shares

20,000 shares

10,000 shares

1. Mary Devine resigned as a director effective from 31 March 2019.

Diversity
Recommendation 2.5: An issuer should have a written Diversity
Policy which includes requirements for the Board or a relevant
committee of the Board to set measurable objectives for achieving
diversity (which, at a minimum, should address gender diversity) and
to assess annually both the objectives and the entity’s progress in
achieving them. The issuer should disclose the policy or a summary
of it.

We appreciate that our workforce, including potential employees,
come from all walks of life. Every individual is unique, having different
skills and experiences including but not limited to educational
opportunity and achievement. People come from many cultures and
backgrounds, along with a wide range of other personal attributes
including gender, age, culture, disability (mental, learning, physical),
economic background, language(s) spoken, marital/partnered status,
physical appearance, race, religious beliefs and gender identity, or
sexual orientation. Briscoe Group has a commitment to attracting,
selecting, developing and retaining the most suitable employees
from this diverse range of attributes. The Group’s Diversity and
Inclusiveness Policy is available on Briscoe Group’s website.

We acknowledge that the retail sector has traditionally had high
representation of women in its operations and yet has been poorly
represented in senior management. We have a very high level of long
term employees and a strong “sense of belonging within the Briscoes
family.”

Similarly, there has been an inadequate retail specific tertiary
educational focus, although it has, as a sector, provided a working
environment with good opportunities for family-oriented work
place balance through long term part-time participation. Education
is fundamental and we are pleased with the developments in this
area in recent years with a number of employees having recently
commenced tertiary study to support their continued development.

The Board and management recognise that diversity without
inclusiveness does not result in the balanced workforce desired in
the business. Briscoe Group has in place policies and procedures to
encourage and support equitable treatment for all employees and
includes consideration of applicants for jobs with the Group.

We acknowledge that any narrowness in diversity is not sustainable
and believe that an increased emphasis on a collaborative and
inclusive culture and focus on developing talent will secure this
realignment. Ensuring that all employees at all levels and in all
workplace environments feel secure and safe, confident and
appreciated through understanding the importance of diversity is
most important to us.

At Board level, diversity across the spectrum of gender, age,
experience and education has been well achieved and well
demonstrates our commitment.

A breakdown of the gender composition of Directors and officers
as at the Company’s balance date, including comparative figures, is
shown below:

27 January 2019

28 January 2018

Female

Male

Female

Male

Directors
Officers1,2,3

2
-

3
3

2
-

3
3

1. Excludes Managing Director (included in breakdown of Directors).
2. Officers is defined as the members of the senior management team, who
report either directly to the Board or to the Group Managing Director.
Includes Chief Operating Officer who has announced his intention to retire
during the first quarter of 2019.

Director Training
Recommendation 2.6: Directors should undertake appropriate
training to remain current on how to best perform their duties as
Directors of an issuer.

The Board expects all Directors to undertake continuous education to
remain current on how to best perform their responsibilities and keep
abreast of changes and trends in economic, political, social, financial
and legal climates and governance practices. The Board also ensures
that new Directors are appropriately introduced to management
and the business, that all Directors are updated on relevant industry
and company issues and receive copies of appropriate company
documents to enable them to perform their roles.

Board Evaluation
Recommendation 2.7: The Board should have a procedure to
regularly assess director, Board and committee performance.

The Chair of the Board leads an annual performance review and
evaluation of the performance of directors, the Board as a whole,
and of the Board committees against the Board and committee
charters, including seeking Director’s views relating to Board and
committee process, efficiency and effectiveness. The Chair of the
Board also engages with individual Directors to evaluate and discuss
performance and professional development.

Separation of Board Chair and CEO
Recommendation 2.8: The Chair and the CEO should be
different people.

The Board Charter makes explicit that the Chairman and the
Managing Director roles are separate.

Principle 3 – Board Committees

The Board should use committees where this will
enhance its effectiveness in key areas, while still
retaining Board responsibility.

Audit and Risk Committee
Recommendation 3.1: An issuer’s audit committee should operate
under a written charter. Membership on the audit committee should
be majority independent and comprise solely of non-executive
directors of the issuer. The chair of the audit committee should not
also be the Chair of the Board.

The Audit and Risk Committee operates under a written Charter,
and this is available on Briscoe Group’s website. The Audit and Risk
Committee comprises Tony Batterton (Chair), Dame Rosanne Meo,
Andy Coupe and Rod Duke and met two times during the year.
The Audit and Risk Committee advises and assists the Board in
discharging its responsibilities with respect to financial reporting,
compliance and risk management practices of Briscoe Group. The
Board considers that the inclusion of the Group Managing Director
as a member of the Committee provides relevant operational insight
which greatly assists the Committee.

