Announcement
MEETING: BGP: Chairman's Address to Annual Meeting 22 May 2019
02:53pm
BGP
22/05/2019 14:53
MEETING
NOT PRICE SENSITIVE
REL: 1453 HRS Briscoe Group Limited
MEETING: BGP: Chairman's Address to Annual Meeting 22 May 2019
Chairman's Address to the Annual Meeting of Shareholders
22 May 2019
It is a great pleasure to be with you today to reflect on the Group's
performance in the latest financial year - and, of course, to shed what light
we can on the issues and opportunities that will be presented as we go
forward.
As you will know, the year to January 2019 was challenging in many respects,
and retailers of every stripe were affected. Some fared better than others. I
am pleased to say that Briscoe Group was among the few that were able to grow
in strength in this period. Sales rose by more than 4 % to $632 million and
Net Profit After Tax by more than 3 % to $63 million.
Our balance sheet remained strong, with cash and bank balances of $81 million
and no term debt. Our financial performance and stability enabled another
increase in dividends - from 19 to 20 cents per share for the year, which was
the 10th successive increase in the annual ordinary dividend.
The retail sector continued to evolve, with increasing competition from
overseas specialty and online players, and with changes away from the
traditional patterns of retail demand across the year. Customer demographics
and preferences also evolved, with implications for our product offerings and
technology.
These challenges were magnified by social and economic factors - fuel price
spikes, an easing in the Auckland property market and industrial actions -
all of which, in our view, seemed to take the edge off consumer sentiment.
In the total context, our improvement in sales and earnings was a function of
very good operational performance, whereby we continued to focus successfully
on the basics of the business while dealing with the other issues in their
turn. Our management team and their fellow employees put in another strong
and sustained performance. This is certainly noted by the Board, and I take
this opportunity to place our appreciation on the record.
We can say with confidence that the challenges are not going away - if
anything they are increasing in number and complexity. Our first quarter
release, reported earlier this month, reflects the reality of that. By way of
further illustration, a leading industry survey reported last month that more
than half of the retailers polled had failed to meet sales targets in the
first three months of the year, in an environment of business uncertainty and
deflated consumer spending.
So that is the backdrop to the current year - one that will provide yet
another test of our ability to build on solid fundamentals, to adapt and to
improve. I am confident that we have the people and capabilities needed to
once again pass that test.
Executive Share Option Plan
The Executive Share Option Plan has been in place since 2003, providing a
format in which senior executives can be rewarded for high performance and
their interests closely aligned with those of all other shareholders.
There were no further options issued during the latest year. The total number
of share options still exercisable represents only 1.0 % of the current
issued share capital.
As we advised shareholders last year, the Board engaged with specialist
external advisers and was reviewing the company's approach to remuneration,
including the share option plan.
As a result of this review changes were implemented to the long-term
incentive (LTI) scheme, including a change in vehicle (from options to
performance rights), to quantum and to participation.
The first issue of performance rights under the updated LTI scheme was made
in April 2019 and a new medium-term incentive scheme is to be introduced for
senior management, who will no longer participate in the new LTI scheme. We
believe that the overall effect of this refreshment will be to more
effectively align Shareholder and Company objectives with those of our
management and employees.
Corporate governance
Briscoe Group is committed to the highest standards of governance and
management. Our latest Annual Report, which can be viewed and/or downloaded
from our website, sets out the corporate governance polices, practices and
processes that we follow... including the extent to which we have adopted
each of the recommendations in the NZX Code introduced in 2017. Where we
don't follow the Code in full we have provided an explanation and a summary
of alternative practices.
I'd certainly encourage you to take a look at that section of the report, if
you haven't already, as it provides a clear understanding our approach to
what is a vital corporate concern.
There were no changes to our Board during the last financial year, however we
since announced in March the resignation of Independent Non-Executive
Director Mary Devine after she was appointed Managing Director of Hallenstein
Glasson. Mary served as a Director of Briscoe Group from 2013. Her
understanding of the retail environment and her previous governance and
management experience enabled her to make an outstanding contribution to your
company over the past six years. A decision in regard to a new Board member
will be made in due course.
