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

                               ----------------

                                   FORM 20-F

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (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, 2000

                                      OR

[_] 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,              327 Chisholm Road, Auburn,
              Australia                        Sydney, NSW 2144 Australia
   (Jurisdiction of incorporation                 (Address of principal
          or organization)                         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

     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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This 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. Readers are cautioned that such statements are
only predictions and that actual events or results may differ materially. In
evaluating such statements, readers should specifically consider the various
factors identified in this report, including the matters set forth under the
caption "Item 9--Management's Discussion and Analysis of Financial Conditions
and Results of Operations--Factors that May Affect Quarterly or Annual
Operating Results," which could cause events or actual results to differ
materially from those indicated by such forward-looking statements. In
addition, readers should carefully review other information contained in this
Annual Report on Form 20-F ("Annual Report") and in the Company's periodic
reports and other documents filed with the Securities and Exchange Commission
("SEC").

                                    PART I

ITEM 1. DESCRIPTION OF BUSINESS.

   Barbeques Galore believes that it is 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. The Company's belief is based on
its years of experience in the barbecue retail industry as well as its
contacts with other industry retailers, suppliers and trade associations.
Organized as an Australian corporation in 1982, the Company opened its first
store in Sydney, Australia in 1977 and opened its first U.S. store in Los
Angeles in 1980. Barbeques Galore stores carry a wide assortment of barbecues
and related accessories which are displayed in a store format that emphasizes
social activities and healthy outdoor lifestyles. Its stores also carry a
comprehensive line of fireplace products and, in Australia, home heating
products, camping equipment and outdoor furniture. As of January 31, 2000, the
Company owned and operated 35 stores in all six states in Australia and 54
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.

   The Company's unique retailing concept differentiates Barbeques Galore from
its 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 the Company's barbecue and
home heater manufacturing operations, which enable the Company to realize
higher margins, control product development and improve inventory flexibility
and supply.

   The Company's growth strategy is to continue expansion of its U.S. store
base and to continue refurbishing (through relocating or remodeling) existing
stores in Australia. During the twelve months ended January 31, 2000, the
Company grew from 46 to 54 Company-owned stores (including three U.S. Navy
concession stores), representing a 17% increase in the number of owned stores
in the United States. The Company currently plans to open approximately 12 new
Company-owned stores in the United States in fiscal 2001, the majority of
which will open in existing markets. Of the 12 new Company-owned stores two
have already opened as of March 26, 2000, five are under construction and
three of the remaining five are in lease negotiation. The Company also
currently intends to open approximately 15 new stores in the United States in
fiscal 2002. In addition, the Company some time ago initiated a major
refurbishment plan for its Australian store base to enhance store
productivity. During the twelve months ended January 31, 2000, four stores
have been refurbished in Australia with an average increase in sales of
approximately 34.1% during that period for those stores.

Company History

   Barbeques Galore opened its first store in Sydney, Australia in 1977 to
serve an unfilled niche in the retail market for versatile, well-designed
barbecues. Since then, the Company has become the leading barbecue retailer

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in Australia, with an estimated 90% consumer awareness level and an
approximately 30% retail market share. In 1980, the Company opened its first
U.S. store in Los Angeles.

   During the 1980s, the Company vertically integrated its 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, the Company further
diversified its product line through the addition of camping equipment and
outdoor furniture, both of which complement the Company's main barbecue line.

   In April 1987, the Company listed its Ordinary Shares on the Australian
Stock Exchange (the "ASE"). In October 1996, as part of its plans to
accelerate new store expansion in the United States, the Company announced its
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. The Company consummated its initial public
offering (the "Offering") in the United States in November 1997.

Seasonality; Weather; Fluctuations In Results

   The Company's business is subject to substantial seasonal variations which
have caused, and are expected to continue to cause, its quarterly results of
operations to fluctuate significantly. Historically, the Company has realized
a major portion of its net sales and a substantial portion of its 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 its peak selling seasons (late spring and early summer),
the Company substantially increases its inventory levels and hires 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,
the Company regularly experiences monthly losses. These seasonal trends result
in the Company experiencing a loss in its first fiscal quarter. The Company
believes this is the general pattern associated with its segment of the retail
industry and expects this pattern will continue in the future. Partially
offsetting the effects of seasonality, the Company operates in both the
Southern and Northern hemispheres, which have opposite seasons, and offers
fireplace products and (in Australia) home heaters in the fall and winter
months. However, sales of any of the Company's 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. The Company's 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. The
Company has in the past experienced quarterly losses, particularly in its
fiscal first quarter, and expects that it will 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 the Company's sales or gross margins during peak seasons or periods
were substantially below expectations, the Company's quarterly and annual
results would be adversely affected.

Manufacturing

   In its Australian factory facilities, the Company manufactures barbecues
under its proprietary Turbo, Capt N Cook, Cook-On and Bar-B-Chef brands and
certain private label brands, as well as home heaters under its proprietary
Norseman and Kent brands. During the twelve months ended January 31, 2000,
proprietary barbecue retail sales represented approximately 35% and 26% of the
Company's total net sales in the United States and Australia, respectively.
The Company believes that controlling its own manufacturing operations allows
it to realize higher margins, control product development and improve
inventory flexibility and supply, without affecting its relationships with
third party vendors. The Company's manufacturing operations are closely
coordinated with its research and development activities. The Company has a
research and development team which is dedicated to barbecue market analysis
and product development. The ten members of this research and development team
have an average of over 14 years of industry experience. The team continuously
studies sales

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data, customer feedback, consumer trends and product designs, working closely
with the Company's other departments (in both the United States and Australia)
and suppliers to develop the annual Barbeques Galore product line. The Company
expended approximately A$1.0 million during the twelve-month period ended
January 31, 2000, on research and development activities.

   In the manufacturing process, metal barbecue frames are fabricated and,
where required, vitreous enameled at the Company's factory, located at its
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 on
the Company's automated production lines. In certain cases, product is shipped
to the Company's U.S. distribution center for assembly. Barbeques Galore
maintains strict quality control standards and its 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 the Company's existing manufacturing and enameling
operations are sufficient to meet anticipated production increases that may
arise from its current store expansion and refurbishment programs.

   In order to streamline its manufacturing operations to enhance production
efficiencies, the Company relocated its barbecue manufacturing operations in
July 1996 to the location of its corporate headquarters and distribution
center in Sydney, Australia. The Company completed the relocation of its
enameling operations in fiscal 1999 to the same facilities as its barbecue and
home heater manufacturing operations, adjacent to its Australian headquarters,
with the in-line powder coating operation commencing mid-November 1998. In
addition, the Company rearranged the assembly, warehouse and Australian
distribution operations to further improve its production flow, inventory
control and distribution management. The relocation of the Company's 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 "Factors That May Affect Quarterly or Annual
Operating Results--Management of Operational Changes."

Purchasing

   The Company believes that it has good relationships with its merchandise
vendors and suppliers of parts and raw materials and does not anticipate that,
as the number of its stores or its 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. The Company deals with its merchandise vendors principally on an
order-by-order basis and does not maintain any long-term purchase contracts
with any vendor. Merchandise is purchased for its U.S. and Australian stores
by the Company's central buying staffs in its respective headquarters. In
selecting merchandise, the buying staffs obtain input from a variety of
sources, including the Company's research and development team, store
employees, focus groups, customer surveys, industry conventions and trade
shows. During the twelve months ended January 31, 2000, the Company purchased
its 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 the Company considers certain barbecue brands to be
significant to its business, especially in the United States. The Company does
not believe that the loss of any single brand, including those made by Weber-
Stephen Products Co., Dynamic Cooking Systems, Onward Multi-Corp or Fiesta Gas
Grills Inc., would have a material adverse effect on its operating results.
Approximately 25% of the Company's merchandise purchases were obtained in such
period from the Company's ten largest vendors. See "Factors That May Affect
Quarterly or Annual Operating Results--Risks Associated with International
Operations; Dependence on Significant Vendors and Suppliers."

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   Manufacturing. The Company also purchases parts and raw materials for use
in its manufacturing and enameling operations. During the twelve months ended
January 31, 2000, the Company's 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 Sheet Metal Supplies Pty Ltd ("SMS"),
a steel distributor and Bromic Pty Ltd ("Bromic"), an Australian gas
components importer, which accounted for approximately 18% and 11% of these
purchases, respectively. There are no formal supply contracts between the
Company and any of its suppliers and in the case of SMS, prices are fixed for
a year in advance. In December 1997, the Company appointed SMS as its steel
supplier with full effect from May 1998. Other major suppliers of barbecue
components include G.L.G. Trading Pte. Ltd. ("GLG "), a Singapore company that
purchases grills, burners and other products directly from factories in China
and Taiwan. The Company has a 50% ownership interest in GLG and a one-third
ownership interest in Bromic. Approximately 64% of the Company's factory parts
and raw material purchases were obtained in such twelve-month period from the
Company's 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. The Company uses back-up suppliers to ensure
competitive pricing. In addition, some of the Company's key suppliers
currently provide the Company with certain purchasing incentives, such as
volume rebates and trade discounts. See "Factors That May Affect Quarterly or
Annual Operating Results--Risks Associated with International Operations;
Dependence on Significant Vendors and Suppliers."

Distribution

   The Company maintains a 57,000 square foot distribution center at its U.S.
headquarters in Irvine, California, a 27,000 square foot distribution center
in Charlotte, North Carolina and a 151,000 square foot combined distribution
and warehousing facility as part of its Australian headquarters. In May 1998,
the Company 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 its 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. The Company also uses smaller warehouses in Perth
(operated by an independent distributor) and Brisbane, Australia, for its
wholesale and licensee distribution operations and leases additional public
warehouse space in Sydney, Los Angeles and Texas as necessary.

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

   The Company maintains separate inventory management systems in Australia
and the United States which allow it 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 its inventory. The
Company estimates that its inventory shrinkage represents no more than 0.5% of
its aggregate retail sales. The Company and its advisors are not aware of any
barbecue industry source from which an industry average shrinkage rate can be
derived. However, the Company believes that the general shrinkage rate for
retailers is approximately 1.5% to 2.0%, and that the Company's rate compares
favorably to that of other retailers.

   As the Company expands into new regions or accelerates the rate of its U.S.
store expansion, it may eventually need additional warehouse capacity. In
order to meet such needs and to minimize the impact of freight costs, the
Company may secure another distribution center, expand its 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, the Company
also solicits the cooperation

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of its vendors, through drop shipments to public warehouses and/or stores, in
order to reduce its freight and handling costs. The Company believes that its
existing Australian distribution arrangements, together with public
warehousing space as needed, are sufficient to meet its current needs.

Wholesale Operations

   In Australia, the Company distributes 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, 2000, the five largest
customers of Pricotech accounted for approximately 58% of its net sales of
A$23.0 million. The Company's wholesale operations, in which its investment
consists primarily of inventory and receivables, currently fill excess
production capacity at the Company's manufacturing and enameling plants. The
Company currently has no plans to operate a wholesale distribution business in
the United States.

Licensing and Franchising

   As of January 31, 2000, the Company licensed 49 Barbeques Galore stores,
generally in rural areas of Australia, and franchised 11 Barbeques Galore
stores in the United States. The Company receives annual licensing fees and
franchising royalties, and benefits 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, 2000, total net sales to licensee and franchisee stores was A$17.9
million and US$6.5 million, respectively. The Company estimates that the
retail sales of Barbeques Galore products alone by licensees and franchisees
was approximately A$28.1 million and US$3.8 million, respectively, in the same
period. A number of the Company's existing licensees have refurbished their
stores in accordance with the Company's established criteria (although no
licensee is required to do so), and the Company maintains an assistance
program to provide advice relating to these enhancements. The Company may
license additional Barbeques Galore stores in Australia on a selective basis,
although it does not intend to franchise any additional stores in the United
States (except within geographical territories as required under existing
franchising agreements).

Competition

   The retail and distribution markets for barbecues and the Company's other
product offerings are highly competitive in both the United States and
Australia. The Company's 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. The
Company's manufacturing and wholesale operations compete with many other
manufacturers and distributors throughout the world, including high-volume
manufacturers of barbecues and home heaters. Many of the Company's competitors
have greater financial, marketing, distribution and other resources than the
Company and, particularly in the United States, may have greater name
recognition than the Company. Furthermore, the lack of significant barriers to
entry into the Company's segment of the retail industry may also result in new
competition in the future. Barbeques Galore competes for retail customers
primarily based on its broad assortment of competitively priced, quality
products (including proprietary and exclusive products), convenience, customer
service, the attractive presentation of merchandise within its store and on
its web site. The Company believes that the following business strengths have
contributed significantly to its past success and intends to further
capitalize on those strengths in executing its growth strategy.

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   Selection of Merchandise. Barbeques Galore offers an extensive selection of
quality barbecues and barbecue accessories designed to suit consumer
lifestyles, preferences and price points. Its stores offer a variety of
barbecues, with a range of styles, finishes and special features, including
the Company's 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,
Barbeques Galore offers consumers one-stop shopping convenience for virtually
all of their barbecue cooking needs.

   Store Environment. The Company's stores offer a shopping environment which
is consistent with its outdoor lifestyle image and promotes the total
barbecuing experience. The Company's 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 the
Company's product lines. An array of barbecues is displayed on the selling
floor complete with accessories to provide the consumer the opportunity to
compare and contrast different models. Store presentation is based on a
detailed and comprehensive store plan regarding visual merchandising to assure
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 9,496 square feet in Australia.

   Customer Service. The Company recognizes that customer service is
fundamental to its success. The Company has a "satisfaction guaranteed" return
policy and honors all manufacturer warranties for products sold at its 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. The Company monitors each store's service
performance and rewards high quality customer service both on a team and
individual level. The Company believes that its employees' knowledge of its
product offerings and the overall barbecue market, and their understanding of
customer needs, are critical components of providing customer service and
distinguish it from its competitors.

   Convenient Store Locations. The Company positions its 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 its site selection criteria, the Company believes it has been effective in
identifying successful new store locations.

   On-line Retail Opportunities. In May 1999, the Company's 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, the Company is
reaching customers in regions where it currently does not have a retail store
presence.

   Integrated Manufacturing Operation; New Product Development. Through its
vertically integrated operations, the Company manufactures a proprietary line
of barbecues and home heaters for its retail stores. In addition, the Company
has an experienced in-house research and development team dedicated to
barbecue and home heater market analysis and product development that can
identify and respond to changing consumer trends. The Company believes that
controlling its own manufacturing operations allows it to realize higher
margins, control product development and improve inventory flexibility and
supply.

   Experienced Management Team. The Company's senior management team has an
average of more than 30 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 149 stores (including 60 licensed or franchised
stores) as of January 31, 2000. The Company believes that management's
experience positions it to execute its business and growth strategies. The
directors and executive officers of the Company beneficially own approximately
40.7% of the Company's outstanding Ordinary Shares.

