GOWINGS RETAIL LIMITED

ACN 098 238 585

Chairman's Report	1
Managing Director's Review	2
Directors' Report	6
Corporate Governance	11
Statement of Financial Performance	12
Statement of Financial Position	13
Statement of Cash Flows	14
Notes to the Financial Statements	15
Directors' Declaration	20
Independent Audit Report
to the Members	20
Shareholder Information	21

This concise report has been derived from the Group's 2002 Annual Report. A copy of the 2002 Annual Report, including the Independent Audit Report, is available to all shareholders, and will be sent to shareholders without charge upon request. The Annual Report can be requested by relephone on (02) 9264 6321. This concise report cannot be expected to provide as full an understanding of the Group's financial performance, financial position and financing and investing activities as the Group's Annual Report.

Chairman's Report

Welcome to the first Annual Report of Gowings Retail Limited.

This year was the start of a new beginning, after 134 years Gowings Retail became a fully independent public company.

The de-merger with Gowing Bros. Limited and subsequent float was a very detailed and time-consuming process, particularly for the executive management team. I would like to thank all of those involved for their time and commitment to the process.

Gowings Retail has had a difficult year financially for its first year of independent operation. However on the positive side, following the opening of the Hornsby Store and the success of the float we are still very well positioned to grow and open new stores.

Our unique retail concept continues to be well accepted by our customers and sought after as a point of difference by shopping centre category managers.

At Gowings work never stops on developing and fine-tuning our range to ensure we anticipate our customers' needs and remain relevant in todays very competitive market place. At the end of the day, it is our passion to look after the customer that gives us our major competitive edge against many of our competitors.

Retail in Australia remains one of the most competitive retail environments in the world. Many industry pundits continue to question the ongoing viability of large format general merchandise retailing, department stores in particular. In this regard it is our view that it is the generalists that are at risk not the specialists, and although many people may seek to categorise us as a department store, nothing could be further from the truth. Gowings has chosen a particular umbrella category, 'men', and then identified three sub-categories, casual clothing, outdoor and

adventure and basics and gifts and then become the dominant player in each

category. We remain confident that our business model is sustainable.

During the year we issued our new shareholder rewards card to qualifying shareholders. I hope those of you who were able to take advantage of your card did so. We regard our shareholders as our most loyal customers and most motivated company ambassadors. I can confidently say that Gowings has no intention of watering down, reducing or abandoning its shareholder reward scheme. We want you to shop at Gowings and we are happy to offer you an additional incentive as a thank you for your financial support.

I am pleased to note that we have successfully negotiated an agreement with Westfields to open our next store, prior to Christmas, in Parramatta.

I look forward to seeing you at the AGM.

John Gowing CHAIRMAN

Managing Director's Review of Operations

Dear Shareholder,

The last year could best be described as a remarkable period in our business' history; it started with the first Gowings store in the suburbs, the separation of the retail business from Gowing Bros. Limited and the subsequent successful floating of the company on the Australian Stock Exchange.

After the first 39 weeks of operation our net profit after tax was \$1.135 million. This result, although disappointing, was achieved in a very difficult retail environment.

The major influence on the final profit result was the underperformance of our store at Hornsby. We believe this to be a reflection on the centre rather than our store.

Our final result has been achieved through an uncompromising approach to operational costs. We have also had significant success in delivering a higher gross margin than forecast. This has been achieved by focusing on sourcing our core products at lower costs and tighter control on shrinkage.

Sales Review

The comparable sales revenue for the Group compared to the previous year was $+4\%$ . This increase is lower than anticipated, however, given the difficult trading conditions, is quite positive.

After a particularly strong start to the year we noticed a considerable drop in consumer confidence post-September 11. This resulted in a weaker than anticipated December quarter. Post-Christmas we experienced some return of confidence in the economy, however the critical fourth quarter was affected by warmer than average temperatures which impacted upon the winter trading period.

The downturn in tourism affected our sales more considerably than many other retailers due to our CBD locations, particularly Wynyard and the Sydney Airport stores, who rely on the tourism trade.

We have also decided not to extend a further 3-year lease option at the Sydney Airport. We will achieve a better return on our investment by utilising our human resources, stock and fixtures for our large format lifestyle stores - our growth model.

Marketing Review

The main focus of our marketing program for the year were the release of our Summer and Winter Journals together with our Christmas Gift Guide.

Again, these proved to be very successful in generating sales, promoting brand awareness and highlighting the features of our large format lifestyle stores.

The three major categories of our lifestyle format are:

Outdoor and Adventure
Casual Lifestyle
Basic Fundamentals and Gifts

We also initiated a new promotion in June of this

year, "The Outdoor & Adventure Sale", which proved to be very successful, both in branding the Outdoor business and promoting sales growth in the June period.

"Not as adventurous as the Gouings Adventure Sale"

Gowings Club

Our last Reward Vouchers issued in April 2002 were well received by all our Gowings Club members; in fact, we had the highest redemption rate of any previous mail-out.

In the last 12 months we have added over 14,000 new members to Gowings Club. In general, Gowings Club members spend more than non-club members and frequent our stores 3-4 times more often.

Gowings Club continues to play an important role in our overall growth and profit strategy and it is still our intention to aggressively market the club program to the benefit of both our loyal club members and our business.

Whale Trust

The Whale Trust has allowed us to continue our strong commitment to the community and environment.

We have raised funds to continue the research that will lead to a healthier environment for whales and other sea creatures.

The Whale Trust has received strong support from our customers who have purchased Whale Trust Futures and Whale Trust merchandise. Our suppliers have also supported the trust by generously donating their time and product.

Gowings Club members have also shown strong support by donating their Gowings Rewards Vouchers to the Whale Trust.

GOWINGS WHALE TRUST EST 2000

Managing Director's Review of Operations

(continued)

Product Review

Our product focus has not changed in the past 12 months; we are still determined to offer quality products at compelling value.

"Our team is focused on what the customer wants and aspires to"

The direct engagement between our Product Developers and our Sales team is crucial in delivering what our customers want.

We have consistently monitored the market for new brands and product and believe we have the right mix to take our business forward.

Our improved buying power has not only allowed us to reduce the selling price of a number of key items, it has also enabled us to improve our final margin this year compared to last year.

This is a key element to our growth strategy. It has and will continue to allow us to have benefits from improved economies of scale.

Gowings Concessions

In the past 12 months we have had three new concession operators; we welcome these operators to our business;

Silent World (Dive Operator)
Let's Travel (Adventure Travel Agent)
Blazer (Men's Fashion)

Our third party operators offer us expertise in specialist areas and add to the unique, eclectic mix of our business.

Future Prospects

We believe that the underlying business is still very sound and the opportunities for growth of Gowings sales and earnings will continue.

We will achieve this by:

Increasing the number of our stores
Improving the profitability of store operations
Reducing our product costs through increased buying power

Over the last 12 months, we have carried out extensive research on our growth model, and after analysing all the information we are still very confident that the large format lifestyle store is the most capable model to achieve the maximum return on our investment.

I am pleased to announce that we have in principle agreed with Westfields to open a new store at Westfield Parramatta. We will be able to take advantage of the pent up consumer demand for Gowings outside the Sydney CBD. Parramatta is the third largest CBD in Australia behind Sydney and Melbourne.

Our Team

Finally, I would like to take this opportunity to thank the entire Gowings team for their efforts throughout the year. As a retailer, the success of our business is dependant on the quality and commitment of our people. Ultimately, it is the performance of our people that will help Gowings to deliver strong growth and increase shareholder returns.

I look forward to the future with optimism.

Peter Sillick MANAGING DIRECTOR

Directors' Report

For the period from the date of incorporation (24 September 2001) to 4 August 2002

Your Directors present their report on the consolidated financial report for period from the date of incorporation (24 September 2001) to 4 August 2002 and in accordance with the Corporations Act 2001 report as follows:

Directors

The names of the Directors in office during the financial period and to the date of this report are:

Non-executive Directors:

John Gowing BComm, CA CHAIRMAN MEMBER AUDIT COMMITTEE & REMUNERATION COMMITTEE

John Gowing (age 41) has been Managing Director of Gowing Bros. Limited since 1987. He has had over 20 years experience in men's retailing in Australia. Prior to Gowings, Mr. Gowing spent 4 years with accounting firm Arthur Young as a Chartered Accountant. He also holds Non-Executive Board positions with Noni B Limited and venture capital firm, Crescent Capital Partners Ltd. Mr. Gowing previously held the position of Vice-President and Treasurer of the Australian Retailers Association of New South Wales.

Duncan Shaw

MEMBER REMUNERATION COMMITTEE

Duncan Shaw (age 61) is currently the Chief Executive Officer of the Australian Retailers Association of New South Wales and has over 40 years experience in the retail industry. He commenced at Grace Bros. as a management trainee and attained the role of Group General Manager Retail Operations and a member of the Managerial Board.

Michael Alscher BComm

CHAIRMAN AUDIT COMMITTEE & MEMBER REMUNERATION COMMITTEE

Michael Alscher (age 34) is currently an Executive Director of Crescent Capital Partners Ltd and York Corporate Advisory Pty Limited and Non-executive Director of Gowing Bros. Limited Mr. Alscher previously held the position of Chief Operating Officer of Gowing Bros. Limited for three years. Prior to Gowings Mr. Alscher worked as a management consultant with Bain International and the L|E|K Partnership.

Executive Directors:

Peter Sillick

MANAGING DIRECTOR

Peter Sillick (age 33) has been managing the Retail Operations of Gowings since 1998 as General Manager of Retail within Gowing Bros and as Managing Director of Gowings Retail Limited Prior to joining Gowings Mr. Sillick worked for 11 years with Woolworths Ltd. one of Australia's largest retailers.