Accounting Standards
As indicated in our Annual Report, there are a couple of new accounting
standards that affected our financial reporting and related disclosures in
the latest year, or will do so in the current year. Perhaps the most
significant change comes from the introduction of NZ IFRS 16 in relation to
the accounting treatment of leases. Our first quarter release outlined the
impact this standard will have on our accounts this year as did a specific
note in the financial statements which were, of course, included in the
Annual Report for the year ended January 2019.
So to reiterate, the impact to the Group's income statement, from NZ IFRS 16,
will be to lower the reported net profit after tax (NPAT) in comparison to
the NPAT which would have been reported under the previous accounting
treatment. The effect of this change on NPAT will occur gradually throughout
the year and will result in a decline in the full-year tax-paid profit of
approximately $2.5 million. It is important to note that the impact of NZ
IFRS 16 has no cash effect to the Group and is for financial reporting
purposes only. The new standard will significantly impact all businesses with
sizable portfolios of leased properties.
Supporting our people
Our appreciation of the people who work in Briscoe Group is a recurring
theme. We recognise that their contribution is not, and never can be, like
traffic on a one-way street. Strong personal and team performance can be
sustained only through mutual respect, endeavour and support.
For that reason we invest continually in the success of our people, both
directly and in conjunction with a number of partners.
The Briscoe Group Education Foundation provides a helping hand for employees
and their children to acquire new or greater skills, or to extend their
education. These endeavours make a difference not only in their work, but
also to their families, the community and the wider society.
The RA Duke Trust supports our partnership with First Foundation. This 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.
13 scholarships have been awarded under this programme so far. With the Free
First Year approach to tertiary education now in place we can make the funds
available go further, and it is our intention to work with First Foundation
to make this investment even more effective in the new funding environment.
We also provide support for staff engaged in tertiary education, working with
Massey University and Auckland University of Technology to provide pathways
for study at a range of levels, from certificates through to advanced
degrees. A number of our managers are engaged in MBA degrees, which
undoubtedly will enhance both their skills and capabilities and those of the
business. We are now looking to extend support under this programme for those
who wish to participate.
So there's a lot of engagement with programmes delivered by external
institutions and organisations. Just as importantly, we support on-the-job
learning bound in with the everyday requirements of the business -
particularly through a couple of excellent internal platforms, Axonify and
Eco Portal. These are really helpful to our people on a daily basis and a
great example of how technology is being utilised within the business.
Community sponsorships
Briscoe Group is a key partner of Cure Kids, which works to develop cures and
improved treatments for serious illnesses that affect thousands of children
in this country. Our generous customers, staff and suppliers, in turn,
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 2019 year. This contribution assisted Cure
Kids to support 52 projects worth more than $10 million, in mental health
research, prevention of late still births and a precision medicine clinical
trial for children with cancers that are difficult to treat.
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 other organisations.
These sponsorship and charitable endeavours are important to us - they
achieve a great deal for community benefit, and we recognise that our
involvement helps to strengthen our shared values and team culture.
Looking ahead
As I've mentioned, the trading environment is challenging and our first
quarter release reinforced this. We do need to be cautious in expectations
for the full year. Nevertheless we are up for the challenge and I do expect
the Group to retain its standing as one of the best performed retailers in
this market.
Before handing over to Rod I'd like to record my appreciation of the
contribution made collectively and individually by my fellow Board members...
currently Tony, Andy and Rod; and latterly Mary, whose resignation, as I
indicated earlier, took effect at the end of March. I believe the Board has
provided an effective combination of knowledge, perspective and skills, in
support of our management team and as representatives of all shareholders.
There have also been significant changes in our senior management team, which
Rod will comment on in his turn. From the Board's perspective, these changes
have been handled well and we look forward to the strong performance of this
team continuing into the future.
On that note I will hand over to Rod for his detailed review of performance
and related matters. Rod, the floor is yours...
End CA:00334885 For:BGP Type:MEETING Time:2019-05-22 14:53:01
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