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Employees

   As of January 31, 2000, the Company employed a total of 1,174 persons, on a
permanent, part-time or temporary basis. The number of temporary employees
fluctuates depending on seasonal needs. None of the Company's employees is
covered by a collective bargaining agreement, although to the Company's
knowledge, approximately six workers in its enameling plant belong to a labor
union. The Company considers its relations with employees to be good and
believes that its employee turnover rate is low.

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, the Company owns a federal trademark registration for the
distinctive configuration of its Turbo grill. The Company also uses 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, the Company uses 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. The Company further utilizes a number of different
trademarks relating to various barbecues, barbecue accessories, home heaters,
camping equipment and outdoor furniture manufactured or offered by the
Company. The Company is not presently aware of any claims of infringement or
other challenges to the Company's right to use its marks and the Company's
name in the United States.

   The Company also owns a number of copyrighted works, including brochures
and other literature about its products and many drawings and designs that it
uses in marketing those products.

Governmental Regulation

   Many of the Company's 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, the
Company's 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. The Company believes that it is in substantial compliance
with such regulations. The Company's 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 "Factors That
May Affect Quarterly or Annual Operating Results--Product Liability and
Governmental and Other Regulations."

   In addition, if the Company's level of foreign ownership exceeds 40%, the
Company would be considered a foreign person and would require certain
governmental approvals in connection with certain acquisitions in Australia.
See "Item 6--Exchange Controls and other Limitations Affecting
Securityholders."

Factors That May Affect Quarterly or Annual Operating Results

   The following are certain factors that should be considered in evaluating
the business, financial conditions and results of operations of the Company.
However, these factors should not be considered to be exclusive, and readers
are urged to consider the statements made elsewhere in this Annual Report on
Form 20-F.

   Implementation of Growth Strategy. The growth of the Company is dependent,
in large part, upon the Company's ability to successfully execute its Company-
owned store expansion program in the United States and its store refurbishment
plan in Australia. Pursuant to the U.S. store expansion program, the Company
opened 10

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new stores in fiscal 1998 and opened 10 new stores and closed one store in
fiscal 1999. During the 12 months ended January 31, 2000 the Company opened 12
new stores (including four franchise stores). The Company also currently
intends to open approximately 12 new stores in fiscal 2001 and approximately
15 new stores in fiscal 2002 in the United States. The Company incurred
capital expenditures relating to this program in the United States of
approximately US$1.8 million, US$1.9 million and US$1.6 million in fiscal
1998, 1999 and 2000, respectively and expects to incur approximately US$3.2
million and US$4.0 million in each of fiscal 2001 and 2002. Pursuant to the
Company's Australian store refurbishment program, in fiscal 1998, the Company
remodeled five existing stores, opened one new store, relocated one store and
closed one store. In fiscal 1999, the Company refurbished one store, relocated
two stores and opened one new store. During the 12 months ended January 31,
2000 the Company opened two new stores, relocated three stores and refurbished
one store. The Company further intends to refurbish one store and relocate one
store in fiscal 2001. The Company incurred capital expenditures relating to
this program in Australia of approximately A$2.5 million, A$1.4 million and
A$1.8 million in fiscal 1998, 1999 and 2000, respectively and expects to incur
approximately A$0.8 million in fiscal 2001. The proposed expansion is
substantially more rapid than the Company's historical growth. 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. In
addition, the Company must be able to hire, train and retain competent
managers and personnel and manage the systems and operational components of
its growth. There can be no assurance that the Company will be able to locate
suitable store sites or enter into suitable lease agreements. In addition,
there can be no assurance that, as the Company opens 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. The failure of the Company to
open new stores or relocate or remodel existing stores on a timely basis,
obtain acceptance in markets in which it currently has limited or no presence,
attract qualified management and personnel or appropriately adjust operational
systems and procedures, would adversely affect the Company's future operating
results.

   The success of the Company's growth strategy may also depend upon factors
beyond its immediate control. The Company has 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 it accelerates 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 the Company's new store expansion. Similarly, changes
in national, regional or local real estate and market conditions could limit
the ability of the Company to expand into target markets or sites.

   As part of its growth strategy, the Company intends to open stores in new
markets where it 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 its store networks in existing markets. Expansion into new markets may
present operating and marketing challenges that are different from those
encountered in the past by the Company in its existing markets. As a result of
its expansion program and its entry into new markets, primarily in the United
States, and its refurbishment program in Australia, the Company has
experienced, and expects to continue to experience, an increase in store pre-
opening costs and refurbishment-related expenses. There can be no assurance
that the Company will anticipate all of the challenges and changing demands
that its expansion will impose on its management or operations and the failure
to adapt thereto, would adversely affect the Company's implementation of its
growth strategy.

   If the Company determined to, or was required to, close a Barbeques Galore
store, the Company would attempt to sublet the vacated store space in order to
cover ongoing lease costs. Even if the Company were able to sublet such store,
the Company may incur significant costs in writing off leasehold improvements.

   In addition, the Company's proposed expansion plans will result in
increased demand on the Company's managerial, operational and administrative
resources. As a result of the foregoing, there can be no assurance that the
Company will be able to successfully implement its growth strategies, continue
to open new stores or

                                       8
<PAGE>

maintain or increase its current growth levels. The Company's failure to
achieve its expansion plan could have a material adverse effect on its future
business, operating results and financial condition. See "--Management of
Operational Changes" and "--Reliance on Systems."

   Effect of Economic Conditions and Consumer Trends. The success of the
Company's 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 the Company's business and results of
operations. Such effects may be exacerbated by the significant current
regional concentration of the Company's business in Australia and the Pacific
West, Southwestern and East coast U.S. markets.

   The success of the Company depends on its ability to anticipate and respond
to changing merchandise trends and consumer demands in a timely manner. The
Company believes it has benefited from a lifestyle trend toward consumers
spending more quality time together in outdoor family gatherings and social
activities. Any change in such trend could adversely affect consumer interest
in the Company's major product lines. Moreover, the Company's 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 the Company
misjudges either the market for its merchandise or its customers' purchasing
habits, it may experience a material decline in sales or be required to sell
inventory at reduced margins. The Company could also suffer a loss of customer
goodwill if its manufacturing operations or stores do not adhere to its
quality control or service procedures or otherwise fail to ensure satisfactory
quality of the Company's products. These outcomes may have a material adverse
effect on the Company's business, operating results and financial condition.

   Management of Operational Changes. The Company has identified a number of
areas for improvement in its operations which will have a significant impact
on the implementation of its growth strategy. The Company has, in recent
years, replaced or upgraded its management information systems and currently
plans to introduce automated replenishment of store inventory in Australia in
the near term. In the United States, the Company has recently upgraded to the
latest version of Point of Sale ("POS") software by JDA Software Group Inc.
("JDA"). The total capital expenditure for such project was not significant.
In addition, the Company recently transferred its general ledger and accounts
payable applications from its existing computer system to the above-mentioned
JDA software system. The Company completed the relocation of its enameling
operations in fiscal 1999, to the same facilities as its barbecue and home
heater manufacturing operations adjacent to its Australian headquarters, with
the in-line powder coating operation commencing mid-November 1998. In
addition, the Company rearranged the assembly, warehouse and Australian
distribution operations to further improve its production flow, inventory
control and distribution management. The relocation of the Company's 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 a number of building, environmental and
other governmental permits. In addition, as the Company expands into new
regions or accelerates the rate of its U.S. store expansion, the Company may
need additional warehouse capacity. In order to meet such needs, the Company
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 or expand its current warehouse facilities in the United States or
utilize public warehousing space, in each case depending on availability and
cost at such time. There can be no assurance as to whether or when the Company
will be able to effect its systems upgrades, any expansion or replacement of
distribution facilities, or any other necessary operational changes that may
arise, or that the Company will not incur cost overruns or disruptions in its
operations in connection therewith. The failure of the Company to effect these
and any other necessary operational changes on a timely basis would adversely
affect the ability of the Company to implement its growth strategy and,
therefore, its business, financial condition and operating results.

   Competition. The retail and distribution markets for barbecues and the
Company's other product offerings are highly competitive in both the United
States and Australia. The Company's retail operations compete against

                                       9
<PAGE>

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 and mail order
companies. The Company's manufacturing and wholesale operations compete with
many other manufacturers and distributors throughout the world, including
high-volume manufacturers of barbecues and home heaters. Barbeques Galore
competes for retail customers primarily based on its broad assortment of
competitively priced, quality products (including proprietary and exclusive
products), convenience, customer service and the attractive presentation of
merchandise within its stores. Many of the Company's competitors have greater
financial, marketing, distribution and other resources than the Company, and
particularly in the United States, may have greater name recognition than the
Company. Furthermore, the lack of significant barriers to entry into the
Company's segment of the retail industry may also result in new competition in
the future.

   Seasonality; Weather; Fluctuations in Results. The Company's business is
subject to substantial seasonal variations which have caused and are expected
to continue to cause, its quarterly results of operations to fluctuate
significantly. Historically, the Company has realized a major portion of its
net sales and a substantial portion of its 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
its peak selling seasons (late spring and early summer), the Company
substantially increases its inventory levels and hires 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, the Company regularly
experiences monthly losses. These seasonal trends result in the Company
experiencing a loss in its first fiscal quarter. The Company believes this is
the general pattern associated with its segment of the retail industry and
expects this pattern will continue in the future. Partially offsetting the
effects of seasonality, the Company operates in both the Southern and Northern
hemispheres, which have opposite seasons, and offers fireplace products and
(in Australia) home heaters in the fall and winter months. However, sales of
any of the Company's 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. The Company's 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. The Company has in the
past experienced quarterly losses, particularly in its fiscal first quarter,
and expects that it will 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 the Company's
sales or gross margins during peak seasons or periods were substantially below
expectations, the Company's quarterly and annual results would be adversely
affected.

   Reliance on Systems. In the United States, the Company has installed a JDA
system on an IBM AS400 platform, which allows it to manage distribution,
inventory control, purchasing, sales analysis, warehousing and financial
applications. At the store level, the Company has installed POS computer
terminals as its 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 its POS terminals and transferred into the
main JDA system daily. 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, the Wang VS system has been replaced by a SUN Systems Ultra
60 running a UNIX environment. The Company has also installed a Microsoft NT
Server for all its desktop applications with the Microsoft suite of software.

   The Company's 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. The Company relies upon
its

                                      10
<PAGE>

existing management information systems in operating and monitoring all major
aspects of the Company's business, including sales, gross margins,
warehousing, distribution, purchasing, inventory control, financial accounting
and human resources. Any disruption in the operation of the Company's
management information systems, or the Company's failure to continue to
upgrade, integrate or expend capital on such systems as its business expands,
could have a material adverse effect upon the Company's business, operating
results and financial condition.

   As the head office system was not able to handle dates beyond January 1,
2000, the Company decided to replace its existing hardware and software,
rather than rework the existing software to be Year 2000 compatible and
appointed Berger Software, an Australian software house, specializing in
distribution and warehouse management software, to supply the main business
application software. The new system handles financial accounting functions
and the Company has integrated an Executive Information system to provide
additional interrogation capabilities. The replacement core IT system has been
represented Year 2000 compliant and was commissioned on August 1, 1999.

   The existing store POS software is Year 2000 compatible and runs in a DOS
environment on stand alone store-based PCs. These systems are 486MHz PCs, some
of which are almost five years old and will be replaced with a new POS system
during the second quarter of fiscal 2001. The new system will run a Windows NT
network with IBM Pentium PCs acting as POS registers. The store checkout
registers will be networked to an In Store Processor ("ISP") which will be
located in the back office of each store. Consolidated data will thus become
readily available on the ISP of each store's activity and the ISP will be
polled daily to transfer the captured store data back to head office for
integration into the head office system. The POS application software has been
supplied by SVI Systems, a U.S. based software company specializing in retail
solution software.

   The new POS system is currently being acceptance tested with the intention
being to pilot the software at certain stores prior to installation throughout
the group and is currently scheduled for completion by the end of June 2000.

   Dependence on Key Employees. The Company's success is largely dependent on
the efforts and abilities of its executive officers, particularly, Sam Linz,
Chairman of the Board, Robert Gavshon, Deputy Chairman of the Board, John
Price, Head of Research and Product Development and Director, and Sydney
Selati, President of Barbeques Galore, Inc., the Company's U.S. operating
subsidiary and Director. These individuals have an average of 17 years of
experience with the Company and have chief responsibility for the development
of the Company's current business and growth strategies. Benjamin A. Ramsey,
Jr. was promoted to the newly created position of Executive Vice President of
Barbeques Galore, Inc. on August 26, 1999 and simultaneously assumed
responsibility for store operations, human resources, training and
development, new store development and barbecue sales to real estate
developers and contractors. The Company does not have employment contracts
with any of its executive officers. The loss of the services of these
individuals or other key employees could have a material adverse effect on the
Company's business, operating results and financial condition. The Company's
success is also dependent upon its ability to continue to attract and retain
qualified employees to meet the Company's needs for its new store expansion
program in the United States and its store refurbishment plans in Australia.

   Risks Associated with International Operations; Dependence on Significant
Vendors and Suppliers. 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, subjection to multiple taxation regimes and potentially adverse tax
consequences, any of which could materially adversely affect the Company's
business, operating results and financial condition.


                                      11
<PAGE>

   The Company purchases certain of its finished inventory and manufacturing
parts and all of its raw materials from numerous vendors and suppliers and
generally has no long-term purchase contracts with any vendor or supplier.
During the twelve months ended January 31, 2000, the Company purchased
inventory from over 500 vendors in the United States, Australia and Asia. In
such period, approximately 25% of the Company's merchandise purchases were
obtained from the Company's ten largest vendors. Although no vendor accounted
for more than 5% of the Company's merchandise purchases in such period, the
Company considers certain barbecue brands to be significant to its business,
especially in the United States. Also during such period, the Company
purchased barbecue and home heater parts from over 90 suppliers in Asia,
Australia and North America. SMS and Bromic supplied the Company with
approximately 18% and 11% respectively, of the Company's factory parts and raw
material purchases during this period and approximately 64% of the Company's
factory parts and raw material purchases were obtained from the Company's ten
largest suppliers. The Company's 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 the Company's key suppliers currently provide the Company with certain
purchasing incentives, such as volume rebates and trade discounts. A reduction
or discontinuance of these incentives could have an adverse effect on the
Company. Although the Company believes that its relationships with its vendors
and suppliers are good, any vendor or supplier could discontinue selling to
the Company at any time.

   Product Liability and Governmental and Other Regulations. Many of the
Company's 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, the Company's
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. Compliance with such regulations has not in the past
had, and is not anticipated to have, a material adverse effect on the
Company's business, operating results and financial condition. Nonetheless,
such regulations have had, and can be expected to have, an increasing
influence on product claims, manufacturing, contents, packaging and heater
usage. In addition, 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 a Company product. 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. Even if such
circumstances were beyond the Company's control, the Company's business,
operating results and financial condition could be materially adversely
affected. In the event of such an occurrence, the Company could incur
substantial litigation expense, receive adverse publicity, suffer a loss of
sales or all or any of the foregoing. Although the Company maintains liability
insurance in both Australia and the United States, there can be no assurance
that such insurance will provide sufficient coverage in any particular case.
In Australia, the limit of the Company's product liability coverage is A$100
million, any one claim and in the aggregate. In the United States, the
Company's U.S. operating subsidiary is covered by a policy having general
liability coverage limited at US$25 million. There is no assurance that
certain jurisdictions in which the Company operates will not impose additional
restrictions on the sale or use of the Company's products.