Recommendation 3.2: Employees should only attend Audit
Committee meetings at the invitation of the Audit Committee.

The Chief Financial Officer, Finance Manager and Internal Audit
Manager attend Audit and Risk Committee meetings at the invitation
of the Audit and Risk Committee. Briscoe Group’s external auditor
also attends meetings at the committee’s invitation. The Audit
and Risk Committee receives reports from the external auditor
without management present, concerning any matters that arise in
connection with the performance of management’s role.

Remuneration Committee
Recommendation 3.3: An issuer should have a Remuneration
Committee which operates under a written charter (unless this
is carried out by the whole Board.) At least a majority of the
Remuneration Committee should be independent directors.
Management should only attend Remuneration Committee meetings
at the invitation of the Remuneration Committee.

The Board operates a Human Resources Committee which
incorporates remuneration. The Human Resources Committee
currently comprises Andy Coupe (Chair), Dame Rosanne Meo, and
Rod Duke and met five times during the year. It assists the Board
in discharging its responsibilities with respect to the remuneration
and performance of the Group Managing Director and other senior
executives, remuneration of Directors and human resources policy
and strategy. The Human Resources Committee operates under
the Human Resources Committee Charter, and this is available on
Briscoe Group’s website. As for the Audit and Risk Committee, the
Board considers the inclusion of the Managing Director as a member

of the Human Resources Committee provides essential operational
insight but also critical insight to executive performance and human
resources strategy. The Managing Director does not participate
in discussion of performance and remuneration. Other selected
management only attend Human Resource Committee meetings at
the invitation of the Human Resources Committee.

Nomination Committee
Recommendation 3.4: An issuer should establish a nomination
Committee to recommend Director appointments to the Board
(unless this is carried out by the whole Board), which should operate
under a written charter. At least a majority of the Nomination
Committee should be independent Directors.

The Board does not operate a separate Nomination Committee
as Director appointments are considered by the Board as a whole.
The Board’s procedure for the nomination and appointment of
Directors is summarised under Principle 2 above (under the heading
“Nomination and Appointment of Directors”).

Overview of Board Committees
Recommendation 3.5: An issuer should consider whether it is
appropriate to have any other Board committees as standing Board
committees. All committees should operate under written charters.
An issuer should identify the members of each of its committees, and
periodically report member attendance.

The Board does not operate any other committees apart from the
Audit and Risk Committee and the Human Resources Committee.
Briscoe Group has considered whether any other standing Board
committees are appropriate and has determined not. Each
committee operates under a charter which is available on Briscoe
Group’s website. Committee members are appointed from members
of the Board and membership is reviewed on an annual basis. Any
recommendations made by the committees are submitted to the
full Board for formal approval. Apart from the Managing Director,
relevant key executives are invited to attend Board committee
meetings as appropriate.

Attendance at Board and Committee Meetings
for the Year Ended 27January 2019

Number of
meetings held

Dame Rosanne Meo

Rod Duke

Mary Devine1.

Tony Batterton

Andy Coupe

Board

Audit
and Risk

Human
Resources

Attended

1. Mary Devine resigned as a director effective from 31 March 2019.

Takeover protocols
Recommendation 3.6: The Board should establish appropriate
protocols that set out the procedure to be followed if there is a
takeover offer for the issuer (amongst other matters).

Given Briscoe Group’s shareholding structure, with the largest
Shareholder being a member of the Board, the Board considers the
likelihood of an unanticipated takeover to be low, and so the Board
does not consider this recommendation to be necessary. However,
in the event of a takeover offer, the Board has already agreed that
a Takeover Response Committee would be convened comprised
of Independent Directors. That committee would consider the
Company’s actions in relation to the takeover offer, including seeking
appropriate legal, financial and strategic advice, complying with
takeover regulation (including the appointment of an independent
advisor under the Takeovers Code and the preparation of a Target
Company Statement) and determining what additional information
(if any) would be provided by the Company to the bidder.

Principle 4 – Reporting and Disclosure

The Board should demand integrity in financial
and non-financial reporting, and in the timeliness
and balance of corporate disclosures.

The Board is committed to timely, accurate and meaningful reporting
of financial and non-financial information.

Continuous Disclosure
Recommendation 4.1: An issuer’s Board should have a written
Continuous Disclosure Policy.

