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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 20-F

(Mark One)

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934 OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended January 31, 2001

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-37259

BARBEQUES GALORE LIMITED
(Exact name of registrant as specified in its charter)

Australian Capital Territory, Australia 327 Chisholm Road, Auburn,
(Jurisdiction of incorporation Sydney, NSW 2144 Australia
or organization) (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the
Act:

(Name of each exchange
(Title of each class) on which registered)
--------------------- ----------------------

None Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

American Depositary Shares, each representing one Ordinary Share
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

Not Applicable
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report:

4,541,652 Ordinary Shares

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No

Indicate by check mark which financial statement item the registrant has
elected to follow:
Item 17 Item 18 X

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TABLE OF CONTENTS

PART I................................................................... 1
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS......... 1
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE....................... 1
Item 3. KEY INFORMATION............................................... 1
Item 4. INFORMATION ON OUR COMPANY.................................... 10
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.................. 19
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.................... 27
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS............. 34
Item 8. FINANCIAL INFORMATION......................................... 37
Item 9. THE OFFER AND LISTING......................................... 37
Item 10. ADDITIONAL INFORMATION........................................ 38
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.... 42
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES........ 43
PART II.................................................................. 44
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES............... 44
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS............................................... 44
Item 15. NOT APPLICABLE................................................ 44
Item 16. NOT APPLICABLE................................................ 44
PART III................................................................. 44
Item 17. FINANCIAL STATEMENTS.......................................... 44
Item 18. FINANCIAL STATEMENTS.......................................... 44
Item 19. EXHIBITS...................................................... 45
SIGNATURES............................................................... 46

TRADEMARKS

BARBEQUES GALORE, TURBO, CAPT'N COOK, COOK-ON and BAR-B-CHEF are federally
registered trademarks and/or service marks in the United States. We also use
the phrases AMERICA'S LARGEST CHAIN OF BARBEQUE STORES and NOT A BARBECUE
AISLE. A BARBECUE STORE as common-law trademarks in the United States.
BARBEQUES GALORE and COOK-ON are also registered with the State of California.
In Australia, we have registered, among others, the names NORSEMAN and KENT,
and additionally use the phrases YOUR OUTDOOR COOKING AND CAMPING STORE and WE
KNOW THE OUTDOORS INSIDE OUT as common-law trademarks. This report contains
other trade names, trademarks and service marks of ours and other
organizations.

This Annual Report on Form 20-F ("Annual Report") report contains certain
statements of a forward-looking nature relating to future events affecting
Barbeques Galore Limited ("Barbeques Galore" or the "Company"), a public
limited company organized under the laws of Australia, or the markets or
industries in which it operates or the future financial performance of the
Company. You are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements,
you should specifically consider the various factors identified in this
report, including the matters set forth under the caption "Item 3. Key
Information-D. Risk Factors," which could cause events or actual results to
differ materially from those indicated by such forward-looking statements. In
addition, you should carefully review other information contained in this
Annual Report and in our periodic reports and other documents filed with the
Securities and Exchange Commission ("SEC"). Unless the context requires
otherwise, references to "Barbeques Galore," "we," "our," "us" and similar
terms, refer to Barbeques Galore Limited and its consolidated subsidiaries.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and "Item 5.
Operating and Financial Review and Prospects" included elsewhere in this
Annual Report. The selected financial data for the fiscal year ended January
31, 1997 is derived from unaudited financial statements (see note 1). The
selected financial data as of January 31, 1997, 1998 and 1999 and for the
fiscal year ended January 31, 1998 is derived from our audited consolidated
financial statements. We have not, however, included our audited consolidated
financial statements for those periods in this Annual Report. The selected
financial data as of January 31, 2000 and 2001 and for the fiscal years ended
January 31, 1999, 2000 and 2001, is derived from our audited financial
statements which have been audited by KPMG, independent auditors and is
included in "Item 18. Financial Statements."

Our consolidated financial statements are prepared in accordance with U.S.
GAAP. Since our Ordinary Shares were delisted from the Australian Stock
Exchange (the "ASE") on December 31, 1996, we have not declared nor paid any
cash dividends on our Ordinary Shares, other than a dividend in an aggregate
amount equal to A$500,000 which was paid on April 21, 1997. We do not
anticipate paying any regular dividends on the Ordinary Shares or American
Depositary Shares ("ADSs") in the foreseeable future. In addition, we are
subject to restrictions on the declaration or payment of dividends under the
ANZ Facility as well as the Merrill Lynch Facility as defined. See "Item 5.
Operating and Financial Review and Prospects-B. Liquidity and Capital
Resources."

Year Ended January 31, (/1/)
------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(In A$ thousands, except per share data)

Statement of Operations
Data:
Net sales................... $148,369 $179,325 $224,984 $260,683 $304,471
Cost of goods sold,
warehouse, distribution and
occupancy costs............ 103,324 122,072 152,708 176,261 207,175
-------- -------- -------- -------- --------
Gross margin................ 45,045 57,253 72,276 84,422 97,296
Selling, general and
administrative expenses.... 40,751 48,992 61,796 72,358 87,365
Store pre-opening costs..... 239 435 810 411 639
Relocation and closure
costs (/2/)................ 1,336 20 -- -- --
-------- -------- -------- -------- --------
Operating income............ 2,719 7,806 9,670 11,653 9,292
Equity in income of
affiliates, net of tax..... 379 547 514 551 340
Interest expense............ 2,236 3,334 2,163 2,276 2,920
Other expense (/3/)......... 1,132 -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before income
tax........................ (270) 5,019 8,021 9,928 6,712
Income tax expense
(benefit).................. (822) 1,488 2,814 3,714 2,229
-------- -------- -------- -------- --------
Net income.................. $ 552 $ 3,531 $ 5,207 $ 6,214 $ 4,483
======== ======== ======== ======== ========
Earnings per share: (/4/)
Basic..................... A$ 0.13 A$ 1.43 A$ 1.15 A$ 1.37 A$ 0.99
======== ======== ======== ======== ========
Diluted................... A$ 0.13 A$ 1.18 A$ 1.13 A$ 1.34 A$ 0.96
======== ======== ======== ======== ========
Weighted average shares
outstanding: (/4/)
Basic..................... 4,228 2,473 4,542 4,542 4,542
======== ======== ======== ======== ========
Diluted................... 4,400 3,432 4,595 4,633 4,689
======== ======== ======== ======== ========
In thousands
Balance Sheet Data:
Working capital............. $ 22,552 $ 36,917 $ 41,162 $ 41,210 $ 56,520
Total assets................ 67,970 82,074 101,202 112,879 131,497
Total long-term debt........ 34,276 18,121 29,030 25,929 36,554
Shareholders' equity........ 10,165 43,927 49,113 54,923 64,232
Selected U.S. Operating
Data:
Stores open at period-end... 25 34 43 51 61
Average net sales per store
(in thousands) (/5/)....... $ 1,579 $ 1,731 $ 2,292 $ 2,287 $ 2,661
Comparable store sales
increase (/6/)............. 6.5% 18.9% 10.9% 14.6% 6.4%
Selling square feet (in
thousands)................. 70.2 96.6 129.8 168.7 195.7
Sales per selling square
foot....................... $ 469 $ 538 $ 637 $ 637 $ 660
Selected Australian
Operating Data:
Stores open at period-end... 32 32 33 35 35
Average net sales per store
(in thousands) (/5/) ...... $ 2,222 $ 2,411 $ 2,702 $ 2,791 $ 2,721
Comparable store sales
increase (/7/)............. 11.6% 5.0% 8.8% 3.9% 1.4%
Selling square feet (in
thousands)................. 276.6 291.2 307.1 332.3 348.3
Sales per selling square
foot....................... $ 256 $ 265 $ 282 $ 289 $ 273

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(/1/)As of April 9, 1997, we changed our fiscal year end from June 30 to
January 31, (effective January 31, 1997).

(/2/)Includes A$262,000 incurred during the year ended June 30, 1996 in
connection with the restructuring of our Australian licensing division,
A$613,000 incurred in June 1996 in connection with the relocation of our
barbecue manufacturing operations and a A$369,000 provision accrued in
January 1997 in connection with the planned relocation of our enameling
facilities.

(/3/)Includes a A$1.1 million charge incurred in December 1996 in connection
with our repurchase of shares from the public and delisting from the ASE.
See "Item 4. Information on Our Company-A. History and Development of Our
Company."

(/4/)Basic earnings per share are computed by dividing net income available to
ordinary shareholders, by the weighted average number of ordinary shares.
Diluted earnings per share are computed by dividing net income available
to ordinary shareholders, by the weighted average number of ordinary
shares and dilutive ordinary share equivalents for the period. In
calculating the dilutive effect of share options, we use the treasury
stock method.

(/5/)For stores open at beginning of period indicated.

(/6/)The number of comparable stores used to compute such percentages was 19,
25, 33, 43 and 52, for the fiscal years ended January 31, 1997, 1998,
1999, 2000 and 2001, respectively.

(/7/)The number of comparable stores used to compute such percentages was 33,
34, 33, 33 and 35, for the fiscal years ended January 31, 1997, 1998,
1999, 2000 and 2001, respectively.

Exchange Rates

The Australian dollar is convertible into U.S. dollars at freely floating
rates, and there are currently no restrictions on the flow of Australian
currency between Australia and the United States. On January 31, 2001, the
Noon Buying Rate was US$0.5480 = A$1.00. The following table sets forth, for
the periods indicated, certain information concerning Noon Buying Rates for
Australian dollars.

Fluctuations in the exchange rate between the Australian dollar and the
U.S. dollar may affect our earnings, the book value of our assets and
shareholders' equity as expressed in Australian and U.S. dollars, and
consequently may affect the market price for the ADSs. Such fluctuations will
also affect the conversion into U.S. dollars by the Depositary of cash
dividends, if any, paid in Australian dollars on the Ordinary Shares
represented by the ADSs. See "Item 9-The Offer and Listing-Price Range of our
ADSs on the Nasdaq Stock Market(R) ("Nasdaq")" and "Item 10. Additional
Information-D. Exchange Control-Restrictions on Foreign Ownership;
Antitakeover Restrictions."

Period
Average (/1/) High Low End
------------- ------ ------ ------

Year Ended January 31,
1999...................................... 0.6271 0.6868 0.5550 0.6271
2000...................................... 0.6451 0.6640 0.6265 0.6382
2001...................................... 0.5734 0.6387 0.5112 0.5480
Month
October 2000.............................. 0.5280 0.5450 0.5181 0.5181
November 2000............................. 0.5218 0.5280 0.5112 0.5262
December 2000............................. 0.5466 0.5590 0.5372 0.5560
January 2001.............................. 0.5552 0.5712 0.5432 0.5480
February 2001............................. 0.5338 0.5540 0.5213 0.5248
March 2001................................ 0.5031 0.5292 0.4881 0.4881
April 26, 2001............................ 0.5057

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(/1/)Determined by averaging the closing price for each date in the period.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

The following are certain factors that should be considered in evaluating
our business, financial conditions and results of operations. However, these
factors should not be considered to be exclusive and you are urged to consider
the statements made elsewhere herein and in our other publicly filed
documents.

If we fail to successfully increase the number of Company-owned stores in the
United States or complete the refurbishment of our stores in Australia, our
growth rate will be detrimentally affected and our business could suffer.

Our growth is dependent, in large part, upon our ability to successfully
execute our Company-owned store expansion program in the United States and our
store refurbishment in Australia.

The success of these store expansion and refurbishment efforts will be
dependent upon, among other things, the identification of suitable markets and
sites for new stores, negotiation of leases on acceptable terms, construction
or renovation of sites, receipt of all necessary permits and governmental
approvals therefor and, if necessary, obtaining additional financing for those
sites. We cannot assure you that we will be able to locate suitable store
sites or enter into suitable lease agreements. In addition, we cannot assure
you that, as we open new stores in existing markets, these new stores will not
have an adverse effect on comparable store net sales at existing stores in
these markets. Our failure to open new stores or relocate or remodel existing
stores on a timely basis or otherwise achieve our expansion plan could have a
material adverse effect on our future business, operating results and
financial condition.

If we fail to properly identify and address the challenges presented by our
expansion into new markets, our business could be detrimentally affected.

As part of our growth strategy, we intend to open stores in new markets
where we will not initially benefit from knowledge of local market conditions,
pre-existing retail brand name recognition or marketing, advertising,
distribution and regional management efficiencies made possible by our store
networks in existing markets. Expansion into new markets may present operating
and marketing challenges that are different from those we have encountered in
the past in our existing markets. As a result of our expansion program and
entry into new markets, primarily in the United States, and our refurbishment
in Australia, we have experienced, and expect to continue to experience, an
increase in store pre-opening costs and refurbishment-related expenses. We
cannot assure you that we will anticipate all of the challenges and changing
demands that our expansion will impose on our management or operations. If we
fail to obtain acceptance in markets in which we currently have limited or no
presence, it would adversely affect our future operating results.

We rely on the services of certain experts and consultants to help implement
our expansion plans, and if these experts and consultants fail to perform as
required, this could detrimentally affect our business.

The success of our growth strategy may also depend upon factors beyond our
immediate control. We have retained outside real estate consultants to assist
in site selection and lease negotiations and may depend, to an increasing
extent, on the services of such consultants and other real estate experts as
we accelerate the rate of new store expansion. The failure of any such
consultants or experts to render needed services on a timely basis could
adversely affect our new store expansion. Similarly, changes in national,
regional or local real estate and market conditions could limit our ability to
expand into target markets or sites.

Failure to hire, train and retain competent managers and personnel could have
a material adverse affect on our business.

If we determined or were required, to close a Barbeques Galore store, we
would attempt to sublet the vacated store space in order to cover ongoing
lease costs. Even if we were able to sublet such store, we may incur
significant costs in writing off leasehold improvements. In addition, our
proposed expansion plans will result in increased demand on our managerial,
operational and administrative resources. In addition, we must be able to
hire, train and retain competent managers and personnel and manage the systems
and operational components of our growth. Our failure to attract qualified
management and personnel or appropriately adjust operational systems and
procedures, would adversely affect our future operating results.

Weakening economic conditions may have an adverse effect on our business and
results of operation.

The success of our operations depends upon a number of factors related to
consumer spending, including future economic conditions affecting disposable
consumer income such as employment, business conditions, interest rates and
taxation. If existing economic conditions were to deteriorate, consumer
spending may decline, thereby adversely affecting our business and results of
operations. These adverse effects may be exacerbated by the significant
current regional concentration of our business in Australia and the Pacific
West, Southwestern and East coast U.S. markets.

Changing merchandise trends or consumer demands could adversely affect our
sales.

Our success depends on our ability to anticipate and respond to changing
merchandise trends and consumer demands in a timely manner. We believe we have
benefited from a lifestyle trend towards consumers spending more quality time
together in outdoor family gatherings and social activities. Any change in
this trend could adversely affect consumer interest in our major product
lines. Moreover, our products must appeal to a broad cross-section of
consumers whose preferences (as to product features such as colors, styles,
finishes and fuel types) cannot always be predicted with certainty and may
change between sales seasons. If we misjudge either the market for our
merchandise or our customers' purchasing habits, we may experience a material
decline in sales or be required to sell inventory at reduced margins. We could
also suffer a loss of customer goodwill if our manufacturing operations or
stores do not adhere to our quality control or service procedures or otherwise
fail to ensure satisfactory quality of our products. These outcomes may have a
material adverse effect on our business, operating results and financial
condition.

If we fail to execute certain operational changes, our ability to implement
our growth strategy would be adversely affected.

We have identified a number of areas for improvement in our operations
which will have a significant impact on the implementation of our growth
strategy. We have, in recent years, replaced or upgraded our management
information systems and currently plan to introduce automated replenishment of
store inventory in Australia in the near term. We completed the relocation of
our enameling operations in fiscal 1999, to the same facilities as our
barbecue and home heater manufacturing operations adjacent to our Australian
headquarters, with the in-line powder coating operation commencing mid-
November 1998. In addition, we rearranged the assembly, warehouse and
Australian distribution operations to further improve our production flow,
inventory control and distribution management. The relocation of our enameling
operations and related changes resulted in the incurring of approximately
A$454,000 in costs, required additional capital expenditures of approximately
A$2.8 million and the obtaining of building, environmental and other
governmental permits. In addition, as we expand into new regions or accelerate
the rate of our U.S. store expansion, we may need additional warehouse
capacity. In order to meet these needs, we leased a 27,000 square foot
distribution center in Charlotte, North Carolina in February 2000 for a period
of five years, with a renewal option for a further five years and may in the
future, need to secure further distribution centers, expand our current
warehouse facilities in the United States or utilize public warehousing space,
in each case depending on availability and cost at such time. We cannot assure
you as to whether or when we will be able to effect our systems upgrades, any
expansion or replacement

of distribution facilities, or any other necessary operational changes that
may arise, or that we will not incur cost overruns or disruptions in our
operations in connection therewith. Our failure to effect these and any other
necessary operational changes on a timely basis would adversely affect our
ability to implement our growth strategy and, therefore, our business,
financial condition and operating results.

Intense competition in our market could prevent us from increasing or
sustaining our revenues.

The retail and distribution markets for barbecues and our other product
offerings are highly competitive in both the United States and Australia. Our
retail operations compete against a wide variety of retailers, including mass
merchandisers, discount or outlet stores, department stores, hardware stores,
home improvement centers, specialty patio, fireplace or cooking stores,
warehouse clubs, web sites and mail order companies. Our manufacturing and
wholesale operations compete with many other manufacturers and distributors
throughout the world, including high-volume manufacturers of barbecues and
home heaters. We compete for retail customers primarily based on our broad
assortment of competitively priced, quality products (including proprietary
and exclusive products), convenience, customer service, the attractive
presentation of merchandise within our stores and on our web site. Many of our
competitors have greater financial, marketing, distribution and other
resources than we do and, particularly in the United States, may have greater
name recognition than us. Furthermore, the lack of significant barriers to
entry into our segment of the retail industry may also result in new
competition in the future. If we fail to compete effectively, we may be unable
to increase our market share or our market share may decline which could
adversely affect our revenues.

Our revenues fluctuate from period to period and are subject to various
factors including seasonality and weather.

Our business is subject to substantial seasonal variations which have
caused and are expected to continue to cause, our quarterly results of
operations to fluctuate significantly. Historically, we have realized a major
portion of our net sales and a substantial portion of our net income for the
year during summer months and holiday seasons when consumers are more likely
to purchase barbecue products, camping equipment and outdoor furniture. In
anticipation of our peak selling seasons (late spring and early summer), we
substantially increase our inventory levels and hire a significant number of
part-time and temporary employees. In non-peak periods, particularly in late
winter in the United States and early fall in Australia, we regularly
experience monthly losses. Partially offsetting the effects of seasonality, we
operate in both the Southern and Northern hemispheres, which have opposite
seasons and offer fireplace products and (in Australia) home heaters, in the
fall and winter months. However, sales of any of our major product lines (in
particular home heaters), may vary widely in peak seasons depending on, among
other things, prevailing weather patterns, local climate conditions, actions
by competitors and shifts in timing of holidays. Our quarterly and annual
results of operations may also fluctuate significantly as a result of a
variety of other factors, including the timing of new store openings, releases
of new products and changes in merchandise mix throughout the year. We have in
the past, experienced quarterly losses, particularly in our fiscal first
quarter, and expect to experience such losses in the future. Because of these
fluctuations in operating results, the results of operations in any quarter
are not necessarily indicative of the results that we may achieve for a full
fiscal year or any future quarter. If for any reason our sales or gross
margins during peak seasons or periods were substantially below expectations,
our quarterly and annual results would be adversely affected.

We rely on certain computer systems to obtain daily sales information from our
stores and to operate and monitor all major aspects of our business. Our
failure to maintain and upgrade core computer systems which operate and
monitor all major aspects of our business could have a material adverse effect
upon our business.

In the United States, we have installed a JDA Software Group Inc. ("JDA")
system on an IBM AS400 platform which allows us to manage distribution,
inventory control, purchasing, sales analysis, warehousing and financial
applications. At the store level, we have installed Point of Sale ("POS")
computer terminals as our

cash registers in all stores. Each POS terminal is equipped with a bar code
scanner for ease of product input and validation. Each store's transaction
data is captured by our POS terminals and transferred into the main JDA system
daily. The store checkout registers are networked to an In-Store Processor
("ISP") which is located in the back office of each store. This makes
consolidated data of each store's activity readily available on the ISP which
is polled daily to transfer the captured store data back to head office for
integration into the head office system. The JDA system provides extensive
reporting and inquiry capability at both the store and corporate levels,
including daily transaction data, margin information, exception analysis and
stock levels. Additionally, the system permits inventory and pricing updates
to be electronically transmitted to the stores on a daily basis. In Australia,
we have installed a SUN Systems Ultra 60 running a UNIX environment and a
Microsoft NT Server for all our desktop applications with the Microsoft suite
of software.

Our Head Office Information Systems process all distribution, warehouse
management, inventory control, purchasing, merchandising, financial and office
automation applications. Each store has PC-based POS registers which manage
all sales transactions and store based purchasing transactions. At the end of
each day's processing, the data from each register is consolidated onto one
register which has an attached modem and which is polled daily to upload the
data to the head office system. We rely upon our existing management
information systems in operating and monitoring all major aspects of our
business, including sales, gross margins, warehousing, distribution,
purchasing, inventory control, financial accounting and human resources. Any
disruption in the operation of our management information systems, or our
failure to continue to upgrade, integrate or expend capital on such systems as
our business expands, could have a material adverse effect upon our business,
operating results and financial condition.

Our success depends on several of our directors, senior management and
employees, and they may not remain with us in the future.

Our success is largely dependent on the efforts and abilities of our
directors, senior management and employees, particularly, Sam Linz, Chairman
of the Board, Robert Gavshon, Deputy Chairman of the Board, John Price, Head
of Product Management and Development and Director, and Sydney Selati,
President of Barbeques Galore, Inc., our U.S. operating subsidiary and
Director. These individuals have an average of 18 years of experience with us
and have chief responsibility for the development of our current business and
growth strategies. During fiscal 2000, Benjamin A. Ramsey, Jr. was promoted to
the newly created position of Executive Vice President of Barbeques Galore,
Inc. and assumed responsibility for store operations, human resources,
training and development, new store development and barbecue sales to real
estate developers and contractors, and Peter Spring was promoted to the newly
created position of Chief Operating Officer-Australia and assumed
responsibility for the day-to-day operations. We do not have employment
contracts with any of our directors, senior management and employees. The loss
of the services of these individuals or other key employees could have a
material adverse effect on our business, operating results and financial
condition.

We face business, political and economic risk because we transact business
outside of the United States.

