COMPLII FINTECH SOLUTIONS LTD — Annual Report 2004

Sep 26, 2004

Company Announcements Office Australian Stock Exchange Level 6, 20 Bridge Street SYDNEY NSW 2000

27 September 2004

Dear Sirs

Please find attached the results announcement and Preliminary Final Report for Gowings Retail Limited for the 52 week period ended 1 August 2004 which includes disclosures to satisfy Appendix 4E requirements.

Yours faithfully

(Laneson

Chris Charleson Company Secretary

Preliminary Final Report of Gowings Retail Limited for the 52 Week Period Ended 1 August 2004

This Yearly Report is provided to the Australian Stock Exchange (ASX) under ASX Listing Rule 4.3A.

Current Reporting Period: Previous Corresponding Period:

52 week period ended 1 August 2004 52 week period ended 3 August 2003

Results Announcement

Trading Review

Gowings Retail Limited ("the Company") today announces a trading loss (before individually significant items) of \$3.3 million for the 52 week period ended 1 August 2004. This compares to a loss of \$1.6 million for the previous corresponding period. Sales revenues amounted to \$30.0 million (2002/03 \$33.9 million), down 11.6% on the previous year. The decrease is primarily due to poor Christmas trading combined with a deferment of the annual Warehouse Sale from July to August.

The Company's gross margin has reduced to 38.5% following a critical review of stock holdings and the significant reduction in the number of stock lines held. While this has had an adverse effect on gross margin, there has been a \$1.8 million or 18% reduction in stock held. The effect of this stock reduction programme has been to free up working capital.

Trading and administrative expenses (before individually significant items) have decreased 4% to \$15.9 million (2002/03: \$16.6 million).

As previously announced, Gowings Retail Limited signed a Deed of Release to exit its Parramatta lease and vacated the store on 20 August 2004. The exit from Parramatta will allow the Company and Management to focus on the remaining four stores and improve their trading performance.

Individually significant items amount to \$9.7 million and comprise a \$4.4 million goodwill write-down, \$2.0 million plant and equipment write-down, \$1.5 million store exit costs, \$1.5 million provision for onerous lease commitments and \$0.3 million of restructuring costs.

The loss after taxation for the 52 week period ended 1 August 2004 is \$13.0 million (2002/03: \$1.7 million).

The Company is part way through a significant change process; the focus of this process is:

• Strengthening management and store teams
• Investing in staff through training and performance-based remuneration
• Investing in systems (principally stock and automated reordering) and a loss prevention programme
• Careful review, and where necessary renegotiation, of the remaining store leases
• Taking control of the brands and other intellectual property that the Company trades on.

Events Subsequent to the Year End

On 4 August 2004, the Company announced:

• That it had reached an agreement with its landlord to exit the Parramatta lease
• That a share placement would be undertaken whereby 3 million shares would be placed and \$750,000 raised to part-fund the Parramatta exit

• That a Shareholder Share Purchase Plan ("SSPP") would be undertaken to allow existing shareholders to purchase up to \$5,000 worth of additional shares
• The appointment of Mr Andrew Brown as Chairman of the Company and Mr Anthony $\bullet$ Young as Deputy Chairman

As noted above, the Company vacated the Parramatta store on 20 August 2004. The share placement was completed on 17 August 2004 and the proceeds applied to partly fund the Parramatta exit.

On 24 August 2004 Mr John Gowing announced his resignation as a Director of the Company.

The details of the SSPP were announced on 14 September 2004. Applications for shares under the SSPP need to be lodged by 15 October 2004. At the same time as the SSPP details were announced, the Company advised that it intended to sell unmarketable parcels of shares to assist with the administration of the Company's share register. The Company will sell unmarketable parcel of shares (i.e. with a value of less than \$500) on behalf of shareholders unless the shareholder notifies to the contrary by 8 November 2004.

Proposed Rights Issue

The Company recognises that the process of change will take some time and that there will need to be an upfront investment to enact the change. In order to fund this process it is proposed to undertake a 1 for 2 renounceable rights issue at a price of 25 cents per share to raise approximately \$2.7 million. An underwriting agreement is under negotiation and the rights issue is expected to be completed by mid December 2004.