As a listed company there is an imperative to ensure the market
is informed, and the listed securities are being fairly valued by the
market. In addition to statutory disclosures, the company provides
ongoing updates of its operations. This material is made publicly
available through releases to the NZX and ASX, in accordance with
the relevant Listing Rules. Briscoe Group has a Continuous Disclosure
Policy, and this is available on Briscoe Group’s website. The purpose
of this policy is to; ensure Briscoe Group complies with its continuous
disclosure obligations; ensure timely, accurate and complete
information is provided to all Shareholders and market participants;
and outline the responsibilities in relation to the identification,
reporting, review and disclosure of material information relevant to
Briscoe Group.

Charters and Policies
Recommendation 4.2: An issuer should make its code of ethics,
Board and committee charters and the policies recommended by NZX
Code, together with any other key governance documents, available
on its website.

Information about Briscoe Group’s corporate governance framework
(including Code of Conduct, Board and Board committee charters,

and other selected key governance codes and policies) is available to
view on Briscoe Group’s website.

WASTE MANAGEMENT

Financial and Non-Financial Reporting
Recommendation 4.3: Financial reporting should be balanced, clear
and objective. An issuer should provide non-financial disclosure
at least annually, including considering material exposure to
environmental, economic and social sustainability risks and other
risks. It should explain how it plans to manage those risks and how
operational or non-financial targets are measured.

Financial Reporting
The Audit and Risk Committee oversees the quality and integrity of
external financial reporting including the accuracy, completeness
and timeliness of financial statements, and ensuring that financial
reporting is balanced, clear and objective. It reviews annual and
half year financial statements and makes recommendations
to the Board concerning the application of accounting policies
and practice, areas of judgement, compliance with accounting
standards, stock exchange and legal requirements, and the results
of the external audit.

Management’s accountability for Briscoe Group’s financial reporting
is reinforced by the written confirmation from the Managing
Director and Chief Financial Officer that, in their opinion, financial
records have been properly maintained and that the financial
statements comply with the appropriate accounting standards and
give a true and fair view of the financial position and performance
of Briscoe Group. Such representations are given on the basis of
a sound system of risk management and internal control which is
operating effectively in all material respects in relation to financial
reporting risk.

Non-Financial Reporting - Sustainability
Briscoe Group assesses its exposure to environmental, economic and
social sustainability as part of the overall framework for managing
risk (see Principle 6 – Risk Management). Briscoe Group is committed
to improving standards of environmental performance to enable
a more efficient and sustainable future. Accordingly, we have the
following initiatives which are incorporated into regular management
reporting to the Board.

Being one of New Zealand’s leading retailers encompassing multiple
large-format retail outlets, there are many ways we look to improve
our environmental performance.

Currently the Group’s sustainability initiatives cover:

• Waste Management

• Energy Efficiency, and
• Carbon Footprint reporting

The Group’s waste management strategy recognises that product
sourcing is the first step in the supply chain and the best opportunity
in minimising unnecessary packaging. Initiatives have been
implemented to:

• Target less packaging and specify recyclable packaging types at
source,
• ensure that the Group is using recyclable packaging materials in

efficient quantities, and,

• ensure that stores have the adequate tools and services to enable

effective landfill minimisation.

By May 2019 the Group will no longer offer single-use plastic bags
at check-outs.

ENERGY EFFICIENCY
Specifying energy efficient elements within our building
documentation for new stores ensures a high level of energy
efficiency for the entire life-cycle of the building.

Operationally, comparing energy use on a site by site basis enables
us to compare similarly sized stores and target potential future
savings through investment in heating, ventilation, air-conditioning
and lighting systems.

CARBON FOOTPRINT
We continue to target areas of improvement across the business to
minimise waste and power consumption.

Principle 5 – Remuneration

The remuneration of Directors and executives
should be transparent and reasonable.

Directors’ Remuneration
Recommendation 5.1: An issuer should recommend director
remuneration to shareholders for approval in a transparent manner.
Actual director remuneration should be clearly disclosed in the
issuer’s Annual Report.

In accordance with the Constitution, Shareholder approval is sought
for any increase in the pool available to pay Directors’ fees. Approval
was last sought in 2016, when the pool limit was set at $380,000
per annum. The Board has determined the following allocation from
the pool.

Board of Directors

Audit and Risk Committee

Human Resources Committee

Position

Chair
Member

Fees (per
annum)

$120,000
$62,500

$12,000
$6,000

$8,500
$6,000

Remuneration of Directors in the reporting period is tabulated below:

Board
Fees

Audit and Risk
Committee

Human
Resources
Committee

Total
Fees

Other
Payments/
Benefits

Total
Remuneration

Dame Rosanne Meo

$115,417

$6,000

$7,042

$128,459

Rod Duke 1.