Barbeques Galore, with its headquarters, manufacturing, enameling,
wholesale and non-U.S. store operations in Australia, transacts a majority of
its business in Australia and obtains a significant portion of its
merchandise, parts and raw materials from China, Taiwan, Indonesia, Thailand,
Italy and other markets outside of the United States and Australia. There are
risks inherent in doing business in international markets, including:

. tariffs;

. customs duties and other trade barriers;

. difficulties in staffing and managing foreign operations;

. political instability, expropriation, nationalization and other
political risks;

. foreign exchange controls, technology, export and import restrictions or
prohibitions;

. delays from customs brokers or government agencies;

. seasonal reductions in business activity; and

. subjection to multiple taxation regimes and potentially adverse tax
consequences.

Any of these risks could materially adversely affect our business,
operating results and financial condition.

We rely on a few significant vendors and suppliers who may discontinue selling
to us at any time.

We purchase certain of our finished inventory and manufacturing parts and
all of our raw materials from numerous vendors and suppliers and generally
have no long-term purchase contracts with any vendor or supplier. During the
twelve months ended January 31, 2001, we purchased inventory from over 500
vendors in the United States, Australia and Asia. In such period,
approximately 25% of our merchandise purchases were obtained from our ten
largest vendors. Although no vendor accounted for more than 5% of our
merchandise purchases in such period, we consider certain barbecue brands to
be significant to our business, especially in the United States. Also during
such period, we purchased barbecue and home heater parts from over 90
suppliers in Asia, Australia and North America. Sheet Metal Supplies Pty
Limited ("SMS"), a steel distributor, Bromic Pty Limited ("Bromic"), an
Australian gas components importer and Sandvik Australia Pty Limited
("Sandvik"), a stainless steel distributor, supplied us with approximately
14%, 9% and 7% respectively, of our factory parts and raw material purchases
during this period and approximately 67% of our factory parts and raw material
purchases were obtained from our ten largest suppliers. Our results of
operations could be adversely affected by a disruption in purchases from any
of these key vendors or suppliers or from volatility in the prices of such
parts or raw materials, especially the price of steel, which has fluctuated in
the past. In addition, some of our key suppliers currently provide us with
certain purchasing incentives, such as volume rebates and trade discounts. A
reduction or discontinuance of these incentives could have an adverse effect
on our business.

Our products and the personal use thereof are subject to certain government
regulations which could influence product liability claims and impact the
manner in which we distribute our products.

Many of our products use gas and flame and, consequently, are subject to
regulation by authorities in both the United States and Australia in order to
protect consumers, property and the environment. For example, our products and
the personal use thereof are subject to regulations relating to, among other
things, the use of fire in certain locations (particularly restrictions
relating to the availability or frequency of use of wood heating in homes and
barbecues in apartments), restrictions on the sale or use of products that
enhance burning potential such as lighter fluid, restrictions on the use of
gas in specified locations (particularly restrictions relating to the use of
gas containers in confined spaces) and restrictions on the use of wood burning
heaters. Such regulations have had, and can be expected to have, an increasing
influence on product claims, manufacturing, contents, packaging and heater
usage. We cannot assure you that certain jurisdictions in which we operate
will not impose additional restrictions on the sale or use of our products.

Product liability claims could materially adversely affect our customer
relations and costs.

Failure of a product could give rise to product liability claims if
customers, employees or third parties are injured or any of their property is
damaged while using one or more of our products. Such injury could be caused,
for example, by a gas valve malfunction, gas leak or an unanticipated flame-up
resulting in injury to persons and/or property. In the event of such an
occurrence, we could incur substantial litigation expense, receive adverse
publicity, suffer a loss of sales or all or any of the foregoing. Even if such
circumstances were beyond our control, our business, operating results and
financial condition could be materially adversely affected. Although we
maintain liability insurance in both Australia and the United States, we
cannot assure you that such insurance will provide sufficient coverage in any
particular case.

One of our former insurance providers has been placed into provisional
liquidation and the impact of this on our insurance coverage is unclear.

We placed a major portion of our insurance policies with HIH Casualty and
General Insurance Limited ("HIH") during the 12 months ending June 30, 2001
and earlier periods. HIH Insurance Limited and 17 of its controlled entities
("HIH Group") have been placed into provisional liquidation and we have been
advised that the Provisional Liquidators expect to be in a position to provide
further information to policyholders during the coming weeks. In the interim,
we have replaced these insurance policies with other insurers. We have no
material claims against us in relation to the period during which we were
covered by HIH. Furthermore, to the best of our knowledge and belief, we are
unaware of any claims which may arise against us in relation to any events
during the period which we were covered by HIH. It is also unknown at this
stage what amounts, if any, would be recoverable from the Provisional
Liquidators of the HIH Group were such claims to arise.

Our manufacturing and enameling operations are subject to government
regulations.

Our barbecue and home heater manufacturing and enameling operations are
subject to regulations governing product safety and quality, the discharge of
materials hazardous to the environment, water usage, workplace safety and
labor relations. Our distribution facilities are also subject to workplace
safety and labor relations regulations. We believe that we are in substantial
compliance with such regulations. As a barbecue and barbecue accessories
store, we sell lighter fluid, lighters, matches and similar products which may
be considered flammable when in contact with open flame or activated. We do
not store containers of gas for barbecue grills in our stores. We store
matches, lighters and the like in closed containers or in displays where the
chance of activation is remote, and do not store these items near open flames.
Our sale of certain products may result in technical violations of certain of
our leases which prohibit the sale of flammable materials in or on the leased
premises. Over our operating history, we have made our landlords aware that we
sell these products. To date, no landlord has terminated or threatened
termination of any lease due to these sales. Violations of these regulations
and restrictions could have a material adverse effect on our business,
operating results or financial condition.

We depend on third-party carriers to distribute our products.

We manufacture a substantial portion of the barbecues and home heaters that
we sell in our stores. We distribute merchandise to our stores primarily from
our distribution centers located at our headquarters in Australia and Irvine,
California and in Charlotte, North Carolina. In distributing merchandise, we
rely upon third-party sea carriers to ship our manufactured products from
Australia to the United States, as well as third-party surface freight
carriers to transport all of our merchandise from our distribution centers and
warehouses to our stores. Accordingly, we are subject to numerous risks
associated with the distribution of our merchandise, including:

. mechanical risks;

. labor stoppages or strikes;

. inclement weather;

. import regulation;

. changes in fuel prices;

. changes in the prices of parts and raw materials; and

. economic dislocations and geopolitical trends.

In addition, we believe that, while our distribution facilities are
sufficient to meet our current needs, we may need another distribution center
or larger facilities in the United States or Australia to support the further
growth and expansion of stores.

Failure of our franchisees and licensees to adhere to our standards could
adversely affect customer loyalty and diminish our brand name and reputation.

As of January 31, 2001, there were 49 licensed stores in Australia and 11
franchised stores in the United States, all of which are operated under the
"Barbeques Galore" name by independent licensees or franchisees who purchase
proprietary and other store products, and receive support services, from us.
The licensees and franchisees operate such stores pursuant to agreements which
typically permit licensees and franchisees to assign the agreements to their
immediate family and provide the licensees and franchisees with exclusive
geographical sales territories. We monitor our licensed and franchised stores
to assure their conformity to Barbeques Galore's standards and image and
require the licensees and franchisees to comply with Barbeques Galore's
merchandising and advertising guidelines. Serious or protracted failures by
licensees or franchisees to adhere to our standards could adversely affect
customer loyalty and diminish our brand name or reputation for quality
products and services, and could require us to devote significant management
attention and resources to enforcing our rights under such agreements.
Conversely, if we fail to provide adequate support services or otherwise
breach our contractual obligations to any licensee or franchisee, such failure
or breach could result in termination of, or litigation relating to, the
relevant licensing or franchise agreement and the loss of fees and sales
revenue.

The majority of the licensing agreements in Australia are terminable at
will (absent fraud) by the licensees only, generally upon sixty days' notice.

Foreign currency fluctuations could adversely affect our results.

We prepare our consolidated financial statements in Australian dollars but
a substantial portion of our revenues and expenses are denominated in U.S.
dollars and, to a lesser extent, other foreign currencies. Accordingly, we are
subject to risks of currency exchange to the extent of currency fluctuations
between the Australian dollar and the U.S. dollar or other currencies in which
we transact our business. This currency imbalance has resulted in, and may
continue to result in, foreign currency transaction gains and losses. Our
Australian operations generally hedge a major portion of their imports against
exchange rate fluctuations with respect to the Australian dollar.

However, in our U.S. operations, we have not, and currently do not,
actively hedge against exchange rate fluctuations, although we may elect to do
so in the future. Accordingly, changes in exchange rates may have a material
adverse effect on our net sales, cost of goods sold, gross margin and net
income, any of which alone or in the aggregate may in turn have a material
adverse effect on our business, operating results and financial condition.
Such currency issues could, thus, affect the market price for the ADSs.
Although we do not anticipate paying any regular cash dividends on the
Ordinary Shares or the ADSs in the foreseeable future, the above exchange rate
fluctuations would affect the conversion into U.S. dollars (for payment to
holders of ADSs) by Morgan Guaranty Trust Company as Depositary, of any cash
dividends paid in Australian dollars on the Ordinary Shares represented by the
ADSs. See "Item 3. Key Information-A. Selected Financial Data-Exchange Rates"
and "Item 9. The Offer and Listing-Price Range of our ADSs on the Nasdaq Stock
Market(R) ("Nasdaq")."

ITEM 4. INFORMATION ON OUR COMPANY

A. HISTORY AND DEVELOPMENT OF OUR COMPANY

We opened our first store in Sydney, Australia in 1977 to serve an unfilled
niche in the retail market for versatile, well-designed barbecues. We
incorporated in the Australian Capital Territory, Australia as a limited
liability company on June 16, 1982. Since then, we have become the leading
barbecue retailer in Australia, with an estimated 90% consumer awareness level
and an approximately 30% retail market share. In 1980, we opened our first
U.S. store in Los Angeles.

During the 1980s, we vertically integrated our operations by expanding into
barbecue manufacturing in order to capture higher margins, control product
development and improve inventory flexibility and supply. Fireplace products
and, in Australia, home heaters were added to take advantage of the winter
selling season. In

Australia, we further diversified our product line through the addition of
camping equipment and outdoor furniture, both of which complement our main
barbecue line. Information concerning principal capital expenditure currently
in progress, the distribution of these investments geographically and the
method of financing is set out in "Item 5. Operating and Financial Review and
Prospects-B. Liquidity and Capital Resources."

In April 1987, we listed our Ordinary Shares on the ASE. In October 1996,
as part of our plans to accelerate new store expansion in the United States,
we announced our intention to repurchase shares from the public, delist from
the ASE (pursuant to a transaction which was consummated as of December 31,
1996) and to seek capital in the United States. We consummated our initial
public offering (the "Offering") in the United States in November 1997.

Our principal executive and registered offices are located at 327 Chisholm
Road, Auburn, NSW 2144, Australia. Our telephone number is 61 2 9704 4177. Our
internet addresses are www.bbqgalore.com and www.barbequesgalore.com.au .
Information contained in our web sites does not constitute a part of this
document.

Our agent for service in the United States is the President, Barbeques
Galore Inc., 15041 Bake Parkway, Suite A, Irvine, California 92718, telephone
(949) 597 2400.

B. BUSINESS OVERVIEW

Description of Business

We believe we are the leading specialty retail chain of barbecue and
barbecue accessory stores in Australia and the United States, based on number
of stores and sales volume. We base this belief on our years of experience in
the barbecue retail industry as well as our contacts with other industry
retailers, suppliers and trade associations. Our stores carry a wide
assortment of barbecues and related accessories displayed in a format that
emphasizes social activities and healthy outdoor lifestyles in addition to a
comprehensive line of fireplace products and, in Australia, home heating
products, camping equipment and outdoor furniture. As of January 31, 2001, we
owned and operated 35 stores in all six states in Australia and 64 stores
(including three U.S. Navy concession stores) in ten states in the United
States. In addition, as of such date, there were 49 licensed stores in
Australia and 11 franchised stores in the United States, all of which operate
under the "Barbeques Galore" name.

Our unique retailing concept differentiates us from our competitors by (i)
offering an extensive selection of barbecues and related accessories to suit
all consumer lifestyles, preferences and price points, (ii) showcasing these
products at convenient store locations with a shopping environment that
promotes the total barbecuing experience and (iii) providing exceptional
customer service through well-trained sales associates who have in-depth
knowledge of the products and understanding of customer needs. These
competitive strengths are enhanced by our barbecue and home heater
manufacturing operations, which enable us to realize higher margins, control
product development and improve inventory flexibility and supply.

Our growth strategy is to continue expansion of our U.S. store base and,
where appropriate, to continue refurbishing (through relocating or
remodeling), existing stores in Australia. During the twelve months ended
January 31, 2001, we grew from 54 to 64 company-owned stores (including three
U.S. Navy concession stores), representing a 19% increase in the number of
company-owned stores in the United States. We currently plan to open four new
company-owned stores in the United States in fiscal 2002, in existing
established markets and to refurbish two of our older stores and relocate one.
Of the four new company-owned stores, one has already opened during early
March 2001, in Cupertino, California, just South of San Francisco, a further
one store is scheduled to open during the first quarter of fiscal 2002 and two
more during the second quarter of fiscal 2002. Looking ahead and in view of
the uncertain economic climate in fiscal 2002, we are taking a cautious
approach to our U.S. store expansion program. In addition, we initiated some
time ago, a major refurbishment plan for our

Australian store base to enhance store productivity. During the twelve months
ended January 31, 2001, two stores have been refurbished in Australia with an
average increase in sales of approximately 8.1% during that period for those
stores.

The following table sets forth, for the periods indicated, the percentage
of our main categories of product sold:

Year Ended
January 31,
-------------------
1999 2000 2001
----- ----- -----

Barbecues............................................. 67.5% 66.7% 67.9%
Barbecue accessories.................................. 10.3 11.5 12.3
Camping equipment..................................... 7.8 8.1 5.9
Heating and fireplace equipment....................... 9.9 7.7 7.6
Outdoor furniture..................................... 4.5 6.0 6.3
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====

We are engaged in the retail industry and operated through stores located
in two geographical segments, Australia and the United States of America. The
following table sets forth the geographical distribution of our revenues from
external customers in A$ thousands and by percentage, for the periods
indicated:

Year Ended January 31,
-------------------------------------------------
1999 2000 2001
--------------- --------------- ---------------
(In A$ thousands)

Revenues from external
customers
Australia................ $130,011 57.8% $139,023 53.3% $141,701 46.5%
United States of
America................. 94,973 42.2% 121,660 46.7% 162,770 53.5%
--------- ----- --------- ----- --------- -----
Total.................. A$224,984 100.0% A$260,683 100.0% A$304,471 100.0%
========= ===== ========= ===== ========= =====

Seasonality; Weather; Fluctuations in Results

Our business is subject to substantial seasonal variations which have
caused, and are expected to continue to cause, our quarterly results of
operations to fluctuate significantly. Historically, we have realized a major
portion of our net sales and a substantial portion of our net income for the
year during summer months and holiday seasons when consumers are more likely
to purchase barbecue products, camping equipment and outdoor furniture. In
anticipation of our peak selling seasons (late spring and early summer), we
substantially increase our inventory levels and hire a significant number of
part-time and temporary employees. In non-peak periods, particularly in late
winter in the United States and early fall in Australia, we regularly
experience monthly losses. These seasonal trends result in our experiencing a
loss during our first fiscal quarter.

We believe this is the general pattern associated with our segment of the
retail industry and expect this pattern will continue in the future. Partially
offsetting the effects of seasonality, we operate in both the Southern and
Northern hemispheres which have opposite seasons and, we offer fireplace
products and (in Australia), home heaters in the fall and winter months.
However, sales of any of our major product lines (in particular, home heaters)
may vary widely in peak seasons depending on, among other things, prevailing
weather patterns, local climate conditions, actions by competitors and shifts
in timing of holidays. Our quarterly and annual results of operations may also
fluctuate significantly as a result of a variety of other factors, including
the timing of new store openings, releases of new products and changes in
merchandise mix throughout the year. We have in the past, experienced
quarterly losses, particularly in our fiscal first quarter, and expect to
experience such losses in the future. Because of these fluctuations in
operating results, the results of operations in any quarter are not

necessarily indicative of the results that may be achieved for a full fiscal
year or any future quarter. If for any reason our sales or gross margins
during peak seasons or periods were substantially below expectations, our
quarterly and annual results would be adversely affected.

Manufacturing

In our Australian factory facilities, we manufacture barbecues under our
proprietary Turbo, Capt'N Cook, Cook-On and Bar-B-Chef brands and certain
private label brands, as well as home heaters under our proprietary Norseman
and Kent brands. During the twelve months ended January 31, 2001, proprietary
barbecue retail sales represented approximately 28% and 29% of our total net
sales in the United States and Australia, respectively. We believe that
controlling our own manufacturing operations allows us to realize higher
margins, control product development and improve inventory flexibility and
supply, without affecting our relationships with third party vendors. Our
manufacturing operations are closely coordinated with our product management
and development activities. We have a product management and development team
which is dedicated to barbecue market analysis and product development. The
ten members of this product management and development team have an average of
over 15 years of industry experience. The team continuously studies sales
data, customer feedback, consumer trends and product designs, working closely
with our other departments (in both the United States and Australia) and
suppliers, to develop the annual Barbeques Galore product line. We expended
approximately A$1.0 million during the twelve-month period ended January 31,
2001, on product management and development activities.

In the manufacturing process, metal barbecue frames are fabricated and,
depending upon requirements, vitreous enameled or powder coated at our
factory, located at our headquarters in Sydney, Australia. Automated inhouse
powder coating and painting facilities commenced during mid-November 1998 and
replaced the outside powder coating and painting contractors. Gas barbecue
manifolds are assembled by hand and tested individually at the factory for
compliance with Australian Gas Association and American Gas Association
standards. On completion of the decorative, surface finishing processes, the
barbecue frames are delivered to the assembly and packaging area where they
are assembled. In certain cases, product is shipped to our U.S. distribution
center for assembly. We maintain strict quality control standards and our
barbecues are under limited warranty for one to five years from the date of
retail purchase, depending on the part being warranted.

Management believes that our existing manufacturing, enameling and powder
coating operations are sufficient to meet anticipated production increases
that may arise from our current store expansion and growth strategy.

In order to streamline our manufacturing operations to enhance production
efficiencies, we relocated our barbecue manufacturing operations in July 1996
to the location of our corporate headquarters and distribution center in
Sydney, Australia. We completed the relocation of our enameling operations in
fiscal 1999 to the same facilities as our barbecue and home heater
manufacturing operations, adjacent to our Australian headquarters, with the
in-line powder coating operation commencing mid-November 1998. In addition, we
rearranged the assembly, warehouse and Australian distribution operations to
further improve our production flow, inventory control and distribution
management. The relocation of our enameling operations and related changes
resulted in the incurring of approximately A$454,000 in costs, required
additional capital expenditures of approximately A$2.8 million and the
obtaining of building, environmental and other governmental permits. See "Item
3. Key Information-D. Risk Factors."

Purchasing

We believe we have good relationships with our merchandise vendors and
suppliers of parts and raw materials and do not anticipate that, as the number
of our stores or our manufacturing volume increases, there will be any
significant difficulty in obtaining adequate sources of supply in a timely
manner and on satisfactory economic terms.

Retail. We deal with our merchandise vendors principally on an order-by-
order basis and do not maintain any long-term purchase contracts with any
vendor. Merchandise is purchased for our U.S. and Australian stores by our
central buying staffs in our respective headquarters. In selecting
merchandise, the buying staffs obtain input from a variety of sources,
including our product management and development team, store employees, focus
groups, customer surveys, industry conventions and trade shows. During the
twelve months ended January 31, 2001, we purchased our inventory from over 500
vendors in the United States, Australia and Asia. No single vendor accounted
for more than 5% of merchandise purchases during this period, although we
consider certain barbecue brands to be significant to our business, especially
in the United States. We do not believe that the loss of any single brand,
including those made by Weber-Stephen Products Co., Dynamic Cooking Systems or
Onward Multi-Corp., would have a material adverse effect on our operating
results. Approximately 25% of our merchandise purchases were obtained in such
period from our ten largest vendors. See "Item 3. Key Information-D. Risk
Factors."

Manufacturing. We also purchase parts and raw materials for use in our
manufacturing and enameling operations. During the twelve months ended January
31, 2001, our buying staffs purchased barbecue and home heater parts from over
90 suppliers in Asia, Australia and North America. No single supplier
accounted for more than 5% of factory parts and raw material purchases during
this period, other than SMS, Bromic and Sandvik which accounted for
approximately 14%, 9% and 7% of these purchases, respectively. There are no
formal supply contracts between us and any of our suppliers and in the case of
SMS, prices are fixed for a year in advance. Other major suppliers of barbecue
components include G.L.G. Trading Pte. Limited ("GLG"), a Singapore company
that purchases grills, burners and other products directly from factories in
China and Taiwan. We have a 50% ownership interest in GLG and a one-third
ownership interest in Bromic. Approximately 67% of our factory parts and raw
material purchases were obtained in such twelve-month period from our ten
largest suppliers. In order to set production budgets, the price of certain
parts and raw materials such as steel, is negotiated and fixed well in advance
of production usage. We use back-up suppliers to ensure competitive pricing.
In addition, some of our key suppliers currently provide us with certain
purchasing incentives, such as volume rebates and trade discounts. See "Item
3. Key Information-D. Risk Factors"

Distribution

We maintain a 57,000 square foot distribution center at our U.S.
headquarters in Irvine, California, a 27,000 square foot distribution center
in Charlotte, North Carolina and a 172,000 square foot combined distribution
and warehousing facility as part of our Australian headquarters. In May 1998,
we purchased, for approximately A$1.75 million, with an additional A$1.3
million (including A$320,000 for racking) needed to upgrade the property, a
distribution facility nearby our existing Australian distribution facilities
which replaced a leased distribution facility and eliminated the necessity to
utilize significant public warehousing space in Sydney, in the foreseeable
future. We also use smaller warehouses in Perth (operated by an independent
distributor) and Brisbane, Australia, for our retail, licensee and wholesale
distribution operations and lease additional public warehouse space in Sydney,
Orange County, California and Texas, as necessary.

Merchandise is delivered by vendors and suppliers to our distribution
facilities and, in certain instances, directly to stores, where it is
inspected and logged into our centralized inventory management systems.
Merchandise is then shipped by our trucks or third party surface freight
weekly or twice weekly, providing stores with a steady flow of merchandise.
Shipments by our Australian operations to our Irvine distribution center are
made by third party sea freight, so that our Irvine distribution center can
maintain about two months of Company-manufactured inventory at all times,
which we believe is sufficient to meet expected U.S. store requirements for
such products.

