Ann: ADDRESS: WHS: Chairman's Address 2012 An

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WHS
23/11/2012 09:30
ADDRESS

REL: 0930 HRS The Warehouse Group Limited

ADDRESS: WHS: Chairman's Address 2012 Annual Meeting

Chairman's Address
To The Warehouse Group Limited Annual Meeting
23 November 2012

Welcome to the Annual Meeting of The Warehouse Group Limited.

Introduction
You may recall that last year I addressed you regarding the fact that this
year would be Year One of a  two to three year turnaround for the business
and that our key focus would be:

- improving the customer shopping experience, and
- investing in our chain of stores

We have done that and for the Board the result this year reflects many
positive outcomes and also identifies a lot of work in progress.

We have seen the excitement of some top line sales growth, market share
growth and improvement in same store sales.

We have sold and leased-back a number of our properties and are reinvesting
the sale proceeds in the business in line with the priorities identified in
the company's strategic plan. We have opened some key new stores and made
good progress on our plans to revitalise our store environments.

We have also taken the opportunity to enhance our sourcing and multichannel
capability and there have been exciting developments in our multichannel
business with our full range now available online, the successful launch of
our "Red Alert" one day deal website.  We have also enhanced our BizRewards
proposition, expanding its use into The Warehouse with very pleasing results.

We are continuously looking for opportunities to grow and develop our brands.

One of the most important things however is the achievement of increased
customer focus, because we wouldn't have achieved those results without this
and, undoubtedly, there's been better execution right across the whole
Company.

However, to me, as Chairman, the key to this business and the key to its
future sustainable success is not just the strategy. It's about the people in
the business, the attitude, the clarity of purpose, the commitment, and the
people development.  An ongoing program is in place and has seen a dramatic
improvement. Sustainable growth and business, to me, is built around
commitment by committed people to deliver sustainable results. Mark, as
leader of the business, has done an excellent job in revitalising the inner
health of this organisation.

We have made some very positive progress and, yes, there's still much to be
achieved, but the Board is very positive -- in fact, excited -- about the
opportunities we see for the future.

Let's now look back at the 2012 financial year.

2012 Result Overview and Dividend
Sales for the 2012 year were $1,732 million compared to $1,668 million last
year.  After adjusting for unusual items, net profit after tax was $65.2
million compared to $76.0 million in F11.  Operating cash flow in F12 was
$44.5 million.

A final dividend of 6.5 cents per share has been declared bringing total
dividends in respect of the 2012 financial year to 20.0 cents per share
compared to 22.0 cents per share in F11.

The final dividend was paid to shareholders on 14 November.

Dividend Policy
The Board expects the Group to continue its strong cash flow performance
enabling the company to fund its future capital requirements from existing
facilities and to retain the current dividend payout ratio of 90% of adjusted
net profit after tax.

Board of Directors
Your Board is comprised of directors with a mix of qualifications, skills and
experience appropriate to the company's existing operations and strategic
direction.

Recently Tony Balfour was appointed to the Board as an independent director,
and I take this opportunity to welcome Tony to his first shareholder meeting
of The Warehouse.

Tony is a globally experienced director with a strong track record of success
in a diverse range of industries.  In his election speech Tony will expand
more fully on his background and experience.  The Board is very pleased to
have been able to appoint as director a person with such a broad and relevant
range of experience.

Your Board is very aware of the need for succession planning and to, where
appropriate, refresh talent around the table.  Plans are underway to ensure
that this continues.

Also of interest is that Robbie Tindall, Sir Stephen's alternate for the past
year is now ready for further development as a capable 33 year old.  We
believe he can add value and hence a mentoring role is now in place to
continue his learning and ability to contribute to our company and others,
which is consistent with the "Future Directors" programme which is being
launched shortly by the 25 percent GROUP.

Retail Environment
Over the past 12 months underlying non-food retail sales continued to show
signs of gradual improvement. Although New Zealand's general economic
outlook supports strengthening consumer confidence a number of factors, both
domestic and international, point to ongoing uncertainty and volatility.  We
expect consumer spending in the non-food sector to continue improving over
the next 12 months but the extent of any underlying growth remains uncertain.

Group Outlook
Earnings are significantly influenced by trading performance over the
critical January quarter. However, having assessed a number of factors
including the shorter term impact of the Group's strategic plan and
reinvestment program, the Board is of the view that adjusted earnings for F13
are likely to be higher that achieved in F12.

Subject to any event or material change in trading conditions, earnings
guidance will be updated in March 2013 when the half year result is
announced.

ENDS
End CA:00230146 For:WHS    Type:ADDRESS    Time:2012-11-23 09:30:16