   In addition, the Company's 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. The Company's distribution facilities
are also subject to workplace safety and labor relations regulations. The
Company believes that it is in substantial compliance with such regulations.
The sale of certain products by the Company may result in technical violations
of certain of the Company's leases which prohibit the sale of flammable
materials in or on the leased premises. As a barbecue and barbecue accessories
store, the Company sells lighter fluid, lighters, matches and similar products
which may be considered flammable when in contact with open flame or
activated. The Company does not store containers of gas for barbecue grills in
its stores. The Company stores matches, lighters and the like in closed
containers or

                                      12
<PAGE>

in displays where the chance of activation is remote, and does not store such
items near open flames. Over the Company's operating history, the Company's
landlords have been made aware that the Company sells such products. To date,
no landlord has terminated or threatened termination of any lease due to such
sales.

   The foregoing regulations and restrictions could have a material adverse
effect on the Company's business, operating results or financial condition.

   Uncertainties Regarding Manufacturing and Distribution of Merchandise. The
Company manufactures a substantial portion of the barbecues and home heaters
sold in its stores and distributes merchandise to Barbeques Galore stores
primarily from its distribution centers located at its headquarters in
Australia and Irvine, California. Throughout the manufacturing process, the
Company utilizes heavy machinery and equipment to produce and assemble
barbecues and home heaters from parts and raw materials supplied from numerous
third party suppliers. In distributing merchandise, the Company relies upon
third party sea carriers to ship its manufactured products from Australia to
the United States, as well as third party surface freight carriers to
transport all its merchandise from its distribution centers and warehouses to
stores. Accordingly, the Company is subject to numerous risks associated with
the manufacturing and distribution of its merchandise, including supply
interruptions, mechanical risks, labor stoppages or strikes, inclement
weather, import regulation, changes in fuel prices, changes in the prices of
parts and raw materials, economic dislocations and geopolitical trends. In
addition, the Company believes that, while its distribution facilities are
sufficient to meet Barbeques Galore's current needs, the Company may need
another distribution center or larger facilities in the United States or
Australia to support the further growth and expansion of stores.

   Risks Related to Franchised and Licensed Stores. As of January 31, 2000,
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 the Company. 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. The Company monitors its licensed and franchised stores to assure
their conformity to Barbeques Galore's standards and image and requires the
licensees and franchisees to comply with Barbeques Galore's merchandising and
advertising guidelines. Although the Company believes that its licensees and
franchisees are presently in substantial compliance with Company guidelines
and that its license and franchise arrangements have not been problematic in
any material respect in the past, serious or protracted failures by licensees
or franchisees to adhere to Company standards could adversely affect customer
loyalty and diminish the Company's brand name or reputation for quality
products and services, and could require the Company to devote significant
management attention and resources to enforcing its rights under such
agreements. Conversely, if the Company fails to provide adequate support
services or otherwise breaches its 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 thereunder. The licensing agreements in
Australia are terminable at will (absent fraud) by the licensees only,
generally upon sixty days' notice.

   Currency Fluctuations.  The Company prepares its consolidated financial
statements in Australian dollars, but a substantial portion of the Company's
revenues and expenses are denominated in U.S. dollars and, to a lesser extent,
other foreign currencies. Accordingly, the Company is 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 the Company
transacts its business. This currency imbalance has resulted in, and may
continue to result in, foreign currency transaction gains and losses. The
Company's Australian operations generally hedge a major portion of its imports
against exchange rate fluctuations with respect to the Australian dollar.
However, in its U.S. operations, the Company has not, and it currently does
not, actively hedge against exchange rate fluctuations, although it may elect
to do so in the future. Accordingly, changes in exchange rates may have a
material adverse effect on the Company's 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 the Company's business, operating

                                      13
<PAGE>

results and financial condition. Such currency issues could, thus, affect the
market price for the American Depositary Shares ("ADSs"). Although the Company
does 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
"Exchange Rate Information," "Item 5--Nature of Trading Market" and "Item 6--
Exchange Controls and Other Limitations Affecting Securityholders."

ITEM 2. DESCRIPTION OF PROPERTY.

   The Company currently leases all of its stores and expects that its policy
of leasing, rather than owning, store properties will continue as it expands.
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). The Company guarantees two franchised store
leases, one of which is secured by the franchisee's rights in its Barbeques
Galore franchise.

   In Sydney, Australia, the Company owns its headquarters and a 151,000
square foot combined distribution and warehousing facility, a 75,000 square
foot portion of which was purchased by the Company 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. The
Company additionally owns its own assembly facility in Australia, measuring
51,000 square feet which was purchased for A$3.5 million during the first
quarter of fiscal 1999 and which also accommodates part of the Company's
administrative facilities. The additional Company-owned space replaced the
distribution facility that the Company previously leased in Australia and
eliminated the necessity to utilize significant public warehousing space in
Sydney, in the foreseeable future. The Company leases the adjacent 75,000
square foot barbecue and home heater factory (under a five-year lease with
four successive five-year renewal options for a total maximum lease term at
present of 20 years) and uses limited public warehousing space in Brisbane. In
addition, the Company completed the relocation of its enameling operations in
fiscal 1999 to the same facilities as its barbecue and home heater
manufacturing operations adjacent to its Australian headquarters, with the in-
line powder coating operation commencing mid-November 1998. In Irvine,
California, the Company leases its 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 "Description of Business--Manufacturing" and "Description of
Business--Distribution".

   The Company's ownership interest in its Sydney headquarters and all of its
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 the Company. See Exhibit No. 10.3 in "Item 19--
Financial Statements and Exhibits."

ITEM 3. LEGAL PROCEEDINGS.

   There are no material pending legal proceedings against the Company. The
Company is 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 the
business, results of operations or financial condition of the Company.

ITEM 4. CONTROL OF REGISTRANT.

   The Company is not, to its knowledge, directly owned or controlled by any
other corporation or foreign government.

                                      14
<PAGE>

   The Company is not aware of any voting arrangements which may, at any
subsequent date, result in a change of control of the Company.

   The following table sets forth certain information regarding the beneficial
ownership of the Ordinary Shares as of March 31, 2000 by (i) each person or
entity known to the Company to own beneficially 10% or more of the outstanding
Ordinary Shares, and (ii) all directors and executive officers of the Company
as a group:

<TABLE>
<CAPTION>
                                                Amount and Nature
 Title of Class  Name of Beneficial Owner   of Beneficial Ownership(1) Percent of Class
 --------------  ------------------------   -------------------------- ----------------
 <C>             <S>                        <C>                        <C>
 Ordinary Shares Sam Linz................           1,303,439 (2)           28.9%
                 All directors and
                 executive officers
                 as a group (10
                 persons)................           1,725,826               40.7%
</TABLE>

(1) Applicable percentage of ownership for each shareholder is based on
    4,541,652 Ordinary Shares outstanding as of March 31, 2000, 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 but excludes 161,091 Ordinary Shares issuable upon the
    exercise of stock options granted under the 1997 Share Option Plan. There
    are an additional 44,972 authorized and unissued Ordinary Shares reserved
    for the grant of stock options under the 1997 Share Option Plan.
    Beneficial ownership is determined in accordance with the rules of the
    Securities and Exchange Commission and generally includes voting or
    investment power with respect to securities. Ordinary shares subject to
    options exercisable within sixty (60) days of the date hereof, 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. Except as indicated by footnote, the persons named in the
    table have sole voting and investment power with respect to all Ordinary
    Shares shown as beneficially owned by them.

(2) Includes 162,205 Ordinary Shares held by Rebel Concepts Pty Limited
    ("Concepts"), 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 the Company, owning the remaining 22.5% and 5.0%,
    respectively, 167,402 Ordinary Shares held by Geblon Pty Limited
    ("Geblon"), 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.

                                      15
<PAGE>

                           EXCHANGE RATE INFORMATION

   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, 2000, the
Noon Buying Rate was US$0.6382 = 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 the Company's earnings, the book value of its assets
and its 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 5--Nature of Trading Market" and "Item 6--
Exchange Controls and Other Limitations Affecting Security holders."

<TABLE>
<CAPTION>
                                                                          Period
Twelve Months Ended January 31,                 Average(1)   High   Low    End
-------------------------------                ------------ ------ ------ ------
<S>                                            <C>          <C>    <C>    <C>
1996
  First Quarter...............................    0.7383    0.7590 0.7229 0.7282
  Second Quarter..............................    0.7248    0.7442 0.7088 0.7385
  Third Quarter...............................    0.7508    0.7704 0.7312 0.7595
  Fourth Quarter..............................    0.7427    0.7607 0.7339 0.7463
1997
  First Quarter...............................    0.7717    0.7915 0.7483 0.7875
  Second Quarter..............................    0.7926    0.8025 0.7727 0.7727
  Third Quarter...............................    0.7895    0.7998 0.7731 0.7917
  Fourth Quarter..............................    0.7908    0.8162 0.7623 0.7623
1998
  First Quarter...............................    0.7786    0.7982 0.7574 0.7806
  Second Quarter..............................    0.7572    0.7866 0.7349 0.7478
  Third Quarter...............................    0.7279    0.7508 0.6866 0.7011
  Fourth Quarter..............................    0.6709    0.7126 0.6357 0.6845
1999
  First Quarter...............................    0.6650    0.6868 0.6440 0.6520
  Second Quarter..............................    0.6082    0.6520 0.5867 0.6070
  Third Quarter...............................    0.5985    0.6328 0.5550 0.6250
  Fourth Quarter..............................    0.6279    0.6457 0.6070 0.6297
2000
  First Quarter...............................    0.6374    0.6620 0.6179 0.6620
  Second Quarter..............................    0.6583    0.6712 0.6415 0.6522
  Third Quarter...............................    0.6482    0.6633 0.6300 0.6376
  Fourth Quarter..............................    0.6451    0.6687 0.6265 0.6382
</TABLE>
--------
(1) Determined by averaging the closing price for each date in the period.

ITEM 5. NATURE OF TRADING MARKET.

Market Information

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

                                      16
<PAGE>

   From April 1987 through December 1996, the Company listed its Ordinary
Shares for trading on the ASE. In December 1996, the Company voluntarily
delisted from the ASE and since such time, there had 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 American Depositary Shares on Nasdaq for the fiscal periods
indicated.

<TABLE>
<CAPTION>
Fiscal Period                                                    High     Low
-------------                                                  -------- -------
<S>                                                            <C>      <C>
Fiscal Year ended January 31, 1999
  First Quarter............................................... US$11.00 US$6.38
  Second Quarter..............................................    10.19    7.25
  Third Quarter...............................................     7.50    2.63
  Fourth Quarter..............................................     7.63    4.50
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
</TABLE>

   As of March 15, 2000, there were 17 holders of record of American
Depositary Shares and 32 additional holders of record of the Company's
Ordinary Shares. Of the Ordinary Shares, to the Company's knowledge, nine
holders of record reside in the United States. The Company is unable to
determine how many holders of record of American Depositary Shares reside in
the U.S.

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITYHOLDERS.

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 the outstanding shares of the Company
(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 shares in the Company 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 its 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, the Company would be considered a foreign person
under the Takeovers Act. In such event, the Company would be required to
obtain the approval of the Treasurer for the Company, together with its
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 the Company would also be included in
determining the foreign ownership of any Australian company or business in
which it may choose to invest. Since the Company has no current plans for any
such acquisitions and only owns commercial property, any such approvals
required to be obtained by the Company as a foreign person under the Takeovers
Act will not affect the Company's current or future ownership or lease of
property in Australia. However, there would be no material tax consequence to
shareholders of the Company (including holders of ADSs) resulting from the
Company 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 the Company's equity securities will be approximately
65.2%. The level of foreign

                                      17
<PAGE>

ownership could also increase in the future if existing Australian investors
decide to sell their shares into the U.S. market or if the Company were to
sell additional Ordinary Shares or ADSs in the future.

   The Company has additionally provided that all stock options outstanding
under the Company's Executive Share Option Plan at such time as the Company
becomes subject to a takeover bid pursuant to which the offeror acquires at
least thirty percent (30%) of the outstanding Ordinary Shares of the Company
shall become immediately exercisable for a period of up to 120 days, measured
from the date the Board notifies the optionee of the takeover bid. Similarly,
the Company has provided that all stock options outstanding under the
Company's 1997 Share Option Plan at such time as the Company is 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 Share Option Plan which became
exercisable on February 1, 1999 and 375,116 Ordinary Shares underlying stock
options granted under the Company's 1997 Share Option Plan, which, barring
acceleration, will become exercisable as to 213,650 in three equal
installments on November 9, 2001, November 9, 2002 and October 9, 2003 and as
to 161,466 in three equal installments on January 7, 2003, January 7, 2004 and
December 7, 2004 according to the terms of the 1997 Share Option Plan. Such
investment restrictions and dilutive acceleration events could have a material
adverse effect on the Company's 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 the
Company, including attempts that might result in a premium over market price
to holders of ADSs. See "Item 12--Executive Share Option Plan" and "Item 12--
1997 Share Option Plan."

   The Constitution of the Company contains certain provisions that could
impede any merger, consolidation, takeover or other business combination
involving the Company or discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of the Company. Provisions
contained in the Constitution , among other things, (i) in effect divide the
Board of Directors of the Company into three classes, which serve for
staggered three-year terms, (ii) 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, (iii) require extended notice (of
up to 28 days) for special resolutions considered by the Board of Directors,
and (iv) authorize the Board of Directors, without any vote or action by
shareholders of the Company, to issue, out of the Company's 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 the Company currently has 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 share 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 the Company.

   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. Under the existing law, the rate of Australian tax on capital gains
realized by non-residents of Australia is 36% for companies and, for
individuals, the rate of tax increases from 29% to a maximum of 47%. The rate
of Australian tax for non-resident companies will reduce to 34% for the 2001
income year (for most taxpayers, the year ended June 30, 2001) and to 30%
thereafter. Non-resident individuals are entitled to an exemption of 50% of
otherwise taxable capital gains on the disposal of Ordinary Shares or ADSs
that have been held for 12 months or more. These circumstances are described
in "Item 7--Taxation."

ITEM 7. TAXATION.

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

                                      18
<PAGE>

(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, 2001. 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 36% for companies, reducing to 34% 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 shares or ADSs are held for 12 months or more, an
individual is 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

                                      19
<PAGE>

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.