We maintain separate inventory management systems in Australia and the
United States which allow us to closely monitor sales and track in-store
inventory. Current plans include the introduction of an automated store
inventory replenishment system in order to better manage our inventory. We
estimate that our inventory shrinkage represents no more than 0.5% of our
aggregate retail sales. We and our advisors are not aware of any

barbecue industry source from which an industry average shrinkage rate can be
derived. However, we believe that the general shrinkage rate for retailers is
approximately 1.5% to 2.0% and that our rate compares favorably to that of
other retailers.

As we expand into new regions or accelerate the rate of our U.S. store
expansion, we may eventually need additional warehouse capacity. In order to
meet such needs and to minimize the impact of freight costs, we may secure
another distribution center, expand our current warehouse facilities in the
United States or utilize public warehousing space. Management believes that
there is an ample supply of warehousing space available at commercially
reasonable rates. Wherever possible, we also solicit the cooperation of our
vendors, through drop shipments to public warehouses and/or stores, in order
to reduce our freight and handling costs. We believe that our existing
Australian distribution arrangements, together with public warehousing space
as needed, are sufficient to meet our current needs.

Wholesale Operations

In Australia, we distribute proprietary and private brand name products and
other imported merchandise, on a wholesale basis, through a wholly-owned
Australian subsidiary, Pricotech Leisure Brands Pty Ltd. ("Pricotech").
Wholesale products offered by Pricotech include Cook-On barbecues, Companion
gas camping equipment, Igloo coolers and Kent home heaters. Pricotech
distributes these products primarily to Australian mass merchants, chains and
buying groups. Customers typically buy these products based on price. In the
twelve months ended January 31, 2001, the five largest customers of Pricotech
accounted for approximately 60% of its net sales of A$23.8 million. Our
wholesale operations, in which our investment consists primarily of inventory
and receivables, currently fill excess production capacity at our
manufacturing and enameling plants. We currently have no plans to operate a
wholesale distribution business in the United States.

Licensing and Franchising

As of January 31, 2001, we licensed 49 Barbeques Galore stores, generally
in rural areas of Australia, and franchised 11 Barbeques Galore stores in the
United States. We receive annual licensing fees and franchising royalties, and
benefit primarily from these arrangements through the sale of Barbeques Galore
merchandise to the licensees and franchisees. Independent licensees and
franchisees operate such stores pursuant to agreements which require them to
comply with Barbeques Galore's merchandising and advertising guidelines and
conform to the Barbeques Galore image. These agreements typically provide the
licensees and franchisees with exclusive geographical sales territories. Most
of the Australian licensing agreements have an indefinite term but permit
licensees to terminate their arrangements at will, while franchisees in the
United States are generally contractually bound for fixed periods with renewal
options. During the twelve months ended January 31, 2001, total net sales to
licensee and franchisee stores was A$18.1 million and US$6.2 million,
respectively. We estimate that the retail sales of Barbeques Galore products
alone by licensees and franchisees was approximately A$28.4 million and US$3.6
million, respectively, in the same period. A number of our existing licensees
have refurbished their stores in accordance with our established criteria
(although no licensee is required to do so), and we maintain an assistance
program to provide advice relating to these enhancements. We may license
additional Barbeques Galore stores in Australia on a selective basis, although
we do not intend to franchise any additional stores in the United States
(except within geographical territories as required under existing franchising
agreements).

Competition

primarily based on our broad assortment of competitively priced, quality
products (including proprietary and exclusive products), convenience, customer
service, the attractive presentation of merchandise within our stores and on
our web site. Many of our competitors have greater financial, marketing,
distribution and other resources than we do and, particularly in the United
States, may have greater name recognition than us. Furthermore, the lack of
significant barriers to entry into our segment of the retail industry may also
result in new competition in the future.

We believe that the following business strengths have contributed
significantly to our past success and intend to further capitalize on those
strengths in executing our growth strategy.

Selection of Merchandise. We offer an extensive selection of quality
barbecues and barbecue accessories designed to suit consumer lifestyles,
preferences and price points. Our stores offer a variety of barbecues, with a
range of styles, finishes and special features, including our proprietary
brands as well as more than 60 other barbecues under different brand names.
Accompanying these barbecues are an assortment of barbecue replacement parts
and accessories which generate high margins. As the leading retail chain
specializing in barbecues and related merchandise, we offer consumers one-stop
shopping convenience for virtually all their barbecue cooking needs.

Store Environment. Our stores offer a shopping environment which is
consistent with our outdoor lifestyle image and promotes the total barbecuing
experience. Our newer stores generally have high ceilings, wide aisles and
extensively use natural materials such as wood and stone. Merchandise is
displayed to convey the breadth and depth of our product lines. An array of
barbecues is displayed on the selling floor complete with accessories to
provide the consumer with the opportunity to compare and contrast different
models. Store presentation is based on a detailed and comprehensive store plan
regarding visual merchandising to ensure that all stores provide a consistent
portrayal of the Barbeques Galore image. Average store retail selling area is
approximately 3,450 square feet in the United States and 9,950 square feet in
Australia.

Customer Service. We recognize that customer service is fundamental to our
success. We have a "satisfaction guaranteed" return policy and honor all
manufacturer warranties for products sold at our stores. Store managers and
sales associates undergo product and sales training programs which enable them
to recommend merchandise that satisfies each customer's lifestyle and needs.
We monitor each store's service performance and reward high quality customer
service both on a team and individual level. We believe that our employees'
knowledge of our product offerings and the overall barbecue market and their
understanding of customer needs, are critical components of providing customer
service and distinguish us from our competitors.

Convenient Store Locations. We position our stores in locations that
maximize convenience and accessibility. Stores are typically situated at
highly visible locations and in close proximity to middle to upper-income
residential neighborhoods or areas of new housing construction. Stores
generally feature ample customer parking space and ready access to major
thoroughfares. Many stores are situated in retail power centers or close to
complementary retail stores, further attracting customer traffic. As a result
of our site selection criteria, we believe we have been effective in
identifying successful new store locations.

On-line Retail Opportunities. In May 1999, our e-Commerce site,
www.bbqgalore.com went live with minimal marketing. Sales from the site have
been recorded in all 50 states in the U.S.A. and, as a result, we are reaching
customers in regions where we currently do not have a retail store presence.

Integrated Manufacturing Operation; New Product Development. Through our
vertically integrated operations, we manufacture a proprietary line of
barbecues and home heaters for our retail stores. In addition, we have an
experienced in-house product management and development team dedicated to
barbecue and home heater market analysis and product development that can
identify and respond to changing consumer trends. We believe that controlling
our own manufacturing operations allows us to realize higher margins, control
product development and improve inventory flexibility and supply.

Experienced Management Team. Our senior management team has an average of
more than 31 years of retail industry experience. Since the current executive
management team assumed responsibility in 1982, the number of Barbeques Galore
stores has grown from 12 stores (including one licensed store) as of June 30,
1982 to 159 stores (including 60 licensed or franchised stores) as of January
31, 2001. We believe that management's experience positions us to execute our
business and growth strategies. Our directors and senior management
beneficially own approximately 41.01% of our outstanding Ordinary Shares.

Trademarks and Patents

"Barbeques Galore," "Turbo," "Capt'N Cook," "Cook-On" and "Bar-B-Chef" are
federally registered trademarks and/or service marks in the United States. In
addition, we own a federal trademark registration for the distinctive
configuration of our Turbo grill. We also use the phrases "America's Largest
Chain of Barbecue Stores" and "Not a Barbecue Aisle. A Barbecue Store," as
common-law trademarks in the United States. "Barbeques Galore" and "Cook-On"
are registered trademarks with the State of California. In Australia only, we
use the phrases "Your Outdoor Cooking and Camping Store" and "We Know the
Outdoors Inside Out," as common-law trademarks and, among others, the names
"Norseman" and "Kent" as registered trademarks. We further utilize a number of
different trademarks relating to various barbecues, barbecue accessories, home
heaters, camping equipment and outdoor furniture manufactured or offered by
us. We are not presently aware of any claims of infringement or other
challenges to our right to use our marks and our name in the United States.

We also own a number of copyrighted works, including brochures and other
literature about our products and many drawings and designs that we use in
marketing those products.

Governmental Regulation

Many of our products use gas and flame and, consequently, are subject to
regulation by authorities in both the United States and Australia in order to
protect consumers, property and the environment. For example, our barbecue and
home heater manufacturing, enameling and powder coating operations are subject
to regulations governing product safety and quality, the discharge of
materials hazardous to the environment, water usage, workplace safety and
labor relations. We believe that we are in substantial compliance with such
regulations. Our products or personal use thereof are subject to regulations
relating to, among other things, the use of fire in certain locations
(particularly restrictions relating to the availability or frequency of use of
wood heating in homes and barbecues in apartments), restrictions on the sale
or use of products that enhance burning potential such as lighter fluid,
restrictions on the use of gas in specified locations (particularly
restrictions relating to the use of gas containers in confined spaces) and
restrictions on the use of wood burning heaters. See "Item 3. Key information-
D. Risk Factors."

In addition, if our level of foreign ownership exceeds 40%, we would be
considered a foreign person and would require certain governmental approvals
in connection with certain acquisitions in Australia. See "Item 10. Additional
Information-D. Exchange Control-Restrictions on Foreign Ownership;
Antitakeover Restrictions."

C. ORGANIZATIONAL STRUCTURE

We are an Australian resident company involved in the manufacture of
barbecues and heaters and the wholesale and retail sale of barbecues, heaters,
camping equipment, outdoor furniture, leisure products and related accessories
through Company-owned and licensed stores in Australia. We are also involved
in the retailing, through Company-owned and franchised stores, of barbecues,
fireplace equipment and accessories in the United States of America. Our
manufacturing operations are located in Australia.

As of April 10, 2001, our listing of subsidiaries is as follows:

Barbeques Galore Limited
whose controlled entities are:

Barbeques Galore (Aust) Pty Limited
whose controlled entities are:

Galore Pty Limited
The Galore Group (International) Pty Limited
whole controlled entity is:

The Galore Group (U.S.A.), Inc.
whose controlled entities are:

Barbeques Galore, Inc.
Barbeques Galore Online, Inc., (formerly Pool Patio "N Things,
Inc.)

Barbeques Galore Services Pty Limited
whose controlled entities are:

Cook-on-Gas Products (Australia) Pty Limited
whose controlled entities are:

Bosmana Pty Limited
Cougar Leisure Products Pty Limited

G.L.G. Australia Pty Limited
whose controlled entities are:

Australian Enamellers Pty Limited
Douglas Manufacturing Pty Limited
Park-Tec Engineering Pty Limited

Pricotech Leisure Brands Pty Limited
Redgun Pty Limited

Galore Group Nominees Pty Limited
Vilbrent Pty Limited

(a): All the abovementioned subsidiaries are incorporated in Australia with
the exception of:

The Galore Group (U.S.A.), Inc;
Barbeques Galore, Inc; and
Barbeques Galore Online, Inc., (formerly Pool Patio "N Things, Inc.)

which are incorporated in the United States of America.

(b): All the abovementioned subsidiaries have ordinary shares as issued
share capital and are 100% owned.

D. PROPERTY, PLANTS AND EQUIPMENT

We currently lease all our stores and expect that our policy of leasing,
rather than owning, store properties will continue as we expand. Existing
store leases provide for original lease terms that generally range from two to
ten years, with single or multiple renewal options that range from three to
ten years at increased rents. Certain of the leases provide for scheduled rent
increases or for contingent rent (based upon store sales exceeding stipulated
amounts). We guarantee two franchised store leases, one of which is secured by
the franchisee's rights in our Barbeques Galore franchise.

In Sydney, Australia, we own our headquarters and a 172,000 square foot
combined distribution and warehousing facility, a 75,000 square foot portion
of which was purchased by us in the second quarter of fiscal 1999 for
approximately A$1.75 million, with an additional A$1.3 million (including
A$320,000 for racking) needed to upgrade prior to full usage. We additionally
own our own assembly facility in Australia, measuring 61,000 square feet which
was purchased for A$3.5 million during the first quarter of fiscal 1999 and
which also accommodates part of our administrative facilities. The additional
company-owned space replaced the distribution facility that we previously
leased in Australia and eliminated the necessity to utilize significant public
warehousing space in Sydney, in the foreseeable future. We lease the adjacent
75,000 square foot barbecue and home heater factory (under a five-year lease
with three successive five-year renewal options for a total maximum lease term
at present of 19 years) and use limited public warehousing space in Brisbane.
In addition, we completed the relocation of our enameling operations in fiscal
1999 to the same facilities as our barbecue and home heater manufacturing
operations adjacent to our Australian headquarters, with the in-line powder
coating operation commencing mid-November 1998. In Irvine, California, we
lease our home office and a 57,000 square foot U.S. distribution center under
leases scheduled to expire in 2002. The 27,000 square foot distribution center
in Charlotte, North Carolina was leased in February 2000 for a period of five
years with a renewal option for a further five years. As in Australia,
additional public warehouse space is leased for short terms. See "Item 4.
Information on our Company-B. Business Overview-Manufacturing" and "-
Distribution."

Our ownership interest in our Sydney headquarters and all our leasehold
interests in real property are subject to a mortgage interest of Australia and
New Zealand Banking Group Limited ("ANZ") governed by a Letter of Offer and
related documents between ANZ (successor-in-interest to Westpac Banking
Corporation) and ourselves. See "Item 19. Exhibits-Exhibit Number 10.3."

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our business, financial condition and results
of operations should be read in conjunction with our consolidated financial
statements and the related notes included elsewhere in this Annual Report.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors, such as
those set forth under "Item 3. Key Information-D. Risk Factors" and elsewhere
in this Annual Report.

Overview

We believe we are the leading specialty retail chain of barbecue and
barbecue accessory stores in Australia and the United States, based on number
of stores and sales volume. We base this belief on our years of experience in
the barbecue retail industry as well as our contacts with other industry
retailers, suppliers and trade associations. We opened our first store in
Sydney, Australia in 1977 and our first U.S. store in Los Angeles in 1980. Our
stores carry a wide assortment of barbecues and related accessories, displayed
in a format that emphasizes social activities and healthy outdoor lifestyles
in addition to a comprehensive line of fireplace products and, in Australia,
home heating products, camping equipment and outdoor furniture. As of January
31, 2001, we owned and operated 35 stores in all six states in Australia and
64 stores (including three U.S. Navy concession stores) in ten states in the
United States. In addition, as of such date, there were 49 licensed stores in
Australia and 11 franchised stores in the United States, all of which operate
under the "Barbeques Galore" name.

We derive our revenue primarily from four categories: Australian retail,
United States retail (including royalties and sales to franchisees),
Australian licensing (including license fees and sales to licensees) and
Australian wholesale. These categories represented 30.8%, 53.8%, 6.1% and 9.3%
respectively, of our net sales for the twelve months ended January 31, 2001,
representing a 3.3%, 33.5%, 1.2% and 14.6% increase over their respective net
sales levels for the twelve months ended January 31, 2000.

We believe the majority of our future growth will result from the
continuing expansion of our U.S. retail business, primarily through the
opening of new stores, and the refurbishment of our Australian store base.
Through our vertically integrated operations, we manufacture a proprietary
line of barbecues and home heaters for our retail stores and licensees as well
as other barbecue and home heater products for our wholesale customers.

A goods and services tax ("GST") was introduced in Australia from July 1,
2000. In order to provide the reader with more comparable information, the
wholesale sales tax on Australian sales, which was abolished from that date,
has been removed from all reported sales in the table on page 22.

The wholesale sales tax was previously included in cost of goods sold as it
was not recoverable from taxation authorities or vendors and was consequently
embedded in sales revenue. The GST in not included in reported sales and cost
of sales figures from July 1, 2000 as the GST is payable or recoverable
to/from Australian taxation authorities. The financial information as
presented in the consolidated statements of operations and other comprehensive
income (loss) has been adjusted in the table on page 22 to remove the
wholesale sales tax from net sales previously reported to provide more
comparable information for users of the financial statements.

A. RESULTS OF OPERATIONS

The following table sets forth for the periods indicated, certain selected
statement of operations data as a percentage of net sales:

Year Ended Jan. 31,
----------------------
1999 2000 2001
------ ------ ------

Statement of Operations Data:
Net sales............................................. 100.0% 100.0% 100.0%
Cost of goods sold, warehouse, distribution and
occupancy costs...................................... 67.9 67.6 68.0
------ ------ ------
Gross margin.......................................... 32.1 32.4 32.0
Selling, general and administrative expenses.......... 27.5 27.7 28.7
Store pre-opening costs............................... 0.3 0.2 0.2
------ ------ ------
Operating income...................................... 4.3 4.5 3.1
Equity in income of affiliates, net of tax............ 0.2 0.2 0.1
Interest expense...................................... 0.9 0.9 1.0
------ ------ ------
Income before income tax.............................. 3.6 3.8 2.2
Income tax expense.................................... 1.3 1.4 0.7
------ ------ ------
Net income............................................ 2.3% 2.4% 1.5%
====== ====== ======

There has been no material impact of inflation and changing prices on our
net sales and operating income for the twelve months ended January 31, 1999
through 2001, respectively.

Twelve Months Ended January 31, 2001 Compared to Twelve Months Ended January
31, 2000

Net sales increased by approximately A$43.8 million, or 16.8%, to A$304.5
million for the fiscal year ended January 31, 2001 from A$260.7 million for
the fiscal year ended January 31, 2000. Ten new stores were opened in the
United States during the twelve months ended January 31, 2001, two of which
marked our initial entry into the Southeast Florida market. In Australia two
stores were refurbished and one store relocated during this period. Comparable
store sales increased 6.4% in the United States and 1.4% in Australia and
contributed

A$23.7 million to the increase in net sales. Increased sales of A$16.3 million
also resulted from stores not forming part of the comparative store sales,
including ten new stores which opened in the United States in the previous
twelve months. The balance of the increased sales was primarily attributable
to a A$3.6 million increase in Australian wholesale sales and a A$0.2 million
increase in sales to Australian licensees.

A goods and services tax ("GST") was introduced in Australia from July 1,
2000. To make proper comparisons, the wholesale sales tax on Australian sales
which was abolished from that date, should be removed from all reported sales
prior to this date. The GST is not included in reported sales figures since
July 1, 2000. The financial information as presented in the consolidated
statements of operations and other comprehensive income (loss) has been
adjusted in the "Analysis of Impact Pursuant to the Introduction of GST on
Reported Sales and Gross Margin" appearing below, to remove the wholesale
sales tax from net sales previously reported.

Based on the pro-forma financial information, net sales increased by
approximately A$47.9 million, or 18.8% to A$302.8 million for the fiscal year
ended January 31, 2001 from A$254.9 million for the fiscal year ended January
31, 2000.

Reported gross margin increased approximately A$12.9 million, or 15.3% to
A$97.3 million for the fiscal year ended January 31, 2001 from A$84.4 million
for the fiscal year ended January 31, 2000. Gross margin percentage decreased
to 32.0% during the fiscal year ended January 31, 2001 from 32.4% during the
comparable period in 2000. The decrease in gross margin percentage was mainly
attributable to a change in product mix and the increased Australian cost of
imported product pursuant to the depreciation of the A$ against the US$; this
in turn, was offset by the timing of supplier rebates and a decrease in the
cost of imported product into the U.S.A. resulting from a favorable exchange
rate for the U.S.A. operation.

The introduction of the GST as detailed above also impacted cost of goods
sold, warehouse, distribution and occupancy costs and gross margin percentage.
Based on the pro-forma financial information, gross margin percentage
decreased to 32.1% during the fiscal year ended January 31, 2001 from 33.1%
during the comparable period in 2000. The decrease in the pro-forma gross
margin percentage was mainly attributable to the factors detailed in the
paragraph above.

Selling, general and administrative expenses (which exclude store pre-
opening expenses) increased approximately A$15.0 million, or 20.7%, to A$87.4
million for the fiscal year ended January 31, 2001 from A$72.4 million for the
fiscal year ended January 31, 2000. As a percentage of net sales, selling,
general and administrative expenses increased to 28.7% during the fiscal year
ended January 31, 2001 from 27.7% during the comparable period in 2000. This
percentage increase was primarily due to lower leverage off the overall sales
base, increased advertising expenditure in the U.S.A. and Australian retail
and increased U.S.A. staffing in the executive, product management and
development, purchasing and accounting departments.

Store pre-opening expenses increased by A$228,000 to A$639,000 for the
fiscal year ended January 31, 2001 from A$411,000 for the comparable period,
due to the number and timing of United States' store openings.

Operating income decreased by A$2.4 million to A$9.3 million for the fiscal
year ended January 31, 2001 from A$11.7 million for the fiscal year ended
January 31, 2000.

Income from affiliates decreased by A$211,000 to A$340,000 for the fiscal
year ended January 31, 2001 from A$551,000 for the fiscal year ended January
31, 2000 due to a decrease in the profitability of Bromic.

Interest expense increased by A$0.6 million to A$2.9 million for the fiscal
year ended January 31, 2001 from A$2.3 million for the fiscal year ended
January 31, 2000 due to a higher usage of seasonal borrowings in the third
quarter.

Our effective tax rate was 33.2% for the fiscal year ended January 31, 2001
and 37.4% during the comparable period as a result of the write-down of the
deferred tax asset for the fiscal year ended January 2001 and the decrease in
the Australian tax rate for this year from 36% to 34%.

Analysis of Impact Pursuant to the Introduction of GST on Reported Sales And
Gross Margin

A goods and services tax ("GST") was introduced in Australia from July 1,
2000. To make proper comparisons the wholesale sales tax on Australian sales,
which was abolished from that date, has been removed from all reported sales
prior to this date in the pro-forma section of the table to provide the reader
with more comparable information. The GST is not included in reported sales
figures since July 1, 2000.

