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Eastern Hi Fi post full year profit

Media release

Wednesday 16th March 2005

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Eastern Hi Fi Group Limited has delivered a net profit after tax of $712,000 for the year ended 31 December - just ahead of the forecast of $703,000 published in the prospectus last November for the Initial Public Offering of shares.

The distributor and retailer of specialist hi-fi and home theatre equipment says it has started the New Year strongly.

"Same store sales in the first two months of 2005 are up 11% and group turnover is up 15%," managing director Steve Allbury said.

The group has also been busy - opening a new store in Palmerston North and acquiring an existing store in Gisborne, as planned, and negotiating the purchase of two further stores in the North Island.

"We have the opportunity to purchase these existing retail stores with established cash flows," Allbury said. "We decided this would be preferable to opening two new stores, as we had previously intended."

On completion of these purchases the group will have 10 retail stores plus a custom-design and build unit.

The group is also a leading importer and distributor of brands including Denon, Tannoy, Arcam, Audioquest, Kef, Music Fidelity, Polk Audio, Russsound, Intellinet, Netstreams, Goldring, Straight Wire and B Tech.

To cope with the increased turnover and accompanying inventory the group is moving to new warehouse and office premises in Mt Wellington, Auckland with more than double the existing floor area.

The move is due to be completed by the end of March when the lease on the existing premises in Ellerslie expires.

The group has recently become the distribution agent for a further brand, Biema, which produces specialised professional audio equipment for the café, restaurant and bar trade.

"This is high quality equipment has been developed in conjunction with Princeton University in the United States and manufactured in China. It is a very good quality for value package and will give us a significant advantage in this segment of the market," Allbury said.

"We have had a far busier start to the year than anticipated."

"In less than three months we are close to passing the operational milestones we had established for the year," Allbury said.

Eastern Hi Fi raised $5 million through its IPO last November ahead of listing on the NZAX in December.

Looking forward, Eastern Hi Fi chairman Rick Bettle said increases in interest rates usually had little impact on Eastern Hi Fi's sales. Meanwhile the group continued to benefit from the higher exchange rate with the US dollar.

The first annual meeting of the company will now be held in June, when a guide to the first half performance will be provided by directors.

Bettle confirmed, that as stated in the prospectus, the group would not declare a final dividend for the 2004 financial year.

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