Pacific Retail Group record half year profit

Pacific Retail Group Limited

Auckland, 26 November: Pacific Retail Group (PRG) reports record half year profit

Pacific Retail Group (PRG) today announced an operating surplus before unusual items and tax of $10.98 million, for the period to 30 September 2002. This represents a 46.2% increase on the performance of the businesses over the corresponding period last year, factoring in the performance of Bendon under previous ownership.

Chief Executive Peter Halkett said the business is performing well and in line with expectations. “Solid foundations have been laid and initiatives launched in recent years are now generating anticipated returns.”

Sales for the period from the Group’s businesses were $269.64 million. If sales from the contract managed stores were included, this figure would be $292.68 million. This represents increases of 8.6% and 17.9% respectively on the prior comparable period, with Bendon’s figures included.

Chairman Maurice Kidd described the evolution of the Group’s business beyond its retail heritage. “Traditionally the Group has been a retail business, but in order to maintain growth and a solid return for our shareholders, we will need to continue to broaden our horizons,” he said.

“Retail related property investment and development, business acquisitions and other investments that may fall outside the scope of the retail and finance companies would see the Group continuing to diversify in a carefully managed way. “

Mr Kidd also announced the appointment of director Mr Philip Newland to Deputy Chairman of the Group.

“Mr Newland, who is Managing Director of our major shareholder Cullen Investments, has broad business expertise which will greatly assist in providing guidance to the Board as the Group expands and develops. His experience in areas outside the Group’s current core activities will be invaluable.”

Mr Newland said he was delighted to be appointed Deputy Chairman and was looking forward to increasing his involvement in the company.

“Cullen Investments and I are deeply committed to Pacific Retail Group and I will be devoting a significant amount of time to my new role. In particular, I will be focusing on the opportunities for diversification that the Board has identified, including property investment and development and financial services.”

Mr Halkett said strong contributors to the half year result were Pacific Retail Finance (PRF) and the newly acquired Bendon.

“Their contribution has been backed up by the consistent performance of the Group’s traditional appliance and retail businesses. “

“PRF is an example of the Group leveraging core competencies beyond the retail sector to generate returns. PRF has become a significant finance company in its own right, contributing substantially to the profit in this result.” …/2 - 2 -

Bendon was acquired at the start of the current half year period. “The six month result of $1.6m compares well to the break even result for the same period last year and includes UK operating costs for the first time. We are further encouraged by the strong growth in revenue to $42.17 million, up 18.4% on the previous corresponding period,” said Halkett.

Expansion of the Group’s existing business during the first six months has included the introduction of furniture to Noel Leeming through two concept stores at Botany Downs and Manukau City, the launch of Noel Leeming on-line, two new Big Byte stores and continued expansion of the Bond and Bond stores and product range.

On the performance of Living & Giving, Mr Halkett said although disappointing, “We are still fine tuning the basics, and remain confident about its long term future. “

Funds from the issue of Secured Capital Notes (SCN’s) in October, which successfully raised $63.71 million and was over-subscribed, will be used to fund ongoing expansion of the business.

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