Year Ended January 31,
------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(In A$ thousands)

Pro-forma
Net sales................... $144,151 $174,687 $219,804 $254,912 $302,717
Cost of goods sold,
warehouse, distribution and
occupancy costs............ 99,106 117,434 147,528 170,490 205,421
-------- -------- -------- -------- --------
Gross margin................ $ 45,045 $ 57,253 $ 72,276 $ 84,422 $ 97,296
======== ======== ======== ======== ========
Gross margin percentage..... 31.2% 32.8% 32.9% 33.1% 32.1%
======== ======== ======== ======== ========
Reported
Net sales................... $148,369 $179,325 $224,984 $260,683 $304,471
Cost of goods sold,
warehouse, distribution and
occupancy costs............ 103,324 122,072 152,708 176,261 207,175
-------- -------- -------- -------- --------
Gross margin................ $ 45,045 $ 57,253 $ 72,276 $ 84,422 $ 97,296
======== ======== ======== ======== ========
Gross margin percentage..... 30.4% 31.9% 32.1% 32.4% 32.0%
======== ======== ======== ======== ========

Twelve Months Ended January 31, 2000 Compared to Twelve Months Ended January
31, 1999

Net sales increased by approximately A$35.7 million, or 15.9% to A$260.7
million for the fiscal year ended January 31, 2000 from A$225.0 million for
the fiscal year ended January 31, 1999. Eight new stores were opened in the
United States during the twelve months ended January 31, 2000 of which six
were in existing markets and the remaining two in Arboretum and South Park,
North Carolina. A further four franchise stores were opened during this
period. In Australia, two new stores were opened, three stores were relocated
and one store was refurbished during this period. Comparable group store sales
increased 7.2% and contributed A$11.5 million to the increase in net sales.
Comparable store sales increased 14.6% in the U.S. and 3.9% in Australia.
Increased sales of A$24.9 million also resulted from stores not forming part
of the comparative store sales, including eight new stores which opened in the
United States in the previous twelve months. The balance of the increased
sales was primarily attributable to a A$0.5 million increase in sales to
Australian licensees, partially offset by a A$1.2 million decrease in
Australian wholesale sales.

Gross margin increased approximately A$12.1 million, or 16.7% to A$84.4
million for the fiscal year ended January 31, 2000 from A$72.3 million for the
fiscal year ended January 31, 1999. Gross margin percentage increased to 32.4%
during the fiscal year ended January 31, 2000 from 32.1% during the comparable
period in 1999. The increase in gross margin percentage was mainly
attributable to product mix, leverage off a higher sales base and improved
manufacturing efficiencies.

Selling, general and administrative expenses (which exclude store pre-
opening expenses) increased approximately A$10.6 million, or 17.2% to A$72.4
million for the fiscal year ended January 31, 2000 from A$61.8 million for the
fiscal year ended January 31, 1999. As a percentage of net sales, selling,
general and administrative expenses increased to 27.7% during the fiscal year
ended January 31, 2000 from 27.5% during the comparable period in 1999
primarily due to increased freight costs and rebates to wholesale customers.

Store pre-opening expenses decreased by A$399,000 to A$411,000 for the
fiscal year ended January 31, 2000 from A$810,000 for the comparable period in
1999 due to the number and timing of United States' store opening expenditure.

Operating income increased by A$2.0 million to A$11.7 million for the
fiscal year ended January 31, 2000 from A$9.7 million for the fiscal year
ended January 31, 1999.

Income from affiliates increased by A$37,000 to A$551,000 for the fiscal
year ended January 31, 2000 from A$514,000 for the fiscal year ended January
31, 1999. This increase resulted mainly from an increase in the profitability
of Bromic, offset by a decrease in profitability of GLG.

Interest expense increased by A$0.1 million to A$2.3 million for the fiscal
year ended January 31, 2000 from A$2.2 million for the fiscal year ended
January 31, 1999. The increase resulted mainly from the increase in the number
of new stores in the United States and general working capital requirements.

Our effective tax rate was 37.4% for the fiscal year ended January 31, 2000
and 35.1% for the comparable period. The increase in effective rate is as a
result of the higher proportion of taxed U.S.A. earnings as well as the write-
down of the deferred tax asset to reflect the incoming reduction of company
taxation rates in Australia.

QUARTERLY RESULTS

Unaudited Quarterly Results and Seasonality

Our quarterly results of operations have fluctuated, and are expected to
continue to fluctuate materially, primarily because of the seasonality
associated with the barbecue and fireplace industries and related item sales.
The timing of new store openings and related pre-opening and other startup
expenses, net sales contributed by new stores, increases or decreases in
comparable store sales, changes in our merchandise mix and overall economic
conditions also contribute to fluctuations in our quarterly results. We
believe this is the general pattern associated with our segment of the retail
industry and expect this pattern will continue in the future. In order to
partially offset the effects of seasonality, we operate in both the Southern
and Northern hemispheres which have opposite seasons, and offer fireplace
products and (in Australia) home heaters in the fall and winter months. In
anticipation of our peak selling season, we substantially increase our
inventory levels and hire a significant number of part-time and temporary
employees. In non-peak periods, such as late winter and early fall, we have
regularly experienced monthly losses. Because of these fluctuations in
operating results, the results of operations in any quarter are not
necessarily indicative of the results that may be achieved for a full fiscal
year or any future quarter. See "Item 3. Key Information-D. Risk Factors."

Unaudited Additional Quarterly Consolidated Financial Data

The following table sets forth, for the periods indicated, certain selected
statement of operations and operating data for each of our last eight fiscal
quarters. The quarterly statement of operations data and selected operating
data set forth below were derived from our unaudited financial statements,
which in the opinion of management of Barbeques Galore contains all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation thereof:

Quarter Ended
---------------------------------------------------------------------------
Apr. 30, July 31, Oct. 31, Jan. 31, Apr. 30, July 31, Oct. 31, Jan. 31,
1999 1999 1999 2000 2000 2000 2000 2001
-------- -------- -------- -------- -------- -------- -------- --------
(In A$ thousands, except per share data)
Statement of Operations
Data:

Net sales............... $46,515 $62,847 $65,158 $86,163 $56,640 $78,430 $73,391 $96,010
Cost of goods sold,
warehouse, distribution
and occupancy costs.... 32,804 42,033 44,319 57,105 39,194 51,914 49,002 67,065
------- ------- ------- ------- ------- ------- ------- -------
Gross margin............ 13,711 20,814 20,839 29,058 17,446 26,516 24,389 28,945
Selling, general and
administrative
Expenses............... 14,899 17,904 18,599 20,956 18,607 21,541 22,523 24,694
Store pre-opening
costs.................. 496 100 42 (227) 403 58 142 36
------- ------- ------- ------- ------- ------- ------- -------
Operating income
(loss)................. (1,684) 2,810 2,198 8,329 (1,564) 4,917 1,724 4,215
Equity in income (loss)
of affiliates, net of
tax.................... 38 127 70 316 18 (36) 72 286
Interest expense........ 519 568 626 563 530 707 885 798
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
income tax............. (2,165) 2,369 1,642 8,082 (2,076) 4,174 911 3,703
Income tax expense
(benefit).............. (834) 1,033 537 2,978 (747) 1,485 324 1,167
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)....... (1,331) 1,336 1,105 5,104 (1,329) 2,689 587 2,536
Other comprehensive
income (loss).......... (1,256) 384 318 150 2,092 762 4,002 (2,030)
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) after
other comprehensive
income (loss).......... $(2,587) $ 1,720 $ 1,423 $ 5,254 $ 763 $ 3,451 $ 4,589 $ 506
======= ======= ======= ======= ======= ======= ======= =======
Earnings (loss) per
share:
Basic.................. $ (0.29) $ 0.29 $ 0.24 $ 1.12 $ (0.29) $ 0.59 $ 0.13 $ 0.56
======= ======= ======= ======= ======= ======= ======= =======
Diluted................ $ (0.29) $ 0.29 $ 0.24 $ 1.11 $ (0.29) $ 0.57 $ 0.13 $ 0.56
======= ======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding:
Basic.................. 4,542 4,542 4,542 4,542 4,542 4,542 4,542 4,542
======= ======= ======= ======= ======= ======= ======= =======
Diluted................ 4,542 4,662 4,629 4,619 4,542 4,757 4,686 4,542
======= ======= ======= ======= ======= ======= ======= =======

Foreign Exchange Fluctuations

See "Item 3. Key Information-A. Selected Financial Data-Exchange Rates" and
"-D. Risk Factors."

Governmental Regulation

See "Item 4. Information on our Company-B. Business Overview-Governmental
Regulation."

B. LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our operations through cash flow from
operations and bank borrowings. In June 1998, we entered into a credit
facility (the "ANZ Facility") with ANZ, revised from a previous facility
entered into in July 1994. The ANZ Facility is subject to annual review and
modification, in accordance with standard Australian practice. Under this
revised facility, we have access to facilities up to A$55.73 million
comprising a multi-option, overdraft, leasing, foreign currency and other
facilities in principal amount of A$47.28 million and real property loans in
principal amount of A$8.45 million. The ANZ Facility is secured by a first
security interest over our present and future Australian assets and a second
security interest (subordinate to a lien under the Merrill Lynch Facility as
defined below) in all our assets in the United States. The ANZ

Facility is further guaranteed by each of our subsidiaries, including The
Galore Group (USA), Inc. and Barbeques Galore, Inc. (referred to collectively
as "Galore USA"). The property loans accrue interest at rates varying from
6.9% to 7.5% per annum and are secured by registered first mortgages over our
respective freehold properties.

All committed facilities are provided subject to the standard Australian
practice of regular annual review of required limits, our performance and the
normal terms and conditions, including financial covenants, applicable to bank
lending. We were in compliance with the financial convenants set out in the
ANZ Facility agreement as at January 31, 2001.

We have historically renegotiated our credit facilities on similar terms
and conditions. As the company is able to roll-over bank bills which are
generally taken out for periods varying from approximately 30 to 90 days, the
majority of the outstanding balance relating to bank bills and property loans
is classified as a non-current liability.

Our total long-term debt matures as follows:

Year ending January 31, (In A$ thousands)
----------------------- -----------------

2002.................................................... $ 15
2003.................................................... 30,456
-------
$30,471
=======

In February 1995, Barbeques Galore Inc., our U.S. operating subsidiary,
entered into a five year credit facility with Merrill Lynch Business Financial
Services, Inc., ("Merrill Lynch") which has been amended from time to time. As
of January 31, 2001, such facility comprises a revolving line of credit in
aggregate principal amount of US$1.0 million (the "Merrill Lynch Facility").
Indebtedness under the revolving line of credit accrues interest at the 30-day
commercial paper rates plus 2.70% and is payable monthly. The Merrill Lynch
Facility is secured by a first security interest in all Galore USA present and
future assets and is guaranteed by us and The Galore Group (USA), Inc., the
parent of Barbeques Galore, Inc.

During 1998, pursuant to an agreement with certain holders of our
Convertible Notes (the "Convertible Notes" or "Notes"), all of which were
converted into Ordinary Shares in connection with our Offering, we registered
1,044,845 Ordinary Shares on Form F-1 (the "Resale F-1"), each having a par
value of A$3.64 and each represented by one ADS (each, a "Resale ADS") for
resale by our shareholders under the Securities Act of 1933, as amended.
997,926 of these Ordinary Shares were received upon the conversion of the
Convertible Notes. The remainder of these Ordinary Shares were registered
voluntarily by us and are presently held by our long-term shareholders who may
wish to divest all or a portion of their holdings. On or about April 22, 1999,
we removed from registration 979,731 Resale ADSs that remained unsold as of
December 15, 1998, the date at which all shareholders listed on the Resale F-1
became entitled to sell their Resale ADSs pursuant to Rule 144 promulgated
under the Securities Act of 1933, as amended.

For the fiscal years ended January 31, 2001, 2000 and 1999, cash flows
provided by (used in) operating activities were A$(0.1) million, A$10.7
million and A$6.5 million, respectively. The cash flows used in operations
primarily reflect the increase in inventory levels related to our build-up of
inventories and the increased number of stores in the United States.

Net cash flows used in investing activities for the fiscal years ended
January 31, 2001, 2000 and 1999 were A$7.1 million, A$5.5 million and A$13.1
million, respectively. The cash flows used in investing activities have
resulted primarily from capital expenditures related to new store openings in
the United States, store refurbishments and relocations in Australia and the
acquisition of properties as detailed in "Item 4. Information on our Company-
D. Property, Plants and Equipment." We anticipate that we will continue to
incur significant capital commitments in connection with further expansion.

The cash flows used in operations and investing activities have been
largely sourced from long term borrowings under the ANZ and Merrill Lynch
Facilities and from the net proceeds from the Offering.

At January 31, 2001 we had working capital of A$56.5 million and maintained
minimal amounts in cash and cash equivalents, relying instead on undrawn
facilities under our borrowing arrangements with ANZ and Merrill Lynch.

We believe the ANZ and Merrill Lynch Facilities are sufficient to meet our
presently anticipated working capital and capital expenditure requirements for
at least the next twelve months.

C. RESEARCH AND DEVELOPMENT

See "Item 4. Information on our Company-B. Business Overview-
Manufacturing."

D. TREND INFORMATION

This information has been disclosed elsewhere throughout this Annual
Report.

E. RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("Statement 133") was
issued by the Financial Accounting Standards Board in June 1998 and, as
amended by SFAS 137 and SFAS 138, is effective for our fiscal year commencing
February 1, 2001. Statement 133 standardizes the accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts. Under the standard, entities are required to carry all derivative
instruments in the statement of financial position at fair value. The
accounting for changes in the fair value (i.e. gains or losses) of a
derivative instrument depends on whether it has been designated and qualifies
as part of a hedging relationship and, if so, on the reason for holding it. If
certain conditions are met, entities may elect to designate a derivative
instrument as a hedge of exposures to changes in fair values, cash flows, or
foreign currencies. If the hedged exposure is a fair value exposure, the gain
or loss on the derivative instrument is recognized in earnings in the period
of change together with the offsetting loss or gain on the hedged item
attributable to the risk being hedged. If the hedged exposure is a cash flow
exposure, the effective portion of the gain or loss on the derivative
instrument is reported initially as a component of other comprehensive income
(outside earnings) and subsequently reclassified into earnings when the
forecasted transaction affects earnings. Any amounts excluded from the
assessment of hedge effectiveness as well as the ineffective portion of the
gain or loss is reported in earnings immediately. Accounting for foreign
currency hedges is similar to the accounting for fair value and cash flow
hedges. If the derivative instrument is not designated as a hedge, the gain or
loss is recognized in earnings in the period of change.

We adopted Statement 133, as amended by SFAS 137 and SFAS 138, on February
1, 2001. We did not have any material derivative instruments outstanding as of
January 31, 2001. As a result, the adoption of Statement 133, as amended by
SFAS 137 and SFAS 138, did not have a material impact on our consolidated
financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
("SAB101") "Revenue Recognition in Financial Statements." SAB101 summarizes
certain of the SEC's staff's views in applying generally accepted accounting
principles to revenue recognition in the financial statements. The
implementation date of SAB101 was delayed by the issuance of SAB101A and,
subsequently, SAB101B. The issuance of SAB101B delayed the mandatory
implementation date of SAB101 to the fourth fiscal quarter of fiscal years
beginning after December 15, 1999.

Accordingly, SAB101, as amended by SAB101B, was adopted by us in the fourth
quarter of fiscal year 2001, effective February 1, 2001. SAB101 did not have a
material impact on our consolidated financial statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Our directors, senior management and key employees are as follows:

Name Age Position
---- --- --------

Directors and Senior Management
Sam Linz....................... 61 Chairman of the Board
Robert Gavshon (/1/)........... 53 Deputy Chairman of the Board and General
Counsel
John Price..................... 50 Head of Product Management and Development
and Director
Sydney Selati.................. 62 President-Galore USA and Director
Edgar Berner (/1/)(/2/)........ 69 Director
Gordon Howlett (/1/)(/2/)...... 59 Director
David Glaser................... 52 Company Secretary
David James.................... 40 Chief Financial Officer
Kevin Ralphs................... 47 Chief Financial Officer-Galore USA
Peter Spring................... 42 Chief Operating Officer-Australia
Benjamin Ramsey................ 46 Executive Vice President-Galore USA
Key Employees-Australia
Monique Collister.............. 53 Group Organizational Development Manager
Jeffrey Fisher................. 34 Retail Development Manager-Barbeques
Galore (Aust) Pty Limited
Gary Heading................... 50 General Manager of Retail/Licensees-
Barbeques Galore (Aust) Pty Limited
Joel Kahan..................... 46 General Manager-Group Information
Technology
Kevin Meltzer.................. 38 General Manager of Manufacturing-Park-Tec
Engineering Pty Limited and Australian
Enamellers Pty Limited
Ian Redmile.................... 49 General Manager-Pricotech Leisure Brands
Pty Limited
Key Employees-United States
Todd Budde..................... 36 Business Process and Information Systems
Manager
Michael Varley................. 54 Vice President of Purchasing, Distribution
and Product Development

- --------
(/1/)Member of the Audit Committee

(/2/)Member of the Compensation Committee

SAM LINZ has served as Chairman of the Board since joining us in May 1982.
Until July 1997, Mr. Linz served as non-executive Chairman of the Board of
Rebel Sport Limited ("Rebel"), a leading national sports superstore chain in
Australia. Mr. Linz was one of the founders of Rebel and a major shareholder
until he sold his interest in July 1997. Prior to joining us, Mr. Linz
developed and managed a large chain of liquor stores and hotels in South
Africa in association with Mr. Selati. Mr. Linz has over 34 years of
experience in the retail industry.

ROBERT GAVSHON joined us in January 1983 as General Counsel and has also
served as Deputy Chairman of the Board since August 1993. Until July 1997, Mr.
Gavshon served as a non-executive Director of Rebel. Mr. Gavshon was one of
the founders of Rebel and a shareholder until he sold his interest in July
1997. Prior to joining us, Mr. Gavshon acted as group counsel and director of
corporate affairs for a multinational corporation based in Sydney, Australia
and prior thereto as a partner in a large commercial law firm in South Africa.
Mr. Gavshon has over 19 years of experience in the retail industry.

JOHN PRICE joined us in 1981 as General Manager of Wholesale and has served
as Head of Product Management and Development since June 1989, and as a
Director since November 1989. Prior to joining us,

Mr. Price helped found and was Managing Director of Cook-On-Gas Products Pty
Limited, a developer and manufacturer of consumer gas products which was
acquired by us in 1981. Mr. Price has over 28 years of experience in the
development and marketing of consumer gas products.

SYDNEY SELATI has served as a Director since July 1997 and President of
Galore USA since May 1988. From 1984 until 1988, Mr. Selati was President of
Sussex Group Limited, a chain of retail furniture stores including Huffman-
Koos, Colby's and Barker Brothers. Prior to that, Mr. Selati developed and
managed a large chain of liquor stores and hotels in South Africa in
association with Mr. Linz. Mr. Selati has over 34 years of experience in the
retail industry.

EDGAR BERNER was appointed as a non-executive Director on September 1,
1998. Mr Berner is a private investor and consultant to emerging companies. He
is presently Vice President and on the Board of Directors of RealAge, Inc., a
privately held internet health information company and also serves on the
Board of Directors of Hot Topic, Inc., (NASDAQ), a teen oriented retail chain
of stores and Garden Fresh, Inc., (NASDAQ), a national soup and salad buffet
restaurant chain.

GORDON HOWLETT has served as a non-executive Director since August 1991.
Mr. Howlett is the Chief Executive Officer of Thorn Asia Pacific and a non-
executive Director of Arthur Yates & Co. Limited, Kennards Hire Pty Limited
and George Norman & Co. Pty Limited. Mr Howlett's previous business experience
was as Executive General Manager-Operations Qantas Airways from 1994 to 1997
and Managing Director of Avis Australia and Vice President of Avis throughout
Asia Pacific, from 1981 to 1994.

DAVID GLASER has served as Company Secretary since March 1994. Mr. Glaser
has also provided retail management accounting services for our retail
subsidiary from February 1996 to April 1998 and, from July 1988 to January
1996, was the financial administrator to certain of our other subsidiaries.
Prior to joining us, Mr. Glaser was a partner at Arthur Andersen in South
Africa. Mr. Glaser has extensive commercial experience in retail,
manufacturing and service industries, both locally and overseas.

DAVID JAMES joined us in January 1992, serving in several group financial
roles and ultimately as General Manager-Finance & Administration until his
departure in September 1996. From September 1996 to July 1997, Mr. James was
employed as Finance Director by HMV Australia Pty Limited, a subsidiary of
EMI plc. He rejoined us in July 1997 as Chief Financial Officer. Prior to
1992, Mr. James served as a Senior Audit Manager for KPMG in Australia.

KEVIN RALPHS has served as Chief Financial Officer of Galore USA since
February 1989. From May 1988 to February 1989, Mr. Ralphs served as Controller
of Galore USA. Mr. Ralphs has also served as controller for American Digital
Products, Inc., a distributor of computer peripherals in the Northeast United
States, treasurer for Hosken Intermediaries, Inc., a reinsurance brokerage
firm, and financial manager for Royal Beech-Nut (Pty) Limited, a foreign
subsidiary of Nabisco.

PETER SPRING joined us in 1977, serving in our warehouse and distribution
operations and was appointed Chief Operating Officer-Australia in May 1999,
having earlier served as General Manager of Retail/Licensees for Barbeques
Galore (Aust) Pty Limited since October 1995. Prior thereto, Mr. Spring served
as General Manager of Operations for Pricotech.

BENJAMIN RAMSEY joined us in March 1993 and held several management
positions within Galore USA until August 1999 when he was appointed Executive
Vice President. Mr Ramsey previously spent 10 years associated with 7-Eleven
Food Stores/Southland Corporation in managerial positions and was subsequently
a franchise holder for a further four years.

MONIQUE COLLISTER joined us in April 1997 as the Training and Development
Manager for the Retail Division. Since March 1999, Ms. Collister has served as
the Group Organizational Development Manager for both the USA and Australian
operations and has a mandate to ensure the development of employees at all
levels

of the organization. Ms. Collister emigrated to Australia in 1996 and prior to
joining us, served as a Training and Development Specialist for Honeywell
Australasia. Ms. Collister has had extensive overseas experience in personnel
training with Walmart Candada, Pitney Bowes and Kinney Canada.

JEFFREY FISHER joined us in 1993 as Retail Development Manager of
Retail/Licensees for Barbeques Galore (Aust) Pty Limited, our retail/licensee
operating subsidiary. Prior thereto, Mr Fisher served for five years as Retail
Development Manager for John Danks & Son and also held various retail
management positions with the Coles Myer group of companies.

GARY HEADING joined us in 1983 and served as National Operations Manager of
Retail/Licensees since 1996 before his appointment in May 1999, to the
position of General Manager of Retail/Licensees for Barbeques Galore (Aust)
Pty Limited.

JOEL KAHAN joined us in June 1990 as Head of Information Technology and has
been responsible for all aspects of our information technology infrastructure
consisting of the Head Office systems and applications as well as our POS
system. Prior to joining us, Mr. Kahan served in technical roles at Computer
Sciences Corp. and Sperry Univac and was also a Project Manager in a Software
House and Data Processing Manager for an automotive component manufacturing
company.