Michael Faulkner BBus, CA

FINANCE DIRECTOR & COMPANY SECRETARY

Michael Faulkner (age 39) joined Gowing Bros. Limited in 1999, holding positions as Chief Financial Officer and Company Secretary. Prior to joining Gowings Mr. Faulkner spent 13 years with chartered accounting firm PricewaterhouseCoopers.

Principal Activities

The principal activities of the consolidated entity during the period consisted of retail operations in recreational products and general merchandise.

Review of Operations

The operations of the consolidated entity are reviewed in detail in the Managing Director's Review of Operations.

Dividends

A maiden fully franked dividend of 3.0 cents per share is payable on 7 November 2002. The Directors have not declared or paid any other dividends.

Significant Changes in the State of Affairs

The Company was incorporated on 24 September 2001.

On 5 November 2001 the Company acquired the retail business of Gowing Bros. Limited pursuant to a Business Purchase Agreement. The purchase price paid under the agreement was \$12,000,000, which was satisfied by the issue of 12,000,000 Ordinary Shares.

The company made an Initial Public Offering (IPO) of 8,000,000 new shares and 2,000,000 sale shares at an issue price of \$1.00 each under a Prospectus dated 8 November 2001 and was admitted to the Official List of companies on the Australian Stock Exchange on 18 December 2001.

Matters Subsequent to the End of the Financial Period

Since 4 August 2002 the consolidated entity has agreed in principle to a 15 year lease in the Parramatta Westfields Shopping Centre. A disclosure statement detailing the broad terms of the agreement has been agreed to by the directors and a formal lease is in the process of being completed.

Likely Developments

The funds raised during the IPO process were raised for the purpose of funding the current growth and development of the retail business. At 4 August 2002 approximately \$3.0m of the funds raised for the above purposes remain, it is the intention of the Directors that those funds be used to fund the opening of the proposed store in Parramatta and one other store.

For further discussion of the prospects of the business please refer to the Managing Director's review.

Directors' Report

(continued)

Environment

The operations of the Consolidated entity are not subject to any particular and significant environmental regulation under a law of the Commonwealth of Australia or any of its States or Territories.

The Consolidated entity is committed to a policy of environmental responsibility in all its business dealings. This policy ensures that when the Consolidated entity can either directly or indirectly influence decisions which impact upon the environment, that influence is used responsibly.

The Consolidated entity, in union with Gowing Bros. Limited, continues to support the Gowings Whale Trust, a trust devoted to raising funds to foster research that will lead to a healthier environment for whales and other sea creatures. All proceeds from the sale of nominated merchandise within our stores are donated to the trust.

Directors' and Officers' Indemnity/Insurance

The Constitution of the Company provides an indemnity (to the extent permitted by law) to each person who is or has been a director, alternate director or executive officer of the company and, if the directors so determine, to any auditor or former auditor of its related bodies corporate for all losses or liabilities incurred as an officer or, if the directors so determine, an auditor of the company including, but not limited to, a liability for negligence or for legal costs on a full indemnity basis.

The company paid a premium in respect to a contract of insurance insuring Directors' and Officers' against certain liability incurred in that capacity. Disclosure of the amount of the premium and the nature of the liabilities in respect of such insurance is prohibited by the contract of insurance.

Directors' Interest

The Directors' relevant interest's in shares and options of the company as at the date of this report are:

Director	Fully Paid	Share
	Ordinary Shares	Options ⁽⁶⁾
John Gowing ⁽¹⁾	858,186
Duncan Shaw ⁽²⁾	50,000
Michael Alscher ⁽³⁾	64,118
Peter Sillick ⁽⁴⁾	100,000	100,000
Michael Faulkner ⁽⁵⁾	67,000	66,500

(1) John Gowing is the Managing Director of and holds approximately 19% of the issued capital of Gowing Bros. Limited Gowing Bros. Limited holds 7,000,001 shares in the company. 300,000 shares in the Company have been issued to Mr. Gowing under the Executive and Director Share Plan.

(2) 50,000 shares in the company have been issued to Mr. Shaw under the Executive and Director Share Plan.

(3) Michael Alscher is a non-executive director of Gowing Bros. Limited. Gowing Bros. Limited holds 7,000,001 shares in the company. 50,000 shares in the Company have been issued to Mr. Alscher under the Executive and Director Share Plan.

(4) 100,000 shares in the company have been issued to Mr. Sillick under the Executive and Director Share Plan.

(5) 67,000 shares in the company have been issued to Mr. Faulkner under the Executive and Director Share Plan.

(6) These options are convertible to shares at an exercise price of \$1.00 at the discretion of the option-holder upon the Company achieving certain performance targets, as disclosed overpage.

Remuneration of Directors and Senior Executives

Remuneration of Directors and senior executives is determined annually by the Board based on recommendations from the Remuneration Committee. Remuneration levels are based on market conditions and consolidated entity performance.

Remuneration during the period ended 4 August 2002 was as follows:

(a) Non-executive Directors

	Director's Fees

John Gowing	37,500
Duncan Shaw	18,750
Michael Alscher	18,750

(b) Executive Directors and Executive Officers

Executive	Salary	Other Benefits $(a)$	Superannuation Contributions	Total
				Ŝ
Peter Sillick	114.615	24,904	9.342	148,861
Michael Faulkner	99.181	18,178	8.084	125,443
John McLay	78,538	20,424	6.387	105,349

(a) Other benefits include motor vehicle and parking benefits inclusive of FBT and options granted.

(c) Executive Directors' and Executive Officers' Options

Options

Remaining
100,000
66,500
66,500

⁽¹⁾ The options were granted to the executives under the terms of the Company's Employee Option Plan. The options are exercisable as follows:

a. Half on achievement of net profit after tax for the Company for year ended 2002 as forecast in the Company's Prospectus.

b. Half on achievement of net profit after tax for the Company for year ended 2003 as forecast in the Company's Prospectus.

Meetings of Directors

There were 13 Directors meetings and 1 meeting of the Audit Committee during the period. The attendance by each Director of the Company during the period was:

Director	Board Meetings Attended/Held	Meetings of the Audit Committee Attended/Held
John Gowing	11/13	1/1
Duncan Shaw	13/13
Michael Alscher	11/13	1 / 1
Peter Sillick	13/13
Michael Faulkner	13/13

Directors' Report

(continued)

Share Options

During the financial period ended 4 August 2002 the following options over unissued shares in the company were granted:

246,000 options to employees under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006.
$\bullet$ 250,000 options to York Corporate Advisory Pty Limited, a company associated with Michael Alscher, on the successful float of the company at an exercise price of \$1.00 expiring on 31 November 2006.
466,000 options to executives under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006. The options issued to executives are exercisable as follows:
half on achievement of net profit after tax for the Company for the year ended 2002 as forecast in the company's Prospectus dated 8 November 2001; and
half on achievement of net profit after tax for the Company for the year ended 2003 as forecast in the company's Prospectus dated 8 November 2001

Float funds

The funds raised from the IPO have been applied against capital raising, payment of debts associated with the building of the Hornsby store and the balance of approximately \$3 million, held on deposit, will be applied against the cost of opening new stores.

Rounding of Amounts to Nearest Thousand Dollars

The Company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

Signed in accordance with a Resolution of the Directors of Gowings Retail Limited.

John Gowing DIRECTOR

Peter Sillick DIRECTOR Sydney, 4 October 2002

Corporate Governance

Board responsibilities and objectives

The Directors are responsible for ensuring that the business of the Company is conducted with the utmost integrity and objectivity in order to enhance the reputation and performance of the Company.

The Directors acknowledge their accountability to all shareholders for the creation of shareholder value and the safeguarding of shareholders' funds. The Board aims to achieve these objectives through the adoption and monitoring of corporate strategies, plans, policies and performance reviews.

Composition of the Board

The Board currently compromises three non-executive members (including the Chairman) and two executive members. the Managing Director and Finance Director. The Constitution states that the number of Directors should be determined by the Board, but be not less than three and no more than twelve at any time.

Any Director (excluding the Managing Director) appointed during a year by the Board must retire from office at the next Annual General Meeting following their appointment, although each being eligible may stand for re-election.

At each Annual General Meeting one third of the Directors (excluding the Managing Director) must retire from office, although each may stand for re-election.

Audit Committee

The Audit Committee is responsible for assisting the Board monitor the control and management of significant business and financial risks, the quality of financial reporting and compliance with statutory and regulatory requirements, codes of conduct and reasonable community expectations.

It provides a direct line of communication between the Directors and External Auditors.

It also recommends to the Board the appointment of the external auditor, reviews the scope and activity of external auditors and reviews audit reports.

The Committee is comprised of two non-executive Directors, Michael Alscher (Chairman) and John Gowing. The Finance Director and External Auditor are also invited to attend meetings.

Remuneration Committee

Responsible for major changes and developments in remuneration policies and personnel practices as well as recommending market-related remuneration for the Senior Executive of the Company. The committee is comprised of three non-executive Directors.

Share Transactions

Directors and Senior Executives who are shareholders can buy or sell securities within 45 days after price sensitive announcements to the Australian Stock Exchange unless at that time they have access to information that, if generally available, might affect the share price of Gowings Retail Limited.

Ethics

Gowings Retail Limited adheres to the highest ethical standards and strives to operate to best business practices.