Mary Devine 2.

Tony Batterton 3.

Andy Coupe

Total

$62,500

$6,000

$11,125

$6,000

$4,500

$7,458

$978,116

$74,500

$78,125

$75,958

$302,917

$29,125

$25,000

$357,042

$978,116

$1,335,158

$128,459

$978,116

$74,500

$78,125

$75,958

1. No Directors’ fees are paid to Executive Directors. For more information in relation to Executive Director remuneration refer to “Chief Executive Remuneration”

below.

2. Mary Devine resigned from Human Resources Committee 20 February 2019 and as a director effective from 31 March 2019.
3. Tony Batterton resigned from Human Resources Committee 23 October 2018.

Remuneration Policy
Recommendation 5.2: An issuer should have a Remuneration
Policy for remuneration of directors and officers, which outlines
the relative weightings of remuneration components and relevant
performance criteria.

Briscoe Group has adopted a Remuneration Policy which sets out the
remuneration principles that apply to all Non-Executive Directors
and all employees including senior management, to ensure that
remuneration practices are fair and appropriate, and that there is a
clear link between remuneration and performance. Briscoe Group is
committed to applying fair and equitable remuneration and reward
practices in the workplace, taking into account internal and external
relativity, the commercial environment, the ability to achieve Briscoe
Group’s business objectives and the creation of Shareholder value.
Under Briscoe Group’s remuneration framework, job size relative
to the relevant competitive market for talent as well as individual
performance against defined key performance objectives are key
considerations in all remuneration based decisions, balanced by
the organisational context. Remuneration for senior management
includes a mix of fixed and variable components. Criteria for
performance payments which comprise short, medium and long-
term incentives are regularly appraised to ensure they incorporate
changing market conditions as well as the Company’s performance
in relation to strategic initiatives that are deemed by the Board to be
most relevant in driving Shareholder value.

Non-Executive Directors are paid fees in accordance with the table
provided under 5.1. The levels at which fees are set reflects the time
commitment and responsibilities of the roles of Non-Executive
Directors and do not involve any performance based payments. The
Board uses various sources to inform its decision making on fees and
consults with expert independent advisors where appropriate.

Subsequent to a review conducted with independent external
advisors, engaged by the Board, with specialist expertise in
remuneration, changes have been recommended in relation to
the Company’s short, medium and long-term incentives. This has
resulted in extensive changes to the long-term incentive (LTI)
scheme including a change in vehicle (performance rights), quantum
and participation. The first issue of performance rights under the

6060

updated LTI scheme will be made during the 2019-20 financial year.
A new medium-term incentive scheme is to be introduced for senior
management who will no longer participate in the new LTI scheme.
In this manner, the various components of remuneration maintain
alignment with the interests of Shareholders, the Company and the
individual.

Employee Remuneration
The number of employees and former employees within Briscoe Group
(including the Managing Director but excluding any other Director)
receiving remuneration and benefits above $100,000, relating to the
52 week period ending 27 January 2019 is set out in the table below:

To be updated
Remuneration 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

$170,000 – 179,999

$180,000 – 189,999

$190,000 – 199,999

$200,000 – 209,999

$210,000 – 219,999

$220,000 – 229,999

$230,000 – 239,999

$240,000 – 249,999

$260,000 – 269,999

$330,000 – 339,999

$350,000 – 359,999

$420,000 – 429,999

$450,000 – 459,999

$720,000 – 729,999

$740,000 – 749,999

$970,000 – 979,999

Chief Executive Officer Remuneration
Recommendation 5.3: An issuer should disclose the remuneration
arrangements in place for the CEO in its Annual Report. This should
include disclosure of the base salary, short-term incentives and
long-term incentives and the performance criteria used to determine
performance based payments.

to a STI payment, but may vary depending on specific areas of focus
as determined by the Managing Director. The Board approves the
STI payments to be made to senior management at the end of the
financial year, and approves the senior manager targets for the
following year.

The remuneration of the Managing Director for the year ended
27 January 2019 was:

Base Salary

Other Benefits

STI

Subtotal

LTI

Total Remuneration

Period Ended
29 January 2019

$720,735

87,381

$170,000

$978,116

The remuneration of the Managing Director comprises fixed and
performance payments. Fixed remuneration includes a base salary,
contributions to superannuation, life insurance, health insurance and
a fuel card. The Managing Director received a short-term incentive
of $170,000. The target value of a STI payment is recommended by
the Human Resources Committee, approved by the Board and linked
strongly to company financial performance and performance against
strategic initiatives. Given his shareholding in the Company, the
Managing Director does not participate in any Company Long Term
Incentive Scheme.