KEVIN MELTZER joined us in May 1999 and served as Operations Manager at
Park-Tec Engineering Pty Limited and Australian Enamellers Pty Limited until
September 2000 when he was appointed to the position of General Manager,
Manufacturing. Prior to joining us, Mr. Meltzer worked at Cape Gate Fence and
Wire Works Pty Limited in South Africa, from 1989 to 1999, as Industrial
Engineer, Production Planner, Sales and Export Manager and Production Manager.

IAN REDMILE joined us in August 1992 as a State Manager for an Australian
state and has served as General Manager of Pricotech, our wholesaling
subsidiary, since February 1997. Prior to joining us, Mr. Redmile served as
Key Account/Sales Manager for Unilever Australia for 12 years.

TODD BUDDE joined us in January 1998 as Business Process and Information
Systems Manager. Prior to joining us, Mr. Budde served as Information Systems
Manager with The Toro Company which has more than 4,700 employees world-wide
and is a leading provider of outdoor maintenance and beautification products
for home, recreation and commercial landscapes. Mr. Budde also has over 15
years of experience in various Information System Management roles with
Toshiba America, Medtronic and Western Dental and Proton.

MICHAEL VARLEY joined us in January 1982 and served in a variety of sales-
and buying-related positions, until May 1989 when he was appointed Vice
President of Operations and Purchasing. Mr. Varley has served as Vice
President of Purchasing, Distribution and Product Development since May 1994.
From 1978 to 1981, Mr. Varley served as manufacturing/production manager for
Mistral Fans, Inc., a manufacturing company, in both the United States and
Australia. Prior to that, Mr. Varley worked as a product engineer and
technical salesperson for several companies in the United Kingdom, South
Africa and Australia.

B. COMPENSATION OF DIRECTORS AND OFFICERS

The aggregate annual compensation, including bonuses under the incentive
program described below, paid by us to all our directors and senior management
as a group for services for the fiscal year ended January 31, 2001 (11
persons) was A$2,915,188. However, this aggregate compensation amount does not
include any stock options granted to such individuals as more fully described
below in the section titled "Item 6. Directors and Senior Management-E. Share
Ownership for Directors and Senior Management-Options to Purchase Securities
from Registrant or Subsidiaries."

The total amount set aside by us and our subsidiaries to provide
superannuation benefits for directors and senior management for the fiscal
year ended January 31, 2001 was A$205,745.

On February 1, 2000, we continued with an incentive program whereby certain
executives would receive a bonus if certain budget objectives were attained
during fiscal year 2001. Under this program, Mr. Linz, Mr. Gavshon, Mr. Price,
and Mr. James would each receive a bonus of 20% and Mr. Selati, Mr. Spring,
Mr. Redmile and Mr. Whitehouse would each receive a bonus of 10%, of their
respective base salaries, if we achieved our budgeted pre-tax profit before
trading contingencies for the fiscal year ending January 31, 2001. Mr. Selati,
Mr. Spring and Mr. Redmile would each receive an additional bonus of 10% of
his base salary if his division achieved its budgeted operating contribution,
regardless of whether or not our budget was achieved. Additionally, Mr.
Whitehouse would receive a bonus of 10% of his base salary if our inventory
level budget for fiscal 2001 was attained.

C. BOARD COMPOSITION AND COMMITTEES

At least one-third of our Board of Directors is elected at each annual
meeting of shareholders. No director may serve for a period in excess of three
years without submitting himself for re-election. The Board of Directors has a
Compensation Committee comprised of Messrs. Berner and Howlett that reviews
and makes recommendations for remuneration packages for executive directors
and senior executives, and an Audit Committee presently comprised of Messrs.
Howlett (Chairman), Berner and Gavshon that advises on the establishment and
maintenance of internal controls and ethical standards, the quality and
reliability of financial information and information provided by our
independent auditors.

D. EMPLOYEES

As of January 31, 2001, we employed a total of 1,345 persons, on a
permanent, part-time or temporary basis. The number of temporary employees
fluctuates depending on seasonal needs. None of our employees is covered by a
collective bargaining agreement and to our knowledge, none of our employees
belongs to a labor union. We consider our relations with employees to be good
and believe that our employee turnover rate is low.

E. SHARE OWNERSHIP FOR DIRECTORS AND SENIOR MANAGEMENT

The following table provides certain information with respect to the
beneficial ownership of our Ordinary Shares, including Ordinary Shares held
directly or in the form of ADSs and share options granted as of April 10,
2001, based on an aggregate of 4,744,690 Ordinary Shares outstanding as of
such date, for each of our directors and all of our directors and senior
management as a group as of such date.

Ordinary Shares (/1/)
Beneficially Owned (/2/)
-------------------------
Directors Number %
--------- -------------- ----------

Sam Linz (/3/)................................. 1,369,289 28.86
Robert Gavshon................................. 289,349 6.10
John Price..................................... 73,830 1.56
Sydney Selati.................................. 179,933 3.79
Edgar Berner................................... 3,000 *
Gordon Howlett................................. 8,000 *
David Glaser (/4/)............................. * *
David James (/4/).............................. * *
Kevin Ralphs (/4/)............................. * *
Benjamin Ramsey (/4/).......................... * *
Peter Spring (/4/)............................. * *
All directors and senior management as a group
(11 persons).................................. 1,945,764 41.01

- --------
* Less than 1% of our outstanding shares.

(/1/)The number of Ordinary Shares listed in this table includes Ordinary
Shares held directly or in the form of ADSs and share options granted.

(/2/)Applicable percentage of ownership for each shareholder is based on
4,541,652 Ordinary Shares outstanding as of April 10, 2001, together with
applicable options for such shareholders. Includes 203,038 Ordinary
Shares issuable upon the exercise of stock options granted under the
Executive Share Option Plan (the "Executive Plan") but excludes 161,091
Ordinary Shares issuable upon the exercise of stock options granted under
the 1997 Share Option Plan (the "1997 Plan"). There are an additional
103,289 authorized and unissued Ordinary Shares reserved for the grant of
stock options under the 1997 Plan. Ordinary Shares subject to options
exercisable within sixty (60) days of April 10, 2001 are deemed
outstanding for computing the percentage of the person holding such
options but are not deemed outstanding for computing the percentage of
any other person. Beneficial ownership is determined in accordance with
the rules of the SEC and includes voting and investment power with
respect to Ordinary Shares. Unless otherwise indicated, the persons named
in the table have sole voting and investment control with respect to all
Ordinary Shares shown as beneficially owned by them.

(/3/)Includes 162,205 Ordinary Shares held by Rebel Concepts Pty Limited, a
company in which Mr. Linz owns a 72.5% interest, with Mr. Robert Gavshon
and Mr. John Price, (or companies associated with them), each a director
of Barbeques Galore Limited, owning the remaining 22.5% and 5.0%
respectively, 167,402 Ordinary Shares held by Geblon Pty Limited, a
company in which Mr. Linz and Mr. Gavshon each have a 50% ownership
interest, with Mr. Linz retaining voting control of the company and 9,548
Ordinary Shares registered in the name of ANZ Nominees Limited.

(/4/)Beneficially owns less than 1% of our outstanding shares.

Share Options for Directors

The following table contains information pertaining to share options held
by directors as of April 10, 2001:

Number of Ordinary Per Share Exercise Price
Shares Issuable on in US$
Exercise of Option (except where indicated) Exercisable Period
------------------ ------------------------ ------------------

Sam Linz................ 65,850 A$8.38 February 1, 1999 to February 1, 2002
15,000 $5.20 November 9, 2001 to October 9, 2003
20,200 $6.38 January 7, 2003 to December 7, 2004
Robert Gavshon.......... 65,850 A$8.38 February 1, 1999 to February 1, 2002
15,000 $5.20 November 9, 2001 to October 9, 2003
20,200 $6.38 January 7, 2003 to December 7, 2004
John Price.............. 21,950 A$8.38 February 1, 1999 to February 1, 2002
3,750 $5.20 November 9, 2001 to October 9, 2003
6,425 $6.38 January 7, 2003 to December 7, 2004
Sydney Selati........... 32,925 A$8.38 February 1, 1999 to February 1, 2002
7,500 $5.20 November 9, 2001 to October 9, 2003
10,100 $6.38 January 7, 2003 to December 7, 2004
Edgar Berner............ 22,056 $6.38 January 7, 2003 to December 7, 2004
Gordon Howlett.......... 2,500 $5.20 November 9, 2001 to October 9, 2003
625 $6.38 January 7, 2003 to December 7, 2004

Options to Purchase Securities from Registrant or Subsidiaries

As of April 10, 2001 there were outstanding options to purchase a total of
565,254 Ordinary Shares granted by us, of which 389,129 were held by our
directors and senior management. These outstanding options were granted under
both our Executive Plan and 1997 Plan. There were no other warrants or rights
to purchase our Ordinary Shares outstanding as of April 10, 2001. The
following table sets forth information concerning outstanding options as of
April 10, 2001:

Price
Number Of Per
Ordinary Shares Ordinary Option
Under Option Share Expiration Date
--------------- -------- ----------------

Executive Plan (/1/)................ 203,038 A$8.38 February 1, 2002
1997 Plan (/2/)..................... 203,950 US$5.20 November 8, 2003
1997 Plan (/2/)..................... 158,266 US$6.38 January 6, 2005
Directors and senior management as a
group (/3/)........................ 389,129 -- --

- --------
(/1/)Options under the Executive Plan will generally expire on the earlier of
the Expiration Date or thirty days after the cessation of employment of
the optionee (or the executive controlling the optionee, if the optionee
is an entity (an "Entity Optionee")). For more information, see the
"Executive Share Option Plan" description below.

(/2/)Options under the 1997 Plan will generally expire on the earlier of the
Expiration Date or three months after the cessation of employment of the
optionee. For more information, see the "1997 Share Option Plan"
description below.

(/3/)Directors and senior management as a group received options under both
our Executive Plan and 1997 Plan. For more information on these plans,
see the "Executive Share Option Plan" and the "1997 Share Option Plan"
descriptions below.

Executive Share Option Plan

On January 31, 1997, we adopted the Executive Plan, pursuant to which, a
total of 203,038 Ordinary Shares were reserved for issuance. On January 31,
1997, the Board granted stock options comprising the entire share reserve
under the Executive Plan. Each such stock option has an exercise price of
A$8.38 per Ordinary Share. The Executive Plan terminated on December 31, 1997.
Accordingly, no additional stock options will be granted under the Executive
Plan. However, all options granted prior to the termination date of the
Executive Plan are subject to the terms and conditions of the documents
evidencing each such option.

All stock options granted under the Executive Plan became exercisable on
February 1, 1999. The stock options will generally lapse 30 days after the
cessation of the employment of the optionee (or the executive controlling the
optionee, if the optionee is an Entity Optionee, whether or not exercisable.
In addition, the stock options will automatically lapse (i) if the optionee or
Entity Optionee transfers, assigns, or encumbers any right or interest in the
options without our consent (except for a one-time exemption for a transfer by
a director or Entity Optionee controlled by a director to an employee of
Barbeques Galore Limited or our related entities) or (ii) for Entity
Optionees, if the Entity Optionee ceases to be controlled by the employee or
director of Barbeques Galore Limited who controlled the Entity Optionee on the
date of grant. Each stock option will terminate five years after the grant
date (the "Expiration Date"), if such options do not lapse or are not
exercised prior to the Expiration Date.

The stock options will automatically accelerate and become immediately
exercisable, for the 30 days prior to their lapse, in the event the optionee
(or executive controlling the Entity Optionee) ceases to be employed by us or
a related entity due to death, permanent disability or ill health. In
addition, the Board of Directors, in its sole discretion, may accelerate any
outstanding stock option or extend the period until lapse, even if expired
(but in no event to a date later than the Expiration Date), upon any other
event terminating the employment of the optionee or the executive controlling
the Entity Optionee. In the event we are subject to a takeover bid pursuant to
which the offeror acquires at least 30% of our outstanding Ordinary Shares,
the Board of Directors may accelerate stock options outstanding at that time
for a period of up to 120 days measured from the date the Board of Directors
notifies the optionee of the takeover bid. Any stock option exercised under
the Executive Plan must be for a minimum of 20% of the stock options included
in the relevant grant.

In the event of changes to our capital structure, appropriate adjustments
will be made to the stock option exercise price and the number of shares
subject to each outstanding stock option.

1997 Share Option Plan

Our 1997 Plan was adopted by the Board of Directors on October 1, 1997, and
approved by shareholders as of October 7, 1997. As of January 31, 2001, a
total of 465,505 Ordinary Shares have been authorized for issuance under the
1997 Plan. The number of Ordinary Shares reserved for issuance under the 1997
Plan will automatically increase on the first trading day of each calendar
year, beginning with the 1999 calendar year, during the term of the 1997 Plan
by an amount equal to one percent (1%) of the Ordinary Shares outstanding on
December 31 of the immediately preceding calendar year. In no event may any
one participant in the 1997 Plan receive stock option grants for more than
27,438 Ordinary Shares per calendar year.

The 1997 Plan consists of the Option Grant Program, under which eligible
individuals in our employ or service (including our officers and other
employees, non-employee Board members, consultants and other independent
advisors, or any parent or subsidiary) may, at the discretion of the Plan
Administrator, be granted stock options to purchase Ordinary Shares at an
exercise price not less than eighty-five percent (85%) of their fair market
value on the option grant date.

The 1997 Plan is administered by the Compensation Committee. The Plan
Administrator has complete discretion, within the scope of its administrative
jurisdiction under the 1997 Plan, to determine which eligible individuals are
to receive stock option grants, the time or times when such grants are to be
made, the number of shares subject to each such grant, the exercise and
vesting schedule to be in effect for the grant, the maximum term for which any
granted stock option is to remain outstanding and the status of any granted
stock option as either an incentive stock option or a non- statutory stock
option under the U.S. Federal tax laws.

Options granted under the 1997 Plan will generally become exercisable in
three equal annual instalments measured from the option grant date. The
exercise price for options granted under the 1997 Plan may be paid in cash or
in Ordinary Shares valued at fair market value on the exercise date. We are in
the process of establishing a procedure pursuant to which options under the
1997 Plan may be exercised through a same-day sale program without any cash
outlay by the optionee. In addition, the Plan Administrator may provide
financial assistance to one or more optionees in the exercise of their
outstanding stock options by allowing such individuals to deliver a full-
recourse, interest-bearing promissory note in payment of the exercise price
and any associated withholding taxes incurred in connection with such
exercise.

In the event we are acquired by merger or asset sale, each outstanding
stock option under the 1997 Plan will immediately accelerate and become fully
exercisable for all of the shares subject to such outstanding options, unless
such stock options are to be assumed or replaced by the successor corporation
(or parent thereof). Any stock options that do not automatically accelerate
upon the occurrence of a merger or asset sale, will immediately accelerate,
and such repurchase rights will accordingly lapse, upon the involuntary
termination of the optionee within 18 months after the effective date of the
merger or asset sale. Stock options accelerated in connection with such
involuntary termination will be exercisable as fully-vested shares until the
earlier of (i) the expiration of the stock option term or (ii) a one (1)-year
period measured from the effective date of the involuntary termination.

The Plan Administrator has the authority to effect, with the consent of the
affected option holders, the cancellation of outstanding stock options under
the 1997 Plan in return for the grant of new stock options for the same or a
different number of shares with an exercise price per share based upon the
fair market value of the Ordinary Shares on the new grant date.

The Board of Directors pursuant to a meeting on September 1, 1998, granted
options to a Director to purchase up to an aggregate of 17,646 Ordinary Shares
at a price of US$8.50 per Ordinary Share under the 1997 Plan, exercisable in
three equal instalments on September 1, 2001, September 1, 2002 and August 1,
2003. These

options were subsequently cancelled pursuant to a circulating resolution of
directors on January 10, 2000 and replaced with options granted to the same
Director, to purchase up to an aggregate of 17,646 Ordinary Shares at a price
of US$6.38 per Ordinary Share under the 1997 Plan, exercisable in three equal
instalments on January 7, 2003, January 7, 2004 and December 7, 2004.

As a result of decreases in the market price of our Ordinary Shares during
the latter part of 1998, the exercise price of those options granted
concurrently with the Offering at US$11.00 per Ordinary Share, was
significantly higher than the market price. Consequently and in order to
provide all employees with the continuing opportunity to acquire our Ordinary
Shares at an attractive purchase price, the Board of Directors at a meeting on
November 9, 1998, resolved to implement a special option cancellation/re-grant
program. Under that program, each option outstanding on that date with an
exercise price of US$11.00 per Ordinary Share (an "Old Option") was cancelled
and simultaneously, a new option for the identical number of shares but with
an exercise price of US$5.20 per Ordinary Share (a "New Option"), was granted
in replacement thereof. The New Options are exercisable in three equal
instalments on November 9, 2001, November 9, 2002 and October 9, 2003. All
other terms and conditions of the New Options are substantially the same as
the Old Options. In the aggregate, Old Options to purchase 177,200 Ordinary
Shares were cancelled and re-granted under the program. During the fiscal year
ended January 31, 2001, a total of 12,900 New Options were forfeited.

In addition to the cancellation and re-grant program on November 9, 1998,
the Board of Directors granted further options to directors, a member of
senior management and employees to purchase up to an aggregate of 48,250
Ordinary Shares at a price of US$5.20 per Ordinary Share under the 1997 Plan
and exercisable on the same dates as above.

Pursuant to the aforementioned circulating resolution of directors, further
options were granted to directors, senior management and employees to purchase
up to an aggregate of 143,820 Ordinary Shares at a price of US$6.38 per
Ordinary Share under the 1997 Plan and exercisable in three equal instalments
on January 7, 2003, January 7, 2004 and December 7, 2004.

The Board may amend or modify the 1997 Plan at any time. However, no such
amendment or modification shall adversely affect the rights of any optionee
without his or her consent. The 1997 Plan will terminate on October 1, 2007,
unless sooner terminated by the Board.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table sets forth certain information with respect to each
person or group of affiliated persons who is known by us to beneficially own
5% or more of our Ordinary Shares including Ordinary Shares held directly or
in the form of ADSs and share options granted as of April 10, 2001, based on
an aggregate of 4,744,690 Ordinary Shares outstanding as of such date:

Ordinary Shares (/1/)
Beneficially Owned (/2/)
-------------------------
Name of beneficial holder Number %
------------------------- -------------- ----------

Sam Linz (/3/)................................... 1,369,289 28.86
FMR Co. ......................................... 513,500 10.82
Robert Gavshon................................... 289,349 6.10

- --------
(/1/)The number of Ordinary Shares listed in this table includes Ordinary
Shares held directly or in the form of ADSs and share options granted.

"1997 Plan"). There are an additional 103,289 authorized and unissued
Ordinary Shares reserved for the grant of stock options under the 1997
Plan. Ordinary Shares subject to options exercisable within sixty (60) days
of April 10, 2001 are deemed outstanding for computing the percentage of
the person holding such options but are not deemed outstanding for
computing the percentage of any other person. Beneficial ownership is
determined in accordance with the rules of the SEC and includes voting and
investment power with respect to Ordinary Shares. Unless otherwise
indicated, the persons named in the table have sole voting and investment
control with respect to all Ordinary Shares shown as beneficially owned by
them.

We are not, to our knowledge, directly owned or controlled by any other
corporation or foreign government and are not aware of any voting arrangements
which may, at any subsequent date, result in a change of control.

B. RELATED PARTY TRANSACTIONS

Company Policy Concerning Transactions with Affiliates

Under the Australian Corporations Law, directors are prohibited from
entering into transactions with us that confer a benefit on any director if
the transaction is not on "arms-length" commercial terms, except where limited
exemptions apply or detailed approval procedures are first observed. We have
adopted a more stringent policy based on the Australian Corporations Law that
requires all transactions with directors, senior management and other
affiliates be on terms that are believed to be at least as favorable to us as
could be obtained from unaffiliated third parties and that such transactions
must be approved by a majority of our disinterested directors.

We believe that the following transactions with directors, senior
management and other affiliates were completed on terms as favorable to us as
could have been obtained from unaffiliated third parties.

Transactions with Affiliates

We hold a one-third ownership interest in Bromic which supplies gas valves
and related products to us. Bromic receives approximately 14% of its revenues
from sales to us and we are Bromic's second largest customer. During the year
ended January 31, 2001, we purchased approximately A$2.8 million of products
from Bromic. Subsequent to January 31, 2001, we invested A$2.0 million for a
one-third equity interest in Renegade Gas Pty Limited ("Renegade"), an
Australian company which operates as an industrial and domestic gas
distributor. Renegade and Bromic (which commenced operations in the U.S.A
during 2000), have common shareholders.

In addition, we hold a 50% equity interest in GLG which supplies us with
grills, burners and other products. GLG receives approximately 90% of its
revenues from sales to us and we are GLG's largest customer. During the year
ended January 31, 2001, we purchased approximately A$12.4 million of products
from GLG.

Transactions Involving Principal Shareholders

Messrs. Linz, Gavshon, Selati and Price beneficially own 28.9%, 6.1%, 3.8%
and 1.6%, respectively, of our outstanding Ordinary Shares. Accordingly, these
individuals may exert substantial influence over our business and affairs,
including the election of our directors and the outcome of corporate actions
requiring shareholder approval.

From time to time in the past, Messrs. Linz, Gavshon and Selati and certain
members of their respective families have advanced funds, repayable on demand
to us, to be used for general corporate purposes. Through these advances, we
have been able to obtain funds at relatively attractive short-term borrowing
rates of approximately 2% per annum below the overdraft rate charged to us by
our bankers. Prior to the Offering, we

had repaid all amounts owing on such advances and terminated these borrowing
arrangements. We have reinstated similar arrangements which the Board of
Directors has determined are in our best interests.

We lease cars for the use of Messrs. Linz, Gavshon, Price and Selati, at a
rate of approximately A$3,795, A$3,885, A$1,977 and US$1,531, respectively,
per month per car.

We pay the premiums on a disability insurance policy naming Mr. Selati as
the insured. If benefits were paid to Mr. Selati under this policy, he would
receive approximately US$7,900 per month until he reaches age 65.

Mr. Linz's sister, together with her husband in one instance and her
husband and son in three other instances, owns four entities ("Related
Franchisors"), each of which operates one franchised Barbeques Galore store in
Orange County, California. The Related Franchisors' franchise agreements
provide the Related Franchisors with the exclusive right to open, upon our
approval, additional Barbeques Galore stores within a specified territory in
Orange County.