Statement of Financial Performance

For the period ended 4 August 2002

Consolidated
	Note	2002
		\$'000
Revenue from ordinary activities	2	27,244
Cost of sales to customers		14,887
Selling expenses		5,033
Cost of occupancy		3,023
Marketing expenses		533
Distribution expenses		445
Administration & overhead expenses		1,826
Borrowing costs expenses		30
Profit from ordinary activities before
income tax expense	3	1,467
Income tax expense	4	332
Net Profit		1,135
Net profit attributable to outside equity interest		16
Net profit attributable to members of
Gowings Retail Limited		1,119
Earnings per share	9	5.54 $\epsilon$
Diluted earnings per share	9	5.54 $\phi$

The above statement of financial performance should be read in conjunction with accompanying notes.

Statement of Financial Position

As at 4 August 2002

्क्ष्ट्य

	Note	Consolidated 2002 \$'000

Current Assets
Cash assets		3,372
Receivables		442
Inventories		11,386
Other		435 15,635
Total Current Assets
Non-Current Assets
Receivables		745
Property, plant and equipment		3,484
Deferred tax assets		88
Intangible assets		4,727
Other		87
Total Non-Current Assets		9,131
Total Assets		24,766
Current Liabilities
Payables		3,756
Interest bearing liabilities		53
Current tax liabilities		274
Provisions		349
Total Current Liabilities		4,432
Non-Current Liabilities
Interest bearing liabilities		17
Deferred tax liabilities		61
Provisions		99
Total Non-Current Liabilities		177
Total Liabilities		4,609
Net Assets		20,157
Equity
Parent entity interest
Contributed equity	5	18,977
Retained profits		1,119
Total parent entity interest		20,096
Outside equity interest in controlled entities		61
Total Equity		20,157

The above statement of financial position should be read in conjunction with the accompanying notes.

$\sim 4.4\pm 0.04$

Statement of Cash Flows

For the period ended 4 August 2002

Note	Consolidated 2002 \$'000
Cash Flows From Operating Activities
Receipts from customers	29,658
Payments to suppliers and employees	(31,311)
	(1,653)
Interest received	152
Borrowing costs	(30)
Net Cash Inflow (Outflow) From Operating Activities	(1, 531)
Cash Flows From Investing Activities
Payments for property, plant and equipment	(480)
Repayment of loans by related parties	6
Net Cash (Outflow) From Investing Activities	(474)
Cash Flows From Financing Activities
Proceeds from issues of shares and other equity securities	7,578
Share issue costs	(1,236)
Repayment of borrowings	(1,002)
Dividends paid to outside equity interests
in controlled entities	(12)
Net Cash Inflow (Outflow) From Financing Activities	5,328
Net Increase (Decrease) in Cash Held	3,323
Cash at the beginning of the financial period
Cash at the End of the Financial Period	3,323
Non-cash financing and investing activities 9

The above statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

1. Summary of Significant Accounting Policies

This concise financial report has been prepared in accordance with the Corporations Act 2001 and AASB 1039 'Concise Financial Reports'. The concise financial report, including the financial statements and specific disclosures included in the concise financial report, has been derived from the full financial report of Gowings Retail Limited.

A full description of the accounting policies adopted by the consolidated entity is provided in the 2002 financial statements which form part of the full financial report.

2. Revenue
	Consolidated 2002 \$'000
Revenue From Operating Activities
Sales to customers	26,283
Rent received from tenants and concessions	641
	26,924

Revenue From Outside the Operating Activities

Interest	172
Supplier discount and rebates received	135
Other	13
	320
Total revenue	27.244

3. Operating profit

Expenses

Profit from ordinary activities before income tax expense has been determined after charging the following specific expenses:

Depreciation of plant and equipment	248
Amortisation
Leasehold improvements	44
Plant and equipment under finance leases	2
Goodwill	187
Total amortisation	233
Bad and doubtful debts -trade debtors	17
Rental expense relating to operating leases	3,290

(continued)

4. Income Tax
			Consolidated 2002 \$'000

	The income tax expense for the financial
	period differs from the amount calculated on the profit. The differences are reconciled as follows:
	Profit from ordinary activities before income tax expense		1,467
	Income tax calculated @ 30%		440
	Tax effect of permanent differences:
	Non-assessable income		(90)
	Amortisation of Goodwill		56
	Deduction for capital raising		(74)
	Income tax adjusted for permanent differences		332
Income Tax Expense			332

5. Contributed Equity
(a) Share capital
Ordinary Shares (note b,c)			20,213
	Less cost of capital raising (note d)		1,236
Ordinary shares			18,977
		Number of
		Shares	Issue Price	\$'000
	(b) Movements in ordinary share capital:
Date	Details
24/9/2001	Opening balance (issued on incorporation)	1	1.00
5/11/2001	Issue of shares on purchase of business	12,000,000	1.00	12,000
18/12/2001	Issue of shares from capital raising	8,212,500	1.00	8,213
4/8/2002	Balance	20,212,501		20,213

5. Contributed Equity (Continued)

(c) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Costs of capital raising

Costs associated with the Initial Public Offering are as follows:

	\$'000
Underwriting fees	500
Corporate advisory	301
Legal	210
Investigating accountants	70
Public relations	25
Design and printing	71
Other	59
	1 236

(e) Dividend Reinvestment Plan

The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash. Shares are issued under the plan at a price determined as the weighted average market price of shares traded during the period commencing 15 trading days before the record date and ending five trading days after the record date, less a discount of up to 10% at the discretion of the Directors.

(f) Options

During the financial period ended 4 August 2002 962,000 options over unissued shares in the company were granted as follows:

246,000 options to employees under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006.
· 250,000 options to York Corporate Advisory Pty Limited, a company associated with Michael Alscher, on the successful float of the company at an exercise price of \$1.00 expiring on 31 November 2006.
466,000 options to executives under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006. The options issued to executives are exercisable as $follows:$
half on achievement of net profit after tax for the Company for the year ended 2002 as forecast in the company's Prospectus dated 8 November 2001; and
half on achievement of net profit after tax for the Company for the year ended 2003 as forecast in the company's Prospectus dated 8 November 2001

A total of 233,000 of the above options have lapsed due to the Company not achieving the set performance target and 15,000 from employees no longer employed by the company.

Notes to the Financial Statements

(continued)

6. Dividends

Franked Dividends

No dividends were paid during the period. A fully franked final dividend of 3 cents per ordinary share was declared by Directors on 9 September 2002. The dividend will be franked out of franking credits arising from the payment of income tax during the period ending 31 July 2003.

The Franking account balance of the Company at 4 August 2002 is \$nil.

7. Segment information

(a) Industry segments

The Company's operations take place wholly within the Retail Industry.

(b) Geographical segments

The operations are carried on in and around Sydney, Australia.

8. Event occurring after reporting date

On 27 September 2002 the Company entered into an Informal Heads of Agreement with Westfields Leasing in respect to a new store in Westfields Parramatta, at the time of preparing this report the companies are in the process of preparing final lease documentation.

9. Earnings per share

Basic earnings per share	5.54 $\epsilon$
Diluted earnings per share	5.54 $\epsilon$
Weighted average number of ordinary shares
used as a denominator in calculating basic
earnings per share and diluted earnings per share	20,212,501

Options

Options granted during the financial period have not been taken into account in calculation of diluted earnings per share as they are unlikely to be exercised due to the exercise price of \$1.00 being significantly above the trading price of the shares.

10. Non-Cash financing and investing activities

On 5 November 2001 the Company purchased its core business from Gowing Bros. Limited for \$12,000,000 settled by way of issue of 12,000,000 ordinary shares.

	S'000
Current Assets
Receivables	439
Inventories	10,852
Prepayments	414
Total Current Assets	11,705
Non-Current Assets
Receivables	117
Property, plant and equipment	3,290
Intangibles	4,914
Other	150
Total Non-Current Assets	8,471
Total Assets	20,176
Current Liabilities
Accounts payable	6,670
Borrowings	1,000
Provisions	299
Total Current Liabilities	7,969
Non-Current Liabilities
Provisions	146
Total Non-Current Liabilities	146
Total Liabilities	8,115
Net Assets	12,061

Consideration $-12,000,000$ Ordinary Shares	12,000
Outside Equity Interest	61
	12,061

11. Full Financial Report

Further financial information can be obtained from the full financial report which is available, free of charge, on request from Gowings Retail Limited.

Directors' Declaration

The directors declare that in their opinion, the concise financial report of the consolidated entity for the period from incorporation to 4 August 2002 as set out on pages 2 to 5 and pages 12 to 19 complies with Accounting Standard AASB 1039: Concise Financial Reports.

The financial statements and specific disclosures included in this concise financial report have been derived from the full financial report for the period ended 4 August 2002.

The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report, which, as indicated in note 11, is available on request.

This declaration is made in accordance with a resolution of the Directors.

John Gowing DIRECTOR Sydney, 4 October 2002

Peter Sillick DIRECTOR

Independent Audit Report

To the members of Gowings Retail Limited

Scope

We have audited the concise financial report of Gowings Retail Limited for the period ended 4 August 2002 as set out on pages 2 to 5 and pages 12 to 20 in order to express an opinion on it to the members of the Company. The Company's Directors are responsible for the concise financial report.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the concise financial report is free of material misstatement. We have also performed an independent audit of the full financial report of the Company for the financial period ended 4 August 2002. Our audit report on the full financial report was signed on 4 October 2002, and was not subject to any qualification.

Our procedures in respect of the audit of the concise financial report included testing that the information included in it is consistent with the full financial report, and examination, on a test basis, of evidence supporting the amounts, discussion and analysis and other disclosures which were not directly derived from the full financial report. These procedures have been undertaken to form an opinion whether the concise financial report complies with Accounting Standard 1039: Concise Financial Reports issued in Australia in that, in all material respects, it is presented fairly in accordance with that standard.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the concise financial report of Gowings Retail Limited complies with Accounting Standard AASB 1039: Concise Financial Reports.