For further details contact:

Mr Paolo Gnecchi-Ruscone Chief Executive Officer 02 9287 6385

Mr Andrew Brown Chairman 02 9239 8744 0418 215 255

Mr Chris Charleson Company Secretary and Chief Financial Officer 02 9287 6385

Results for Announcement to the Market
For the 52 week period ended 1 August 2004

Headline Numbers

$\cdots$		2004 \$'000	2003 \$'000
Revenue from ordinary activities	Down 11.1%	31,085	34,953
Profit/(loss) from ordinary activities before tax and individually significant items	Down 101.3%	(3,317)	(1,648)
Profit/(loss) from ordinary activities after tax		(13,011)	(1,697)
Net profit/(loss) attributable to members		(13,024)	(1,707)
Dividends (Ordinary Shares)		Nil	Nil
Net tangible assets per security		\$0.22	\$0.66

Statement of Financial Performance

For the 52 week period ended 1 August 2004

	Note	2004 \$'000	2003 \$'000
Sales revenue (sales of goods) Cost of sales	$\overline{2}$	30,003 (18, 464)	33,939 (20, 024)
Gross Profit		11,539	13,915
Other revenue from ordinary activities Selling expenses	$\overline{2}$	1,082 (6,655)	1,014 (6,985)
Occupancy expenses Marketing expenses Distribution expenses		(4,633) (1,280) (691)	(4,277) (1, 546) (611)
Administration expenses Borrowing costs		$*(12,367)$ (21)	(3, 135) (23)
Profit/(Loss) From Ordinary Activities Before Income Tax Expense	2	(13,026)	(1,648)
Income tax credit/(expense) relating to ordinary activities		15	(49)
Net Profit/(Loss) Net profit attributable to outside equity interests		(13,011) (13)	(1,697) (10)
Net Profit/(Loss) Attributable to Members of the Parent Entity	3	(13, 024)	(1,707)
Total Changes In Equity Other Than Those Resulting From Transactions With Owners As Owners		(13,024)	(1,707)
* includes individually significant items of \$9,709,000 (see Note 2b)
Earnings/(Loss) per Share
Basic earnings/(loss) per share	6	$(63.5)$ cents	$(8.3)$ cents
Basic earnings/(loss) per share (before individually significant items)	6	$(16.2)$ cents	$(8.3)$ cents
Diluted earnings/(loss) per share	6	$(63.5)$ cents	$(8.3)$ cents
The above statement of financial performance should be read in conjunction with the accompanying notes
Profit Before Individually Significant Items		2004	2003
Profit/(loss) from ordinary activities before tax and Individually significant items		\$'000 (3,317)	\$'000 (1,648)

Net profit/(loss)

Taxation

Individually significant items

15

$(49)$

$(1,697)$

$(9,709)$

$(13,011)$

Statement of Financial Position

As at 1 August 2004

	Note	2004 \$'000	2003 \$'000
Current Assets
Cash assets		523	3,341
Receivables		236	377
Inventories		8,407	10,253
Other		456	456
Total Current Assets		9,622	14,427
Non-Current Assets
Receivables		114	703
Property, plant and equipment		1,921	4,132
Intangibles			4,481
Other		63	134
Total Non-Current Assets		2,098	9,450
Total Assets		11,720	23,877
Current Liabilities
Payables		5,300	4,757
Interest bearing liabilities		4	503
Current tax liabilities		16	55
Provisions		290
Other		301	353
Total Current Liabilities		5,911	5,668
Non-Current Liabilities
Interest bearing liabilities		9	15.
Provisions		1,296	117
Total Non-Current Liabilities		1,305	132
Total Liabilities		7,216	5,800
Net Assets		4,504	18,077
Equity
Contributed equity	5	18,661	19,210
Retained profits	3	(14, 218)	(1, 194)
Parent entity interest		4,443	18,016
Outside equity interest		61	61
Total Equity		4,504	18,077

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

Statement of Cash Flows

For the 52 week period ended 1 August 2004

	Note	2004 \$'000	2003 \$'000
Cash Flows from Operating Activities
Receipts from customers		30,071	38,452
Payments to suppliers and employees Interest received		(32, 230) 72	(37, 278) 108
Interest and other costs of finance paid		(21)	(23)
Income tax paid		(38)	(242)
Net cash (used in)/provided by operating activities		(2, 146)	1,017
Cash Flows from Investing Activities
Proceeds from sale of property, plant and equipment		28
Payment for property, plant and equipment		(246)	(1, 161)
Net cash used in investing activities		(218)	(1, 161)
Cash Flows from Financing Activities
Repayments of borrowings		(504)	(4)
Proceeds from borrowings			500
Proceeds from repayments of loans		50	39
Dividends paid			(373)
Net cash (used in)/provided by financing activities		(454)	162
Net (decrease)/increase in cash held		(2,818)	18
Cash at the beginning of the period		3,341	3,323
Cash at the end of the period	4(a)	523	3,341

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

For the 52 week period ended 1 August 2004

Note	Contents
1	Basis of preparation
2	Profit/(Loss) from ordinary activities
3	Retained profits
4	Notes to the statement of cash flows
5	Contributed equity
6	Earnings/(loss) per share
7	Net tangible assets per security
8	Commitments for expenditure
9	Segment information
10	Information on Audit

For the 52 week period ended 1 August 2004

1. Basis of Preparation

This Preliminary Final Report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

The accounting policies adopted in the preparation of the Preliminary Final Report are consistent with those adopted and disclosed in the 2003 Annual Financial Report.