Pursuant to his appointment as a non-executive Director on September 1,
1998, options to purchase up to an aggregate of 17,646 Ordinary Shares at a
price of US$8.50 per Ordinary Share were granted by us to Mr. Edgar Berner
under the 1997 Plan, exercisable in three equal instalments on September 1,
2001, September 1, 2002 and August 1, 2003. These options were subsequently
cancelled pursuant to a circulating resolution of directors on January 10,
2000 and replaced with options to the same Director, to purchase up to an
aggregate of 17,646 Ordinary Shares at a price of US$6.38 per Ordinary Share
under the 1997 Plan, exercisable in three equal instalments on January 7,
2003, January 7, 2004 and December 7, 2004. See "Item 6. Directors, Senior
Management and Employees-E. Share Ownership for Directors and Senior
Management-1997 Share Option Plan".

Pursuant to the cancellation and regrant program on November 9, 1998,
options to purchase up to an aggregate of 46,250 Ordinary Shares at a price of
US$5.20 per Ordinary Share were granted by us to Directors and a member of
senior management under the 1997 Plan, exercisable in three equal instalments
on November 9, 2001, November 9, 2002 and October 9, 2003. Mr. Sam Linz and
Mr. Robert Gavshon each received a grant of 15,000 Ordinary Shares, Mr. Sydney
Selati received a grant of 7,500 Ordinary Shares, Mr. John Price received a
grant of 3,750 Ordinary Shares and Mr. Gordon Howlett and Mr. David James each
received a grant of 2,500 Ordinary Shares. Pursuant to the aforementioned
circulating resolution of directors, options to purchase up to an aggregate of
75,195 Ordinary Shares at a price of US$6.38 per Ordinary Share were granted
to Directors and Senior Management under the 1997 Plan, exercisable in three
equal instalments on January 7, 2003, January 7, 2004 and December 7, 2004.
Mr. Sam Linz and Mr. Robert Gavshon each received a grant of 20,200 Ordinary
Shares, Mr. Sydney Selati received a grant of 10,100 Ordinary Shares, Mr. John
Price received a grant of 6,425 Ordinary Shares, Mr. David James received a
grant of 5,300 Ordinary Shares, Mr. Edgar Berner received a grant of 4,410
Ordinary Shares, Mr. Benjamin Ramsey received a grant of 4,000 Ordinary
Shares, Mr. Kevin Ralphs received a grant of 3,185 Ordinary Shares, Mr. David
Glaser received a grant of 750 Ordinary Shares and Mr. Gordon Howlett received
a grant of 625 Ordinary Shares. See "Item 6. Directors, Senior Management and
Employees-E. Share Ownership for Directors and Senior Management-1997 Share
Option Plan".

Certain of our directors were also granted options to purchase up to an
aggregate of 203,038 Ordinary Shares at a price of A$8.38 per Ordinary Share.
See "Item 6. Directors, Senior Management and Employees-E. Share Ownership for
Directors and Senior Management."

C. INTEREST OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Please see Item 18 for a list of the financial statements filed as part of
this Annual Report.

Dividend Policy

We do not anticipate paying any regular dividends on the Ordinary Shares or
ADSs in the foreseeable future. In addition, we are subject to restrictions on
the declaration or payment of dividends under the ANZ Facility as well as the
Merrill Lynch Facility as defined. See "Item 5. Operating and Financial Review
and Prospects-B. Liquidity and Capital Resources."

Legal Proceedings

There are no material pending legal proceedings against us. We are involved
in various claims and legal actions arising in the ordinary course of
business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on our business, results of
operations or financial condition.

B. SIGNIFICANT CHANGES

There have been no significant subsequent events following the close of the
last financial year up to the date of this Annual Report that are known to us
and require disclosure in this Annual Report and for which disclosure was not
made in this Annual Report.

ITEM 9. THE OFFER AND LISTING

Price Range of our ADSs on the Nasdaq Stock Market(R) ("Nasdaq")

Effective October 11, 1999 our Ordinary Shares were traded on Nasdaq under
the symbol BBQZ, as represented by ADSs, pursuant to changes to Nasdaq
requirements, in terms of which we were no longer required to add the letter
"Y" to the end of our Nasdaq ticker symbol. The ADSs are represented by
American Depositary Receipts ("ADRs") issued by Morgan Guaranty Trust Company
of New York as Depositary. Each ADS represents one Ordinary Share.

From April 1987 through December 1996, we listed our Ordinary Shares for
trading on the ASE. In December 1996, we voluntarily delisted from the ASE and
since such time, there has been no established foreign public market for the
Ordinary Shares or ADSs.

The following table sets forth the range of high and low closing sale
prices of the ADSs on Nasdaq for the fiscal periods indicated:

Price Per ADS
on Nasdaq
----------------
High Low
-------- -------

(a) Annual high and low market prices
February 1, 1998 to January 31, 1999..................... US$11.00 US$2.63
February 1, 1999 to January 31, 2000..................... 9.75 2.50
February 1, 2000 to January 31, 2001..................... 11.50 3.00
(b) Quarterly high and low market prices
Fiscal Year ended January 31, 2000
First Quarter.......................................... US$ 7.81 US$5.69
Second Quarter......................................... 8.38 6.25
Third Quarter.......................................... 7.50 5.94
Fourth Quarter......................................... 9.75 2.50
Fiscal Year ended January 31, 2001
First Quarter.......................................... US$11.50 US$7.75
Second Quarter......................................... 9.31 8.06
Third Quarter.......................................... 8.88 5.94
Fourth Quarter......................................... 6.06 3.00
(c) Monthly high and low market prices
October 2000............................................. US$ 7.44 US$5.94
November 2000............................................ 6.06 4.94
December 2000............................................ 5.00 3.00
January 2001............................................. 4.63 3.88
February 2001............................................ 4.38 4.00
March 2001............................................... 4.38 2.50

As of April 10, 2001, there were 15 holders of record of ADSs and 28
additional holders of record of our Ordinary Shares. Of the Ordinary Shares,
to our knowledge, six holders of record reside in the United States. We are
unable to determine how many holders of record of ADSs reside in the United
States.

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

Previously filed in our Registration Statement on Form F-1 (Registration
No. 333-56805), filed with the Commission on June 12, 1998 and incorporated by
reference herein.

C. MATERIAL CONTRACTS

Not applicable.

D. EXCHANGE CONTROL

Restrictions on Foreign Ownership; Antitakeover Restrictions

Under Australian law, foreign persons are prohibited from acquiring more
than a limited percentage of the shares in an Australian company without
approval from the Australian Treasurer or in certain other limited
circumstances. These limitations are set forth in the Australian Foreign
Acquisitions and Takeovers Act (the "Takeovers Act"). Under the Takeovers Act,
as currently in effect, any foreign person, together with associates, is
prohibited from acquiring 15% or more of our outstanding shares (or else the
Treasurer may make an order requiring the acquiror to dispose of those shares
within a specified period of time). In addition, if a foreign person acquires
our shares and as a result the total holdings of all foreign persons and their
associates exceeds 40% in the aggregate without the approval of the Australian
Treasurer, then the Treasurer may make an order requiring the acquiror to
dispose of those shares within a specified time if the Treasurer finds that
the acquisition is contrary to the national interest. The same rule applies if
the total holdings of all foreign persons and their associates already exceeds
40% and a foreign person (or our associate) acquires any further shares,
including in the course of trading, in the secondary market of the ADSs. In
addition, if the level of foreign ownership exceeds 40% at any time, we would
be considered a foreign person under the Takeovers Act. In such event, we
would be required to obtain the approval of the Treasurer for us, together
with our associates, to acquire (i) more than 15% of an Australian company or
business with assets totalling over A$50 million or (ii) any direct or
indirect ownership interest in Australian urban real estate. In addition, the
percentage of foreign ownership of Barbeques Galore would also be included in
determining the foreign ownership of any Australian company or business in
which we may choose to invest. Since we have no current plans for any such
acquisitions and only own commercial property, any such approvals that we may
be required to obtain as a foreign person under the Takeovers Act will not
affect our current or future ownership or lease of property in Australia.
However, there would be no material tax consequence to our shareholders
(including holders of ADSs) resulting from our being deemed a foreign person
under the Takeovers Act. If all of the ADSs are owned by foreign persons or
their associates then the level of foreign ownership of our equity securities
will be approximately 67.2%. The level of foreign ownership could also
increase in the future if existing Australian investors decide to sell their
shares into the U.S. market or if we were to sell additional Ordinary Shares
or ADSs in the future.

We have additionally provided that all stock options outstanding under our
Executive Plan at such time as we become subject to a takeover bid pursuant to
which the offeror acquires at least thirty percent (30%) of our outstanding
Ordinary Shares shall become immediately exercisable for a period of up to 120
days, measured from the date the Board of Directors notifies the optionee of
the takeover bid. Similarly, we have provided that all stock options
outstanding under our 1997 Plan at such time as we are acquired by merger or
asset sale pursuant to which such stock options are not assumed or replaced by
the successor corporation shall become immediately exercisable for a period of
one (1) year (or until the expiration of the stock option term, if earlier).
There are 203,038 Ordinary Shares underlying stock options outstanding
pursuant to the Executive Plan which became exercisable on February 1, 1999
and 362,216 Ordinary Shares underlying stock options granted under our 1997
Plan, which, barring acceleration, will become exercisable as to 203,950 in
three equal instalments on November 9, 2001, November 9, 2002 and October 9,
2003 and as to 158,266 in three equal instalments on January 7, 2003, January
7, 2004 and December 7, 2004 according to the terms of the 1997 Plan. Such
investment restrictions and dilutive acceleration events discussed above could
have a material adverse effect on our ability to raise capital as needed and
could make more difficult or render impossible, attempts by certain entities
(especially foreign entities, in the case of the Takeovers Act), to acquire
us, including attempts that might result in a premium over market price to
holders of ADSs. See "Item 6. Directors, Senior Management and Employees-E.
Share Ownership for Directors and Senior Management-Executive Share Option
Plan" and "-1997 Share Option Plan".

Our Constitution contains certain provisions that could impede any merger,
consolidation, takeover or other business combination involving us or
discourage a potential acquiror from making a tender offer or otherwise
attempting to obtain control of us. Provisions contained in the Constitution ,
among other things:

. in effect divide the Board of Directors into three classes, which serve
for staggered three-year terms;

. provide that the shareholders may amend or repeal special resolutions,
including changes to the Constitution and extraordinary transactions,
only by a vote of at least 75% of the votes cast at a meeting at which a
quorum is present;

. require extended notice (of up to 28 days) for special resolutions
considered by the Board of Directors; and

. authorize the Board of Directors, without any vote or action by our
shareholders, to issue, out of our authorized and unissued capital
shares, shares in different classes, or with special, preferred or
deferred rights, which may relate to voting, dividend, return of capital
or any other matter.

Although we currently have no plans to issue any preferred shares, the
rights of the holders of Ordinary Shares or ADSs will be subject to, and may
be adversely affected by, the rights of the holders of any preferred or senior
shares that may be issued in the future. The issuance of any preferred or
senior shares, and the other provisions of the Constitution referred to above,
could have the effect of making it more difficult for a third-party to acquire
control of us.

In certain circumstances, non-residents of Australia may be subject to
Australian tax on capital gains made on the disposal of Ordinary Shares or
ADSs. The rate of Australian tax on capital gains realized by non-residents of
Australia is 34% for companies for the 2001 income year (for most taxpayers,
the year ending June 30, 2001) and 30% thereafter. For individuals, the rate
of tax increases from 29% to a maximum of 47%. However, if the Ordinary Shares
or ADSs are held for 12 months or more, an individual should be entitled to an
exemption of 50% of the otherwise taxable capital gain. These circumstances
are described in "Item 10. Additional Information-E. Taxation."

E. TAXATION

Dividends. Fully franked dividends (i.e., dividends paid out of the
Company's profits which have been subject to Australian income tax at the
maximum corporate tax rate) which are paid to shareholders who are U.S.
residents will not be subject to Australian income or Australian withholding,
taxes. Unfranked dividends (i.e., dividends that are paid out of profits that
have not been subject to Australian income tax) are subject to Australian
withholding tax when paid to U.S. resident shareholders. In the event the
Company pays partially franked dividends, shareholders will be subject to
withholding tax on the unfranked portion. Pursuant to the bilateral taxation
convention between Australia and the United States (the "Treaty"), the
withholding tax imposed on dividends paid by the Company to a U.S. resident is
limited to 15%.

Dividends which are paid to the Company by a U.S. subsidiary out of the
trading profits of that subsidiary will give rise to a credit in the Company's
"foreign dividend account" ("FDA"). Where the Company has a credit balance in
its FDA and makes a written FDA declaration specifying that all or a portion
of an unfranked dividend to be paid by the Company is an FDA dividend, the
amount so specified will be exempt from Australian withholding tax. The
payment of an FDA dividend gives rise to a debit in the Company's FDA account.
The Australian Federal Government has announced that it intends to extend the
dividend withholding tax exemption to all types of foreign income derived by
an Australian company with effect from July 1, 2002. As part of this
extension, the FDA will be replaced by a "foreign income account" ("FIA").

Sales of ADSs or Ordinary Shares. U.S. residents who do not hold and have
not at any time in the five years preceding the date of disposal held (for
their own account or together with associates) 10% or more of the issued share
capital of a public Australian company are not liable for Australian capital
gains tax on the disposal of shares or ADSs of such company.

U.S. residents are subject to Australian capital gains tax on the disposal
of shares or ADSs of a private Australian company where the disposal
consideration exceeds the cost base unless such a gain is exempt from
Australian tax under the Treaty. The rate of Australian tax on taxable capital
gains realized by U.S. residents is 34% for companies for the 2001 income year
(for most taxpayers, the year ending June 30, 2001) and 30% thereafter. For
individuals, the rate of tax increases from 29% to a maximum of 47%. However,
if the Ordinary Shares or ADSs are held for 12 months or more, an individual
should be entitled to an exemption of 50% of the otherwise taxable capital
gain. U.S. residents who are subject to Australian tax on capital gains made
on the disposal of shares or ADSs are required to file an Australian income
tax return for the year in which the disposal occurs.

A company listed on a stock exchange (a "Listed Company") will be treated
as a private company in respect of a fiscal year for Australian tax purposes
if it is closely held (i.e. at any time during that fiscal year, not less than
75% of the paid up capital of the Company, voting power or dividend rights are
held by 20 or fewer persons), unless the Australian Commissioner of Taxation
(the "Commissioner"), pursuant to the discretion granted to him, rules that
such company will be treated as a public company for such fiscal year. As the
ADSs are listed for quotation on Nasdaq, the Company will be deemed a Listed
Company. The Company currently qualifies as a public Australian company;
however, because the ownership of the Company must be continuously monitored,
there can be no assurance that the Company will not become closely held,
thereby losing its public company status.

Non-residents of Australia who are securities dealers or in whose hands a
profit on disposal of ADSs or Ordinary Shares is regarded as ordinary income
and not as a capital gain (such ADSs and Ordinary Shares are referred to as
"revenue assets") will be subject to Australian income tax on Australian
source profits arising on the disposal of the ADSs or Ordinary Shares, unless
such profits are exempt from Australian tax under the Treaty. Prospective
investors should consult their own tax advisors in determining whether the
ADSs or Ordinary Shares are revenue assets because such a conclusion depends
on the particular facts and circumstances of the individual investor.

Pursuant to the Treaty, capital gains or profits arising on the disposal of
ADSs or Ordinary Shares which constitute "business profits" of an enterprise
carried on by a U.S. resident who does not carry on business in Australia
through a permanent establishment to which such gains or profits are
attributable are exempt from Australian tax. The term "business profits" is
not defined in the Treaty and thus its meaning in the present context is that
which the term has under Australian tax law. The Australian Courts have held
that the term business profits is not confined to profits derived from the
carrying on of a business but must embrace any profit of a business nature or
commercial character. The term "permanent establishment" is defined in the
Treaty to mean a fixed place of business through which an enterprise is
carried on and includes an Australian branch of the U.S. resident and an agent
(other than an agent of independent status) who is authorized to conclude
contracts on behalf of the U.S. resident and habitually exercises that
authority in Australia. Any capital gains or profits derived by a U.S.
resident from the disposal of the ADSs or Ordinary Shares held as revenue
assets (including gains derived by a securities dealer) will constitute
business profits under the Treaty and, thus be exempt from Australian tax,
provided that such holder does not carry on business in Australia through a
permanent establishment to which such gains or profits are attributable.

U.S. residents with no taxable capital gains or income (or deductible
losses) from sources in Australia other than dividends with respect to the
Ordinary Shares or ADSs are not required to file an Australian income tax
return.

Stamp Duty

Under the law as it currently stands, stamp duty is imposed in the
Australian Capital Territory on any transfer of shares in a company
incorporated in the Australian Capital Territory and will be payable on the
transfer of Ordinary Shares in the Company. In the absence of a relevant
exemption, duty will be payable on the transfer of Ordinary Shares in the
Company at the rate of A$0.60 for each A$100.00 of the higher of the
consideration paid or payable to acquire the Ordinary Shares and the
unencumbered value of the Ordinary Shares. This duty is payable by the
transferee.

The current stamp duty legislation in the Australian Capital Territory
imposes stamp duty on a dutiable transaction relating to ADRs, whether or not
that transaction is effected in writing. Dutiable transactions include a
transfer, an agreement for sale or transfer and a declaration of trust. The
term ADR is specifically defined in the legislation and requires the
depositary to hold the underlying Ordinary Shares as trustee for the ADR
holder.

The stamp duty legislation contains a number of exemptions from ad valorem
duty, including an exemption from duty for certain transfers to foreign
residents of ADRs which are listed on a "recognized stock exchange." Nasdaq is
such an exchange. The term "foreign resident" is specifically defined in the
stamp duty legislation. A person is a foreign resident if they are not
resident or domiciled in Australia. A company is a foreign resident if it is
incorporated outside Australia, does not have its central management and
control in Australia, and does not have its voting power controlled by
shareholders resident in Australia.

There are a number of other exemptions from duty on the transfer of
Ordinary Shares or ADRs. The availability of exemptions depends upon the
particular circumstances surrounding each transaction. These include
exemptions relating to deceased estates, transfers between trustees and
beneficiaries, bankrupt estates, divorces, securities lending transactions and
reconstructions of corporate groups. You should consult a legal adviser in
relation to the precise terms and availability of any exemption.

Gift, Estate and Inheritance Taxes

There are no specific gift, estate or inheritance taxes in Australia.
However, the transfer by a U.S. resident of Ordinary Shares or ADSs by way of
gift or upon death, may have Australian income tax and stamp duty
implications.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENTS BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

All documents relating to us which are referred to in this Annual Report
are available at our principal executive and registered offices at 327
Chisholm Road, Auburn, NSW 2144, Australia.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in
interest rates and changes in foreign exchange rates.

Foreign Currency Market Risk

Our functional currency is the Australian dollar although we transact a
portion of our business in foreign currencies and accordingly have foreign
currency exposure through our sales in the United States and purchases from
overseas suppliers in U.S. dollars.

Our Australian operations generally hedge a major portion of our imports
against exchange rate fluctuations with respect to the Australian dollar.
However, in our U.S. operations, we have not, and currently do not, actively
hedge against exchange rate fluctuations, although we may elect to do so in
the future. Accordingly, changes in exchange rates may have a material adverse
effect on our net sales, cost of goods sold, gross margin and net income, any
of which alone or in the aggregate may in turn have a material adverse effect
on our business, operating results and financial condition.

We utilize foreign currency forward contracts as a means of offsetting
fluctuations in the dollar value of foreign currency accounts payable. The
counterparties to the contracts are major financial institutions and the risk
of loss to us in the event of non-performance by a counterparty, is not
significant. There were no foreign currency forward contracts outstanding as
at January 31, 2000 and 2001, respectively.

Interest Rate Risk

Because we have long-term debt under the facilities with ANZ and Merrill
Lynch, we are exposed to changes in interest rates.

The ANZ facility includes bank bills which are generally taken out for
periods varying from approximately 30 to 90 days and rolled over at the end of
their respective terms. Overseas purchases are generally refinanced for
periods varying up to 170 days. As of January 31, 2000 and 2001, the weighted
average interest rates accruing on the bank bills utilized under the ANZ
Facility were as follows:

January 31, January 31, January 31, January 31,
2000 2001 2000 2001
----------- ----------- ------------ ------------
(In A$ thousands) (Interest rate per annum)

Bank bills................. $12,242 $22,006 6.2% 7.2%
Property loans............. 8,450 8,450 6.8% to 7.4% 6.9% to 7.5%

As of January 31, 2001 the Merrill Lynch facility comprises a revolving
line of credit amounting to US$1.0 million. Indebtedness under the revolving
line of credit accrues interest at the 30-day commercial paper rates plus
2.70% and is payable monthly.

Our total long-term debt matures as follows:

Year ending January 31, (In A$ thousands)
----------------------- -----------------

2002.................................................... $ 15
2003.................................................... 30,456
-------
$30,471
=======

The difference between the carrying value and fair value of long term debt
is not significant.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

Changes in Securities

On December 3, 1999 we announced that our Board of Directors had authorized
the repurchase of up to 450,000 ADRs of Barbeques Galore Limited as market
conditions become favorable. The repurchase program will expire on January 31,
2002 or upon reaching an aggregate purchase quantity of 450,000 ADRs.
Commencing March 23, 2001 and thereafter, we have repurchased, at a cost of
US$791,563 and from available resources, 265,000 ADRs on the open market,
pursuant to the repurchase program.

ITEM 15.

Not applicable.

ITEM 16.

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS

See Item 18 for a list of the Financial Statements filed as part of this
Annual Report.

ITEM 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this Annual Report,
together with the report of the independent auditors:

Independent Auditors' Report.

Consolidated Balance Sheets as of January 31, 2000 and 2001.

Consolidated Statements of Operations and Other Comprehensive Income (Loss)
for the years ended January 31, 1999, 2000 and 2001.

Consolidated Statements of Shareholders' Equity for the years ended January
31, 1999, 2000 and 2001.

Consolidated Statements of Cash Flows for the years ended January 31, 1999,
2000 and 2001.

Notes to the Consolidated Financial Statements.