HLB Mann Judd (NSW Partnership) CHARTERED ACCOUNTANTS Sydney, 4 October 2002

$\Delta L R$ Mann Judef $S \times \nabla$ rem.

S. K. Preen PARTNER

Shareholder Information

The shareholder information set out below was applicable as at 30 September 2002.

Distribution of Securities

Range of fully paid ordinary (FPO) shares/options	Number of FPO holders	Number of option holders
$1 - 1,000$	1,376
$1,001 - 5,000$	629
$5,001 - 10,000$	219
$10,001 - 100,000$	136	12
$100,001$ - and over	15
	2.375	31

$\mathcal{L}(\mathcal{A})$ and $\mathcal{L}(\mathcal{A})$ and $\mathcal{L}(\mathcal{A})$

Voting Rights

On show of hands, at a General Meeting of the Company, each member present in person or by proxy has one vote and upon a poll each person present or by proxy shall have one vote for each ordinary share held.

Substantial Shareholders

The substantial shareholders as defined by Section 708 of the Corporations Act 2001 are:
Gowing Bros. Limited	7.000.001	Ordinary shares
Mr Anthony Kieron Young/	2.086,603	Ordinary shares
Strategic Value Pty Ltd

20 Largest Shareholders

combon ترتبتين The names of the 20 largest holders of shares are listed below:

Name		Fully paid ordinary shares	Percentage of issued capital
1	Gowing Bros. Limited	7,000,001	34.63
2	Mr. Anthony Kieron Young	1,581,500	7.82
3	Cogent Nominees Pty Limited	856,857	4.24
4	Strategic Value Pty Limited	505,103	2.50
5	Huntley Investment Company Ltd	489,881	2.42
6	Mr. Edward John Gowing	456,253	2.26
7	Mr. John Edward Gowing	388,909	1.92
8	Warwick Pty Limited	305,105	1.51
9	Carlton Hotel Limited	286,342	1.42
10	Huntley Investment Company Limited	260,119	1.29
11	Washington H Soul Pattinson and Company Limited	180,000	0.89
12	Woodside Pty Limited	135,288	0.67
13	Berne No 132 Nominees Pty Limited	127,982	0.63
14	Mrs. Mollie Gowing	118,908	0.59
15	National Nominees Limited	106,560	0.53
16	AUSA International Pty Limited	100,000	0.49
17	David Hannon Investments Pty Limited	100,000	0.49
18	Malla Pty Limited	100,000	0.49
19	Mr. Peter Sillick	100,000	0.49
20.	Dandeloo Pty Limited	78,967	0.39

Marketable Parcels

The number of shareholdings held in less than marketable parcels is 1,250.

Corporate directory

Gowings Retail Limited

ABN 71 098 238 585

Registered Office

Level 8 15 Market Street Sydney NSW 2000

Telephone: (02) 9264 6321 Facsimile: (02) 9261 3020 Website: www.gowings.com.au

Company Secretary

Michael Faulkner

Share Registry

Computershare Investor Services Pty Ltd Level 3 60 Carrington Street Sydney NSW 2000 Telephone: (02) 8234 5000 Facsimile: (02) 8234 5050

Auditors

HLB Mann Judd (NSW Partnership) Mann Judd House 159 Kent Street Sydney NSW 2000

GOWINGS RETAIL LIMITED

GOWINGS WEBSITE www.gowings.com.au GOWINGS SERVICE CENTRE 1800 803 304

MARKET ST SYDNEY 9287 6394

OXFORD ST DARLINGHURST 9331 5544

319 GEORGE ST WINYARD 9262 1281

PACIFIC HIGHWAY HORNSBY WESTFIELD 9482 1314

$\hat{\mathcal{L}}$

$\lambda$

$\bar{z}$

$\bar{Q}^0$

$\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\$

Gowings Retail Limited
ACN 098 238 585

Financial Report

4 August 2002

$\ddot{\phantom{1}}$

Financial Report
For the period from the date of incorporation (24 September 2001) to 4 August 2002

$\mathcal{L}(\mathbf{q})$ and $\mathcal{L}(\mathbf{q})$ and $\mathcal{L}(\mathbf{q})$

Chairman's Report		2
Managing Director's Review	~≈	3
Directors' Report ł		6
Corporate Governance		10
Statements of Financial Performance		11
Statements of Financial Position		12
Statements of Cash Flows		13
Notes to the Financial Statements		14
Directors' Declaration		27
Independent Audit Report to the Members		28
Shareholder Information		29

$\mathcal{L}^{\mathcal{A}}$

$\sim 10$

$\overline{1}$

$\hat{\gamma}$

Chairman's Report

Welcome to the first Annual Report of Gowings Retail Limited.

This year was the start of a new beginning, after 134 years Gowings Retail became a fully independent public company.

Our unique retail concept continues to be well accepted by our customers and sought after as a point of difference by shopping centre category managers.

At Gowings work never stops on developing and fine-tuning our range to ensure we anticipate our customers needs and remain relevant in todays very competitive market place. At the end of the day, it is our passion to look after the customer that gives us our major competitive edge against many of our competitors.

Finally, I am pleased to note that we have successfully negotiated an agreement with Westfields to open our next store, prior to Christmas, in Parramatta.

Hook forward to seeing you at the AGM.

lohn Gowing

CHAIRMAN

$\overline{2}$

Managing Director's Review of Operations

Dear Shareholder.

After the first 39 weeks of operation our net profit after tax was \$1.135 million. This result, although disappointing, was achieved in a very difficult retail environment.

The major influence on the final profit result was the underperformance of our store at Hornsby. We believe this to be a reflection on the centre rather than our store.

Sales Review

The comparable sales revenue for the Group compared to the previous year was +4%. This increase is lower than anticipated, however, given the difficult trading conditions, is quite positive.

The downturn in tourism affected our 'sales more considerably than many other retailers due to our CBD locations, particularly Wynyard and the Airport stores, who rely on the tourism trade.

We have also decided not to extend a further 3-year lease option at the Airport. We will achieve a better return on our investment by utilising our human resources, stock and fixtures for our large format lifestyle stores - our growth model.

Marketing Review

The main focus of our marketing program for the year were the release of our Summer and Winter Journals together with our Christmas Gift Guide.

Again, these proved to be very successful in generating sales, promoting brand awareness and highlighting the features of our large format lifestyle stores.

The three major categories of our lifestyle format are:

$\star$ Outdoor and Adventure
Casual Lifestvle
Basic Fundamentals and Gifts

We also initiated a new promotion in June of this year, "The Outdoor & Adventure Sale", which proved to be very successful, both in branding the Outdoor business and promoting sales growth in the June period.

"Not as adventurous as the Gowings Adventure Sale"

Managing Director's Review of Operations (continued)

Gowings Club

$\cdot$

Our last Reward Vouchers issued in April 2002 were well received by all our Gowings Club members; in fact, we had the highest redemption rate of any previous mail-out.

In the last 12 months we have added over 14,000 new members to Gowings Club. In general, Gowings Club members spend more than non-club members and frequent our stores 3-4 times more often.

Gowings Club continues to play an important role in our overall growth and profit strategy and is still our intention to aggressively market the club program to the benefit of both our loyal club members and our business.

Whale Trust

The Whale Trust has allowed us to continue our strong commitment to the community and environment.

We have raised funds to continue the research that will lead to a healthier environment for whales and other sea creatures.

Gowings Club members have also shown strong support by donating their Gowings Rewards Vouchers to the Whale Trust.

Product Review

Our product focus has not changed in the past 12 months; we are still determined to offer quality products at compelling value.

"Our team is focused on what the customer wants and aspires to"

The direct engagement between our Product Developers and our Sales team is crucial in delivering what our customers want.

We have consistently monitored the market for new brands and product and believe we have the right mix to take our business forward.

Our improved buying power has not only allowed us to reduce the selling price of a number of key items, it has also enabled us to improve our final margin this year compared to last year.

This is a key element to our growth strategy. It has and will continue to allow us to have benefits from improved economies of scale.

Gowings Concessions

In the past 12 months we have had three new concession operators; we welcome these operators to our business;

(Dive Operator) Silent World
$\star$ (Adventure Travel Agent) Let's Travel
(Men's Fashion) Blazer

Our third party operators offer us expertise in specialist areas and add to the unique, eclectic mix of our business.

Managing Director's Review of Operations (continued)

Future Prospects

We believe that the underlying business is still very sound and the opportunities for growth of Gowings' sales and earnings will continue.

We will achieve this by:

$\star$ Increasing the number of our stores
Improving the profitability of store operations
$\star$ Reducing our product costs through increased buying power

ķ,

Over the last 12 months we have carried out extensive research on our growth model, and after analysing all the information we are still very confident that the large format lifestyle store is the most capable model to achieve the maximum return on our investment.

Our Team

I look forward to the future with optimism.

Peter Sillick MANAGING DIRECTOR

Directors' Report

For the period from the date of incorporation (24 September 2001) to 4 August 2002

Your Directors present their report on the consolidated financial report for the period from the date of incorporation (24 September 2001) to 4 August 2002 and in accordance with the Corporations Act 2001 report as follows:

Directors

The names of the Directors in office during the financial period and at the date of this report are:

Non-executive Directors:

John Gowing BComm, CA

Chairman

Member Audit Committee & Remuneration Committee

John Gowing (age 41) has been Managing Director of Gowing Bros. Ltd since 1987. He has had over 20 years experience in men's retailing in Australia. Prior to Gowings, Mr. Gowing spent 4 years with accounting firm Arthur Young as a Chartered Accountant. He also holds Non-Executive Board positions with Noni B Limited and venture capital firm, Crescent Capital Partners Ltd. Mr Gowing previously held the position of Vice - President and Treasurer of the Australian Retailers Association of New South Wales.