Senior Management
Briscoe Group’s senior management are appointed by the Managing
Director and their key performance indicators (‘KPIs’) are comprised
of specific Group financial objectives along with business related
individual objectives. Establishing and monitoring these KPIs is
done annually by the Managing Director, recommending them
to the Human Resources Committee, which in turn, makes
recommendations to the Board for approval. The performance of
the senior management against these KPIs is evaluated annually
and serves as a key determinant of any short-term incentive scheme
values and payments.

Short Term Incentive Payments
Short term incentive (STI) payments are at risk cash payments
designed to motivate and reward for short term (within each
financial year) performance. The target value of a STI payment
is set by the Managing Director with a specified dollar potential
available to each participant in the scheme. The target areas for all
employees who are entitled to a STI payment are set based on a
combination of company financial performance and specific financial
performance relative to the employee’s areas of responsibility and
individual goals. The weightings applied to each of the target areas
will be largely consistent throughout the company for roles entitled

Medium Term Incentive Payments
Medium term incentive (MTI) payments are at risk cash payments
designed to motivate and reward for medium term (crossing
two financial years) performance. A two-year term provides for
evaluation of performance over a longer term than used for purposes
of STI and ensures a degree of impact or sustainability thereby
avoiding or reducing the risk of “short-termism”. MTI participants
are members of the senior management team who significantly
influence achievement of the Company’s performance. The target
value of an MTI payment is recommended by the Managing Director
for approval by the Board, with a specified dollar amount potentially
available to each participant in the scheme. Performance is assessed
at Company rather than individual level with measures aligned to
those of the LTI scheme, albeit over a slightly lesser timeframe. The
Board will review performance and approve any MTI payments to
be made to senior management at the end of the financial year and
approve objectives for the following year.

Long Term Incentive Payments
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 or if the employee is
no longer employed by the Company. Each option entitles the holder
to one ordinary share in the capital of the Company on payment of
the exercise price. 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.

During the financial year the Company did not issue any further share
options to employees. (2018: Nil).

In 2018 completion of the LTI review resulted in the revision of the
scheme to narrow the group of participants, change the basis of
performance to be a combination of compound earnings per share
(EPS) growth and total shareholder return (TSR) over a three year
period as well as a move to performance rights as a vehicle through
which grants and any subsequent payments are made.

Principle 6 – Risk Management

of staff and the general culture of the business in relation to safety.

Directors should have a sound understanding of
the material risks faced by the issuer and how to
manage them. The Board should regularly verify
that the issuer has appropriate processes that
identify and manage potential and material risks.

Briscoe Group has implemented a Health and Safety Risk Matrix
to identify specific hazards and risks, assess their severity of impact
and likelihood of occurrence, document mitigation strategies and
determine the level of residual risk. This matrix is reviewed at least
annually by the Board and annual Health and Safety objectives and
KPI’s are set for the business based on the significant risks identified.

Risk Management
Recommendation 6.1: An issuer should have a risk management
framework for its business and the issuer’s Board should receive and
review regular reports. A framework should also be put in place to
manage any existing risks and to report the material risks facing the
business and how these are being managed.

The Board is responsible for Briscoe Group’s risk assessment,
management and internal control and it believes has carried out
a robust risk assessment process. Through the Audit and Risk
Committee, the Board monitors policies and processes that identify
significant business risks and implements procedures to monitor
these risks. A management risk committee comprising the Managing
Director, Chief Financial Officer, Chief Operating Officer and Internal
Audit Manager meets every quarter to identify and assess the major
risks affecting the business by maintaining a risk matrix which is
used to develop strategies to monitor and mitigate these risks. Risks
are assessed against the impact of the risk and the likelihood of it
eventuating. The risk matrix is provided to the Board six monthly.
The management risk committee reports to the Audit and Risk
committee. Significant risks are discussed at Board meetings, or as
required. Briscoe Group maintains insurance policies that it considers
adequate to meet insurable risks.

Health and Safety
Recommendation 6.2: An issuer should disclose how it manages its
health and safety risks and should report on their health and safety
risks, performance and management.

The Human Resources Committee, the General Manager Human
Resources and specialist team members in the Human Resource
function assist the Board in meeting its responsibilities under the
Health and Safety at Work Act 2015, other regulations and policies.