ITEM 19. EXHIBITS

The following exhibits are filed as part of this Annual Report:

Exhibit
Number
-------

3.1 Memorandum and Articles of Association. (/1/)
4.1 Form of Specimen of American Depositary Receipt. (/1/)
4.2 Form of Deposit Agreement among the Registrant, Morgan Guaranty Trust
Company of New York, as Depositary, and holders from time to time of
ADSs issued thereunder. (/1/)
10.1 Executive Share Option Plan. (/1/)
10.2 1997 Share Option Plan. (/1/)
10.3 Major Agreements relating to the Registrant's credit facility with
Australia and New Zealand Banking Corporation Group Limited ("ANZ"),
including the formal Letter of Offer from ANZ to Directors of the
Company, dated May 25, 1998, approving the Letter of Offer from ANZ to
the Company. (/2/)
10.4 Major Agreements relating to the Registrant's U.S. operating
subsidiary's credit facility with Merrill Lynch Business Financial
Services Inc. ("Merrill Lynch"), including Term WCMA(R) Loan and
Security Agreement No. 9502340701, dated as of February 23, 1995 by
and between Galore USA and Merrill Lynch; WCMA(R) Note, Loan and
Security Agreement No. 231-07T10, dated as of February 23, 1995 by and
between Galore USA and Merrill Lynch; Unconditional Guaranty by the
Registrant relating to WCMA(R) Note, Loan and Security Agreement No.
9502340701; Unconditional Guaranty by the Registrant relating to
WCMA(R) Note, Loan and Security Agreement No. 231-07710; Term WCMA(R)
Note No. 9502340701; Letter dated November 27, 1996 from Merrill Lynch
to Galore USA re: WCMA(R) line of credit variation; Letter and Letter
Agreement dated August 27, 1997 from Merrill Lynch to Galore USA re:
WCMA(R) line of credit variation; Letter Agreement dated January 20,
1998 from Merrill Lynch to Galore USA re: amendment to WCMA(R) Note,
Loan and Security Agreement No. 231-07T10, modifying locations of
collateral and change in maturity date to February 28, 1998. (/1/)
10.5 Deeds of purchase of Registrant's headquarters facility and assembly
operations facility. (/1/)
10.6 Lease dated as of March 6, 1992 by and between Galore USA and Phoenix
Business Center Partners re: Irvine, California U.S. headquarters and
distribution facility. (/1/)
10.7 Contract for the sale of land for the Registrant's warehousing and
distribution facility. (/2/)
10.8 WCMA(R) Note, Loan and Security Agreement No. 231-07T10, as
amended. (/3/)
10.9 Deeds of purchase of Registrant's headquarters facility and assembly
operations facility, as amended. (/3/)
10.10 Major Agreements relating to the Registrant's credit facility with
Australia and New Zealand Banking Corporation Group Limited ("ANZ"),
including the formal Letter of Offer from ANZ to Directors of the
Registrant, dated May 25, 1998; resolutions of the Directors of the
Registrant, dated June 26, 1998 approving of the Letter of Offer from
ANZ to the Registrant. (/4/)
10.11 Contract for the sale of land for the Registrant's warehousing and
distribution operations. (/4/)
21.1 List of Subsidiaries as of April 10, 2001.
23.1 Consent of KPMG.
24.1 Power of Attorney (see page 46).

- --------
(/1/)Previously filed in the Registrant's Registration Statement on Form F-1
(Registration No. 333-56805), filed with the Commission on June 12, 1998,
and incorporated herein by reference.

(/2/)Previously filed in the Registrant's Post-Effective Amendment No. 1 to
the Registration Statement on Form F-1 (Registration No. 333-56805),
filed with the Commission on September 21, 1998, and incorporated herein
by reference.

(/3/)Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
K, filed with the Commission on June 15, 1998, and incorporated herein by
reference.

(/4/)Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
K, filed with the Commission on September 14, 1998, and incorporated
herein by reference.

SIGNATURES

The Registrant, Barbeques Galore Limited, a corporation organized and
existing under the laws of the Commonwealth of Australia, hereby certifies
that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this Annual Report on its
behalf, thereunto duly authorised on May 1, 2001.

BARBEQUES GALORE LIMITED

/s/ Robert Gavshon
By___________________________________
Robert Gavshon
Deputy Chairman of the Board of
Directors and General Counsel

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, jointly and severally, Robert Gavshon
and Sydney Selati, and each one of them, as his true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Annual Report on
Form 20-F, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitute, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report on Form 20-F has been signed by the following in the
capacities and on the dates indicated:

/s/ Sam Linz Chairman of the Board and May 1, 2001
____________________________________ Director (Principal
Sam Linz Executive Officer)

/s/ David James Principal Financial and May 1, 2001
____________________________________ Accounting Officer
David James

/s/ Robert Gavshon Deputy Chairman of the Board May 1, 2001
____________________________________ and Director
Robert Gavshon

/s/ John Price Director May 1, 2001
____________________________________
John Price

/s/ Edgar Berner Director May 1, 2001
____________________________________
Edgar Berner

/s/ Gordon Howlett Director May 1, 2001
____________________________________
Gordon Howlett

/s/ Sydney Selati Director and Authorized U.S. May 1, 2001
____________________________________ Representative
Sydney Selati

FINANCIAL STATEMENTS INDEX

Pages
Numbers
-------

Independent Auditors' Report.......................................... 48
Consolidated Balance Sheets........................................... 49
Consolidated Statements of Operations and Other Comprehensive Income
(Loss)............................................................... 50
Consolidated Statement of Shareholders' Equity........................ 51
Consolidated Statements of Cash Flows................................. 52
Notes to Consolidated Financial Statements............................ 53

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Barbeques Galore Limited

We have audited the accompanying consolidated balance sheets of Barbeques
Galore Limited and subsidiaries as of January 31, 2001 and 2000 and the
related consolidated statements of operations and other comprehensive income
(loss), shareholders' equity and cash flows for the years ended January 31,
2001, 2000 and 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Barbeques
Galore Limited and subsidiaries as of January 31, 2001 and 2000 and the
results of their operations and their cash flows for the years ended January
31, 2001, 2000 and 1999, in conformity with accounting principles generally
accepted in the United States of America.

/s/ KPMG
KPMG
March 9, 2001
Sydney, Australia

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

January 31, January 31, January 31,
2000 2001 2001
----------- ----------- -----------------
(In A$ thousands (In US$ thousands
except share data) except share data)

Assets
Current assets:
Cash and cash equivalents........... $ 33 $ 34 $ 18
Accounts receivable, net............ 14,792 15,797 8,635
Receivables from affiliates......... -- 3 2
Inventories, net.................... 54,022 65,122 35,596
Deferred income taxes............... 2,368 1,736 949
Prepaid expenses and other current
assets............................. 1,039 2,872 1,570
-------- -------- -------
Total current assets................ 72,254 85,564 46,770
Non-current assets:
Receivables from affiliates......... 748 642 351
Property, plant and equipment, net.. 34,970 40,007 21,868
Goodwill, net....................... 1,327 1,238 677
Deferred income taxes............... 1,646 1,435 784
Other non-current assets............ 1,934 2,611 1,427
-------- -------- -------
Total assets........................ $112,879 $131,497 $71,877
======== ======== =======
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued
liabilities........................ $ 26,014 $ 26,160 $14,299
Payables to related parties......... 700 349 191
Payables to affiliates.............. 47 -- --
Current maturities of long-term
debt............................... 22 15 8
Current portion of obligations under
capital leases..................... 2,405 2,520 1,377
Income taxes payable................ 1,856 -- --
-------- -------- -------
Total current liabilities........... 31,044 29,044 15,875
Non-current liabilities:
Long-term debt...................... 20,692 30,456 16,648
Obligations under capital leases,
excluding current portion.......... 5,237 6,098 3,333
Other long-term liabilities......... 983 1,667 911
-------- -------- -------
Total liabilities................... 57,956 67,265 36,767
-------- -------- -------
Shareholders' equity:
Ordinary shares, no par value--
authorized 27,437,853 shares;
4,541,652 issued shares............ 40,733 40,733 22,265
Accumulated other comprehensive
income............................. 1,105 5,931 3,242
Retained earnings................... 13,085 17,568 9,603
-------- -------- -------
Total shareholders' equity.......... 54,923 64,232 35,110
-------- -------- -------
Total liabilities and shareholders'
equity............................. $112,879 $131,497 $71,877
======== ======== =======

See accompanying notes to Consolidated Financial Statements.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND
OTHER COMPREHENSIVE INCOME (LOSS)

Year ended Year ended Year ended Year ended January
January 31, January 31, January 31, 31,
1999 2000 2001 2001
----------- ----------- ----------- ------------------
(In US$ thousands,
(In A$ thousands, except except share and
share and per share data) per share data)

Net sales............... $224,984 $260,683 $304,471 $173,366
Cost of goods sold,
warehouse, distribution
and occupancy costs.... 152,708 176,261 207,175 117,914
-------- -------- -------- --------
Gross margin............ 72,276 84,422 97,296 55,452
Selling, general and
administrative
expenses............... 61,796 72,358 87,365 49,909
Store pre-opening
costs.................. 810 411 639 379
-------- -------- -------- --------
Operating income........ 9,670 11,653 9,292 5,164
-------- -------- -------- --------
Equity in income of
affiliates, net of
tax.................... 514 551 340 185
Interest expense........ 2,163 2,276 2,920 1,663
-------- -------- -------- --------
Income before income
tax.................... 8,021 9,928 6,712 3,686
Income tax expense...... 2,814 3,714 2,229 1,225
-------- -------- -------- --------
Net income.............. 5,207 6,214 4,483 2,461
Other comprehensive
income (loss).......... 332 (404) 4,826 2,748
-------- -------- -------- --------
Net income after other
comprehensive income
(loss)................. $ 5,539 $ 5,810 $ 9,309 $ 5,209
======== ======== ======== ========
Earnings per share:
Basic................. $ 1.15 $ 1.37 $ 0.99 $ 0.54
======== ======== ======== ========
Diluted............... $ 1.13 $ 1.34 $ 0.96 $ 0.52
======== ======== ======== ========
Weighted average shares
outstanding (in
thousands):
Basic................. 4,542 4,542 4,542 4,542
======== ======== ======== ========
Diluted............... 4,595 4,633 4,689 4,689
======== ======== ======== ========

See accompanying notes to Consolidated Financial Statements.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Accumulated
Additional Other Total
Shares Ordinary Paid-In Comprehensive Retained Shareholders'
Outstanding Shares Capital Income Earnings Equity
----------- -------- ---------- ------------- -------- -------------
('000) (In A$ thousands, except share data)

Balances at January 31,
1998................... 4,542 $16,532 $24,554 $1,177 $ 1,664 $43,927
Net income.............. -- -- -- -- 5,207 5,207
Foreign currency
translation
adjustment............. -- -- -- 332 -- 332
Initial public offering
("the Offering")
costs.................. -- -- (353) -- -- (353)
Transfer of balance of
additional paid-in
capital to ordinary
shares on July 1, 1998
resulting from
amendments to the
Australian Corporations
Law.................... -- 24,201 (24,201) -- -- --
----- ------- ------- ------ ------- -------
Balances at January 31,
1999................... 4,542 40,733 -- 1,509 6,871 49,113
Net income.............. -- -- -- -- 6,214 6,214
Foreign currency
translation
adjustment............. -- -- -- (404) -- (404)
----- ------- ------- ------ ------- -------
Balances at January 31,
2000................... 4,542 40,733 -- 1,105 13,085 54,923
Net income.............. -- -- -- -- 4,483 4,483
Foreign currency
translation
adjustment............. -- -- -- 4,826 -- 4,826
----- ------- ------- ------ ------- -------
Balances at January 31,
2001................... 4,542 $40,733 $ -- $5,931 $17,568 $64,232
===== ======= ======= ====== ======= =======

The Australian Company Law Review Act (the "Act") came into effect on July
1, 1998. The Act abolished par value shares and any amounts standing to the
credit of "Additional Paid-In Capital" became part of the value of Ordinary
Shares on that date. Effective July 1, 1998, Ordinary Shares do not have a
nominal or par value.

See accompanying notes to Consolidated Financial Statements.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Cash flows from operating activities:
Net income................................ $ 5,207 $ 6,214 $ 4,483
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization............. 5,975 6,462 7,594
Deferred income taxes..................... (42) (245) 843
Amounts set aside to provisions........... 602 349 (278)
Undistributed income of affiliates........ (317) (52) 105
Loss (gain) on sale of property, plant and
equipment................................ 73 (10) (30)
Changes in operating assets and
liabilities:
Receivables and prepaid expenses.......... (2,510) (3,118) (3,424)
Inventories............................... (3,800) (7,091) (11,027)
Other assets.............................. (59) 4 21
Accounts payable and accrued liabilities.. 1,392 8,192 1,566
-------- -------- --------
Net cash provided by (used in) operating
activities................................. 6,521 10,705 (147)
-------- -------- --------
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment................................ 28 139 332
Capital expenditures...................... (13,181) (5,777) (7,558)
Loan repayments received.................. 43 100 106
-------- -------- --------
Net cash (used in) investing activities..... (13,110) ( 5,538) (7,120)
-------- -------- --------
Cash flows from financing activities:
Repayment of long-term debt............... (10,021) (18,129) (21,500)
Proceeds from long-term debt.............. 19,450 14,500 31,257
Principal payments under capital leases... (1,844) (2,316) (2,489)
Offering costs............................ (353) -- --
-------- -------- --------
Net cash provided by (used in) financing
activities............................. 7,232 (5,945) 7,268
-------- -------- --------
Effects of exchange rate fluctuations....... 2 -- --
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents................................ 645 (778) 1
Cash and cash equivalents at beginning of
period..................................... 166 811 33
-------- -------- --------
Cash and cash equivalents at end of period.. $ 811 $ 33 $ 34
======== ======== ========

See accompanying notes to Consolidated Financial Statements.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

(a) Description of business

Barbeques Galore Limited ("Barbeques Galore" or "the Company") is an
Australian resident company which is involved in the manufacture of barbecues
and heaters, and wholesale and retail sales of barbecues, heaters, camping
equipment, outdoor furniture, leisure products and related accessories through
Company-owned and licensed stores in Australia. The Company is also involved
in the retailing, through Company-owned and franchised stores, of barbecues,
fireplace equipment and accessories in the United States of America. The
Company's manufacturing operations are located in Australia.

(b) Principles of consolidation

The consolidated financial statements include the financial statements of
the Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated on consolidation.

Inventories are comprised of raw materials and stores, work in progress and
finished goods. Inventories are valued at the lower of cost or market using
the first-in, first-out ("FIFO") method.

(d) Derivative financial instruments

The Company uses foreign currency forward contracts to offset earnings
fluctuations from anticipated foreign currency cash flows. These instruments
are marked to market and the results recognized immediately as income or
expense.

(e) Investments in affiliated companies

Investments in the ordinary shares of 20% to 50% owned companies are
accounted for by the equity method.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated
depreciation. Plant and equipment under capital leases are initially recorded
at the present value of minimum lease payments. The method of depreciation and
estimable useful lives over which property, plant and equipment is
depreciated, are as follows:

Method Years
------------- -----

Building.................................................... Straight line 40
Machinery and equipment..................................... Straight line 8-12
Leasehold improvements...................................... Straight line 5-20
Leased plant and equipment.................................. Straight line 3-5

Plant and equipment held under capital leases and leasehold improvements
are amortized on a straight-line basis over the shorter of the lease term or
estimated useful life of the asset. Obligations under capital leases are
reduced by payments of principal. The interest components of the capital lease
payments are charged to the consolidated statements of operations and other
comprehensive income (loss).

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(g) Goodwill

Goodwill, which represents the excess of the purchase price over the fair
value of net assets acquired, is amortized on a straight-line basis over the
expected periods to be benefited, generally 20 years. The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operation.
The amount of goodwill impairment, if any, is measured based on projected
discounted future operating cash flows using an appropriate discount rate. The
assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.

(h) Product management and development, and advertising

Product management and development, and advertising costs are expensed as
incurred. Amounts expensed were as follows:

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Product management and development..... $1,047 $ 1,014 $ 1,044
Advertising............................ 9,605 11,022 13,588
====== ======= =======

(i) Income taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases as well as
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. The Company does not provide for income tax on foreign
currency translation adjustments since it does not provide for such taxes on
undistributed earnings of foreign subsidiaries.

(j) Share option plan

The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation, in 1996, under which we
elected to continue following the provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations for our share option plan. Generally, compensation expense is
recorded on the date of grant only if the market price of the underlying share
exceeded the exercise price.

(k) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments,
litigation, fines and penalties, and other sources are recorded when it is
probable that a liability has been incurred and the amount of the assessment
can be reasonably estimated.

(l) Use of estimates

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(m) Impairment of long-lived assets and long-lived assets to be disposed of

The Company reviews long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Impairment of assets to be
held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted operating net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, impairment to be
recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.

(n) Rent expense, surplus leased space and lease incentives

The Company leases certain store locations under operating leases, which
provide for annual payments that increase over the lives of the leases. Total
payments under the leases are expensed on a straight-line basis over the lease
term unless another systematic and rational allocation basis is more
representative of the time pattern in which the leased property is physically
employed.

Where premises under a non-cancellable operating lease become vacant during
the lease term, a charge is recognized on that date equal to the present value
of the expected future lease payments less any expected future sub-lease
income.

If the Company receives incentives provided by a lessor to enter into an
operating lease agreement, these incentives are brought to account as
reductions in rent expense over the term of the lease on a straight-line
basis.

(o) Revenue recognition

Revenue (net of returns and allowances) is recognized at the point of
shipment for wholesale sales to external customers and the point of sale for
retail goods.

(p) Cash and cash equivalents

Cash includes cash on hand and at bank. For purposes of the consolidated
statements of cash flows, the Company considers all highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.

(q) Store pre-opening costs

Store pre-opening costs are expensed when incurred.

(r) Earnings per share

Basic earnings per share are computed by dividing net income available to
ordinary shareholders, by the weighted average number of ordinary shares.
Diluted earnings per share are computed by dividing net income available to
ordinary shareholders, by the weighted average number of ordinary shares and
dilutive ordinary share equivalents for the period. In calculating the
dilutive effect of share options, the Company uses the treasury stock method.

(s) Foreign currency translation

Foreign currency transactions are converted to Australian currency at the
rates of exchange applicable at the dates of the transactions. Amounts
receivable and payable in foreign currencies at balance date are converted at
the year end rates. Gains and losses from conversion of monetary assets and
liabilities, whether realized or unrealized, are included in income before
income taxes as they arise.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Assets and liabilities of overseas subsidiaries are translated at year-end
rates and operating results at the average rates ruling during the year.

(t) Convenience translation (unaudited)

The information in US dollars in the consolidated balance sheets and
consolidated statements of operations and other comprehensive income (loss) is
presented solely for the convenience of the reader and has been translated at
the spot rate on January 31, 2001 of US$0.5466 per A$1.00 and at the average
rate for each quarter in respect of the fiscal year ended January 31, 2001
which equates to an annual equivalent of US$0.5694 per A$1.00, respectively.
These translations should not be construed as representations that the
Australian dollar amounts actually represent such US dollar amounts or could
be converted into US dollars at the rate indicated or at any other rate.

(u) Other comprehensive income

The only component of other comprehensive income (loss) that impacts the
Company is foreign currency translation adjustments. The net gain (loss)
associated with the foreign currency translation adjustments for the years
ended January 31, 1999, 2000 and 2001 was A$332,000, A$(404,000) and
A$4,826,000, respectively. Accumulated other comprehensive income at January
31, 2000 and 2001 consisted solely of foreign currency translation adjustments
with credit balances of A$1.1 million and A$5.9 million, respectively.

(v) Goods and Services Tax

A Goods and Services Tax ("GST") was introduced in Australia from July 1,
2000. The GST is not included in reported sales since July 1, 2000. A
wholesale sales tax on sales in effect in Australia prior to July 1, 2000 was
abolished as of that date. Sales tax amounts were included in sales and cost
of sales for all periods presented prior to July 1, 2000.

2. Derivative Financial Instruments

The Company utilizes foreign currency forward contracts as a means of
offsetting fluctuations in the dollar value of foreign currency accounts
payable. The counterparties to the contracts are major financial institutions
and the risk of loss to the Company in the event of non-performance by a
counterparty is not significant. There were no foreign currency forward
contracts outstanding as at January 31, 2000 and 2001, respectively.

3. Accounts Receivable

Accounts receivable consists of the following:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Trade accounts receivable........................... $14,432 $15,121
Less: Reserve for doubtful accounts................. (463) (308)
------- -------
13,969 14,813
Other receivables................................... 823 984
------- -------
$14,792 $15,797
======= =======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. Inventories

The major classes of inventories are as follows:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Finished goods....................................... $50,018 $61,069
Work in progress..................................... 1,425 539
Raw materials........................................ 2,997 3,859
------- -------
54,440 65,467
Less: Reserve for obsolescence....................... (418) (345)
------- -------
$54,022 $65,122
======= =======

5. Investments in Affiliated Companies

Investments in affiliated companies consist of a one-third ownership of the
ordinary shares of Bromic Pty Limited and subsidiaries ("Bromic"), an
Australian group which imports and distributes componentry to the gas and
appliance industries, and 50% of the ordinary shares of GLG Trading Pte
Limited ("GLG"), a Singapore company which acts as a buying office for
Barbeques Galore and other third parties.

Bromic provides liquid petroleum gas cylinders and related products such as
manifolds, bundy tubes, glass and barbecue ignitions to the Company. GLG
supplies cast iron used in the manufacture of burners, hot plates and grills,
small assembled barbecues and certain accessories such as tongs and warming
racks.

Sales to affiliated companies are not significant. Interest is also charged
on amounts owing from affiliates at commercial rates but is not significant.
Amounts owing from affiliates are in relation to cash advances.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Prices charged between the Company and our affiliates are set at the level
of prices that are charged to unrelated parties. Trading with affiliates for
each period and amounts outstanding at each period end are as follows:

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Purchases from affiliates:
-Bromic................................ $ 2,729 $ 3,371 $ 2,777
-GLG Trading Pte Limited............... 8,562 8,261 12,403
------- ------- -------
$11,291 $11,632 $15,180
======= ======= =======
Dividends received or due and
receivable from affiliates:
-Bromic................................ $ -- $ 200 $ 200
-GLG Trading Pte Limited............... 197 299 226
------- ------- -------
$ 197 $ 499 $ 426
======= ======= =======

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Receivable from affiliates (net):
-Bromic.............................................. $ 453 $397
-GLG Trading Pte Limited............................. 248 248
------ ----
$ 701 $645
====== ====
Investment in affiliates............................. $1,054 $949
====== ====

Investments in affiliates are included in the balance sheet as other non-
current assets. The investment in these companies is carried at the equity
accounted value representing cost plus the Company's share of undistributed
profits, less dividends. Combined summarized and unaudited, financial data as
at and for the years ended January 31, 1999, 2000 and 2001, is as follows:

January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Current assets.......................... $ 7,605 $ 8,927 $10,102
Current liabilities..................... (3,334) (4,558) (5,711)
------- ------- -------
Working capital......................... 4,271 4,369 4,391
Property, plant and equipment, net...... 1,157 1,149 1,237
Other assets............................ 61 326 684
Long-term debt.......................... (2,312) (2,418) (2,194)
------- ------- -------
Shareholders' equity.................... $ 3,177 $ 3,426 $ 4,118
======= ======= =======
Sales................................... $17,806 $20,545 $21,396
======= ======= =======
Gross margin............................ $ 4,307 $ 4,514 $ 3,923
======= ======= =======
Net income.............................. $ 1,164 $ 1,422 $ 777
======= ======= =======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income statement information has been presented for the respective twelve-
month periods ended January 31, 2001. The balance dates of Bromic and GLG are
June 30 and December 31, respectively.