                                      20
<PAGE>

ITEM 8. SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
                                                   Selected Consolidated Financial Data
                                                       Seven Months
                                Fiscal Year Ended      Ended January
                                    June 30,              31,(1)           Twelve Months Ended January 31,(1)
                               --------------------  ------------------  ------------------------------------------
                                 1995       1996       1996      1997      1997       1998       1999       2000
                               ---------  ---------  --------  --------  ---------  ---------  ---------  ---------
                                                    In thousands, except per share data
Statement of Operations Data:
<S>                            <C>        <C>        <C>       <C>       <C>        <C>        <C>        <C>
Net sales...............       A$138,057  A$141,691  A$92,074  A$98,752  A$148,369  A$179,325  A$224,984  A$260,683
Cost of goods sold (2)..          92,290     98,158    62,789    67,955    103,324    122,072    152,708    176,261
                               ---------  ---------  --------  --------  ---------  ---------  ---------  ---------
Gross margin............          45,767     43,533    29,285    30,797     45,045     57,253     72,276     84,422
Selling, general and
 administrative
 expenses...............          40,058     39,339    24,328    25,740     40,751     48,992     61,796     72,358
Store pre-opening
 costs..................              64        153       114       200        239        435        810        411
Relocation and closure
 costs (3)..............             --         875       --        461      1,336         20        --         --
                               ---------  ---------  --------  --------  ---------  ---------  ---------  ---------
Operating income........           5,645      3,166     4,843     4,396      2,719      7,806      9,670     11,653
Equity in income of
 affiliates, net of
 tax....................             963        836       709       252        379        547        514        551
Interest expense........           2,230      2,262     1,619     1,593      2,236      3,334      2,163      2,276
Other expense (income)
 (4)....................             --      (2,303)   (2,303)    1,132      1,132        --         --         --
                               ---------  ---------  --------  --------  ---------  ---------  ---------  ---------
Income (loss) before
 income tax.............           4,378      4,043     6,236     1,923       (270)     5,019      8,021      9,928
Income tax expense
 (benefit)..............             573         98     1,286       366       (822)     1,488      2,814      3,714
                               ---------  ---------  --------  --------  ---------  ---------  ---------  ---------
Net income..............       A$  3,805  A$  3,945  A$ 4,950  A$ 1,557  A$    552  A$  3,531  A$  5,207  A$  6,214
                               =========  =========  ========  ========  =========  =========  =========  =========
Basic earnings per share
 (5)....................       A$   0.86  A$   0.89  A$  1.11  A$  0.38  A$   0.13  A$   1.43  A$   1.15  A$   1.37
                               =========  =========  ========  ========  =========  =========  =========  =========
Diluted earnings per
 share (5)..............       A$   0.86  A$   0.89  A$  1.11  A$  0.38  A$   0.13  A$   1.18  A$   1.13  A$   1.34
                               =========  =========  ========  ========  =========  =========  =========  =========
Weighted average shareso
 utstanding (5).........           4,450      4,450     4,450     4,073      4,228      2,473      4,542      4,542
                               =========  =========  ========  ========  =========  =========  =========  =========
In thousands
Balance Sheet Data:
Working capital                A$ 26,856  A$ 24,710  A$25,139  A$22,552  A$ 22,552  A$ 36,917  A$ 41,162  A$ 41,210
Total assets............          67,624     66,562    67,544    67,970     67,970     82,074    101,202    112,879
Total long-term debt....          17,690     15,819    11,631    34,276     34,276     18,121     29,030     25,929
Shareholders' equity....          26,326     27,817    30,349    10,165     10,165     43,927     49,113     54,923
Selected U.S. Operating
 Data:
Stores open at period-
 end....................              17         21        19        25         25         34         43         51
Average net sales per
 store (in thousands)
 (6)....................       A$  1,630  A$  1,572  A$   862  A$   822  A$  1,579  A$  1,731  A$  2,292  A$  2,287
Comparable store sales
 increase (7)...........            21.2%      10.0%     10.0%      4.1%       6.5%      18.9%      10.9%      14.6%
Selling square feet (in
 thousands).............            51.3       59.5      55.7      72.7       70.2       96.6      129.8      168.7
Sales per selling square
 foot...................       A$    519  A$    489  A$   279  A$   251  A$    469  A$    538  A$    637  A$    637
Selected Australian
 Operating Data:
Stores open at period-
 end....................              31         31        32        32         32         32         33         35
Average net sales per
 store (in thousands)
 (6)....................       A$  1,844  A$  2,081  A$ 1,446  A$ 1,658  A$  2,222  A$  2,411  A$  2,702  A$  2,791
Comparable store sales
 increase (8)...........             4.3%       8.1%      6.0%     10.6%      11.6%       5.0%       8.8%       3.9%
Selling square feet (in
 thousands).............           273.9      279.9     272.3     281.3      276.6      291.2      307.1      332.3
Sales per selling square
 foot...................       A$    216  A$    230  A$   165  A$   182  A$    256  A$    265  A$    282  A$    289
</TABLE>
-------
(1) As of April 9, 1997, the Company changed its fiscal year end from June 30
    to January 31 (effective January 31, 1997).
(2) Cost of goods sold includes the cost of merchandise sold during the
    periods, warehouse, distribution and store-level occupancy costs.

                                       21
<PAGE>

(3) Includes A$262,000 incurred during the year ended June 30, 1996 in
    connection with the restructuring of the Company's Australian licensing
    division, A$613,000 incurred in June 1996 in connection with the
    relocation of the Company's barbecue manufacturing operations and a
    A$369,000 provision accrued in January 1997 in connection with the planned
    relocation of the Company's enameling facilities.
(4) Includes a A$2.3 million gain during the year ended June 30, 1996, related
    to the Company's sale of its equity interest in GLG New Zealand and a
    A$1.1 million charge incurred in December 1996 in connection with the
    Capital Reduction and delisting.
(5) Basic earnings per share are computed by dividing net income by the
    weighted average number of ordinary shares. Diluted earnings per share are
    computed by dividing net earnings available to ordinary shareholders, as
    adjusted for the effect of the elimination of after-tax interest expense
    related to assumed conversion of the convertible notes, by the weighted
    average number of Ordinary Shares and dilutive ordinary share equivalents
    for the period.
(6) For stores open at beginning of period indicated.
(7) The number of comparable stores used to compute such percentages was 17
    for each of fiscal 1995 and 1996, 16 and 19 for the seven-month periods
    ended January 31, 1996 and 1997 respectively and 19, 25, 33 and 43 for the
    fiscal years ended January 31, 1997, 1998, 1999 and 2000 respectively.
(8) The number of comparable stores used to compute such percentages was 32
    and 31 for fiscal 1995 and 1996 respectively, 31 and 33 for the seven-
    month periods ended January 31, 1996 and 1997 respectively and 33, 34, 33
    and 33 for the fiscal years ended January 31, 1997, 1998, 1999 and 2000
    respectively.

                                      22
<PAGE>

   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 the Company's last eight fiscal
quarters. The quarterly statement of operations data and selected operating
data set forth below were derived from unaudited financial statements of the
Company, which in the opinion of management of the Company contain all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation thereof.

<TABLE>
<CAPTION>
                                                       Quarter Ended
                          ---------------------------------------------------------------------------
                          Apr. 30,  July 31, Oct. 31,  Jan. 31,  Apr. 30,  July 31, Oct. 31, Jan. 31,
                            1998      1998     1998      1999      1999      1999     1999     2000
                          --------  -------- --------  --------  --------  -------- -------- --------
                                            In thousands, except per share data
<S>                       <C>       <C>      <C>       <C>       <C>       <C>      <C>      <C>
Statement of Operations
 Data:
Net sales...............  A$36,744  A$54,433 A$58,102  A$75,705  A$46,515  A$62,847 A$65,158 A$86,163
Cost of goods sold,
 warehouse, distribution
 and occupancy costs....    25,117    36,492   40,258    50,841    32,804    42,033   44,319   57,105
                          --------  -------- --------  --------  --------  -------- -------- --------
Gross margin............    11,627    17,941   17,844    24,864    13,711    20,814   20,839   29,058
Selling, general and
 administrative
 expenses...............    12,462    15,273   16,028    18,054    14,899    17,904   18,599   20,956
Store pre-opening
 costs..................       147       282      243       138       496       100       42     (227)
Relocation and closure
 costs..................        15       --       (11)      (25)      --        --       --       --
                          --------  -------- --------  --------  --------  -------- -------- --------
Operating income
 (loss).................      (997)    2,386    1,584     6,697    (1,684)    2,810    2,198    8,329
Equity in income of
 affiliates, net of
 tax....................        96       138      196        84        38       127       70      316
Interest expense........       388       446      666       663       519       568      626      563
                          --------  -------- --------  --------  --------  -------- -------- --------
Income (loss) before
 income tax.............    (1,289)    2,078    1,114     6,118    (2,165)    2,369    1,642    8,082
Income tax expense
 (benefit)..............      (502)      802      255     2,259      (834)    1,033      537    2,978
                          --------  -------- --------  --------  --------  -------- -------- --------
Net income (loss).......      (787)    1,276      859     3,859    (1,331)    1,336    1,105    5,104
Other comprehensive
 income (loss)..........       435       597     (515)     (185)   (1,256)      384      318      150
                          --------  -------- --------  --------  --------  -------- -------- --------
Net income (loss) after
 other comprehensive
 income (loss)..........  A$  (352) A$ 1,873 A$   344  A$ 3,674  A$(2,587) A$ 1,720 A$ 1,423 A$ 5,254
                          ========  ======== ========  ========  ========  ======== ======== ========
Basic earnings (loss)
 per share..............  A$ (0.17) A$  0.28 A$  0.19  A$  0.85  A$ (0.29) A$  0.29 A$  0.24 A$  1.12
                          ========  ======== ========  ========  ========  ======== ======== ========
Diluted earnings (loss)
 per share..............  A$ (0.17) A$  0.28 A$  0.19  A$  0.84  A$ (0.29) A$  0.29 A$  0.24 A$  1.11
                          ========  ======== ========  ========  ========  ======== ======== ========
Weighted average shares
 outstanding............     4,542     4,542    4,542     4,542     4,542     4,542    4,542    4,542
                          ========  ======== ========  ========  ========  ======== ======== ========
</TABLE>

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

   Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "--Factors That May Affect Quarterly
or Annual Operating Results" contained in "Item I--Description of Business"
and elsewhere in the Annual Report.

Overview

   Barbeques Galore believes that it is 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. The Company's belief is based on
its years of experience in the barbecue retail industry as well as its
contacts with other industry retailers, suppliers and trade associations. The
Company opened its first store in Sydney, Australia in 1977 and opened its

                                      23
<PAGE>

first U.S. store in Los Angeles in 1980. Barbeques Galore stores carry a wide
assortment of barbecues and related accessories, a comprehensive line of
fireplace products and, in Australia, home heating products, camping equipment
and outdoor furniture. As of January 31, 2000, the Company owned and operated
35 stores in all six states in Australia and 54 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.

   The Company derives its 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 36.9%, 46.7%, 7.0% and 8.8%
respectively, of the Company's net sales for the twelve months ended January
31, 2000, representing an 11.3%, 28.1%, 2.5% and (5.0%) increase/(decrease)
over their respective net sales levels for the twelve months ended January 31,
1999.

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

Results of Operations

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

<TABLE>
<CAPTION>
                                                             Twelve Months
                                                            Ended Jan. 31,
                                                           -------------------
                                                           1998   1999   2000
                                                           -----  -----  -----
<S>                                                        <C>    <C>    <C>
Statement of Operations Data:
Net sales................................................  100.0% 100.0% 100.0%
Cost of goods sold, warehouse, distribution and occupancy
 costs...................................................   68.1   67.9   67.6
                                                           -----  -----  -----
Gross margin.............................................   31.9   32.1   32.4
Selling, general and administrative expenses.............   27.3   27.5   27.7
Store pre-opening costs..................................    0.2    0.3    0.2
                                                           -----  -----  -----
Operating income.........................................    4.4    4.3    4.5
Equity in income of affiliates, net of tax...............    0.3    0.2    0.2
Interest expense.........................................    1.9    0.9    0.9
                                                           -----  -----  -----
Income before income tax.................................    2.8    3.6    3.8
Income tax expense.......................................    0.8    1.3    1.4
                                                           -----  -----  -----
Net income...............................................    2.0%   2.3%   2.4%
                                                           =====  =====  =====
</TABLE>

   There has been no material impact of inflation and changing prices on the
Company's net sales and operating income for the twelve months ended January
31, 1998 through 2000, respectively.

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

                                      24
<PAGE>

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.

   The Company's 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.

Twelve Months ended January 31, 1999 compared to Twelve Months ended January
31, 1998

   Net sales increased by approximately A$45.7 million, or 25.5%, to A$225.0
million for the fiscal year ended January 31, 1999 from A$179.3 million for
the fiscal year ended January 31, 1998. Ten new stores were opened and one
store closed in the United States during the twelve months ended January 31,
1999 of which three were in existing markets and the remaining seven in
Greensboro and Cary, North Carolina, Sterling, Fairfax Fredricksburg and
Springfield, Virginia and White Marsh, Maryland. In Australia, one new store
was opened and three stores refurbished or relocated. Comparable group store
sales increased 17.3% and contributed A$21.9 million to the increase in net
sales. Comparable store sales increased 10.9% in the United States and 8.8% in
Australia. Increased sales also resulted from stores not forming part of the
comparative store sales, including new stores opened in the U.S. in the
previous twelve months. The balance of the increased sales was primarily
attributable to a A$1.9 million increase in Australian licensing and a A$0.8
million increase in Australian wholesale.

   Gross profit increased approximately A$15.0 million, or 26.2%, to A$72.3
million for the fiscal year ended January 31, 1999 from A$57.3 million for the
fiscal year ended January 31, 1998. Gross margin percentage increased to 32.1%
during the fiscal year ended January 31, 1999 from 31.9% during the fiscal
year ended

                                      25
<PAGE>

January 31, 1998. The increase in gross margin was primarily attributable to
the reduced cost of goods arising from the weak Australian dollar, purchased
by the U.S. operation from Australia. This was partially offset by product
sales mix at the Company's newer U.S. stores and pricing pressures on lower
end barbecues in Australia.

   Selling, general and administrative expenses (which exclude store pre-
opening expenses) increased approximately A$12.8 million, or 26.1%, to A$61.8
million for the fiscal year ended January 31, 1999 from A$49.0 million for the
fiscal year ended January 31, 1998. As a percentage of net sales, selling,
general and administrative expenses increased to 27.5% during the fiscal year
ended January 31, 1999 from 27.3% during the comparable period in 1998
primarily due to an increase in payroll costs in the home office in the United
States.

   Store pre-opening costs increased A$375,000 to A$810,000 for the fiscal
year ended January 31, 1999 from A$435,000 for the fiscal year ended January
31, 1998, primarily due to the number and timing of United States' store
opening expenditure.

   Relocation and closure costs decreased by A$20,000 to A$0 for the fiscal
year ended January 31, 1999, from A$20,000 for the fiscal year ended January
31, 1998.

   Operating income (excluding relocation and closure costs) increased by
A$1.8 million to A$9.6 million for the fiscal year ended January 31, 1999 from
A$7.8 million for the fiscal year ended January 31, 1998. As a percentage of
net sales, operating income (excluding relocation and closure costs) decreased
to 4.3% in the fiscal year ended January 31, 1999 from 4.4% in the fiscal year
ended January 31, 1998.