Duncan Shaw

Member Remuneration Committee

Duncan Shaw (age 61) is currently the Chief Executive Officer of the Australian Retailers Association of New South Wales and has over 40 years of experience in the retail industry. He commenced at Grace Bros. as a management trainee and attained the role of Group General Manager Retail Operations and a member of the Managerial Board.

Michael Alscher BComm

Chairman Audit Committee & Member Remuneration Committee

Michael Alscher (age 34) is currently an Executive Director of Crescent Capital Partners Ltd and York Corporate Advisory Pty Limited and Non Executive Director of Gowing Bros. Ltd. Mr Alscher previously held the position of Chief Operating Officer of Gowing Bros for three years. Prior to Gowings Mr Alscher worked as a management consultant with Bain International and the LJEJK Partnership.

Executive Directors:

Peter Sillick

Managing Director

Peter Sillick (age 33) has been managing the Retail Operations of Gowings since 1998 as General Manager of Retail within Gowing Bros and as Managing Director of Gowings Retail Ltd. Prior to joining Gowings Peter worked for 11 years with Woolworths Ltd one of Australia's largest retailers.

Michael Faulkner BBus, CA

Finance Director & Company Secretary

Michael Faulkner (age 39) joined Gowing Bros. Limited in 1999, holding positions as Chief Financial Officer and Company Secretary. Prior to joining Gowings Michael spent 13 years with chartered accounting firm PricewaterhouseCoopers.

Principal Activities

The principal activities of the consolidated entity during the period consisted of retail operations in recreational products and general merchandise. This is the first period of operations of the consolidated entity.

Review of Operations

The operations of the consolidated entity are reviewed in detail in the Managing Director's Review of Operations.

Directors' Report (continued)

Dividends

A maiden fully franked dividend of 3.0 cents per share is payable on 7 November 2002.

Significant Changes in the State of Affairs

The Company was incorporated on 24 September 2001.

The company made an Initial Public Offering (IPO) of 8,000,000 new shares and 2,000,000 sale shares of \$1.00 under a Prospectus dated 8 November 2001 and was admitted to the Official List of companies on the Australian Stock Exchange on 18 December 2001.

Matters Subsequent to the End of the Financial Period

Since 4 August 2002 the consolidated entity has agreed in principal to a 15 year lease in the Parramatta Westfields Shoppingtown, a disclosure statement detailing the broad terms of the agreement has been approved by the directors. A formal lease is in the process of being completed.

Likely Developments

The funds raised during the IPO process were raised for the purpose of funding the current growth and development of the retail business. The Statement of Financial Position indicates that approx \$3.0m of the funds raised for the above purposes remain at the end of the financial period, it is the intention of the Directors that those funds be used to fund the opening of the proposed store in Parramatta and in part another store.

For further discussion of the prospects of the business please refer to the Managing Director's review.

Environment

The operations of the Consolidated entity are not subject to any particular and significant environmental regulation under a law of the Commonwealth of Australia or any of its States or Territories.

The Consolidated entity in union with Gowing Bros. Ltd. continues to support the Gowings Whale Trust, a trust devoted to raising funds to foster research that will lead to a healthier environment for whales and other sea creatures. All proceeds from the sale of nominated merchandise within our stores is donated to the trust.

Directors' and Officers' Indemnity/insurance

Directors' Report (continued)

Directors' Interest

The relevant interest in shares capital and options of the company as at the date of this report are:

Director		Fully Paid Ordinary Shares	Share Options $(6)$
John Gowing $(1)$ Duncan Shaw $(2)$	s.	858,186 50,000	-
Michael Alscher $(3)$		64,118
Peter Sillick $(4)$		100,000	100,000
Michael Faulkner (5)		67,000	66,500

(1) John Gowing is the Managing Director of and holds approximately 19% of the issued capital of Gowing Bros. Ltd. Gowing Bros. Ltd. holds 7,000,001 shares in the company. 300,000 shares in the Company have been issued to Mr Gowing under the Executive and Director Share Plan.

50,000 shares in the company have been issued to Mr Shaw under the Executive and Director Share Plan. $(2)$

(3) Michael Alscher is a non-executive director of Gowing Bros. Ltd. Gowing Bros. Ltd holds 7,000,001 shares in the company. 50,000 shares in the Company have been issued to Mr Alscher under the Executive and Director Share Plan.

(4) 100,000 shares in the company have been issued to Mr Sillick under the Executive and Director Share Plan.

(5) 67,000 shares in the company have been issued to Mr Faulkner under the Executive and Director Share Plan.

These options are convertible to shares at an exercise price of \$1.00 at the discretion of the option-holder upon the Company achieving certain performance targets. The $(6)$ options quoted here represent those options that have not lapsed, please refer to the separate options detailed below.

Remuneration of Directors and Senior Executives

Remuneration during the period ended 4 August 2002 was as follows:

Non-executive Directors $(a)$

INUITEAELULIVE DII CULUI S	Directors Fees
John Gowing	37,500
Duncan Shaw	18,750
Michael Alscher	18.750

Executive Directors and Executive Officers $(b)$

Executive	Salarv	Other Benefits $(a)$	Superannuation Contributions	Total
Peter Sillick	114.615	24.904	9.342	148.861
Michael Faulkner	99.181	18,178	8,084	125,443
John McLav	78.538	20,424	6.387	105,349

(a) Other benefits include motor vehicle and parking benefits inclusive of FBT and options granted

Executive Directors' and Executive Officers' Options $(c)$

	Options Granted	Exercise	Options Lapsed	Options Remaining
Executive	(1)	Price
Peter Sillick	200.000	\$1.00	100,000	100.000
Michael Faulkner	133,000	\$1.00	66.500	66.500
John McLav	133.000	\$1.00	66,500	66,500

(1) The options were granted to the executives under the terms of the Company's Employee Option Plan. The options are exercisable as follows:

a. Half on achievement of net profit after tax for the Company for the year ended 2002 as forecast in the Company's Prospectus.

Half on achievement of net profit after tax for the Company for the year ended 2003 as forecast in the Company's Prospectus. $b$ .

Director's Report (continued)

Meetings of Directors

There were 13 Directors meetings and 1 meeting of the Audit Committee during the period. The attendance by each Director of the Company during the period was:

Director	Board Meetings Attended/Held	Meetings of the Audit Committee Attended/Held
John Gowing	11/13	1/1
Duncan Shaw	13/13
Michael Alscher	11/13	1/1
Peter Sillick	13/13
Michael Faulkner	13/13

(1) No meetings of the Remuneration committee held as remuneration of Senior Executives of the company set prior to incorporation

Share Options

During the financial period ended 4 August 2002 the following options over unissued shares in the company were granted:

246,000 options to employees under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006.
250,000 options to York Corporate Advisory Pty Limited, a company associated with Michael Alscher, on the successful float of the company at an exercise price of \$1.00 expiring on 31 November 2006.
466,000 options to executives under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006. The options issued to executives are exercisable as follows:
half on achievement of net profit after tax for the Company for the year ended 2002 as forecast in the company's Prospectus, dated 8 November 2001; and
- half on achievement of net profit after tax for the Company for the year ended 2003 as forecast $\blacksquare$ in the company's Prospectus, dated 8 November 2001

Float funds

Rounding of Amounts to Nearest Thousand Dollars

The Company is of a kind referred to in Class Order 98/0100 issued by the Australian Securites & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order.

Signed in accordance with a Resolution of the Directors of Gowings Retail Limited.

John Gowing Director

Sydney 4 October 2002

Peter Sillick Director

Corporate Governance

Board responsibilities and objectives

The Directors are responsible for ensuring that the business of the Company is conducted with the utmost integrity and objectivity in order to enhance the reputation and performance of the Company.

The Directors acknowledge their accountability to all shareholders for the creating of shareholder value and the safeguarding of shareholders' funds. The Board aims to achieve these objectives through the adoption and monitoring of corporate strategies, plans, policies and performance reviews.

Composition of the Board

The Board currently compromises three non-executive members (including the Chairman) and two executive members, the Managing Director and Finance Director. The Constitution states that the number of Directors should be determined by the Board, but be not less than three and no more than twelve at any time.

Any Director (excluding the Managing Director) appointed during a year must retire from office at the next Annual General Meeting following their appointment, although each being eligible may stand for re-election.

At each Annual General Meeting one third of the Directors (excluding the Managing Director) must retire from office, although each may stand for re-election.

Audit Committee

It also recommends to the Board the appointment of the external auditor, reviews the scope and activity of external auditors and reviews audit reports.

The Committee is comprised of two non-executive Directors, Michael Alscher (Chairman) and John Gowing, the Finance Director and External Auditor are also invited to attend meetings.

Remuneration Committee

Responsible for major changes and developments in remuneration policies and personnel practices as well as recommending market-related remuneration for the Senior Executives of the Company. The committee is comprised of three non-executive Directors.

Share Transactions

Ethics

Gowings Retail Limited adheres to the highest ethical standards and strives to operate to best business practices.

$\mathbf{v} = \mathbf{v} \times \mathbf{v}$ . Let

Statements of Financial Performance
For the period ended 4 August 2002

	Note	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
Revenue from ordinary activities	$\overline{2}$	27,244	26,499
Cost of sales to customers ł Selling expenses Cost of occupancy	me.	14,887 5,033 3,023	14,606 4,815 2,894
Marketing expenses Distribution expenses Administration & overhead expenses Borrowing cost expenses		533 445 1,826 30	511 445 1,773 30
Profit from ordinary activities before income tax expense	3	1,467	1,425
Income tax expense	4	332	306
Net Profit		1,135	1,119
Net profit attributable to outside equity interest		16
Net profit attributable to members of Gowings Retail Limited	22	1,119	1,119
Total changes in equity other than those resulting from transactions with owners as owners	24	1,119	1,119
Earnings per share 3 Diluted earnings per share	37 37	5.54 _¢ 5.54¢	5.54c 5.54 _¢

The above statements of financial performance should be read in conjunction with the accompanying notes.

