Gowing Bros : Half Yearly Report and Accounts 31 January 2022

APPENDIX 4D | For the half-year ended 31 January 2022

Investing together for a secure future

Gowing Bros. Limited

ABN 68 000 010 471

Suite 303, 35-61 Harbour Drive

Coffs Harbour, NSW, 2450

T: 61 2 9264 6321 F: 61 2 9264 6240

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The reporting period is the half-year ended 31 January 2022 with the previous corresponding period being the half-year ended 31 January 2021 unless otherwise stated. The results have been reviewed by the Company's auditors.

DIVIDENDS

• (1) Total Revenue was up on the prior year, this was largely due to record sales recorded at Gowings Surf Hardware International

• (2) Profit After Tax increase to $7.2 million. For more detail refer the profit and loss on page of the report.

• (3) Net assets per share before tax on unrealised gains on equities, investment properties, private equities and freehold properties increased to $4.12 from $3.89 during the half year 31 January 2022.

• (4) The board has elected to declare a final 3 cents per share fully franked LIC dividend and a special 1 cent dividend

Refer to the Managing Director's report for further details on the results and investments.

MANAGING DIRECTORS REPORT

WHAT HAPPENED TO SUMMER?

Another 6 months has passed, and we are still experiencing the 'on again, off again' COVID-19 isolation roulette. It has been a very difficult time for anyone to run a business, let alone a household. Now we are also grappling with the uncertainty of Europe on the brink of war and the highest set of "inflationary expectations" since I first started at Gowings in 1987.

Hopefully we have reached some sort of equilibrium with the pandemic, where we will achieve the holy grail of herd immunity and we can all go back to living normal lives again. The poor weather and the onset of Omicron certainly put a dampener on Christmas and summer trade in our shopping centres. In response to NSW Government's legislated retailer support package, Gowings as landlord provided approx. $450,000 support to our qualifying retailers. This rental abatement has been offset against the prudent $2 million provision we made for ongoing pandemic relief in last year's annual accounts.

There was a slight improvement in sentiment following half year end in January. Unfortunately, this was closely followed by the outbreak of War in Ukraine and associated escalating petrol prices, which are taking a chunk out of our customers discretionary spending dollar.

A highlight of the half years results was the realisation of several investments in our private equity portfolio. Notably the sale of our investment in EFT Sure held both directly by Gowings and in Our Innovation Fund, which netted Gowings a profit of $2.4 Million. Other realised gains during the period amounted to $5.1 Million.

As reported in last year's annual report, two of our long-term unlisted investments went through an IPO process during the half and listed on their respective local stock exchanges. The companies were Cobram Estate Ltd listed on the ASX, and Dice Molecules on the NASDAQ.

GOWINGS SURF HARDWARE INTERNATIONAL

Our wholly owned subsidiary Surf Hardware International (SHI) had another strong half year, contributing approx. $2 million to continuing Gowings Group earnings for the half year. SHI is benefitting from the global trend of increased participation in the sport of surfing generally and by women in particular. The awareness around the sport was greatly helped by the inclusion of surfing as an Olympic Sport in the Japan Olympics last year for the first time.

SUSTAINABILITY PROGRAMME

Gowings has continued investigating and implementing sustainability initiatives across all areas of our business operations. Our goal is to have as light an impact on the environment as is realistically possible. Initiatives either commenced, under investigation or completed include;

SAWTELL COMMONS

Stage 3 at Sawtell Commons is nearing completion. There have been some unavoidable delays due to continuing wet weather and some of the contracting team isolating due to Covid. We are in the process of releasing and reselling part of this next stage. The market in Coffs Harbour for residential land is quite strong, we are optimistic of achieving solid sales results.

FLOODS NORTHERN RIVERS

At time of writing, Gowings is working with NSW Emergency Services to deliver targeted help in the form of Bunnings vouchers to some of those most in need. We have made a provision of $120,000 to do this.

DIVIDENDS

The Group has generated strong operational cash-flows and will be declaring an interim 3c fully franked LIC dividend, and a 1c special dividend from Surf Hardware International's strong performance.

The Company believes in maintaining a prudent approach to dividends given the capital requirements of the Company across various developments and investment opportunities either underway or under consideration.

OUTLOOK

May you live in interesting times' is a Chinese curse that seems currently very pertinent. Uncertainty continues to prevail. We are fortunately in a relatively good space on the Mid North Coast of NSW, which has and continues to be a net beneficiary of the times.

Thank you to all our team members and the wider Gowings community for their continuing support.

PROFIT AND LOSS STATEMENT

31 Jan 2022 $'000

31 Jan 2021 $'000

Operational Net Income Interest income Investment properties Equities

Managed private equities Surf Hardware International

63

4,069

668

106

2,164

104

3,672

284

333

2,142

Total Net Income from Ordinary Activities Expenses

7,070

Administration, public company and other Operational Profit

(2,895)

4,175

6,535

(1,301)

5,234

Gains on sale or revaluation Investment properties - realised gains

Managed private equities - realised and unrealised gains Derivatives

154 1,290 -

Other

Other income Other costs Profit Before Tax Income tax expense Profit After Tax

2,566 - 8,185 (1,035)

- - 587

105 (68)

5,858 (842)

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