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Dear Fellow Shareholders, I am pleased to report that we have achieved solid progress during the past financial year. It was also a year in which we were able to deliver considerable value to our shareholders. Despite the very difficult trading conditions that we experienced in Australia, we were able to record a small increase in Group profit for the year which was a significant achievement. Our results for the year show that we achieved $189 million of revenue, Group profit of $10.039 million and we opened eight new stores in Australia and one in New Zealand. Our profit result represents an excellent 21.8% return on shareholders funds. The return has averaged 24% over the past four years and we can be justifiably proud of this record, matched by few companies on the NZ Stock Exchange. The value of the Company has been reflected in the share price which has increased 33% to $3.80 in the 12 months ended 30 June 2001. Our dividend payout for the past year, of 15 cents per share, represents 56% of our tax paid profit for the year, and is an 11% increase on the previous year. Our dividend payout has over doubled in four years and is consistent with our stated objectives of increasing shareholder value while pursuing controlled profitable growth for the Group. The Group has now 115 stores spread between Australia (74) and New Zealand (41), with many exciting opportunities available to us over the coming years. The Boards focus over the past 12 months has been concentrated on bringing the two operating companies in Australia and New Zealand closer together under the leadership of our Chief Executive Officer, Mike Parsell. This has involved some rationalisation of certain duplicated Christine Hill has now joined the Board as a Director. Christine has been associated with the Company since its formation in 1979, and has been closely involved with the artistic direction of the Groups store designs and interior layouts over the years. Christine brings a feminine perspective to the Boards activities. The Board decided last year to sell its two buildings in Whangarei and Brisbane and to lease them back on long term leases. The Whangarei building was sold in September 2001, realising $1.5 million. The Brisbane building is being sold in two stages, with stage one being placed on the market in September 2001. Stage one of the building is expected to realise around AUD$4.6 million in the next 2-3 months, with a further AUD$2 million realised on the sale of stage two of the Brisbane building in three years time. A decision has not yet been made regarding the use of these funds, but increasing shareholder value is paramount in the Boards thinking. The Group is in fine shape financially with a very sound balance sheet. With an equity ratio of 54% at 30 June 2001, we are in a strong position to take advantage of the tremendous growth opportunities available to us. We have upwards of 40 new store possibilities in Australia, and further marketing opportunities to increase our market share in New Zealand. The reduction of corporate tax rates in Australia from 34 cents to 30 cents from 1/7/01 will also be a major boost for the Group. With the expected uplift in the retail scene in Australia in the next Our Company continues to go from strength to strength. We have a team of dedicated and passionate individuals at all levels of the Group, a great many of whom have been with us for many years. Their expertise and enthusiasm constitutes a major reason for our success. They foster and preserve a company culture which is unique and keeps us ahead of our competitors. My thanks go to everyone in the Company. Our Annual meeting will be held at the Albany North Harbour Stadium on the North Shore in Auckland on the 16th November and I look forward to welcoming you there.
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