$\hat{\mathcal{L}}$

$\bar{I}$

$\Delta \sim 10^{11}$ mass $^{-1}$

Statements of Financial Position As at 4 August 2002

	Note	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
Current Assets
Cash assets	5 $\sim$	3,372	3,251
Receivables	$\mathbf 6$	442	405
$\pmb{\mathcal{J}}$ Inventories	$\overline{7}$	11,386	9,731
Other	8	435	424
Total Current Assets		15,635	13,811
Non-Current Assets
Receivables	9	745	2,174
Investment in Controlled Entities	32		245
Property, plant and equipment	10	3,484	3,458
Deferred tax assets	11 12	88 4,727	88 4,727
Intangible assets Other	13	87	87
Total Non-Current Assets		9,131	10,779
		24,766	24,590
Total Assets
Current Liabilities
Payables	14	3,756	3,675
Interest bearing liabilities	15	53	53
Current tax liabilities 3	16	274 349	246 343
Provisions	17 J.
Total Current Liabilities		4,432	4,317
Non-Current Liabilities
Interest bearing liabilities	18	17	17
Deferred tax liabilities	19	61	61
Provisions	20	99	99
Total Non-Current Liabilities		177	177
Total Liabilities		4,609	4,494
Net Assets		20,157	20,096
Equity
Parent entity interest
Contributed equity	21	18,977	18,977
Retained profits	22	1,119	1,119
Total parent entity interest		20,096	20,096
Outside equity interest in controlled entities	23	61
Total Equity	24	20,157	20,096

$\bar{\psi}$

The above statements of financial position should be read in conjunction with the accompanying notes.

$\mathcal{L}(\mathbf{x})$ and $\mathcal{L}(\mathbf{x})$ .

Statements of Cash Flows For the period ended 4 August 2002

	Note	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
Cash Flows From Operating Activities
Receipts from customers Payments to suppliers and employees		29,658 (31, 311) (1,653)	28,509 (30,051) (1, 542)
Service fee received from associate Dividends received Interest received Borrowing costs		152 (30)	177 45 150 (30)
Net Cash Inflow (Outflow) From Operating Activities	35	(1, 531)	(1, 200)
Cash Flows From Investing Activities
Loans to related parties Payments for property, plant and equipment Repayment of loans by related parties		(480) 6	(471) (473) 6
Net Cash (Outflow) From Investing Activities		(474)	(938)
Cash Flows From Financing Activities
Proceeds from issues of shares and other equity securities Share issue costs Repayment of borrowings Dividends paid to outside equity interests in controlled entities		7,578 (1, 236) (1,002) (12)	7,578 (1,236) (1,002)
Net Cash Inflow (Outflow) From Financing Activities		5,328	5,340
Net Increase (Decrease) in Cash Held	5	3,323	3,202
Cash at the beginning of the financial period
Cash at the End of the Financial Period		3,323	3,202
Financing Arrangements Non-cash financing and investing activities	36

The above statements of cash flows should be read in conjunction with the accompanying notes.

$\mathbb{Q}$

Notes to the Financial Statements For the period ended 4 August 2002

Summary of Significant Accounting Policies $\mathbf{1}$ .

This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

It is prepared in accordance with the historical cost convention. As this is the first period of operations of the company no comparatives are provided.

Principles of consolidation $(a)$

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Gowings Retail Limited ("company" or "parent entity") as at 4 August 2002 and the results of all controlled entities for the period then ended. Gowings Retail Limited and its controlled entities together are referred to in this financial report as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full. Outside equity interests in the results and equity of controlled entities are shown separately in the consolidated statement of financial performance and statement of financial position respectively.

Where control of an entity is obtained during a financial year, its results are included in the consolidated statement of financial performance from the date on which control commences. Where control of an entity ceases during a financial year its results are included for that part of the year during which control existed.

Income Tax $(b)$

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the accounting profit after allowing for permanent differences. Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.

$(c)$ Revenue Recognition

Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Retail sales are recognised when possession of the goods has passed to the customer. Rental income is recognised in accordance with the underlying lease agreement.

$(d)$ Receivables

All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 90 days from the date of recognition.

Collectibility of trade debtors is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists.

Inventories (e)

Inventories are valued using the retail inventory method. This method involves valuing inventories at current selling prices and then reducing the amount to cost through application of mark-up ratios. This method results in the inventories being valued at an amount that approximates the lower of cost and net realisable value.

Subsidiaries value inventories at the lower of cost and net realisable value using the first in first out method.

Depreciation of Property, Plant and Equipment $(f)$

Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of each item of property, plant and equipment over its expected useful life to the consolidated entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives of plant and equipment are 2-15 years.

Leasehold Improvements $(g)$

The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter. Leasehold improvements held at the reporting date are being amortised over periods ranging from 1 to 15 years.

Notes to the Financial Statements For the period ended 4 August 2002

$(h)$ Leased Non-Current Assets

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incident to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the interest expense.

The lease asset is amortised on a straight line basis over the term of the lease, or where it is likely that the consolidated entity will obtain ownership of the asset, the life of the asset. Lease assets held at the reporting date are being amortised over 6 years.

Other operating lease payments are charged to the statement of financial performance in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

Intangible Assets - Goodwill $(i)$

Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired, including any liability for restructuring costs, is brought to account as goodwill and amortised on a straight line basis over the period during which the benefits are expected to arise.

Trade and Other Creditors $(i)$

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid.

Employee Entitlements $(k)$

$(i)$ Wages, Salaries and Annual Leave

Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employees' services up to that date.

Long Service Leave $(ii)$

A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

$(1)$ Cash

For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.

Earnings Per share $(m)$

Basic Earnings Per Share $(i)$

Basic earnings per share is determined by dividing the operating profit after income tax attributable to members of the company by the weighted average number of ordinary shares outstanding during the period.

Diluted Earnings Per Share $(ii)$

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the period.

Notes to the Financial Statements For the period ended 4 August 2002

Rounding of Amounts $(n)$

The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

$\overline{\phantom{a}}$

Revenue	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
Revenue From Operating Activities Sales to customers Rent received from tenants and concessions	26,283 641	25,238 641
	26,924	25,879
Revenue From Outside the Operating Activities

170 172 Interest 45 Dividends - controlled entities 135 115 Supplier discount and rebates received 277 Service fees $13$ 13 Other 320 620 26,499 27,244

Total revenue

$3.$ Operating profit

Expenses $(a)$

Profit from ordinary activities before income tax expense has been determined after charging the following specific expenses:

Depreciation of plant and equipment	248	243
Amortisation Leasehold improvements Plant and equipment under finance leases Goodwill Total amortisation	44 ≏ 187 233	44 2 187 233
Bad and doubtful debts -trade debtors Rental expense relating to operating leases	17 3.290	9 3,160

$\ddot{\bullet}$

$\overline{a}$

Notes to the Financial Statements For the period ended 4 August 2002

Income tax 4.		Consolidated 2002 \$'000	Parent Entity 2002 \$'000
	The income tax expense for the financial period differs from the amount calculated on the profit. The differences are reconciled as follows:
	÷. Profit from ordinary activities before income tax expense	1,467	1,425
Income tax calculated @ 30%		440	427
Tax effect of permanent differences: Non-assessable income		(90)	(103)
Amortisation of Goodwill Deduction for capital raising		56 (74)	56 (74)
	Income tax adjusted for permanent differences	332	306
		332	306
Income Tax Expense
5.	Current assets - Cash assets
Cash at bank and on hand		190 3,182	69 3,182
Deposits at call		3,372	3,251
	The above figures are reconciled to cash at the end of the financial period as shown in the statements of cash flows as follows:
Balances as above Less: Bank overdrafts (note 15)	7	3,372 49	3,251 49
Balances per statements of cash flows		3,323	3,202
Deposits at Call
	The deposits bear floating interest rates between 4.25% and 4.8%
6.	Current assets - Receivables
Trade debtors		342 57	293 43
Less: Provision for doubtful debts		285	250
Other receivables		157	155
		442	405

7.	Current assets - Inventories
Finished goods		11,126 260	9,715 16
Stock in transit		11,386	9,731

$\chi^2$ and $\chi^2$ and $\chi^2$

$\bar{z}$

Notes to the Financial Statements For the period ended 4 August 2002

		Consolidated 2002 \$'000	Parent Entity 2002 \$'000
8.	Current assets - Other
	72 Prepayments	435	424
9.	f Non-Current Assets - Receivables

	Loans to directors Other debtors	567 178	567 178
	Loans to associate companies		1,429
		745	2,174
10.	Non-Current Assets - Property, Plant and Equipment
	Leasehold Improvements
	Leasehold improvements -at cost	446	446
	Less: Accumulated amortisation	44	44
	Total Leasehold Improvements	402	402
	Plant and Equipment
At cost		3,324	3,288
	3 Less: Accumulated depreciation	264	254
		3,060	3,034
	Plant and equipment under finance lease	24	24
	Less: Accumulated amortisation	2	$\overline{2}$
		22	22
	Total Plant and Equipment	3,082	3,056
		3,484	3,458
	There were no disposals during the period covered by this report
11.	Non-Current Assets - Deferred Tax assets
	Future income tax benefit	88	88
12.	Non-Current Assets - Intangible assets
		4,914	4,914
	Goodwill on acquisition (note 36) Less: Accumulated amortisation	187	187
		4,727	4,727

Goodwill on acquisition of the retail business from Gowing Bros. Limited is being amortised over 20 years

