Joyce Corporation Ltd achieved an underlying operating profit before tax (excluding one-off nonrecurring times) of $1.603m for the year ended 30th June 2009 which represents an increase of 24% on the previous year. However, the operating was adversely impacted by downward property revaluations, development costs and legal expenses for the year of $3.649m. This resulted in a net loss after tax of $1.329m.

The property revaluation, which is required under accounting standards, resulted in a write down of $2.820m.

Strategically we are delivering on our objective to run a combination of Company owned and operated stores and franchised stores. Part of this strategy is to underpin our growth objectives. We are also pleased to have added five new stores during the 2008/0009 financial year. In total the group operates 46 stores nationally.

The Directors have advised that the determination of a final dividend will be deferred until the outcome of the Queensland property sale is determined. The property sale agreement is subject to a due diligence period which ends on 23 October 2009 with settlement planned for no later than 30 June 2010.

The Board of Directors would like to acknowledge the commitment and effort of the staff of Joyce and Bedshed. Directors also acknowledge our shareholders, Bedshed franchisees and suppliers in supporting the Company.

Outlook

The Company’s future exposure to property revaluations, required under current accounting standards, should lessen given Joyce’s recent announcement that the company has accepted an offer for the sale of the Queensland property and the brighter prospects of the national economy.

Net tangible assets per share are $0.69. Net assets per share, excluding deferred tax liabilities on recent revaluations, are $1.30 per share. The Group has robust financial wherewithal with a strong asset base which we are planning to leverage for growth.

The objective of achieving a satisfactory return on shareholders’ funds is being worked on proactively.

Performance Overview
Despite a very challenging year in terms of the economic environment, Joyce Corporation Ltd generated an underlying operating profit before tax (excluding one-off non-recurring times) of $1.603m for the year ended 30th June 2009. This represents an increase of 24% on the previous year.

The following table shows the underlying performance:

	2009 $000	2008 $000
Underlying operating profit before tax (excluding property revaluations, property sale and legal expenses)	1,603	1,290
Underlying profit before tax (excluding property revaluations and property sale)	774	451
The net loss after tax, property revaluations and legal expenses for the year was $1.329m. The following table shows a comparison between the 2008 and 2009 financial results:
	2009 $000	2008 $000
Bedshed stores and franchising*	1,467	697
Joyce administration costs and direct property income and costs*	(693)	(246)
Profit on disposal of investment property	-	1,629
Property revaluations	(2,820)	(14)
Reported net profit/(loss) before tax	(2,046)	2,066
Income tax benefit	717	-
Reported net profit/(loss) after tax	(1,329)	2,066
* The above results include an allocation of inter-segment finance charges/revenue.

Joyce’s administration costs and direct property income and costs generated a larger loss than in the previous financial year but this is largely due to the re-alignment of costs between Franchising and Joyce.

Joyce’s industrial property portfolio in Queensland and New South Wales diminished in value $2.8M before tax this financial year compared to a loss of $14K in the previous financial year.

Bedshed's Performance

2008/2009 has been a year of growth and development for Bedshed Franchising Pty Ltd. As the core business of the Joyce Group, Bedshed Franchising Pty Ltd is the franchisor of one of Australia’s largest specialty bedding and bedroom furniture retailers, with stores in Western Australia, Victoria, Queensland, New South Wales and South Australia. The company has 46 stores in total.

Bedshed’s unique retail recipe has proven to be a highly profitable formula during its 29 year history. During the 2008/2009 financial year, Bedshed experienced a national 1% decline in like for like sales but a 4% increase overall over the previous year, which is a strong result in what has been an extremely competitive and challenging market.

The sales growth across Bedshed stores has exceeded national retail sales growth figures and has been well supported by the success of the Bedshed Import Program, where leading edge designs are sourced from exclusive overseas manufacturers and sold at very competitive prices. Additions to the core bedding and furniture ranges have resulted in incremental sales for the group.

The Bedshed Marketing Program continues to deliver strong results in each state. These positive results have been achieved through attractive offers and aggressive marketing spend, made possible by Bedshed’s strong sales growth and increase in store numbers.

Bedshed added 5 new stores to the network during the year, namely Cockburn in Western Australia, Highpoint (Melbourne) and Wodonga in Victoria, Mittagong in New South Wales and Helensvale in Queensland. This expansion took the number of stores to 46 with a plan to have 80 within 5 years or so.

Bedshed purchased the Claremont store from the franchisee during the year and now runs a network of 14 company owned and operated stores to complement the 32 franchised stores. Bedshed decided that in future it will run a combination of company owned and operated stores, as well as support its network of franchised stores in order to access the strong retail margins available as a result of Bedshed’s strong supply chain and operating model. Bedshed is learning quickly to run its own stores optimally and this in turn is making it a better franchisor.

Looking Forward

Single digit sales growth is anticipated in the coming year with a better second half of the financial year expected as improved consumer confidence translates into higher retail sales.

Management continues to review the performance of its company owned and operated stores and will look to close any that it feels will not be profitable in the long term.

Our People

Joyce has continued to review its resource requirements and has made a number of changes in the organisational structure, both to lower our operating costs and to meet our strategic and operational priorities. The Company retains a talented team to take it forward.

The staff members of Bedshed Franchising Pty Ltd are to be congratulated on their dedication to the business and on their contribution towards the strong sales growth and expansion of the Bedshed stores network.