   Income from affiliates decreased by A$33,000 to A$514,000 in the fiscal
year ended January 31, 1999 from A$547,000 in the fiscal year ended January
31, 1998. This decrease resulted mainly from a decrease in profitability of
the Company's affiliate, Bromic.

   Interest expense decreased by A$1.2 million to A$2.2 million in the fiscal
year ended January 31, 1999 from A$3.3 million in the fiscal year ended
January 31, 1998. The decrease reflects the reduced debt usage of the Company
following the capital raising in November 1997 and the conversion into
Ordinary Shares in November 1997 of the convertible notes of A$10.0 million
which carried interest at 10.25% per annum. This reduction was partially
offset by the interest cost related to the acquisition of warehouse and
distribution properties in Australia during the fiscal year ended January 31,
1999 and increased working capital requirements.

   The Company's effective tax rate was 35.1% in the fiscal year ended January
31, 1999 and 29.6% during the comparable period in 1998 due to a higher
effective tax rate.

Liquidity and Capital Resources

   The Company has historically financed its operations through cash flow from
operations and bank borrowings. In November 1997, the Company completed the
Offering, raising net proceeds of approximately US$13.8 million (approximately
A$19.7 million). These funds have been used as set forth in this Annual Report
in the section titled "Item 16--Changes in Securities, Changes in Security for
Registered Securities and Use of Proceeds."

   In June 1998, the Company and ANZ entered into a credit facility (the "ANZ
Facility"), 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, the Company and its
subsidiaries have access to facilities up to A$49.6 million comprising a
multi-option, overdraft, leasing, foreign currency and other facilities in
principal amount of A$35.15 million, real property loans in principal amount
of A$8.45 million and a further seasonal trade finance facility of A$6.0
million. 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 as defined in the
paragraph following) in all the Company's assets in the United States. The ANZ
Facility is further guaranteed by each subsidiary of the Company, 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 6.8% to 7.4% per annum and are secured by registered first
mortgages over the respective freehold properties of the Company.

                                      26
<PAGE>

   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 of January 31, 2000, 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 the Company and
The Galore Group (USA), Inc., the parent of Barbeques Galore, Inc.

   In October 1996, the Company, Warburg Dillon Read Australia Limited
("Warburg Australia"), as representative of the holders of convertible notes
of the Company, and certain principal shareholders of the Company entered into
certain debt instruments, pursuant to which the Company issued and sold A$10.0
million in aggregate principal amount of convertible notes (the "Convertible
Notes" or "Notes") in December 1996. All of the Convertible Notes were
converted into 1,197,926 Ordinary Shares of the Company in connection with the
consummation of the Offering in the United States in November 1997. Certain
holders of Ordinary Shares acquired upon conversion of the Convertible Notes
were Selling Shareholders in the Offering, selling an aggregate of 200,000
Ordinary Shares acquired upon conversion of the Convertible Notes.

   During 1998, pursuant to an agreement with certain holders of the
Convertible Notes (all of which were converted into Ordinary Shares in
connection with the Company's Offering), the Company 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 American Depositary Share (each, a "Resale
ADS") for resale by shareholders of the Company 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 the Company and are presently held by long-term
shareholders of the Company who may wish to divest all or a portion of their
holdings in the Company. On or about April 22, 1999, the Company 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, 2000, 1999 and 1998, cash flow
provided by (used in) operating activities was A$10.7 million, A$6.5 million
and A$(1.1) million, respectively. The cash used in operations primarily
reflects the increase in inventory levels related to the Company's 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, 2000, 1999 and 1998 were A$5.5 million, A$13.1 million and A$4.5
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 in Australia and the acquisition of
properties as detailed in "Item 2--Description of Property." The Company
anticipates that it 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, 2000 the Company had working capital of A$41.2 million and
maintained minimal amounts in cash and cash equivalents, relying instead on
undrawn facilities under its borrowing arrangements with ANZ and Merrill
Lynch.

   The Company believes the ANZ and Merrill Lynch Facilities are sufficient to
meet its presently anticipated working capital and capital expenditure
requirements for at least the next twelve months.

New Pronouncements by Financial Accounting Standards Board

   Statement of Financial Accounting Standards 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, is
effective for the Company's fiscal year commencing February 1, 2001. Statement
133

                                      27
<PAGE>

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.

   The Company has not determined the impact that Statement 133 will have on
its financial statements and believes that such determination will not be
meaningful until closer to the date of initial adoption.

Unaudited Quarterly Results and Seasonality

   The Company's 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 the Company's merchandise mix and
overall economic conditions also contribute to fluctuations in the Company's
quarterly results. The Company believes this is the general pattern associated
with its segment of the retail industry and expects this pattern will continue
in the future. In order to partially offset the effects of seasonality, the
Company operates in both the Southern and Northern hemispheres which have
opposite seasons, and offers fireplace products and (in Australia) home
heaters in the fall and winter months. In anticipation of its peak selling
season, the Company substantially increases its inventory levels and hires a
significant number of part-time and temporary employees. In non-peak periods,
such as late winter and early fall, the Company has 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 1--Description of Business--Factors That May Affect Quarterly or Annual
Operating Results."

ITEM 9A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

   Market risks relating to the Company's operations result primarily from
changes in interest rates and changes in foreign exchange rates.

Foreign Currency Market Risk

   The Company's functional currency is the Australian dollar although it
transacts a portion of its business in foreign currencies and accordingly has
foreign currency exposure through its sales in the United States and purchases
from overseas suppliers in U.S. dollars.

   The Company's Australian operations generally hedge a major portion of its
imports against exchange rate fluctuations with respect to the Australian
dollar. However, in its U.S. operations, the Company has not, and it currently
does not, actively hedge against exchange rate fluctuations, although it may
elect to do so in the future. Accordingly, changes in exchange rates may have
a material adverse effect on the Company's 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 the Company's business, operating
results and financial condition.

                                      28
<PAGE>

   The notional amount of foreign currency forward contracts used as a means
of offsetting fluctuations in the dollar value of foreign currency accounts
payable is set out below. 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.

<TABLE>
<CAPTION>
                                January 31, January 31, January 31, January 31,
                                   1999        2000        1999        2000
                                ----------- ----------- ----------- -----------
                                (weighted average rate)    (in A$ thousands)
   <S>                          <C>         <C>         <C>         <C>
   Buy U.S. dollars
   Not later than one year.....   0.6335        Nil        $604        $Nil
                                  ======        ===        ====        ====
</TABLE>

   The fair value of foreign currency contracts is not significant.

Interest Rate Risk

   As the Company has long-term debt under the facilities with ANZ and Merrill
Lynch, it is exposed to changes in interest rates.

   The ANZ facility comprises 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, 1999 and January 31, 2000,
the weighted average interest rates accruing on the bank bills utilized under
the ANZ Facility were as follows:

<TABLE>
<CAPTION>
                               January 31, January 31, January 31,  January 31,
                                  1999        2000         1999         2000
                               ----------- ----------- ------------ ------------
                                  (in A$ thousands)    (interest rate per annum)
   <S>                         <C>         <C>         <C>          <C>
   Bank bills.................   $15,721     $12,242   5.7%         6.2%
   Property loans.............     8,450       8,450   6.9% to 9.6% 6.8% to 7.4%
</TABLE>

   As of January 31, 2000, 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.

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

<TABLE>
<CAPTION>
        Year ending January 31,                               (in A$ thousands)
        -----------------------                               -----------------
        <S>                                                   <C>
        2001.................................................      $    22
        2002.................................................       20,692
                                                                   -------
                                                                   $20,714
                                                                   =======
</TABLE>

   The fair value of long term debt is not significant.

                                      29
<PAGE>

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.

   The executive officers, directors and key employees of the Company are as
follows:

<TABLE>
<CAPTION>
          Name            Age Position
          ----            --- --------
<S>                       <C> <C>
Directors and Executive
 Officers of the Company
Sam Linz................   60 Chairman of the Board
Robert Gavshon (1)(2)...   52 Deputy Chairman of the Board and General Counsel
John Price..............   49 Head of Research and Product Development and Director
Sydney Selati...........   61 President--Galore USA and Director
Edgar Berner (1)(2).....   68 Director
Gordon Howlett (1)(2)...   58 Director
David Glaser............   51 Company Secretary
David James.............   39 Chief Financial Officer
Kevin Ralphs............   46 Chief Financial Officer--Galore USA
Benjamin Ramsey.........   45 Executive Vice President--Galore USA

Key Employees--Australia
Gary Heading............   49 General Manager of Retail/Licensees--Barbeques Galore
                              (Aust) Pty Limited
Jeffrey Fisher..........   33 Retail Development Manager--Barbeques Galore (Aust) Pty
                              Limited
William Lyons...........   57 Managing Director of Manufacturing--Park-Tec Engineering
                              Pty Limited and Australian Enamellers Pty Limited
Ian Redmile.............   48 General Manager--Pricotech Leisure Brands Pty Limited
Peter Spring............   41 Chief Operating Officer
Gary Whitehouse.........   50 General Manager of Logistics

Key Employees--United
 States
Michael Varley..........   53 Vice President of Purchasing, Distribution and Product
                              Development
Austin Yeh..............   52 Vice President and Director of Staff Training
</TABLE>
--------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee

   SAM LINZ has served as Chairman of the Board since joining the Company 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 was a major
shareholder until he sold his interest in July 1997. Prior to joining the
Company, 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 33
years of experience in the retail industry.

   ROBERT GAVSHON joined the Company 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 was a shareholder until he sold his interest
in July 1997. Prior to joining the Company, 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 18 years of experience in the
retail industry.

   JOHN PRICE joined the Company in 1981 as General Manager of Wholesale and
has served as Head of Research and Product Development since June 1989, and as
Director of the Company since November 1989. Prior to joining the Company, 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 the Company in 1981. Mr. Price has over 27 years of experience in
the development and marketing of consumer gas products.

                                      30
<PAGE>

   SYDNEY SELATI has served as Director of the Company 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 33 years of
experience in the retail industry.

   EDGAR BERNER was appointed as a non-executive Director of the Company 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 of the Company since
August 1991. Mr. Howlett is the Chief Executive Officer of Thorn Asia Pacific
and is a non-executive Director of Arthur Yates & Company 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 the retail
subsidiary of the Company from February 1996 to April 1998 and, from July 1988
to February 1994, was the financial administrator to certain other of the
Company's subsidiaries. Prior to joining the Company, 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 the Company in January 1992, serving the Company in
several group financial roles, ultimately as General Manager-Finance &
Administration until his departure in September 1996. From September 1996 to
July 1997, Mr. James was employed by HMV Australia Pty Ltd., a subsidiary of
EMI plc, as Finance Director. He rejoined the Company in July 1997 as Chief
Financial Officer of the Company. 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) Ltd., a foreign
subsidiary of Nabisco.

   BENJAMIN RAMSEY joined the Company 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 4 years.

   JEFFREY FISHER joined the Company in 1993 as Retail Development Manager of
Retail/Licensees for Barbeques Galore (Aust) Pty Limited, an operating
subsidiary of the Company. 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 the Company 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.

   WILLIAM LYONS has served as Managing Director of Manufacturing for Park-Tec
Engineering Pty Limited, an operating subsidiary of the Company since
September 1987. Prior to joining the Company,

                                      31
<PAGE>

Mr. Lyons served as the Manager of Quintrex Marine, a division of Alcan, and
as the Manager of Vass Electrical Engineering. Prior to managing Quintrex
Marine and Vass Electrical Engineering, Mr. Lyons was involved in Design,
Production and Factory Management of Cope Allman for 17 years.

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

   PETER SPRING was appointed Chief Operating Officer--Australian Operations
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 and has served
the Company since its inception in 1977.

   GARY WHITEHOUSE joined the Company in May 1990 as National Warehouse
Manager and has served as General Manager of Logistics for the Company since
July 1996. Prior to joining the Company, Mr. Whitehouse served as Financial
Systems Accountant for Qantas Airways. Prior to that, Mr. Whitehouse held
managerial positions, including commercial manager, state branch manager and
warehousing/distribution manager.

   MICHAEL VARLEY joined the Company 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.

   AUSTIN YEH has served as Vice President and Director of Staff Training
since August 1999. Prior to that and from May 1994, Mr Yeh served as Vice
President and Director of Operations for Galore USA. Prior to joining Galore
USA, Mr. Yeh served for 15 years as Director of Operations for C&R Clothiers,
a major menswear retailer.

   At least one-third of the Board of Directors of the Company 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, Gavshon
and Howlett that reviews and makes recommendations for remuneration packages
for executive directors and senior executives, and an Audit Committee
presently comprised of Messrs. Berner, Gavshon and Howlett that advises on the
establishment and maintenance of internal controls and ethical standards as
well as on the quality and reliability of financial information provided by
the Company's independent auditors.

ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS.

   The aggregate annual compensation, including bonuses under the incentive
program described below, paid by the Company to all directors and executive
officers of the Company as a group for services (i) for the twelve-month
period ended January 31, 1998 (nine persons) was A$1,462,568, (ii) for the
twelve-month period ended January 31, 1999 (nine persons) was A$1,671,241 and
(iii) for the twelve month period ended January 31, 2000 (ten persons) was
A$1,851,637. 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 12--Options to Purchase Securities from Registrant or
Subsidiaries".

   The total amount set aside by the Company and its subsidiaries to provide
superannuation benefits for such officers and directors for the twelve-month
period ended January 31, 2000 was A$184,638.

   On February 1, 1999, the Company continued with an incentive program
whereby certain executives would receive a bonus if certain budget objectives
were attained during fiscal year 2000. Under this program, Mr. Linz, Mr.
Gavshon, Mr. Price, and Mr. James would each receive a bonus of 20% and Mr.
Selati, Mr. Lyons,

                                      32
<PAGE>

Mr. Spring, Mr. Redmile and Mr. Whitehouse would each receive a bonus of 10%,
of their respective base salaries, if the Company achieved its budgeted pre-
tax profit before trading contingencies for the fiscal year ending January 31,
2000. Mr. Selati, Mr. Lyons, 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 the Company's
budget was achieved. Additionally, Mr. Whitehouse would receive a bonus of 10%
of his base salary if the Company's inventory level budget for fiscal 2000 was
attained.

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES.