$\mathcal{A}^{\text{max}}{\text{max}}$ and $\mathcal{A}^{\text{max}}{\text{max}}$

Notes to the Financial Statements For the period ended 4 August 2002

		Consolidated 2002 \$'000	Parent Entity 2002 \$'000
13.	Non-Current Assets - Other
	Prepayments	87	87
14.	ł Current Liabilities -Payables
	Trade creditors Other creditors	3,121 635	3,033 642
		3,756	3,675
15.	Current Liabilities - Interest bearing liabilities
	Lease liabilities (note 29) Bank overdraft - unsecured	4 49	$\overline{4}$ 49
		53	53
16.	Current Liabilities - Current tax liabilities
	Income tax	274	246
17.	Current Liabilities - Provisions 3
Other	Employee entitlements	299 50	293 50
		349	343
18.	Non-Current Liabilities - Interest Bearing liabilities
	Lease liabilities (note 29)	17	17
19.	Non-Current Liabilities - Deferred Tax Liabilities
	Provision for deferred income tax	61	61
20.	Non-Current Liabilities - Provisions
	Employee entitlements	99	99
21.	Contributed Equity
(a)	Share capital
	Ordinary Shares (note b,c) Less cost of capital raising (note d)	20,213 1,236	20,213 1,236
	Ordinary shares	18,977	18,977

$\hat{\mathcal{C}}$

Notes to the Financial Statements For the period ended 4 August 2002

	Contributed Equity (Continued)	Number of Shares	Issue Price	\$'000
	Movements in ordinary share capital:
Date	Details	$\rightarrow$
24/9/2001 5/11/2001 18/12/2001	Opening balance (issued on'incorporation) Issue of shares on purchase of business Issue of shares from capital raising	12,000,000 8,212,500	1.00 1.00 1.00	12,000 8,213
4/8/2002	Balance	20,212,501		20,213

Ordinary Shares $(c)$

$(b)$

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

$(d)$ Costs of capital raising

Costs associated with the Initial Public Offering are as follows:

	$1550$ Clated with the findal rubild Offering are as follows.	\$'000
Underwriting fees Corporate advisory Legal Investigating accountants Public relations Design and printing Other	Y.	500 301 210 70 25 71 59
		1.236

Dividend Reinvestment Plan $(e)$

The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash. Shares are issued under the plan at a price determined as the weighted average market price of shares traded during the period commencing 15 trading days before the record date and ending five trading days after the record date. less a discount of up to 10% at the discretion of the Directors.

$(f)$ Options

During the financial period ended 4 August 2002 962,000 options over unissued shares in the company were granted as follows:

246,000 options to employees under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006.
250,000 options to York Corporate Advisory Pty Limited, a company associated with Michael Alscher, on the successful float of the company at an exercise price of \$1.00 expiring on 31 November 2006.
466,000 options to executives under the Employee Option Plan at an exercise price of \$1.00 expiring on 31 November 2006. The options issued to executives are exercisable as follows:
half on achievement of net profit after tax for the Company for the year ended 2002 as forecast in the company's Prospectus, dated 8 November 2001; and
half on achievement of net profit after tax for the Company for the year ended 2003 as forecast $\blacksquare$ in the company's Prospectus, dated 8 November 2001

233,000 of the above options have lapsed due to the Company not achieving the set performance target for the period ended 4 August 2002 and 15,000 from employees no longer employed by the company.

Notes to the Financial Statements For the period ended 4 August 2002

		Consolidated 2002 \$'000	Parent Entity 2002 \$'000
22.	Retained Profits $\rightarrow$
	Net profit attributable to members of Gowings Retail Limited	1,119	1,119
	Retained profits at the end of the financial period	1,119	1,119
23.	Outside Equity Interests in Controlled Entities
Interest in:	Share capital Retained profits	61
		61
24.	Equity
	Total changes in equity recognised in the statement of financial performance Shares issued, net of transaction costs Total changes in outside equity interest	1,119 18,977 61	1,119 18,977
	Total equity at the end of the financial period $\frac{1}{2}$	20,157	20,096

25. Dividends

$\downarrow$

$\mathbf{r}$

Franked Dividends

No dividends were paid during the period. A fully franked final dividend of 3 cents per ordinary share was declared by
Directors on 9 September 2002. The dividend will be franked out of franking credits arising from the pa during the period ending 31 July 2003.

$\hat{\pmb{\epsilon}}$

$\ddot{\phantom{a}}$

The Franking account balance of the Company at 4 August is \$nil.

26. Remuneration of Directors

	Directors of Entities in the Consolidated Entity	Directors of Parent Entity
	2002 \$'000	2002 \$'000
Income paid or payable, or otherwise made available, to directors by entities in the consolidated entity and related parties in connection with the management of affairs of the
parent entity or its controlled entities	349	349

Notes to the Financial Statements For the period ended 4 August 2002

Remuneration of Directors (continued)

$\hat{\pmb{\cdot}}$

ä,

Options are granted to executive directors under the Gowings Retail Employee Option Plan, details of which are set out in note 21(f).

The numbers of parent entity directors whose total income from the parent entity or related parties was within the specified bands are as follows:

	$\mathcal{A}$		2002 S
10,000	$\blacksquare$	19,999	っ ∸
30,000	$\sim$	39,999
120,000	$\blacksquare$	129,999
140,000	$\blacksquare$	149,999

Remuneration of Executives 27.

	Executive Officers of Consolidated Entity	Executive Officers of the Parent Entity
	2002 \$'000	2002 \$'000
Remuneration received, or due and receivable, from entities in the consolidated entity and related parties by Australian based executive officers (including directors) whose remuneration was at least \$100,000:
Executive officers of the parent entity	380	380

Options are granted to executive officers under the Gowings Retail Employee Option Plan, details of which are set out in note 21(f). A summary of the numbers of options granted to executive officers (with income of at least \$100,000) during the period ended 4 August 2002 is set out below.

$\overline{\phantom{a}}$

	Granted	Lapsed	Outstanding
Executive officers of the parent entity	466.000	233,000	233.000

The numbers of executive officers (including directors) whose remuneration from entities in the consolidated entity and related parties was within the specified bands are as follows:

			Executive Officers of the Parent Entity 2002
100,000	$\sim$	109.999
120,000	$\sim$	129.999	4.
$140.000 -$		149.999

$\sim$ .

$\mathcal{L}^{\pm}$

Notes to the Financial Statements For the period ended 4 August 2002

		Consolidated 2002 \$'000	Parent Entity 2002 \$'000
28.	Remuneration of Auditors
	Remuneration for audit or review of the financial reports of the parent entity or any entity in the consolidated entity:
	Audit Services Other services	48 70	48 70
		118	118
29.	Commitments for expenditure
	Lease Commitments Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable:
	Within one year Later than one year but not later than 5 years Later than 5 years	3,986 17,592 18,712	3,986 17,592 18,712
		40,290	40,290
	Representing: Non-cancellable operating leases Future finance charges on finance leases	40,288 2	40,288 2
	3	40,290	40,290
	Operating Leases Commitments for minimum lease payments excluding GST in relation to non-cancellable operating leases are payable as follows: Within one year Later than one year but not later than 5 years Later than 5 years	3,985 17,591 18,712	3,985 17,591 18,712
	Commitments not recognised in the financial statements	40,288	40,288
follows:	Finance Leases Commitments in relation to finance leases excluding GST are payable as
	Within one year Later than one year but not later than 5 years Later than 5 years	5 18	5 18
	Minimum lease payments Less: Future finance charges	23 2	23 2
	Total lease liabilities	21	21
	Representing lease liabilities: Current (note 15)	4	4 17
	Non-current (note 18)	17 21	21

The weighted average interest rate implicit in the leases is 6.8%

Notes to the Financial Statements For the period ended 4 August 2002

Employee entitlements 30.		Consolidated 2002 \$3000	Parent Entity 2002 \$'000
Employee Entitlement Liabilities Provision for employee entitlements Current (note 17) Non-current (note 20)	$-21$	299 99	293 99
Aggregate employee entitlement liability		398	392
Employee numbers		No.	No.
Average number of employees during the financial period		235	230

Gowings Retail Employee Option Plan

refer note 21(f)

Related parties 31.

Directors

The names of persons who were directors of Gowings Retail Limited at any time during the financial period are as follows: John Gowing, Michael Alscher, Duncan Shaw, Peter Sillick and Michael Faulkner. All of these persons were appointed directors during the period.

Remuneration and Retirement Benefits

Information on remuneration of directors is disclosed in note 26.

Loans to Directors and Director-Related Entities

Loans to directors of entities in the consolidated entity and their director-related entities disclosed in note 9 comprise:

A.	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
Secured share loans	567,000	567,000 _____

Directors share loans are issued under the terms of the Executive and Director share plan, the loans are provided to the Directors on a limited recourse basis and are issued interest free. The loans are to be repaid through the credit of dividends.

Other transactions with directors and director-related entitles

(a) Gowing Bros. Limited John Gowing is Managing Director and holds directly or indirectly approximately 19% of the issued capital, Michael Alscher is a non-executive Director and holds 210,724 shares.
As detailed in the Gowings Retail Ltd. Prospectus, on 5 November 2001 the Company acquired the $(i.)$ retail business of Gowing Bros. Limited pursuant to a Business Purchase Agreement. The purchase price paid under the agreement was \$12,000,000, which was satisfied by the issue of 12,000,000 shares refer not 37.
As detailed in the Gowings Retail Ltd. Prospectus, the Company entered into a retail property lease $(ii.)$ prior to the public issue for the George and Market Street Store, the terms of the lease are normal commercial terms. The gross amount of rent paid during the period amounted to \$1,813,000.
Under the terms of a shared services agreement the company paid fees for marketing services $(iii.)$ amounting to \$24,000.

