FINANCIAL REVIEW - DISCUSSION AND ANALYSIS

Surplus After Tax

The Groups surplus after tax was $15,060,000 a 47% increase on last years surplus excluding the unusual item for profit on sale of the Australian head office building of $1,326,000. Total sales went up from $224,802,000 to $259,777,000 a 15.6% increase.

The main factor contributing to this record result was an increase in the Australian same store revenue of 9.8% which was achieved while maintaining its gross margin. NZ same store sales increased 1.2% for the year.The NZ EBIT contained a one-off write down associated with the pending centralisation of support services to Brisbane of $705,000. If this one-off cost is added back to the NZ EBIT then they enjoyed an increase in EBIT of 9.1% to $11,714,000. The EBIT loss in Canada reduced from NZ$1,802,000 to NZ$1,366,000 in its first full year of operation. The directors are pleased with this result and more stores are planned in Canada for 04/05.

Occupancy costs represented 6.7% of trade sales this year compared to 6.5% last year.

Depreciation for the group went up from $5,070,000 to $6,025,000 in 03/04.

CASH FLOW

Net cash flow from operating activities was $24,779,000 compared to $6,789,000 last year, an increase of 265%.

Key drivers were:

  • an increase in receipts from customers of $21,001,000,a 8.7% increase on last year.
  • a decrease in income tax paid of $1,821,000,a decrease of 27.5%.

Net cash outflow relating to investing activities was up by $1,283,000 to $6,124,000.

Key drivers were:

  • cash flow from sale of assets down from $5,335,000 (principally from sale of Australian head office building) to $250,000 this year.
  • purchase of new assets decreased to $6,409,000,down from $10,313,000.

Net cash outflow from financing activities was $6,487,000 compared to a net inflow of $78,000 last year due mainly to:

  • Borrowings reduced from $21,552,000 in 02/03 to only $6,593,000.
  • Dividends paid reduced to $6,944,000 from $14,266,000 (special dividend of $7,712,000) in 02/03.

BALANCE SHEET
Net assets increased from $50,048,000 at the end of 02/03 to $57,607,000 this year.Long term borrowings decreased slightly to $40,604,000 from $42,299,000 last year. The net debt to debt plus equity ratio decreased to 32.5% from 44.5% last year. The equity ratio at year end was 46.9% compared to 45.8% at the same time last year. Total assets went up from $109,228,000 to $122,831,000 due principally to:

  • Cash on hand up $11,723,000.
  • Inventories up $3,768,000.

The working capital ratio decreased from 5.4:1 to 4.3:1.

EVENTS AFTER BALANCE DATE
There were no events after balance date requiring disclosure.

SHAREHOLDERS RETURNS

  • Declared dividends total 21 cents per share compared to 37 cents for 02/03 (which included a special dividend of 20 cents per share).
  • Shares traded between $4.05 and $6.00 ending at $6.00 at 30 June 2004.
  • Average return on equity was 28% compared to 22% last year
  • Average return on total assets was 13.0% compared to 11.2% last year.

Trend Statement



2004
2003
2002
2001
2000
1999
1998
$000
$000
$000
$000
$000
$000
$000
Group Sales
$ 259,777
$ 224,802
$ 214,105
$ 189,168
$ 181,983
$ 156,940
$ 141,254
Earnings
Surplus before taxation,
before abnormals
22,063
15,096
18,340
15,130
15,517
13,549
11,059
Surplus before taxation, after abnormals
22,063
16,637
18,698
15,130
15,517
13,549
11,059
Tax provision
7,003
5,067
5,992
5,091
5,578
4,755
3,867
Surplus after tax,
before abnormals
15,060
10,244
12,298
10,039
9,939
8,774
7,192
Surplus after tax,
after abnormals
15,060
11,570
12,706
10,039
9,939
8,774
7,192
Dividend Distributions
6,944
14,266
5,978
2,518*
5,216
4,444
3,669
Retained surplus for year
8,116
(2,696)
6,728
7,521
4,723
4,330
3,523
Funds Employed
Paid-up ordinary capital
8,078
7,712
7,712
7,712
7,712
7,712
7,712
Reserves and retained earnings
49,529
42,336
45,616
41,860
34,875
29,339
24,605
Shareholders' funds
57,607
50,048
53,328
49,572
42,587
37,051
32,317
Non current liabilities
42,091
43,478
28,994
28,503
22,670
21,849
18,302
 