   As of March 31, 2000 there were outstanding options to purchase a total of
578,154 Ordinary Shares granted by the Company, of which 364,129 were held by
directors and officers of the Company. These outstanding options were granted
under both the Company's Executive Share Option Plan and the 1997 Share Option
Plan. There were no other warrants or rights to purchase the Company's
Ordinary Shares outstanding as of March 31, 2000. The following table sets
forth information concerning outstanding options as of March 31, 2000:

<TABLE>
<CAPTION>
                                       Number Of    Price Per
                                    Ordinary Shares Ordinary       Option
                                     Under Option     Share   Expiration Date
                                    --------------- --------- ----------------
<S>                                 <C>             <C>       <C>
Executive Share Option Plan (1)....     203,038       A$8.38  February 1, 2002
1997 Share Option Plan (2).........     213,650      US$5.20  November 8, 2003
1997 Share Option Plan (2).........     161,466      US$6.38  January 6, 2005
Directors and Officers as a Group
 (3)...............................     364,129          --          --
</TABLE>
--------
(1) Options under the Executive Share Option 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 Share Option 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 Officers as a group received options under both the
    company's Executive Share Option Plan and the 1997 Share Option 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, the Company adopted the Executive Share Option Plan
(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 Share Option 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 thirty days after the
cessation of the employment of the optionee (or the executive controlling the
optionee, if the optionee is an entity (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 the Company's consent (except for a one-time
exemption for a transfer by a director or Entity Optionee controlled by a
director to an employee of the Company or its related entities) or (ii) for
Entity Optionees, if the Entity Optionee ceases to be controlled by the
employee or director of the Company 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

                                      33
<PAGE>

prior to the Expiration Date. The stock options will automatically accelerate
and become immediately exercisable, for the thirty days prior to their lapse,
in the event the optionee (or executive controlling the Entity Optionee)
ceases to be employed by the Company or a related entity due to death,
permanent disability or ill health. In addition, the Board, 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 the
Company is subject to a takeover bid pursuant to which the offeror acquires at
least thirty percent of the outstanding Ordinary Shares of the Company, the
Board may accelerate stock options outstanding at that time for a period of up
to 120 days measured from the date the Board notifies the optionee of the
takeover bid. Any stock option exercised under the Executive Plan must be for
a minimum of twenty percent of the stock options included in the relevant
grant.

   In the event of changes to the Company's 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

   The Company's 1997 Share Option Plan (the "1997 Plan") was adopted by the
Board of Directors on October 1, 1997, and approved by the shareholders as of
October 7, 1997. As of January 31, 2000, a total of 420,088 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 the Company's employ or service (including officers and other
employees, non-employee Board members, consultants and other independent
advisors 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 eighty-five percent (85%) of their
fair market value on the option grant date.

   The 1997 Plan will be administered by the Compensation Committee. The Plan
Administrator will have 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 installments 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. The
Company is 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 that the Company is 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 of the
Company, will immediately accelerate, and such repurchase rights will
accordingly lapse, upon the

                                      34
<PAGE>

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 installments 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 installments 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, 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 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/regrant 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
installments 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 regranted under the program. During the fiscal year
ended January 31, 2000, a total of 11,800 New Options were forfeited.

   In addition to the cancellation and regrant program on November 9, 1998,
the Board of Directors granted further options to directors, an officer 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, officers 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 installments 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 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.

Delisting Transaction and Note Conversion

   In December 1996, the Company delisted from the ASE after repurchasing
Ordinary Shares pursuant to a "Capital Reduction" program for a total
consideration of A$20.1 million, exclusive of transaction costs, financed
through the issuance and sale of A$10.0 million in aggregate principal amount
of convertible notes (the "Notes") and the borrowing of A$11.2 million under
the ANZ Facility. In connection with the Offering, the Company converted all
of the Notes into 1,197,926 Ordinary Shares, 200,000 of which were sold in the
Offering by the holders thereof. Certain holders of the Notes, including
Fagume Pty Ltd., an affiliate of Gordon Howlett, a director of the Company,
National Australia Trustees Ltd., on behalf of Philip Gardiner, a former
director of

                                      35
<PAGE>

the Company, Michael Varley, an employee of the Company, Don and Mary McLeod,
a former employee of the Company and his wife, Sarah Gavshon, the mother of
Robert Gavshon, a director and executive officer of the Company, and Mildred
Pogorelsky, the mother-in-law of Sam Linz, a director and executive officer of
the Company, received Ordinary Shares pursuant to such conversion on the same
terms as all other Noteholders. Upon conversion of the Notes, all debt
instruments relating to the Notes by and among the Company, Warburg Australia,
as representative of the holders of the Notes, and Sam Linz, Robert Gavshon,
Sydney Selati, John Price and affiliates of such individuals were terminated.

   Warburg Australia, a financial advisor to a group of shareholders holding,
in the aggregate, more than five percent of the outstanding Ordinary Shares of
the Company, received underwriting and advising fees of A$750,000 in
connection with the Offering and a one-time fee of A$15,000 in connection with
the original issuance of the Notes.

   In connection with the issuance and sale of the Notes, the Company granted
stock options to purchase up to an aggregate of 203,038 Ordinary Shares under
the Executive Share Option Plan to Messrs. Sam Linz, Robert Gavshon, Sydney
Selati and John Price, who are directors and executive officers of the Company
and to David James and Kevin Ralphs who are executive officers of the Company.
See "Item 12--Options to Purchase Securities and Registrant or Subsidiaries."

Transactions with Affiliates

   The Company holds a one-third ownership interest in Bromic, which supplies
gas valves and related products to the Company. Bromic receives approximately
19% of its revenues from sales to the Company, which in turn is Bromic's
second largest customer. In the year ended January 31, 2000, the Company
purchased approximately A$3.4 million of products from Bromic. Subsequent to
January 31, 2000, the Company invested A$2.0 million for a one-third equity
interest in Renegade Gas Pty Limited ("Renegade"), an Australian company which
recently entered the gas distribution business. Renegade is affiliated to
Bromic which recently commenced operations in the U.S.A.

   In addition, the Company holds a 50% equity interest in GLG, which supplies
the Company with grills, burners and other products. GLG receives
approximately 90% of its revenues from sales to the Company, which in turn is
GLG's largest customer. In the year ended January 31, 2000, the Company
purchased approximately A$8.3 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 the outstanding Ordinary Shares of the Company.
Accordingly, these individuals may exert substantial influence over the
business and affairs of the Company, including the election of the Company's
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 the Company to be used for general corporate purposes. Through these
advances, the Company has been able to obtain funds at relatively attractive
short-term borrowing rates of approximately 2% per annum below the overdraft
rate charged to the Company by its bankers. As of July 31, 1997, the Company
had repaid all amounts owing on such advances and terminated these borrowing
arrangements. The Company has reinstated similar arrangements which the Board
of Directors has determined are in the best interests of the Company.

   The Company leases cars for the use of Messrs. Linz, Gavshon, Price and
Selati, at a rate of approximately A$3,909, A$3,910, A$1,620 and US$912,
respectively, per month per car.

   The Company pays 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.

                                      36
<PAGE>

   In connection with the Capital Reduction, the Company acquired from Mr.
Selati, who is the President of Galore USA and a Director of the Company, his
15% interest in the company, in exchange for the issuance to Mr. Selati of
137,189 Ordinary Shares valued at A$1,000,000. The Company elected Mr. Selati
to its Board of Directors on July 21, 1997.

   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 Company
approval, additional Barbeques Galore stores within a specified territory in
Orange County.

   Pursuant to his appointment as a non-executive Director of the Company 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 the Company to
Mr. Edgar Berner under the 1997 Plan, exercisable in three equal installments
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 installments on
January 7, 2003, January 7, 2004 and December 7, 2004. See "Item 12--Options
to Purchase Securities from Registrant or Subsidiaries."

   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 the Company to Directors and an
Executive Officer under the 1997 Plan, excerisable in three equal installments
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 Executive Officers under the 1997 Plan, exercisable in three
equal installments 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. Benjamin Ramsey received a grant of 4,000
Ordinary Shares, Mr. Edgar Berner received a grant of 4,410 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 12--Options to Purchase Securities
from Registrant or Subsidiaries."

Company Policy Concerning Transactions With Affiliates

   Under the Australian Corporations Law, directors are prohibited from
entering into transactions with the Company conferring a benefit on any
director which are not on "arms-length" commercial terms, except where limited
exemptions apply or detailed approval procedures are first observed. The
Company has adopted a more stringent policy based on the Australian
Corporations Law that requires that all transactions with directors, executive
officers and other affiliates will be on terms that are believed to be at
least as favorable to the Company as could be obtained from unaffiliated third
parties and that such transactions must be approved by a majority of the
Company's disinterested directors.

   The Company believes that the foregoing transactions with directors,
executive officers and other affiliates were completed on terms as favorable
to the Company as could have been obtained from unaffiliated third parties.

                                      37
<PAGE>

                                    PART II

ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED.

   Not applicable.

                                   PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES.

   Not applicable.

ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
         SECURITIES.

Dividends

   Since the Ordinary Shares were delisted from the ASE on December 31, 1996,
the Company has not declared or paid any cash dividends on its Ordinary Shares
other than a dividend in an aggregate amount equal to A$500,000 paid on April
21, 1997. The Company does not anticipate paying any regular dividends on the
Ordinary Shares or ADSs in the foreseeable future. In addition, the Company is
subject to certain restrictions on the declaration or payment of dividends
under the ANZ Facility, as well as the Merrill Lynch Facility.

Changes in Securities

   The Company convened a duly noticed special meeting of shareholders on
October 7, 1997, at which a quorum was present. The shareholders voted to
authorize the effectiveness of a reverse share split of Ordinary Shares of the
Company to take effect immediately before consummation of the Offering and to
authorize the Pricing Committee of the Board of Directors to determine the
final ratio of such reverse share split. As a result, every 18.223 Ordinary
Shares were exchanged for one Ordinary Share immediately prior to the Offering
in November 1997.

   In addition, at the same meeting, the shareholders approved the 1997 Share
Option Plan, to serve as the successor to its previous equity incentive plan.
Immediately prior to the Offering, all holders of Notes of the Company
converted such Notes into Ordinary Shares. Thereafter, all agreements defining
the terms and conditions of the Notes were terminated.

   On December 3, 1999 the Company announced that its Board of Directors had
authorized the repurchase of up to 450,000 Ordinary Shares of Barbeques Galore
Limited common stock as market conditions become favourable. The purchase
program will expire on January 31, 2002 or upon reaching an aggregate purchase
quantity of 450,000 Ordinary Shares. To date, the Company has not repurchased
any Ordinary Shares pursuant to the repurchase program. Purchases pursuant to
the program will be made as part of an effective use of the Company's
resources.

Use of Proceeds

   In November 1997, the Company registered, issued and sold 1,700,000
American Depositary Shares (each representing one Ordinary Share of the
Company) at a price of US$11.00 per share, for an aggregate offering amount of
US$18,700,000 including 1,500,000 ADSs sold by the Company for an aggregate
offering amount of US$16.5 million and 200,000 ADSs registered for the selling
security holders, at $11.00 per share for an aggregate offering amount of
US$2.2 million. The ADSs were registered on a Form F-1 registration statement,
Commission file number 333-37259 with the Securities and Exchange Commission,
which registration statement

                                      38
<PAGE>

became effective on November 3, 1997. The managing underwriters were J.P.
Morgan & Co. and Warburg Dillon Read Inc. The Company did not receive any of
the proceeds from the offering of ADSs on behalf of the selling security
holders.

   In connection with the offering, the Company incurred approximately
A$493,580 in registration expenses, approximately A$1,652,597 for underwriting
expenses and approximately A$1,749,506 for other related expenses.
Approximately A$83,703 of other related expenses consisted of direct or
indirect reimbursement to directors or officers of the Company for expenses in
connection with the offering. The net proceeds of the offering, after
deducting the foregoing expenses, were approximately US$13.8 million
(approximately A$19.7 million).

   The Company has used the net proceeds of the offering as follows:

   Approximately US$8.4 million (approximately A$12.0 million) was used to
repay indebtedness incurred under the ANZ Facility. Approximately US$1.8
million was used to repay all outstanding indebtedness under the Merrill Lynch
Facility. The remaining funds, approximately US$3.6 million (approximately
A$5.1 million), have been used to fund a portion of the Company's operations
and investing activities and to continue the expansion of the Company's
operations in the United States.

                                    PART IV

ITEM 17. FINANCIAL STATEMENTS.

   The Company has elected to provide financial statements pursuant to Item 18
of Form 20-F.

ITEM 18. FINANCIAL STATEMENTS.

   The Company has elected to provide financial statements pursuant to Item 18
of Form 20-F. Such financial statements have been prepared in accordance with
U.S. generally accepted accounting principles.

   The financial statements and independent auditors' reports are included on
pages 40 to 61 of this Annual Report.


                                      39
<PAGE>

                         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, 2000 and 1999 and the
related consolidated statements of income, shareholders' equity and cash flows
for the years ended January 31, 2000, 1999 and 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in Australia which are substantially equivalent to auditing standards
generally accepted in the United States. 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, 2000 and 1999 and the
results of their operations and their cash flows for the years ended January
31, 2000, 1999 and 1998, in conformity with generally accepted accounting
principles in the United States.

/s/ KPMG
KPMG
March 10, 2000
Sydney, Australia

                                      40
<PAGE>

                            BARBEQUES GALORE LIMITED

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                      January 31, January 31,    January 31,
                                         1999        2000            2000
                                      ----------- ----------- ------------------
                                         (in A$ thousands     (in US$ thousands
                                        except share data)    except share data)
<S>                                   <C>         <C>         <C>
Assets
Current assets:
Cash and cash equivalents...........   $    811    $     33        $    21
Accounts receivable, net............     11,916      14,792          9,440
Inventories, net....................     47,095      54,022         34,477
Deferred income taxes...............      2,238       2,368          1,511
Prepaid expenses and other current
 assets.............................      1,346       1,039            663
                                       --------    --------        -------
Total current assets................     63,406      72,254         46,112
Non-current assets:
Receivables from affiliates.........        848         748            477
Property, plant and equipment, net..     32,620      34,970         22,318
Goodwill, net.......................      1,418       1,327            847
Deferred income taxes...............      1,030       1,646          1,051
Other non-current assets............      1,880       1,934          1,234
                                       --------    --------        -------
Total assets........................   $101,202    $112,879        $72,039
                                       ========    ========        =======
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued
 liabilities........................   $ 16,753    $ 26,014        $16,602
Payables to related parties.........      1,060         700            447
Payables to affiliates..............        168          47             30
Current maturities of long-term
 debt...............................        172          22             14
Current portion of obligations under
 capital leases.....................      2,029       2,405          1,535
Income taxes payable................      2,062       1,856          1,184
                                       --------    --------        -------
Total current liabilities...........     22,244      31,044         19,812
Non-current liabilities:
Long-term debt......................     24,171      20,692         13,206
Obligations under capital leases,
 excluding current portion..........      4,859       5,237          3,342
Other long-term liabilities.........        815         983            627
                                       --------    --------        -------
Total liabilities...................     52,089      57,956         36,987
                                       --------    --------        -------
Shareholders' equity:
Ordinary shares, no par value--
 authorized 27,437,853 shares;
 4,541,652 issued shares............     40,733      40,733         25,996
Accumulated other comprehensive
 income.............................      1,509       1,105            705
Retained earnings...................      6,871      13,085          8,351
                                       --------    --------        -------
Total shareholders' equity..........     49,113      54,923         35,052
                                       --------    --------        -------
Total liabilities and shareholders'
 equity.............................   $101,202    $112,879        $72,039
                                       ========    ========        =======
</TABLE>

          See accompanying notes to Consolidated Financial Statements.