Notes to the Financial Statements For the period ended 4 August 2002

$31.$ Related parties (continued)

(b) York Corporate Advisory Pty Limited, a company of which Michael Alscher is a director, acted as corporate adviser to Gowing Bros Limited and Gowings Retail Limited during the demerger and IPO of Gowings Retail Limited. Gowings Retail Limited's share of fees amounted to \$300,000. The company paid \$1,500 fees to York Corporate Advisory Pty Limited for additional advisory services. All fees paid to York Corporate Advisory Pty Limited have been charged on a commercial basis.
(c) Creative Licence Pty Limited, a business operated by an associate of John Gowing. During the period to 4 August 2002 the company incurred fees amounting to \$123,000 from Creative Licence for services rendered in creative production of the company's advertising journals and printed documentation. All fees charged were on a commercial basis.

32. Investments in Controlled Entities

Name of Entity	Country of Incorporation	Class of Shares	Equity Holding	Cost of parent Entity's Investment
			2002 %	2002
Gowings Pty Limited	Australia	Ordinary	100	100
Gowings Hardware Pty Limited	Australia	Ordinary	80	245.154
Gowings Wholesale Pty Limited	Australia	Ordinary	100	100
Subsidiaries were part of the business purchase refer note 36

Event occurring after reporting date 33.

On 26 September 2002 the Company entered into an agreement with Westfields in respect to a new shop in Westfields Parramatta.

Segment information 34.

$(a)$ Industry segments

The Company's operations take place wholly within the Retail Industry.

$\dot{\mathbf{z}}$

Geographical Segments $(b)$

The operations are carried on in and around Sydney, Australia.

	Consolidated 2002 \$'000	Parent Entity 2002 \$'000
35. Reconciliation of Operating profit after income tax to net cash inflow from operating activities
Operating profit after income tax Depreciation and amortisation	1,135 481	1,119 476
Changes in assets and liabilities
Decrease (increase) in trade debtors and bills of exchange (Increase) in inventories Decrease (increase) in future income tax benefit (Increase) in other operating assets Increase (decrease) in trade creditors Increase (decrease) in provision for income taxes payable (Decrease) in provision for deferred income tax Increase (decrease) in other provisions	(10) (535) 62 (107) (2,915) 275 (2) 85	(3) (221) 62 (98) (2,861) 247 (2) 81
Net cash inflow/(outflow) from operating activities	(1,531)	(1.200)

Notes to the Financial Statements For the period ended 4 August 2002

Non-Cash financing and investing activities 36.

$\ddot{\phantom{a}}$

On 5 November 2001 the Company purchased its core business from Gowing Bros. Limited for \$12,000,000 settled by way of issue of 12,000,000 ordinary shares of \$1.00 each.

Details of the acquisition are as follows:	\$'000
Current Assets
f Receivables	439
Inventories	10,852
Prepayments	414
Total Current Assets	11,705
Non-Current Assets
Receivables	117 3,290
Property, plant and equipment	4,914
Intangibles Other	150
Total Non-Current Assets	8,471
	20,176

Current Liabilities
Accounts payable	6,670 1,000
Borrowings Provisions	299

Total Current Liabilities 2	7,969
Non-Current Liabilities
Provisions	146
Total Non-Current Liabilities	146
Total Liabilities	8,115
Net Assets	12,061

Consideration - 12,000,000 Ordinary Shares @ \$1.00	12,000
Outside Equity Interest	61
	12,061

	Consolidated
	2002
	Cents
Earnings per share 37.
Basic earnings per share	5.54
Diluted earnings per share	5.54
Weighted average number of ordinary shares used as a denominator in
calculating basic earnings per share	20,212,501

Options

Directors' Declaration

The directors of the company declare that:

The financial statements and notes, as set out on pages 11 to 26: $\mathbf{1}$ .
(a) comply with Accounting Standards and the Corporations Act 2001; and
(b) give a true and fair view of the financial position as at 4 August 2002 and performance for the period ended on that date of the company and the economic entity.
In the directors' opinion there are reasonable grounds to believe that the company will be able 2. to pay its debts as and when they become due and payable.

This Declaration is made in accordance with a Resolution of the Directors.

John Gowing

Director

Peter Sillick Director

Sydney 4 October 2002

Independent Audit Report

To the members of Gowings Retail Limited.

Scope

$\cdot$

We have audited the financial report of Gowings Retail Limited for the financial period ended 4 August 2002 as set out on pages 11 to 27. The company's directors are responsible for the financial report which includes the financial statements of the company and the consolidated financial statements of the consolidated entity comprising the company and the entities it controlled at the end of, or during, the financial year. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether or not the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether or not, in all material respects, the financial report is presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements and the Corporations Act 2001 in Australia so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Gowings Retail Limited is in accordance with:

the Corporations Act 2001, including: $(a)$
giving a true and fair view of the company's and consolidated entity's financial position as at 4 August 2002 $(i)$ and of their performance for the financial period ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001 in Australia; and $(ii)$
other mandatory professional reporting requirements. $(b)$

HLB Marin Judet

HLB MANN JUDD (NSW Partnership) Chartered Accountants

$5.6$ $\sqrt{2}$

SK PREEN Partner

Sydney 4 October 2002

Shareholder Information

The shareholder information set out below was applicable as at 30 September 2002

Distribution of securities

------------------------ Range of fully paid ordinary (FPO) shares/options	Number of FPO Holders	Number of option holders
1.000 $1 -$	1.376
$1.001 - 5.000$	629	11
$5,001 - 10,000$	219
10.001 - 100.000	136 ويبس	12
$100.001 -$ and over	15
	2,375	31

Voting rights

$\bullet$

$\mathbf{r}$

Substantial Shareholders

The substantial shareholders as defined by Section 708 of the Corporations Act 2001 are:

Gowing Bros. Limited	7.000.001	Ordinary shares
Mr Anthony Kieron Young/ Strategic Value Pty Ltd	2.086.603	Ordinary shares

20 Largest shareholders

The names of the 20 largest holders of shares are listed below:

		Fully paid ordinary shares	Percentage of
Name			issued capital
	÷.	7,000,001	34.63
$\mathbf{1}$	Gowing Bros. Limited $\lambda$		7.66
2	Mr Anthony Kieron Young	1,548,855	4.24
3	Cogent Nominees Pty Limited	856,857
4	Strategic Value Pty Limited	505,103	2.50
5	Huntley Investment Company Ltd	489,881	2.42
6	Mr Edward John Gowing	456,253	2.26
7	Mr John Edward Gowing	388,909	1.92
8	Warwick Pty Limited	305,105	1.51
9	Carlton Hotel Limited	286,342	1.42
10	Huntley Investment Company Limited	260,119	1.29
11	Washington H Soul Pattinson and Company Limited	180,000	0.89
12	Woodside Pty Limited	135,288	0.67
13	Berne No 132 Nominees Pty Limited	127,982	0.63
14	Mrs Mollie Gowing	118,908	0.59
15	National Nominees Limited	106,660	0.53
16	AUSA International Pty Limited	100,000	0.49
17	David Hannon Investments Pty Limited	100,000	0.49
18	Malla Pty Limited	100,000	0.49
19	Mr Peter Sillick	100,000	0.49
20	Dandeloo Pty Limited	78,967	0.39

Marketable parcels

The number of shareholdings held in less than marketable parcels is 1,250.

AI assistant

COMPLII FINTECH SOLUTIONS LTD — Annual Report 2002

64639_rns_2002-11-06_c45d20ce-3b2e-49d1-9fc3-78bd6a188272.pdf

GOWINGS RETAIL LIMITED

Contents

Chairman's Report

Welcome to the first Annual Report of Gowings Retail Limited.

Managing Director's Review of Operations

Dear Shareholder,

Sales Review

Marketing Review

"Not as adventurous as the Gouings Adventure Sale"

Gowings Club

Whale Trust

Managing Director's Review of Operations

Product Review

"Our team is focused on what the customer wants and aspires to"

Gowings Concessions

Future Prospects

Our Team

Directors' Report

Directors

Non-executive Directors:

Duncan Shaw

Michael Alscher BComm

Executive Directors:

Peter Sillick

Michael Faulkner BBus, CA

Principal Activities

Review of Operations

Dividends

Significant Changes in the State of Affairs

Matters Subsequent to the End of the Financial Period

Likely Developments

Directors' Report

Environment

Directors' and Officers' Indemnity/Insurance

Directors' Interest

Remuneration of Directors and Senior Executives

(a) Non-executive Directors

(b) Executive Directors and Executive Officers

(c) Executive Directors' and Executive Officers' Options

Meetings of Directors

Directors' Report

Share Options

Float funds

Rounding of Amounts to Nearest Thousand Dollars

Corporate Governance

Board responsibilities and objectives

Composition of the Board

Audit Committee

Remuneration Committee

Share Transactions

Ethics

Statement of Financial Performance

Statement of Financial Position

Statement of Cash Flows

Notes to the Financial Statements

1. Summary of Significant Accounting Policies

Revenue From Outside the Operating Activities

3. Operating profit

Expenses

5. Contributed Equity (Continued)

(c) Ordinary Shares

(d) Costs of capital raising

(e) Dividend Reinvestment Plan

(f) Options

Notes to the Financial Statements

6. Dividends

Franked Dividends

7. Segment information

(a) Industry segments

(b) Geographical segments

8. Event occurring after reporting date

Options

10. Non-Cash financing and investing activities

11. Full Financial Report

Directors' Declaration

Independent Audit Report

Scope

COMPLII FINTECH SOLUTIONS LTD Annual Report 2002