99,698
93,526
82,322
78,075
65,257
58,900
50,619
Utilisation of funds
Non current assets
23,619
23,475
17,510
22,652
19,635
14,583
13,169
Expenditure carried forward/goodwill
222
298
393
505
625
756
892
Net working capital
75,857
69,753
64,419
54,918
44,997
43,561
36,558
$ 99,698
$ 93,526
$ 82,322
$ 78,075
$ 65,257
$ 58,900
$ 50,619
*There was a change in accounting policy in 2001 regarding providing for dividends.
 
CASH FLOW STATEMENT
2004
2003
2002
2001
2000
1999
1998
$000
$000
$000
$000
$000
$000
$000
Net profit before tax
22,063
16,637
18,698
15,130
15,517
13,549
11,059
Depreciation
6,025
5,070
4,855
4,280
4,264
2,903
2,783
Other non-cash adjustments
192
311
(350)
147
1,545
1,002
1,901
Tax paid
(4,806)
(6,627)
(6,753)
(7,911)
(5,718)
(4,567)
(3,786)
Dividends
(6,944)
(14,266)
(5,978)
(5,410)
(4,638)
(4,059)
(3,091)
Working capital increase
1,305
(8,602)
(7,579)
(3,759)
(1,394)
(10,106)
(3,455)
Capital expenditure
(6,409)
(10,313)
(6,256)
(8,028)
(9,161)
(4,502)
(2,652)
Other
366
0
0
0
0
(30)
(82)
Surplus cash pre external funds
11,792
(17,790)
(3,363)
(5,551)
415
(5,810)
2,677
External source of funds
Net borrowings/(repayments)
0
14,656
2,326
6,250
0
3,455
(1,750)
Treasury stock
91
(312)
(435)
-
-
-
-
Asset sales
285
5,472
1,808
178
146
222
238
Surplus cashflow
$ 12,168
$ 2,026
$ 336
$ 877
$ 561
($ 2,133)
$ 1,165
STATISTICS & OTHER FINANCIAL DATA
2004
2003
2002
2001
2000
1999
1998
Earning per share
39.07c
30.0c
32.95c
26.03c
25.8c
22.8c
18.7c
Net tangible asset backing
$1.49
$1.29
$1.37
$1.27
$1.09
94.6c
82.1c
Interest cover (times)
8.8
7.2
10.3
8.1
10.6
9.9
8
Cash flow from operating
activities $000's
$24,779
$6,789
$8,871
$7,887
$14,214
$2,781
$8,502
Net debt $000's
$26,587
$40,177
$27,454
$27,113
$22,051
$21,234
$16,023
Dividend per ordinary share
21.0c
†37.0c
17.0c
% of tax paid profit as
ordinary dividend
53.7%
56.6%
45.6%
25.0%
52.3%
50.5%
51.0%
Working capital ratio
4.3:1
5.4:1
5.6:1
5.1:1
3.6:1
3.8:1
3.9:1
EBIT/Sales % before abnormals
9.6%
7.9%
9.5%
9.1%
9.4%
9.6%
8.9%
Return on average capital funds
28.0%
22.0%
23.90%
21.8%
24.9%
25.3%
24.0%
Jewellery stores at year end
143
134
120
115
106
102
94
Exchange rate for translating Australian results
0.88
0.89
0.82
0.79
0.8
0.84
0.83
Exchange rate for translating Canadian results
0.84
0.80
-
-
-
-
-
 

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