The Human Resources Committee, along with management is
responsible for ensuring that Health and Safety has appropriate
focus and is sufficiently resourced to achieve its objectives within
Briscoe Group.

Company performance across a range of measures of Health
and Safety are a consistent and priority agenda item at all Board
meetings. The Board and senior management are apprised of all
notifiable incidents and injuries and the actions taken to ensure the
health and wellbeing of injured persons. Actions taken to prevent
incident recurrence are also advised.

Management operates and assesses the effectiveness of risk
assessment and mitigation, safety processes and systems, capability

The Company operates an ongoing system of hazard identification
and management and monthly reviews of performance to ensure
that opportunities for improvement are identified and progressed.
Focus on traffic management across our sites along with targeted
manual handling training are two such areas that have been
prioritised and resourced accordingly in 2018.

The Group continually assesses its actual Health and Safety
performance rates against independent information provided by ACC
to ensure that improvement in safety outcomes rather than outputs
are used in determining true effectiveness.

Along with monthly updates on safety related incidents as part
of regular Board reporting, the Board is appraised of quarterly
performance on a range of measures sourced directly from ACC.
Significant measures which contribute to the Briscoe Group’s
Experience Rating continue to show improvement. A wide range of
actions across the Group have been part of our journey to ensuring
our team and others go home from work safe each day. In the last
year the implementation of formal Traffic Management Plans has
been a key focus, along with face to face training in Manual Handling
and significant additional investment targeted safety related
education using our online learning platform.

Improvements noted include reduction in the number of work-
related claims and the number of days of earnings related
compensation. We have seen corresponding increases in the
reporting of safety related incidents which we view as significant
opportunities to investigate and improve situations prior to injury
occurring. Total Recordable Incident Frequency rates (TRIFR), a
widely used measure of safety performance, has been introduced as
a metric and will be used for future reporting.

At the end of the previous calendar year the Group committed to
the implementation of a cloud-based health and safety recording,
reporting and risk management system which will enhance efficiency
of incident reporting, improved reporting capabilities and enhance
our capabilities in the area of injury management.

Principle 7 – Auditors
The Board should ensure the quality and
independence of the external audit process.

External Audit
Recommendation 7.1 and 7.2: The Board should establish a
framework for the issuer’s relationship with its external auditors. This
should include procedures prescribed in the NZX Code. The external

auditor should attend the issuer’s annual shareholders meeting to
answer questions from shareholders in relation to the audit.

The Audit and Risk Committee is responsible for the oversight of
Briscoe Group’s external audit arrangements. These arrangements
include procedures for the matters described in Recommendation 7.1
of the NZX Code.

The Audit and Risk Committee is committed to ensuring Briscoe
Group’s external auditor is able to carry out its work independently
so that financial reporting is reliable and credible. Briscoe Group
has an External Auditor Independence policy, which is available on
Briscoe Group’s website. The External Audit Independence policy
implements the procedures set out in the NZX Code.

The policy sets out the work that the external auditor is required
to do and specifies the services that the external auditor is not
permitted to do unless authorised by both the Chairman and
Chairman of the Audit and Risk Committee and so advised to the
Board. This is so the ability of the auditor to carry out its work is not
impaired and could not reasonably be perceived to be impaired.

Briscoe Group’s external auditor is PricewaterhouseCoopers. Total
fees paid to PricewaterhouseCoopers in its capacity as auditor for
period ended 27 January 2019 were $128,000 including additional
work performed in relation to new accounting standards (2018:
$114,500). Total fees paid to PricewaterhouseCoopers for other
professional services for the period ended 27 January 2019 were
$160,000 (2018: $26,000). The other service fees comprise a half
yearly review, financial and taxation due diligence services and
executive remuneration review and advice.

PricewaterhouseCoopers has historically attended the Annual
Shareholders’ Meeting, and the lead audit partner is available to
answer relevant questions from Shareholders at that meeting.

Internal Audit
Recommendation 7.3: Internal audit functions should be disclosed.

Briscoe Group has an internal audit team that performs assurance
and compliance reviews across company operations as part of a
risk-based programme of work approved by the Audit and Risk
Committee. In scope are all aspects of the Group’s store and non-
store operations. In addition to the assurance and compliance work,
the internal audit team provide advice to improve both established
systems and processes, and during the design and implementation
phase of new systems and processes.

The Internal Audit Manager reports functionally to the Audit and Risk
Committee and administratively to the Chief Financial Officer. The
Internal Audit Manager provides regular reporting to management as
well as to the Board and Audit and Risk Committee.