6. Property, Plant and Equipment

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Land and buildings................................... $ 9,546 $ 9,546
Machinery and equipment.............................. 24,651 28,432
Leasehold improvements............................... 12,534 14,055
Assets under capital leases.......................... 12,940 13,595
-------- --------
59,671 65,628
Less: Accumulated depreciation/amortization.......... (24,701) (25,621)
-------- --------
$ 34,970 $ 40,007
======== ========

7. Goodwill

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Goodwill............................................. $1,800 $1,800
Less: Accumulated amortization....................... (473) (562)
------ ------
$1,327 $1,238
====== ======

8. Leases

The Company is obligated under various capital leases for store
improvements and certain machinery and equipment that expire at various dates
during the next five years. The capital leases for store improvements relate
to the purchase of furniture and fixtures installed in retail stores. These
retail stores are all managed under operating leases. Machinery and equipment
under capital leases include leased machinery, office furniture and fixtures
and certain motor vehicles. All capital lease liabilities are secured by the
asset to which the lease relates. The gross amount of store improvements and
machinery and equipment and related accumulated amortization recorded under
capital leases is as follows:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Store improvements................................... $ 7,132 $ 5,489
Machinery and equipment.............................. 5,808 8,106
------- -------
12,940 13,595
Less: Accumulated amortization....................... (5,269) (4,944)
------- -------
$ 7,671 $ 8,651
======= =======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company also has entered into non-cancellable operating leases,
primarily for retail stores. These leases generally contain renewal options
for periods ranging from three to five years and require the Company to pay
all executory costs such as maintenance and insurance. Rental expense for
operating leases (except those with lease terms of a month or less that were
not renewed) consisted of the following:

January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Rental expenses ......................... $15,667 $18,765 $23,071
======= ======= =======

Future minimum capital lease payments and future minimum lease payments
under non-cancellable operating leases as of January 31, 2001 are:

Capital Operating
leases leases
------- ---------
(in A$ thousands)

Year ending January 31,
2002.................................................... 3,095 21,484
2003.................................................... 2,621 18,846
2004.................................................... 2,555 16,482
2005.................................................... 1,209 14,520
2006.................................................... 473 11,234
Years subsequent to 2006................................ -- 29,265
------- --------
Total minimum lease payments............................ 9,953 $111,831
Less: Amounts representing interest..................... 1,335
-------
Present value of net minimum capital lease payments .... 8,618
Less: Current portion of obligations under capital
leases................................................. (2,520)
-------
Obligations under capital leases, excluding current
portion................................................ $ 6,098
=======

9. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Trade accounts payable............................. $12,053 $14,150
Accrued liabilities................................ 11,037 8,949
Employees benefits................................. 2,577 2,617
Other.............................................. 347 444
------- -------
$26,014 $26,160
======= =======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. Long-Term Debt

Long-term debt consists of the following:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Current:
Bank bills........................................... $ 22 $ 15
======== =======
Non-current:
Bank bills........................................... $ 12,242 $22,006
Property loans....................................... 8,450 8,450
-------- -------
$ 20,692 $30,456
======== =======

Effective June 1998, the Company and its subsidiaries have access to a
facility with the Australia and New Zealand Banking Group Limited ("ANZ") (the
"ANZ Facility") revised from a previous facility entered into in July 1994.
Under this revised facility, the Company and its subsidiaries have access to
facilities up to A$55,734,000, comprising a multi-option, overdraft, leasing,
foreign currency and other facilities in principal amount of A$47,284,000 and
real property loans in principal amount of A$8,450,000 (secured by registered
first mortgages over the respective freehold properties of the Company). As of
January 31, 2001 the Company had not utilized A$32,022,000 of the total
facility. The ANZ Facility is secured by a first security interest over the
Company's present and future Australian assets and a second security interest
(subordinate to a lien under the Merrill Lynch Facility detailed below) in all
the Company's assets in the United States. The ANZ Facility is further
guaranteed by each subsidiary of the Company as well as The Galore Group
(USA), Inc. and Barbeques Galore, Inc. (referred to collectively as "Galore
USA").

The ANZ facility includes bank bills which are generally taken out for
periods varying from approximately 30 to 90 days and rolled over at the end of
their respective terms. Overseas purchases are generally refinanced for
periods varying up to approximately 170 days. As of January 31, 2000 and 2001,
the weighted average interest rates accruing on the bank bills utilized under
the ANZ Facility were as follows:

January 31, January 31, January 31, January 31,
2000 2001 2000 2001
----------- ----------- ------------ ------------
(In A$ thousands) (Interest rate per annum)

Bank bills................ $12,242 $22,006 6.2% 7.2%
Property loans............ 8,450 8,450 6.8% to 7.4% 6.9% to 7.5%

All committed facilities are provided subject to the standard Australian
practice of regular annual review of required limits, the Company's
performance and the normal terms and conditions, including financial
covenants, applicable to bank lending. The Company was in compliance with the
financial covenants set out in the ANZ Facility agreement as at January 31,
2001.

The Company has historically renegotiated its credit facilities on similar
terms and conditions. Because the Company is able to roll-over bank bills
generally taken out for periods varying from approximately 30 to 90 days, the
majority of the outstanding balance relating to bank bills and property loans
is classified as a non-current liability.

In February 1995, Barbeques Galore, Inc., the Company's U.S. operating
subsidiary, entered into a five-year credit facility with Merrill Lynch
Business Financial Services, Inc. ("Merrill Lynch") which has been amended
from time to time. As currently in effect, such facility comprises a revolving
line of credit in aggregate principal

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

amount of US$1.0 million (the "Merrill Lynch Facility"). Indebtedness under
the revolving line of credit accrues interest at the 30-day commercial paper
rates plus 2.70% and is payable monthly. The Merrill Lynch Facility is secured
by a first security interest in all Galore USA present and future assets and
is guaranteed by the Company and The Galore Group (USA), Inc., the parent of
Barbeques Galore, Inc.

The Company's total long-term debt matures as follows:

Year ending January 31, (In A$ thousands)
----------------------- -----------------

2002...................................................... $ 15
2003...................................................... 30,456
-------
$30,471
=======

11. Income Taxes

Income before income taxes was taxed under the following jurisdictions:

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Australia............................... $7,822 $8,270 $6,396
United States........................... 199 1,658 316
------ ------ ------
$8,021 $9,928 $6,712
====== ====== ======

The expense (benefit) for income taxes is presented below:

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Current:
Australia................................ $2,697 $2,929 $1,125
United States............................ 159 1,530 262
------ ------ ------
2,856 4,459 1,387
====== ====== ======
Deferred:
Australia................................ 38 87 1,148
United States............................ (80) (832) (306)
------ ------ ------
(42) (745) 842
------ ------ ------
$2,814 $3,714 $2,229
====== ====== ======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income tax expense differed from the amounts computed by applying the
Australian federal income tax rate of 34% (Years ended January 31, 1999 and
2000: 36%) to pretax income as a result of the following:

Year ended Year ended Year ended
January 31, January 31, January 31,
1999 2000 2001
----------- ----------- -----------
(In A$ thousands)

Computed "expected" tax expense........ $2,888 $3,574 $2,282
Increased (reduction) in income taxes
resulting from:
Restatement of net deferred tax assets
pursuant to change in taxation rate... -- 221 (67)
State taxes, net of federal tax
benefit............................... 11 86 37
Equity in earnings of affiliates not
subject to taxation................... (185) (198) (141)
Other, net............................. 100 31 118
------ ------ ------
$2,814 $3,714 $2,229
====== ====== ======

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liability is presented
below:

January 31, January 31,
2000 2001
----------- -----------
(In A$ thousands)

Deferred tax assets:
Provisions not presently deductible................ $1,491 $1,460
Plant and equipment, due to differences in
depreciation...................................... 777 1,007
Inventories, due to capitalized costs.............. 945 882
Leases, due to differences in lease payments,
interest and amortization......................... 1 (70)
Net operating loss carryforward.................... 237 209
Other.............................................. 707 (184)
------ ------
Total deferred tax assets.......................... $4,158 $3,304
------ ------
Deferred tax liability:
Prepayments........................................ 144 133
------ ------
Total deferred tax liability....................... $ 144 $ 133
------ ------
Net deferred tax asset............................. $4,014 $3,171
====== ======

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment. In order
to fully realize the deferred tax asset associated with the net operating loss
carryforwards, the Company will need to generate future taxable income of
approximately A$538,000 prior to the expiration of the net operating loss
carryforwards in 2012. Based upon projections for future taxable income over
the periods which the deferred tax assets are deductible, management believes
it is more likely than not the Company will realize the benefits of these
deductible differences. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12. Share Option Plans

Executive Share Option Plan

Effective January 31, 1997, the Company adopted the Executive Share Option
Plan (the "Executive Plan") pursuant to which the Board of Directors granted
certain members of management options to purchase Ordinary Shares in the
Company. A total of 203,038 options were issued under the Executive Plan with
an exercise price of A$8.38 per share and became exercisable on February 1,
1999 after which each optionholder became entitled to subscribe for one fully
paid Ordinary Share. The options are not quoted and are due to expire on the
earlier of the 5th anniversary from the issue date or, subject to certain
conditions, on cessation of employment.

The fair value of each share option grant was estimated to be A$1.12 on the
date of grant using the Black-Scholes option-pricing model with the following
assumptions: weighted average risk-free interest rate of 6.49%; no dividend
yield; expected life of 2.5 years and volatility of 17.97%.

1997 Share Option Plan

Under the terms of the Company's 1997 Share Option Plan (the "1997 Plan"),
a total of 465,505 Ordinary Shares have been authorized for issuance. The 1997
Plan was adopted by the Board of Directors on October 1, 1997 and approved by
shareholders as of October 7, 1997.

The number of Ordinary Shares reserved for issuance under the 1997 Plan
will automatically increase on the first trading day of each calendar year,
beginning with the 1999 calendar year, during the term of the 1997 Plan by an
amount equal to one percent (1%) of the Ordinary Shares outstanding on
December 31 of the immediately preceding calendar year. In no event may any
one participant in the 1997 Plan receive option grants for more than 27,438
Ordinary Shares per calendar year.

The 1997 Plan consists of the Option Grant Program, under which eligible
individuals in the Company's employ or service (including officers and other
employees, non-employee Board members, consultants and other independent
advisers of the Company, or any parent or subsidiary) may, at the discretion
of the Plan Administrator, be granted stock options to purchase Ordinary
Shares at an exercise price not less than eight-five per cent (85%) of their
fair market value on the option grant date.

The 1997 Plan is administered by the Compensation Committee. The Plan
Administrator has complete discretion, within the scope of its administrative
jurisdiction under the 1997 Plan, to determine which eligible individuals are
to receive stock option grants, the time or times when such grants are to be
made, the number of shares subject to each such grant, the exercise and
vesting schedule to be in effect for the grant, the maximum term for which any
granted stock option is to remain outstanding and the status of any granted
stock option as either an incentive stock option or a non-statutory stock
option under the U.S. Federal tax laws.

The Board of Directors, pursuant to a meeting on September 1, 1998, granted
options to a Director to purchase up to an aggregate of 17,646 Ordinary Shares
at a price of US$8.50 per Ordinary Share under the 1997 Plan, exercisable in
three equal instalments on September 1, 2001, September 1, 2002 and August 1,
2003. These options were subsequently cancelled pursuant to a circulating
resolution of the directors on January 10, 2000 and replaced with options
granted to the same Director, to purchase up to an aggregate of 17,646
Ordinary Shares at a price of US$6.38 per Ordinary Share under the 1997 Plan,
exercisable in three equal instalments on January 7, 2003, January 7, 2004 and
December 7, 2004.

As a result of decreases in the market price of the Company's Ordinary
Shares during the latter part of 1998, the exercise price of those options
granted concurrently with the Offering at US$11.00 per Ordinary Share, was
significantly higher than the market price. Consequently and in order to
provide all employees with the

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

continuing opportunity to acquire Ordinary Shares of the Company at an
attractive purchase price, the Board of Directors at a meeting on November 9,
1998, resolved to implement a special option cancellation/re-grant program.
Under that program, each option outstanding on that date with an exercise
price of US$11.00 per Ordinary Share (an "Old Option") was cancelled and
simultaneously, a new option for the identical number of shares but with an
exercise price of US$5.20 per Ordinary Share (a "New Option"), was granted in
replacement thereof. The New Options are exercisable in three equal
instalments on November 9, 2001, November 9, 2002 and October 9, 2003. All
other terms and conditions of the New Options are substantially the same as
the Old Options. In the aggregate, Old Options to purchase 177,200 Ordinary
Shares were cancelled and re-granted under the program. During the fiscal year
ended January 31, 2001, a total of 12,900 New Options were forfeited.

The fair value of the 48,250 share option grant was estimated on the date
of grant using the Black-Scholes option-pricing model with the following
assumptions: weighted average risk-free interest rate of 4.7%; no dividend
yield and volatility of 84.42%. The incremental value of the 177,200 regranted
options (reduced by 21,500 options forfeited of which 9,700 options are in
respect of the 12 months ended January 31, 2001) was A$1.54 per option, which,
when added to the compensation cost per the original option of A$8.04, results
in a total compensation cost from the date of re-grant, of A$9.58.

The fair value of the 17,646 and 143,820 share option grants (the latter
reduced by 3,200 options forfeited in respect of the 12 months ended January
31, 2001), was estimated on the date of the grant using the Block-Scholes
option-pricing model with the following assumptions: weighted average risk-
free interest rate of 6.7%; no dividend yield and volatility of 78.35%.

The expected lives and fair value of the options as at grant date are as
hereunder:

Number of Expected Weighted Average Fair
Options Lives (yrs) Value Per Option
--------- ----------- ---------------------

155,700 4.8 A$9.58
48,250 4.8 5.44
17,646 4.9 6.60
140,620 4.9 6.60
------- ------
362,216 A$7.73
======= ======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of the status of the Company's Executive Plan and 1997 Plan as of
January 31, 1999, 2000 and 2001 and changes during the periods ended on those
dates is presented below:

Weighted- Options
average exercisable
Options exercise price at year end
-------- -------------- -----------

Outstanding balance at January 31,
1998................................ 402,438 A$12.37 --
------- -------
Granted.............................. 65,896 10.00
Forfeited............................ (22,200) 16.44
Cancelled............................ (177,200) 16.44
Regranted............................ 177,200 8.20
-------- ------- -------
Outstanding balance at January 31,
1999................................ 446,134 8.55 203,038
------- -------
Cancelled............................ (17,646) 14.91
Regranted............................ 17,646 9.75
Granted.............................. 143,820 9.75
Forfeited............................ (11,800) 8.20
-------- ------- -------
Outstanding balance at January 31,
2000................................ 578,154 8.70 203,038
------- -------
Forfeited............................ (12,900) 8.58
-------- ------- -------
Outstanding balance at January 31,
2001................................ 565,254 A$ 8.70 203,038
======== ======= =======

The weighted average fair value of options granted during the years ended
January 31, 1999, 2000 and 2001 was A$5.38, A$6.60 and A$nil, respectively.

The following table summarizes information about share options outstanding
at January 31, 2001:

Number outstanding Weighted-average Weighted-
at January 31, remaining contractual average
2001 life (years) exercise price
------------------ --------------------- --------------

203,038 0.5 A$8.38
155,700 2.8 8.20
48,250 2.8 8.20
17,646 3.9 9.75
140,620 3.9 9.75
------- ------
565,254 2.3 A$8.70
======= ======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company applies APB Opinion No. 25 in accounting for its share option
plans and, accordingly, no compensation cost has been recognized for its share
options in the years ended January 31, 1999, 2000 and 2001 respectively. Had
the Company determined compensation cost based on the fair value at the grant
date for its share options under SFAS No. 123, the Company's net income would
have been reduced to the pro forma amounts indicated below:

Year ended January 31,
-----------------------
1999 2000 2001
------- ------- -------
(In A$ thousands,
except per share data)

Net income
As reported....................................... $ 5,207 $ 6,214 $ 4,483
Pro forma......................................... $ 4,830 $ 5,894 $ 4,001
Primary earnings per share
As reported....................................... $ 1.15 $ 1.37 $ 0.99
Pro forma......................................... $ 1.06 $ 1.30 $ 0.88
Diluted earnings per share
As reported....................................... $ 1.13 $ 1.34 $ 0.96
Pro forma......................................... $ 1.05 $ 1.27 $ 0.85

13. Commitments and Contingencies

There are no material pending legal proceedings against us. We are involved
in various product liability claims and legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on our business, results
of operations or financial condition.

The Company placed a major portion of its insurances with HIH Casualty and
General Insurance Limited ("HIH") during the 12 months ending June 30, 2001
and earlier periods. HIH Insurance Limited and 17 of its controlled entities
("HIH Group") have been placed into provisional liquidation and the Company
has been advised that the Provisional Liquidators expect to be in a position
to provide further information to policyholders during the coming weeks. In
the interim, the Company has replaced its insurances with other insurers. The
Company has no material claims against it in relation to the period during
which it enjoyed cover with HIH. Furthermore, to the best of the Company's
knowledge and belief, it is unaware of any claims which may arise against it
in relation to any events during the period of cover with HIH. It is also
unknown at this stage what amounts, if any, would be recoverable from the
Provisional Liquidators of the HIH Group, were such claims, to arise.

14. Segments and Related Information

The Company is engaged in the retail industry and operates through stores
located in two geographic segments, Australia and the United States.

The accounting policies of the reportable segments are the same as those
described in note 1 of Notes to Consolidated Financial Statements. The Company
measures the performance of its operating segments based on gross margin and
operating income, which is defined as income before equity income of
affiliates, net of tax, interest expense and income taxes. In addition, the
operating income of the United States does not include all the income
attributable to it for product manufactured and purchased for the United
States by the Australian subsidiaries.

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Summarized financial information concerning our reportable segments is as
follows:

Australia United States Total
--------- ------------- --------
(In A$ thousands)

12 months to January 31, 2001
Revenues from external customers........... $141,701 $162,770 $304,471
======== ======== ========
Gross margin............................... $ 47,074 $ 50,222 $ 97,296
======== ======== ========
Operating income........................... $ 8,962 $ 330 $ 9,292
======== ======== ========
Total assets............................... $ 73,861 $ 57,636 $131,497
======== ======== ========
12 months to January 31, 2000
Revenues from external customers........... $139,023 $121,660 $260,683
======== ======== ========
Gross margin............................... $ 45,707 $ 38,715 $ 84,422
======== ======== ========
Operating income........................... $ 9,724 $ 1,929 $ 11,653
======== ======== ========
Total assets............................... $ 71,188 $ 41,691 $112,879
======== ======== ========
12 months to January 31, 1999
Revenues from external customers........... $130,011 $ 94,973 $224,984
======== ======== ========
Gross margin............................... $ 42,827 $ 29,449 $ 72,276
======== ======== ========
Operating income........................... $ 9,438 $ 232 $ 9,670
======== ======== ========
Total assets............................... $ 68,449 $ 32,753 $101,202
======== ======== ========

15. Related Party Transactions

Messrs Linz, Gavshon and Selati and certain members of their respective
families have advanced funds, repayable on demand, to the Company to be used
for general corporate purposes at rates approximately 2% per annum below the
overdraft rate charged to the Company by its bankers.

Year ended
January 31,
--------------
1999 2000 2001
---- ---- ----
(In A$
thousands)

Interest costs incurred in respect of amounts advanced by
directors or director related entities.................... $102 $44 $33
==== === ===

16. Supplemental Disclosure of Cash Flow Information

Year ended January 31,
-----------------------
1999 2000 2001
------- ------- -------
(In A$ thousands)

Cash paid during the period for:
Interest............................................ $ 2,273 $ 2,273 $ 2,333
Income taxes........................................ 2,114 3,685 2,499
======= ======= =======

BARBEQUES GALORE LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company acquired plant and equipment by means of capital leases, which
are not reflected in the consolidated statements of cash flows with an
aggregate fair value of:

Year ended January 31,
-----------------------
1999 2000 2001
------- ------- -------
(In A$ thousands)

Equipment acquired under capital leases............. $ 3,589 $ 3,070 $ 3,465
======= ======= =======

17. Pension Plans

The Company has established two new superannuation funds, Barbeques Galore
CustomSuper Plan (for all permanent full time and part time employees) and
Barbeques Galore SuperLeader Plan (for all casual employees) and managed under
the AMP CustomSuper and SuperLeader Master Trust Deeds respectively. Both new
funds are successors to the defined contribution pension plans established by
the Company and its Australian subsidiaries for the provision of benefits to
its Australian employees on retirement, death or disability.

The Company also sponsors a defined contribution plan in the United States
covering substantially all employees who meet specified age and service
requirements. Company contributions are discretionary.

Contributions expensed under these plans were as follows:

Year ended January 31,
-----------------------
1999 2000 2001
------- ------- -------
(In A$ thousands)

Contribution expense................................. $ 1,355 $ 1,625 $ 1,898
======= ======= =======

18. Earnings Per Share

Year ended Year ended Year ended
January 31, 1999 January 31, 2000 January 31, 2001
-------------------- -------------------- --------------------
Per Per Per
share share share
Income Shares amount Income Shares amount Income Shares amount
------ ------ ------ ------ ------ ------ ------ ------ ------
(In A$ thousands, except share and per share data)

Net income ............. $5,207 $6,214 $4,483
------ ------ ------
Basic earnings per
share:
Net income available to
common shareholders ... 5,207 4,542 $1.15 6,214 4,542 $1.37 4,483 4,542 $0.99
===== ===== =====
Effect of dilutive
securities:
Options deemed
exercised.............. 53 91 147
------ ----- ------ ----- ------ -----
Diluted earnings per
share:
Net income available to
common shareholders
plus assumed
conversions ........... $5,207 4,595 $1.13 $6,214 4,633 $1.34 $4,483 4,689 $0.96
====== ===== ===== ====== ===== ===== ====== ===== =====

19. Subsequent Event

The Company invested A$2.0 million for a one-third equity interest in
Renegade Gas Pty Limited ("Renegade"), an Australian industrial and domestic
gas distributor. Renegade and Bromic (which commenced operations in the U.S.A.
during 2000), have common shareholders (refer note 5).