Thursday, August 24, 2006

Brazin Limited Results

Brazin announced their results today. Below is some extracts with my comments under the overall heading.

Brazin Limited (ASX code: BRZ) announced a net profit after tax (NPAT) increase of 10.1%
to $11.2 million for the 53 week year ended 2 July 2006 (2005: $10.2 million).
NPAT from continuing operations was $14.3 million (2005: $18.5 million). This was
achieved on a continuing operations sales revenue increase of 13.1% to $525.7 million
(2005: $464.9 million). This sales increase was driven by the acquisition of HMV Australia
in October 2005. Excluding HMV sales, there was a (0.5%) decline in sales revenue. DCK
Australia (diva) was a significant contributor to the group’s profit for the year, contributing
$8.8 million on an equity accounted basis, pre financing costs. After financing costs, diva
contributed $6.5 million to group NPAT.

Cash flow Comments :

Cash flow from operations remains strong, assisted by the good reductions achieved in
inventory holdings, particularly in Entertainment. Despite the acquisition of $10 million
inventory from HMV, Entertainment overall inventory holdings over the year only increased
by $3 million. $10.9 million of dividends were received from diva, including a preacquisition
dividend of $4.4 million. Diva dividends were applied to reduce the borrowings
associated with acquiring diva.

Dividends :

The directors have declared a final fully franked dividend of 2.5 cents per share (2005: 2.5
cents per share), payable on 29 September 2006. This takes the full year dividend to 11 cents
per share (2005:10.5 cents per share).

Overall an ok result for the company and it shows there was no reason for the drop in share price that occured. In particular it should be noted the following : Trading results from July and August to date have met or exceeded budget expectations within each Brand segment.

This is a good sign that the company is starting to manage costs effectively and should result in better results in the future. Still a stock to hold if you own or maybe worth a buy if you don't own it.

Good Luck Trading.

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