Principle 8 – Shareholder Rights and Relations

The Board should respect the rights of
shareholders and foster constructive relationships
with shareholders that encourage them to engage
with the issuer.

Information for Shareholders
Recommendation 8.1: An issuer should have a website where
investors and interested stakeholders can access financial and
operational information and key corporate governance information
about the issuer.

Briscoe Group is committed to an open and transparent relationship
with Shareholders. The Board aims to ensure that all Shareholders
are provided with all information necessary to assess Briscoe Group’s
direction and performance.

This is done through a range of communication methods including
periodic and continuous disclosures to NZX and ASX, half year
and annual reports and the Annual Shareholders’ Meeting. Briscoe
Group’s website provides financial and operational information,
information about its dIrectors and senior management and
copies of its governance documents, for investors and interested
stakeholders to access at any time.

Communicating with Shareholders
Recommendation 8.2: An issuer should allow investors the ability to
easily communicate with the issuer, including providing the option to
receive communications from the issuer electronically.

Shareholders have the option of receiving their communications
electronically, including by email or through Briscoe Group’s investor
centre. Briscoe Group’s website includes a section for Shareholder
communications and the Board has always been committed to having
an open dialogue with Shareholders and welcomes investor enquiries.

Shareholder Voting Rights
Recommendation 8.3 and 8.4: Shareholders should have the right to
vote on major decisions which may change the nature of the company
in which they are invested in. Each person who invests money in a
company should have one vote per share of the company they own
equally with other shareholders.

In accordance with the Companies Act 1993, the Company’s
Constitution, and the NZX and ASX Listing Rules, Briscoe Group
refers any significant matters to Shareholders for approval at a
Shareholder meeting. Where Shareholder votes are conducted by
poll, each Shareholder is entitled to one vote per share.

Notice of Annual Shareholders Meeting
Recommendation 8.5: The Board should ensure that the annual
shareholders notice of meeting is posted on the issuer’s website as
soon as possible and at least 28 days prior to the meeting.

Briscoe Group posts any Notices of Shareholder meetings on
its website as soon as these are available. The general practice
is to make these available not less than four weeks prior to the
Shareholder meeting.

6363

General Disclosures

Board of Directors

Dame Rosanne Meo, OBE: Chairman (Non-Executive)
Chairman of AMP Staff Superannuation. Director of AMP (NZ)
Administration Ltd, realestate.co.nz and Rosanne Meo Consulting
Limited.

Rod Duke: Group Managing Director and Deputy Chairman
Group Managing Director since 1991. Director of Kein Geld (NZ)
Limited, RA Duke Limited and RD Golf Investments Limited.

Tony Batterton, BCom, C.A: Director (Non-Executive)
Partner and Executive Director of Evergreen Partners Ltd. Director
of Direct Capital Investments Ltd & Subsidiaries, Direct Capital IV
Investments Ltd & Subsidiaries, Direct Capital IV Management Ltd
& Subsdiaries, Direct Capital IV Partners Ltd, Direct Capital IV GP Ltd,
Tiger Ventures NZ Ltd, George H Investments Ltd, P F Olsen Group
Ltd, PF Olsen Ltd, Siplow Nominees Ltd, Wright Loan Ltd, Direct
Capital Partners Ltd, and Evergreen GP Ltd.

Andy Coupe, LLB: Director (Non-Executive)
Chairman of New Zealand Takeovers Panel. Director of Gentrack
Group Ltd, Kingfish Ltd, Barramundi Ltd, Marlin Global Ltd and
Television New Zealand Ltd. Chartered member of Institute
of Directors.

Subsidiary Companies

Rod Duke is a director of the following subsidiaries: Briscoes (NZ)
Limited, The Sports Authority Limited (trading as Rebel Sport), Rebel
Sport Limited and Living & Giving Limited.

Principal Activities of the Group

Briscoe Group Limited is a non-trading holding company, but
provides management services to its subsidiaries.

Directors

A. Shareholdings
Beneficially Held

MM Devine1.

RAB Coupe

As at 22 March 2019

10,000

Non-Beneficially Held

As at 22 March 2019

RA Duke as Trustee of the RA Duke Trust

170,878,656

RPO’L Meo

AD Batterton

100,000

20,000

For further details refer to Substantial Product Holders
information below.