	2. Profit/(Loss) From Ordinary Activities	2004 \$'000	2003 \$'000
(a)	Profit/(loss) from ordinary activities before income tax includes the following items of revenue and expense: Revenue
	Revenue from sales of goods	30,003	33,939
	Other revenue from ordinary activities: Interest income	81	108
	Rental and concession income	779	607
	Other income	222	299
		1,082	1,014
	Revenue from ordinary activities	31,085	34,953
(b)	Expenses
	Depreciation of non-current assets Loss on disposal of non-current assets	423 2	497 16.
	Amortisation of non-current assets	123	246
	Individually significant items:
	- Writedown of goodwill	4,359
	- Writedown of property, plant and equipment	2,065
	- Parramatta store exit costs	1,539
	- Provision for uncommercial leases	1,470
	- Restructuring costs	276
		9,709
3.	Retained Profits
		2004	2003
		\$'000	\$'000
	Balance at beginning of period	(1, 194)	1,119
	Net profit/(loss) attributable to members	(13,011)	(1,697)
	Net profit attributable to outside equity interests	(13)	(10)
	Dividends paid		(606)
	Balance at end of period	(14, 218)	(1, 194)

For the 52 week period ended 1 August 2004

		2004 \$'000	2003 \$'000
	4. Notes to the Statement of Cash Flows
(a)	Reconciliation of Cash For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows∶
	Cash and deposits at call Bank overdraft	523	3,341
		523	3,341
		2004 \$'000	2003 \$'000
(b)	Financing Facilities Secured finance facility, reviewed annually and payable at call:
	Amount used Amount unused	1,000	500 500
		1,000	1,000

npany ١y repayable on demand.

(c) Cash balances not available for use Rent guarantee 62 $\overline{a}$

For the 52 week period ended 1 August 2004

1. Contributed Equity

---------------------------------------	2004 \$'000	2003 \$'000
Balance at beginning of period	19,210	18.977
Issue of shares	$\overline{r}$	233
Cancellation of shares	(549)	$\overline{a}$
Balance at end of period	18.661	19,210

The number of fully paid shares on issue at 1 August 2004 was 20,433,093 (3 August 2003: 20,600,093). On 1 January 2004, 167,000 shares, previously issued under the Company's employee share plan, were cancelled. Loans to former executives amounting to \$161,000 were forgiven in exchange for the cancellation of these shares. In addition, allowance has been made for 417,000 shares, previously issued under that share plan to former Directors and executives, that are to be cancelled after the balance date At the same time, loans of \$388,000 are to be forgiven.

At 1 August 2004 there are 582,000 (3 August 2003: 468,000) options over unissued shares outstanding. 200,000 options were issued and 86,000 expired (due to employees resigning) in the 52 week period. The remaining options have the following conditions:

Number	Exercise price	Expiry date
382,000	\$1.00	31 November 2006
70.000	\$1.00	31 May 2008
65,000	\$0.80	31 May 2008
65,000	\$0.60	31 May 2007

6. Earnings/(Loss) per Share	2004 ¢ per Share	2003 $\phi$ per Share
Basic EPS	(63.5)	(8.3)
Basic EPS (before individually significant items)	(16.2)	(8.3)
Diluted EPS	(63.5)	(8.3)

Basic earnings/(loss) per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

	2004 \$'000	2003 \$'000
Earnings/(loss)	(13, 024)	(1,707)
Earnings/(loss) before individually significant items	(3,315)	(1,707)
	Number	Number
Weighted average number of ordinary shares	20,501,922	20,496,027

Diluted earnings per share

Options over ordinary shares of the Company have not been taken into account in calculating diluted earnings per share as their exercise price is significantly in excess of the current trading price of the shares.

For the 52 week period ended 1 August 2004

7. Net Tangible Assets per Security	2004	2003
Net tangible assets per security	\$0.22	\$0.66
8. Commitments for Expenditure	2004 \$'000	2003 \$'000
Commitments in relation to operating leases contracted for at the reporting date but not recognised as liabilities, payable:
Within one year	4.421	4,946
Later than one year but not later than 5 years	16,957	20,849
Later than 5 years	11,164	21,063
	32,542	46,858

The above commitments relate to the property leases the Company has at 1 August 2004 and presumes that the leases will run for their full term. Should certain leases be terminated early, in some circumstances, there may be a requirement to repay fit-out contributions provided by the landlords. At 1 August 2004 the contingent liability in respect of this matter is \$450,000.

9. Segment Information

The consolidated entity operates in one business, namely the general retailing of menswear and men's products, and in one geographical market, Australia.

10. Information on Audit

This Preliminary Final Report is based on accounts to which one of the following applies:

$\Box$

The accounts have been audited

The accounts have been subject to $\Box$ review

The accounts are in the process of being The accounts have not yet been 冈 $\Box$ audited

audited or reviewed

Description of likely dispute or qualification if the accounts have not yet been audited or subject to review or are in the process of being audited or subjected to review.

None