                                       41
<PAGE>

                            BARBEQUES GALORE LIMITED

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                          Year ended  Year ended  Year ended      Year ended
                          January 31, January 31, January 31,    January 31,
                             1998        1999        2000            2000
                          ----------- ----------- ----------- ------------------
                               (in A$ thousands, except       (in US$ thousands,
                               share and per share data)       except share and
                                                               per share data)
<S>                       <C>         <C>         <C>         <C>
Net sales...............   $179,325    $224,984    $260,683        $168,766
Cost of goods sold,
 warehouse, distribution
 and occupancy costs....    122,072     152,708     176,261         114,111
                           --------    --------    --------        --------
Gross margin............     57,253      72,276      84,422          54,655
Selling, general and
 administrative
 expenses...............     48,992      61,796      72,358          46,845
Store pre-opening
 costs..................        435         810         411             266
Relocation and closure
 costs..................         20          --          --              --
                           --------    --------    --------        --------
Operating income........      7,806       9,670      11,653           7,544
                           --------    --------    --------        --------
Equity in income of
 affiliates, net of
 tax....................        547         514         551             356
Interest expense........      3,334       2,163       2,276           1,473
                           --------    --------    --------        --------
Income before income
 tax....................      5,019       8,021       9,928           6,427
Income tax expense......      1,488       2,814       3,714           2,404
                           --------    --------    --------        --------
Net income..............      3,531       5,207       6,214           4,023
Other comprehensive
 income (loss)..........        977         332        (404)           (262)
                           --------    --------    --------        --------
Net income after other
 comprehensive income
 (loss).................   $  4,508    $  5,539    $  5,810        $  3,761
                           ========    ========    ========        ========
Earnings per share:
Basic earnings per
 share..................   $   1.43    $   1.15    $   1.37        $   0.89
                           ========    ========    ========        ========
Diluted earnings per
 share..................   $   1.18    $   1.13    $   1.34        $   0.87
                           ========    ========    ========        ========
Weighted average shares
 outstanding (in
 thousands).............      2,473       4,542       4,542           4,542
                           ========    ========    ========        ========
</TABLE>


          See accompanying notes to Consolidated Financial Statements.

                                       42
<PAGE>

                            BARBEQUES GALORE LIMITED

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                           Accumulated
                                               Additional     Other     Retained      Total
                           Shares    Ordinary   Paid-In   Comprehensive Earnings  Shareholders'
                         Outstanding  Shares    Capital      Income     (Deficit)    Equity
                         ----------- --------  ---------- ------------- --------- -------------
                           ('000)        (in A$ thousands, except share and per share data)
<S>                      <C>         <C>       <C>        <C>           <C>       <C>
Balances at January 31,
 1997...................    1,844    $ 6,720    $  4,613     $  200      $(1,368)    $10,165
Net income..............      --         --          --         --         3,531       3,531
Dividend of $0.2715 per
 share..................      --         --          --         --          (499)       (499)
Foreign currency
 translation
 adjustment.............      --         --          --         977          --          977
Issuance of ordinary
 shares.................    1,500      5,460      18,149        --           --       23,609
Conversion of
 convertible notes......    1,198      4,360       5,682        --           --       10,042
Initial public offering
 (the "Offering")
 costs..................      --         --       (3,898)       --           --       (3,898)
Other...................      --          (8)          8        --           --          --
                            -----    -------    --------     ------      -------     -------
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
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
                            =====    =======    ========     ======      =======     =======
</TABLE>

   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

                                       43
<PAGE>

                            BARBEQUES GALORE LIMITED

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                              Year ended  Year ended  Year ended
                                              January 31, January 31, January 31,
                                                 1998        1999        2000
                                              ----------- ----------- -----------
                                                       (in A$thousands)
<S>                                           <C>         <C>         <C>
Cash flows from operating activities:
 Net income.................................    $ 3,531     $ 5,207     $ 6,214
 Adjustments to reconcile net income to net
  cash provided by (used in) operating
  activities:
 Depreciation and amortization..............      4,236       5,975       6,462
 Deferred income taxes......................        118         (42)       (245)
 Amounts set aside to provisions............       (925)        602         349
 Undistributed income of affiliates.........       (219)       (317)        (52)
 Loss (gain) on sale of property, plant and
  equipment.................................        (52)         73         (10)
 Changes in operating assets and
  liabilities:
 Receivables and prepaid expenses...........     (2,316)     (2,510)     (3,118)
 Inventories................................     (9,185)     (3,800)     (7,091)
 Other assets...............................        (81)        (59)          4
 Accounts payable and accrued liabilities...      3,755       1,392       8,192
                                                -------     -------     -------
Net cash provided by (used in) operating
 activities.................................     (1,138)      6,521      10,705
                                                -------     -------     -------
Cash flows from investing activities:
 Proceeds from sale of property, plant and
  equipment.................................        322          28         139
 Capital expenditures.......................     (5,000)    (13,181)     (5,777)
 Loan repayments received...................        181          43         100
                                                -------     -------     -------
Net cash (used in) investing activities.....     (4,497)    (13,110)    ( 5,538)
                                                -------     -------     -------
Cash flows from financing activities:
 Repayment of long-term debt................    (34,111)    (10,021)    (18,129)
 Proceeds from long-term debt...............     24,274      19,450      14,500
 Bank overdraft proceeds (repayments).......     (1,826)         --          --
 Principal payments under capital leases....     (1,782)     (1,844)     (2,316)
 Dividend paid..............................       (499)         --          --
 Proceeds from issuance of ordinary shares..     23,609          --          --
 Offering costs.............................     (3,898)       (353)         --
                                                -------     -------     -------
  Net cash (used in) provided by financing
   activities...............................      5,767       7,232      (5,945)
                                                -------     -------     -------
Effects of exchange rate fluctuations.......          4           2          --
                                                -------     -------     -------
Net increase (decrease) in cash and cash
 equivalents................................        136         645        (778)
Cash and cash equivalents at beginning of
 period.....................................         30         166         811
                                                -------     -------     -------
Cash and cash equivalents at end of period..    $   166     $   811     $    33
                                                =======     =======     =======
</TABLE>

          See accompanying notes to Consolidated Financial Statements.

                                       44
<PAGE>

                           BARBEQUES GALORE LIMITED

                  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.

(c) Inventories

   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. 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:

<TABLE>
<CAPTION>
                                                                Method     Years
                                                             ------------- -----
<S>                                                          <C>           <C>
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
</TABLE>

   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.


(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.

                                      45
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(h) Research and development, and advertising

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

<TABLE>
<CAPTION>
                                             Year ended  Year ended  Year ended
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$thousands)
   <S>                                       <C>         <C>         <C>
   Research and development.................   $  924      $1,047      $ 1,014
   Advertising..............................    8,397       9,605       11,022
                                               ======      ======      =======
</TABLE>

(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.

(i) Share option plan

   The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation, in 1996, under which the
Company elected to continue following the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations for its 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.

(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.

                                      46
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(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 as incurred over the lease terms.

   Where premises under a non-cancelable 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 earnings available to
ordinary shareholders by the weighted average number of ordinary shares.
Diluted earnings per share are computed by dividing net earnings available to
ordinary shareholders, as adjusted for the effect of the elimination of after-
tax interest expense related to assumed conversion of the convertible notes,
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.

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

   The information in US dollars in the consolidated balance sheets and
consolidated statements of operations is presented solely for the convenience
of the reader and has been translated at the spot rate on January 31, 2000 of
US$0.6382 per A$1.00 and at the average rate for the fiscal year ended January
31, 2000 of US$0.6474 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.

                                      47
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(t) Comprehensive income

   The only component of comprehensive income 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,
1998, 1999 and 2000 was A$977,000, A$332,000 and A$(404,000), respectively.
Accumulated other comprehensive income at January 31, 1999 and 2000 consisted
solely of foreign currency translation adjustments with credit balances of
A$1.5 million and A$1.1 million, respectively.

2.  Derivative Financial Instruments

   The notional amount of foreign currency forward contracts used as a means
of offsetting fluctuations in the dollar value of foreign currency accounts
payable is set out below. 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.

<TABLE>
<CAPTION>
                                January 31, January 31, January 31, January 31,
                                   1999        2000        1999        2000
                                ----------- ----------- ----------- -----------
                                (weighted average rate)    (in A$ thousands)
   <S>                          <C>         <C>         <C>         <C>
   Buy U.S. dollars
   Not later than one year.....   0.6335        Nil        $604        $Nil
                                  ======        ===        ====        ====
</TABLE>

   The fair value of foreign currency contracts is not significant.

3. Accounts Receivable

   Accounts receivable consists of the following:

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Trade accounts receivable............................  $ 11,682     $14,432
   Less: Reserve for doubtful accounts..................      (424)       (463)
                                                          --------     -------
                                                            11,258      13,969
   Other receivables....................................       658         823
                                                          --------     -------
                                                          $ 11,916     $14,792
                                                          ========     =======
</TABLE>

4. Inventories

   The major classes of inventories are as follows:

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Finished goods.......................................  $ 42,524     $50,018
   Work in progress.....................................     1,542       1,425
   Raw materials........................................     3,283       2,997
                                                          --------     -------
                                                            47,349      54,440
   Less: Reserve for obsolescence.......................      (254)       (418)
                                                          --------     -------
                                                          $ 47,095     $54,022
                                                          ========     =======
</TABLE>


                                      48
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5. Investments in Affiliated Companies

   Investments in affiliated companies consist of 33.33 percent 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 percent 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.

   Prices charged between the Company and its 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:

<TABLE>
<CAPTION>
                                           Year ended  Year ended  Year ended
                                           January 31, January 31, January 31,
                                              1998        1999        2000
                                           ----------- ----------- -----------
                                                    (in A$ thousands)
   <S>                                     <C>         <C>         <C>
   Purchases from affiliates:
   --Bromic...............................   $ 4,019     $ 2,729     $ 3,371
   --GLG Trading Pte Ltd..................     7,148       8,562       8,261
                                             -------     -------     -------
                                             $11,167     $11,291     $11,632
                                             =======     =======     =======
   Dividends received or due and
    receivable from affiliates:
   --Bromic...............................   $   250     $   --      $   200
   --GLG Trading Pte Ltd..................        83         197         299
                                             -------     -------     -------
                                             $   333     $   197     $   499
                                             =======     =======     =======
</TABLE>

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Receivable from affiliates (net):
   --Bromic.............................................   $  432      $  453
   --GLG Trading Pte Ltd................................      248         248
                                                           ------      ------
                                                           $  680      $  701
                                                           ======      ======
   Investment in affiliates.............................   $1,002      $1,054
                                                           ======      ======
</TABLE>

                                      49
<PAGE>

                            BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   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. Combined summarized, unaudited, financial data as at January 31, 1998,
1999 and 2000 is as follows:

<TABLE>
<CAPTION>
                                            January 31, January 31, January 31,
                                               1998        1999        2000
                                            ----------- ----------- -----------
                                                     (in A$ thousands)
   <S>                                      <C>         <C>         <C>
   Current assets..........................   $ 7,414     $ 7,605     $ 8,927
   Current liabilities.....................     4,038       3,334       4,558
                                              -------     -------     -------
   Working capital.........................     3,376       4,271       4,369
   Property, plant and equipment, net......     1,224       1,157       1,149
   Other assets............................       223          61         326
   Long-term debt..........................    (2,417)     (2,312)     (2,418)
                                              -------     -------     -------
   Shareholders' equity....................   $ 2,406     $ 3,177     $ 3,426
                                              =======     =======     =======
   Sales...................................   $18,460     $17,806     $20,545
                                              =======     =======     =======
   Gross margin............................   $ 4,571     $ 4,307     $ 4,514
                                              =======     =======     =======
   Net income..............................   $ 1,176     $ 1,164     $ 1,422
                                              =======     =======     =======
</TABLE>

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

6. Property, Plant and Equipment

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Land and buildings...................................  $  9,275     $ 9,546
   Machinery and equipment..............................    21,097      24,651
   Leasehold improvements...............................    11,153      12,534
   Assets under capital leases..........................    11,587      12,940
                                                          --------     -------
                                                            53,112      59,671
   Less: Accumulated depreciation/amortization..........   (20,492)    (24,701)
                                                          --------     -------
                                                          $ 32,620     $34,970
                                                          ========     =======
</TABLE>

7. Goodwill

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Goodwill.............................................   $ 1,800     $1,800
   Less: Accumulated amortization.......................      (382)      (473)
                                                           -------     ------
                                                           $ 1,418     $1,327
                                                           =======     ======
</TABLE>

                                       50
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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:

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Store improvements...................................   $ 6,155     $7,132
   Machinery and equipment..............................     5,432      5,808
                                                           -------     ------
                                                            11,587     12,940
   Less: Accumulated amortization.......................    (4,836)    (5,269)
                                                           -------     ------
                                                           $ 6,751     $7,671
                                                           =======     ======
</TABLE>

   The Company also has entered into non-cancelable 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:

<TABLE>
<CAPTION>
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$ thousands)
   <S>                                       <C>         <C>         <C>
   Rental expenses..........................   $11,948     $15,667     $18,765
                                               =======     =======     =======
</TABLE>

   Future minimum capital lease payments and future minimum lease payments
under non-cancelable operating leases as of January 31, 2000 are:

<TABLE>
<CAPTION>
                                                            Capital  Operating
                                                            leases    leases
                                                            -------  ---------
                                                            (in A$ thousands)
   <S>                                                      <C>      <C>
   Year ending January 31,
   2001.................................................... $ 2,940   $15,631
   2002....................................................   2,124    14,733
   2003....................................................   1,715    12,563
   2004....................................................   1,653    10,639
   2005....................................................     400     9,313
   Years subsequent to 2005................................     --     20,835
                                                            -------   -------
   Total minimum lease payments............................   8,832   $83,714
                                                            =======   =======
   Less: Amounts representing interest.....................  (1,190)
                                                            -------
   Present value of net minimum capital lease payments.....   7,642
   Less: Current portion of obligations under capital
    leases.................................................  (2,405)
                                                            -------
   Obligations under capital leases, excluding current
    portion................................................ $ 5,237
                                                            =======
</TABLE>


                                      51
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. Accounts Payable and Accrued Liabilities

   Accounts payable and accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                       January 31, January 31,
                                                          1999        2000
                                                       ----------- -----------
                                                          (in A$ thousands)
   <S>                                                 <C>         <C>
   Trade accounts payable.............................  $  7,394     $12,053
   Accrued liabilities................................     6,831      11,037
   Employees benefits.................................     2,123       2,577
   Other..............................................       405         347
                                                        --------     -------
                                                        $ 16,753     $26,014
                                                        ========     =======
</TABLE>

10. Long-Term Debt

   Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                         January 31, January 31,
                                                            1999        2000
                                                         ----------- -----------
                                                            (in A$ thousands)
   <S>                                                   <C>         <C>
   Current:
   Bank bills...........................................  $    172     $    22
                                                          ========     =======
   Non-current:
   Bank bills...........................................  $ 15,721     $12,242
   Property loans.......................................     8,450       8,450
                                                          --------     -------
                                                          $ 24,171     $20,692
                                                          ========     =======
</TABLE>


   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$49,600,000, comprising a multi-option facility in principal
amount of A$35,150,000, real property loans in principal amount of A$8,450,000
(secured by registered first mortgages over the respective freehold properties
of the Company) and a further seasonal trade finance facility of A$6,000,000.
As of January 31, 2000 the Company had not utilized A$27,400,000 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 comprises 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, 1999 and 2000,
the weighted average interest rates accruing on the bank bills utilized under
the ANZ Facility were as follows:

<TABLE>
<CAPTION>
                              January 31, January 31, January 31,  January 31,
                                 1999        2000         1999         2000
                              ----------- ----------- ------------ ------------
                                 (in A$ thousands)    (interest rate per annum)
   <S>                        <C>         <C>         <C>          <C>
   Bank bills................   $15,721     $12,242   5.7%         6.2%
   Property loans............     8,450       8,450   6.9% to 9.6% 6.8% to 7.4%
</TABLE>


                                      52
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   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,
2000.

