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AUSTRALIA: FREEDOM GROUP POSTS +41% IN NET PROFITS

¡¾Feb.26, 2002¡¿

AUSTRALIA: FREEDOM GROUP POSTS +41% IN NET PROFITS

February 2002 - Australia's Freedom Group Ltd recorded a 41% jump in half year net profit. The furniture company reported a net profit of A$7.9 million (US$4.01 million) for the six months to December 2001, with total retail sales rising to A$219 million (US$111.27 million) from A$189.9 million (US$96.49 million) in the previous first half.

According to the company the profit jump justified the tough decisions made over the refocusing period. The strong performance was the result of the closure of the loss making businesses such as Andersons and the improvement in the contribution from New Zealand and the Guests business. Across the group the improvement in sales in the first half was expected to continue. In the six months to December 2001, same store comparable written sales rose 8.3%.

The purchase in November of bedding specialist Capt'n Snooze only contributed to the interim result for one month but the business was expected to contribute during the second half in line with pre-acquisition forecasts of between A$400,000 (US$203,240) and A$500,000 (US$254,050). Following the return of the Guests business to break even, Freedom removed the freeze on expansion for the mid to upper market furniture store.

There are currently 15 Guests stores across the country - mostly in Victoria, Queensland and Western Australia. Company wide, Freedom plans to roll out at least another six Capt'n Snooze stores and at least another three Guests and three Freedoms before the end of 2003.Considering the strength of the balance sheet, Mr Walker said Freedom was looking for the best way to utilise its funds. "We are not about to announce an acquisition but if something came along that we thought was in the best interests of the shareholders and gave us synergies then we would certainly consider it very seriously," he said. "It is probably more likely to be in Australia but we haven't excluded the possibility of doing something offshore." Freedom was also considering opening Capt'n Snooze stores in New Zealand. The group declared an interim dividend of four cents per share fully franked.