1. Mary Devine resigned as a director effective from 31 March 2019.

B. Share dealings
During the 52 week period ended 27 January 2019 the following
directors acquired/sold shares in the Company:

Acquired:

Date of
transactions

Number of
shares acquired

Consideration

R A Duke as trustee of the R A Duke Trust:

10 May 2018

11 May 2018

25 October 2018

AD Batterton:

24 September 2018

27 September 2018

30,000

291,400

7,000

2,350

7,650

$104,100

$993,674

$22,750

$8,272

$27,540

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 Limited.

There were no changes in company structure during the year.

C. Directors’ Insurance
As provided by the Group’s Constitution and in accordance with
Section 162 of the Companies Act 1993 the Group has arranged
Directors’ and Officers’ Liability Insurance which ensures Directors
will incur no monetary loss as a result of actions undertaken by them
as Directors provided they act within the law.

D. Interests in contracts

During the 52 week period ended 27 January 2019 the following
Directors have declared pursuant to Section 140 (1) of the Companies
Act 1993 that they be regarded as having an interest in the following
transactions:

•

Payment of rental of $645,00 (2018: $640,166) on the retail
property of which the RA Duke Trust is the owner. (Refer to
Note 6.1.1 of the financial statements).

Payment of rental of $535,164 (2018: $535,164) on the retail
property owned by Kein Geld (NZ) Ltd, an entity associated with
RA Duke (refer to Note 6.1.1. of the financial statements).

E. Directors’ and Officers’ use of Company Information
During the period the Board received no notices pursuant
to Section 145 of the Companies Act 1993 relating to use
of Company information.

Shareholders Information
Holding Range at 22 March 2019

No.
Investors

Total Holdings

957

1587

581

475

647,680

4,615,613

4,642,512

11,127,615

200,723,080

1-1,000

1,001-5,000

5,001-10,000

10,001-100,000

100,001 and over

Total

3,638

221,756,500

0.29

2.08

2.09

5.02

90.52

100%

Substantial Product Holders

The following information is given pursuant to section 293 of the
Financial Markets Conduct Act 2013. As at 27 January 2019, details
of the Substantial Product Holders in the company and their relevant
interests in the company’s shares are as follows:

Substantial Product Holder

R A Duke (2)

Holding as at
27 January 2019(1)

170,878,656

(1) This information reflects the company’s records and disclosures made
under section 280(1)(b) of the Financial Markets Conduct Act 2013.

(2) R A Duke has a relevant interest as a trustee of the R A Duke Trust
which was disclosed in the SSH notice dated 13 October 2016, in
respect of 170,081,138 shares. As at 27 January 2019 this interest was
in respect of 170,878,656 shares.

Total number of voting shares in the company
as at 27 January 2019 was 221,599,500

Top 20 Holder List

As at 22 March 2019

Rank

Holder’s Name*

Total

JB Were (NZ) Nominees Limited** ............................................................ 172,933,284 ........................................77.98

Gerald Harvey .....................................................................................................5,250,000 .......................................... 2.37

Harvey Norman Properties (NZ) Ltd ..............................................................5,250,000 .......................................... 2.37

FNZ Custodians Limited ...................................................................................3,600,399 ...........................................1.62

National Nominees New Zealand Limited .................................................... 1,288,757 .......................................... 0.58

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 .......................................... 0.55

Stuart Hamilton Johnstone and Lorraine Rose Johnstone ..........................1,000,000 .......................................... 0.45

Shu-Wen Chiang ...................................................................................................800,538 .......................................... 0.36

Forsyth Barr Custodians Limited ......................................................................... 782,913 .......................................... 0.35

Manhattan Trustee Limited .................................................................................683,000 ...........................................0.31

Citibank Nominees (NZ) Ltd ............................................................................... 640,588 .......................................... 0.29

Peter William Burilin ............................................................................................ 540,839 .......................................... 0.24

Custodial Services Limited .................................................................................. 495,092 .......................................... 0.22

Accident Compensation Corporation ................................................................480,000 .......................................... 0.22

Investment Custodial Services Limited ..............................................................472,995 ...........................................0.21

Keith Arthur William Brunt ................................................................................. 365,000 ...........................................0.16

Carla Ingrid Brockman .......................................................................................... 336,300 ........................................... 0.15

Gemscott Limited ................................................................................................. 335,000 ........................................... 0.15

HSBC Nominees (New Zealand) Limited ..........................................................319,580 ...........................................0.14

Custodial Services Limited ................................................................................... 241,075 ........................................... 0.11

A number of the registered holders listed below hold shares as nominees for, or on behalf of, other parties.
Includes 170,878,656 shares in relation to holdings associated with R A Duke.

*
**