Financial Modelling

CEO’s report to shareholders for the year ended 31 December 2022

[extracts]

60 YEARS OF EXCELLENCE IN THE GREAT OUTDOORS

A$2.7m

$92.6m

Net profit after tax Group sales

• The Directors report a net profit after tax for the year ended 31 December 2022 of A$2.2m (2021: A$2.6 million), a decrease of 15% on the prior year.

• Group sales were $90.2 million (2021: $92.6 million), 3% down on the 2021 year.

• The retail environment became increasingly challenging in 2022, and these challenges continue in 2023. The cumulative impact of increased fuel, food, interest rate and rent costs has seen consumer confidence fall to a low not experienced for many years. Aggressive price competition from our major competitors, the introduction of new, niche retailers and customers’ ability to buy products online from anywhere in the world have adversely affected our sales volume and value.

• The company’s strategy is to strive to maintain market share, reduce costs at every level in the business and maintain the strength of our balance sheet. Our current inventory levels are mostly at acceptable levels, which is a reflection of the tight focus the company has always demonstrated.

• Particular attention is being placed on delivering economies out of our supply chain, and we have highlighted areas for potential improvements that will be realised over the next few months. This includes investigating the feasibility of further expansion into Canada, the USA or the UK.

• The cost pressures in the business are particularly intense; the impact of annual rent increases based on inflation demanded by the major retail landlords cannot be underestimated. In some situations, rents have increased to unsustainable levels and we anticipate there will be fallout in some shopping centres where tenants that lack financial resources find it impossible to continue.

• We are continuing to address some of the findings in the consultant’s report. In particular, increased staff training, a reduction in ‘non-core’ product lines and a thorough review of our supply-chain to ensure the highest standards of sustainability practices and ethical behaviour from all of our suppliers. We also need to drastically improve our online experience to provide another channel for our customers to purchase our products.