   The Company has historically renegotiated its credit facilities on similar
terms and conditions. For this reason, the majority of the outstanding balance
relating to bank bills and term 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 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 aggregate rate as at January 31, 2000 was 8.42%. 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:

<TABLE>
<CAPTION>
   Year ending January 31,                                    (in A$ thousands)
   -----------------------                                    -----------------
   <S>                                                        <C>
   2001......................................................      $    22
   2002......................................................       20,692
                                                                   -------
                                                                   $20,714
                                                                   =======
</TABLE>

11. Income Taxes

   Income before income taxes was taxed under the following jurisdictions:

<TABLE>
<CAPTION>
                                             Year ended  Year ended  Year ended
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$ thousands)
   <S>                                       <C>         <C>         <C>
   Australia................................   $4,614      $7,822      $8,270
   United States............................      405         199       1,658
                                               ------      ------      ------
                                               $5,019      $8,021      $9,928
                                               ======      ======      ======
</TABLE>

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

<TABLE>
<CAPTION>
                                             Year ended  Year ended  Year ended
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$ thousands)
   <S>                                       <C>         <C>         <C>
   Current:
   Australia...............................    $1,107      $2,697      $2,929
   United States...........................       263         159       1,530
                                               ------      ------      ------
                                                1,370       2,856       4,459
                                               ======      ======      ======
   Deferred:
   Australia...............................       286          38          87
   United States...........................      (168)        (80)       (832)
                                               ------      ------      ------
                                                  118         (42)       (745)
                                               ------      ------      ------
                                               $1,488      $2,814      $3,714
                                               ======      ======      ======
</TABLE>


                                      53
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Income tax expense differed from the amounts computed by applying the
Australian federal income tax rate of 36% to pretax income as a result of the
following:

<TABLE>
<CAPTION>
                                           Year ended  Year ended  Year ended
                                           January 31, January 31, January 31,
                                              1998        1999        2000
                                           ----------- ----------- -----------
                                                    (in A$ thousands)
   <S>                                     <C>         <C>         <C>
   Computed "expected" tax expense........   $1,807      $2,888      $3,574
   Increased (reduction) in income taxes
    resulting from:
   Restatement of net deferred tax assets
    pursuant to change in taxation rate...      --          --          221
   State taxes, net of federal tax
    benefit...............................       29          11          86
   Change in the valuation allowance......      (79)        --          --
   Equity in earnings of affiliates not
    subject to taxation...................     (196)       (185)       (198)
   Other, net.............................      (73)        100          31
                                             ------      ------      ------
                                             $1,488      $2,814      $3,714
                                             ======      ======      ======
</TABLE>

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

<TABLE>
<CAPTION>
                                                       January 31, January 31,
                                                          1999        2000
                                                       ----------- -----------
                                                          (in A$ thousands)
   <S>                                                 <C>         <C>
   Deferred tax assets:
   Provisions not presently deductible................   $1,294      $1,491
   Plant and equipment, due to differences in
    depreciation......................................      867         777
   Inventories, due to capitalized costs..............      490         945
   Leases, due to differences in lease payments,
    interest and amortization.........................       78           1
   Net operating loss carryforward....................       92         237
   Other..............................................      612         707
                                                         ------      ------
   Total deferred tax assets..........................   $3,433      $4,158
                                                         ------      ------
   Deferred tax liability:
   Prepayments........................................      165         144
                                                         ------      ------
   Total deferred tax liability.......................   $  165      $  144
                                                         ------      ------
   Net deferred tax asset.............................   $3,268      $4,014
                                                         ======      ======
</TABLE>

   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$694,000 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.

                                      54
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. Share Option Plans

 Executive Share Option Plan

   Effective January 31, 1997, the Company adopted an executive share option
plan (the "Executive Plan") under 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 420,088 Ordinary Shares have been authorized for issuance. The 1997
Plan was adopted by the Board of Directors on October 1, 1997 and approved by
the shareholders as of October 7, 1997.

   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 will be 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 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 installments 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, 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 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/regrant 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
installments on November 9, 2001, November 9, 2002 and October 9, 2003. All
other

                                      55
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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 regranted under the program. During the fiscal year ended
January 31, 2000, a total of 11,800 New Options were forfeited.

   In addition to the cancellation and regrant program on November 9, 1998,
the Board of Directors granted further options to directors, an officer 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, officers 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 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 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 11,800 options forfeited during the 12 months ended
January 31, 2000) was A$1.54 per option; due to unrecognized compensation
costs per original option of A$8.04, the total compensation cost to be
recognized from the date of regrant was A$9.58.

   The fair value of the 17,646 and 143,820 share option grants 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:

<TABLE>
<CAPTION>
       Number of                 Expected                             Weighted Average Fair
        Options                 Lives (yrs)                             Value Per Option
       ---------                -----------                           ---------------------
       <S>                      <C>                                   <C>
         165,400                    4.8                                      A$9.58
          48,250                    4.8                                        5.44
          17,646                    4.9                                        6.60
         143,820                    4.9                                        6.60
         -------                                                             ------
         375,116                                                             A$7.77
         =======                                                             ======
</TABLE>

                                      56
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A summary of the status of the Company's Executive and 1997 Plan as of
January 31, 1998, 1999 and 2000 and changes during the periods ended on those
dates is presented below:

<TABLE>
<CAPTION>
                                                    Weighted --     Options
                                                      average     exercisable
                                         Options   exercise price at year end
                                         --------  -------------- -----------
   <S>                                   <C>       <C>            <C>
   Outstanding balance at January 31,
    1997................................  203,038      $ 8.38           --
                                                       ------       -------
   Granted..............................  199,400       16.44
                                         --------      ------       -------
   Outstanding balance at January 31,
    1998................................  402,438       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
   Granted..............................  161,466        9.75
   Forfeited............................  (11,800)       8.20
                                         --------      ------       -------
   Outstanding balance at January 31,
    2000................................  578,154      A$8.70       203,038
                                         ========      ======       =======
</TABLE>

   The weighted average fair value of options granted during the years ended
January 31, 1998, 1999 and 2000 were A$10.76, A$5.38 and A$6.60 respectively.

   The following table summarizes information about share options outstanding
at January 31, 2000:

<TABLE>
<CAPTION>
       Number outstanding            Weighted-average                    Weighted--
         at January 31,            remaining contractual                  average
              2000                     life (years)                    exercise price
       ------------------          ---------------------               --------------
       <S>                         <C>                                 <C>
            203,038                         1.5                            A$8.38
             48,250                         3.8                              8.20
            165,400                         3.8                              8.20
             17,646                         4.9                              9.75
            143,820                         4.9                              9.75
            -------                         ---                            ------
            578,154                         3.3                            A$8.69
            =======                         ===                            ======
</TABLE>

                                      57
<PAGE>

                           BARBEQUES GALORE LIMITED

            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, 1998, 1999 and 2000, respectively. Had
the Company determined compensation cost based on the fair value at the grant
date for its share options under SFAS 123, the Company's net income would have
been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                            Year ended  Year ended  Year ended
                                            January 31, January 31, January 31,
                                               1998        1999        2000
                                            ----------- ----------- -----------
                                            (in A$ thousands, except per share
                                                           data)
   <S>                                      <C>         <C>         <C>
   Net income
     As reported...........................   $3,531      $5,207      $6,214
     Pro forma.............................   $3,239      $4,830      $5,894
   Primary earnings per share
     As reported...........................   $ 1.43      $ 1.15      $ 1.37
     Pro forma.............................   $ 1.31      $ 1.06      $ 1.30
   Diluted earnings per share
     As reported...........................   $ 1.18      $ 1.13      $ 1.34
     Pro forma.............................   $ 0.94      $ 1.05      $ 1.27
</TABLE>

13. Commitments and Contingencies

   Product liability claims have been made against certain companies in the
group which are not expected to result in any material loss to the Company.

14. Segments and Related Information

   The Company is engaged in the retail industry and operated 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.

                                      58
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Summarized financial information concerning the Company's reportable
segments is as follows:


<TABLE>
<CAPTION>
                                               Australia United States  Total
                                               --------- ------------- --------
                                                      (in A$ thousands)
   <S>                                         <C>       <C>           <C>
   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
                                               ========    ========    ========
   12 months to January 31, 1998
   Revenues from external customers........... $117,613    $ 61,712    $179,325
                                               ========    ========    ========
   Gross margin............................... $ 38,468    $ 18,785    $ 57,253
                                               ========    ========    ========
   Operating income........................... $  7,309    $    497    $  7,806
                                               ========    ========    ========
   Total assets............................... $ 59,560    $ 22,514    $ 82,074
                                               ========    ========    ========
</TABLE>

15. Related Party Transactions

   The Company shares premises and incurs rent and operating expenses on
behalf of Rebel Sport Limited. Mr. Linz and Mr. Gavshon were directors and
significant shareholders of Rebel Sport Limited up until July 10, 1997. These
amounts are payable to the Company on 30 day terms. 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.

<TABLE>
<CAPTION>
                                            Year ended  Year ended  Year ended
                                            January 31, January 31, January 31,
                                               1998        1999        2000
                                            ----------- ----------- -----------
                                                     (in A$ thousands)
   <S>                                      <C>         <C>         <C>
   Interest costs incurred in respect of
    amounts advanced by directors or
    director related entities..............    $ 44        $102         $44
   Amounts advanced to Rebel Sport
    Limited................................     320         --          --
   Amounts reimbursed by Rebel Sport
    Limited................................     260         --          --
                                               ====        ====         ===
</TABLE>

                                      59
<PAGE>

                           BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


16. Supplemental Disclosure of Cash Flow Information

<TABLE>
<CAPTION>
                                             Year ended  Year ended  Year ended
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$ thousands)
   <S>                                       <C>         <C>         <C>
   Cash paid during the period for:
   Interest.................................   $3,362      $2,273      $2,273
   Income taxes.............................    2,163       2,114       3,685
                                               ======      ======      ======
</TABLE>

   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:

<TABLE>
<CAPTION>
                                          Year ended  Year ended  Year ended
                                          January 31, January 31, January 31,
                                             1998        1999        2000
                                          ----------- ----------- -----------
                                                   (in A$ thousands)
   <S>                                    <C>         <C>         <C>
   Equipment acquired under capital
    leases...............................   $1,729      $3,589      $3,070
                                            ======      ======      ======
</TABLE>

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
their 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:

<TABLE>
<CAPTION>
                                             Year ended  Year ended  Year ended
                                             January 31, January 31, January 31,
                                                1998        1999        2000
                                             ----------- ----------- -----------
                                                      (in A$ thousands)
   <S>                                       <C>         <C>         <C>
   Contribution expense.....................   $1,113      $1,355      $1,625
                                               ======      ======      ======
</TABLE>

                                      60
<PAGE>

                            BARBEQUES GALORE LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


18. Earnings Per Share

<TABLE>
<CAPTION>
                              Year ended           Year ended           Year ended
                           January 31, 1998     January 31, 1999     January 31, 2000
                         -------------------- -------------------- --------------------
                                        Per                  Per                  Per
                                       share                share                share
                         Income Shares amount Income Shares amount Income Shares amount
                         ------ ------ ------ ------ ------ ------ ------ ------ ------
                               (in A$ thousands, except share and per share data)
<S>                      <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
Income.................. $3,531               $5,207               $6,214
                         ------               ------               ------
Basic EPS
Income available to
 common shareholders....  3,531 2,473  $1.43   5,207 4,542  $1.15   6,214 4,542  $1.37
                                       =====                =====                =====
Effect of Dilutive
 Securities
Convertible shares net
 of tax.................    504   919            --    --             --    --
Options deemed
 exercised..............    --     41            --     53            --     91
                         ------ -----         ------ -----         ------ -----
Diluted EPS
Income available to
 common shareholders
 plus assumed
 conversions............ $4,035 3,433  $1.18  $5,207 4,595  $1.13  $6,214 4,633  $1.34
                         ====== =====  =====  ====== =====  =====  ====== =====  =====
</TABLE>

19. Subsequent Event

   The Company invested A$2.0 million for a one-third equity interest in
Renegade Gas Pty Limited ("Renegade"), an Australian company which recently
entered the gas distribution business. Renegade is affiliated to Bromic (refer
note 5) which recently commenced operations in the U.S.A.

                                       61
<PAGE>

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS.

(a) The following documents are filed as part of this Annual Report on Form 20-
F:

<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
                                                                          ------
   <S>                                                                    <C>
   Independent Auditors' Report..........................................   40
   Consolidated Balance Sheets...........................................   41
   Consolidated Statements of Income.....................................   42
   Consolidated Statement of Shareholders' Equity........................   43
   Consolidated Statements of Cash Flows.................................   44
   Notes to Consolidated Financial Statements............................   45
</TABLE>

(b) Exhibits

<TABLE>
<CAPTION>
  Exhibit
   Number
  -------
  <C>      <S>
   3.1*    Memorandum and Articles of Association.
   4.1*    Form of Specimen of American Depositary Receipt.
   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.
  10.1*    Executive Share Option Plan.
  10.2*    1997 Share Option Plan.
  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.
  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.
  10.5*    Deeds of purchase of Registrant's headquarters facility and assembly
           operations facility.
  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.
  10.7+    Contract for the sale of land for the Registrant's warehousing and
           distribution facility.
  10.8**   WCMA(R) Note, Loan and Security Agreement No. 231-07T10, as amended.
  10.9**   Deeds of purchase of Regisrant's headquarters facilty and assembly
           operations facility, as amended.
  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.
  10.11*** Contract for the sale of land for the Registrant's warehousing and
           distribution operations.
  23.1     Consent of KPMG.
  24.1     Powers of Attorney (see page 65).
</TABLE>

                                       62
<PAGE>

--------
  *  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 by reference herein.
 **  Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
     K, filed with the Commission on June 15, 1998, and incorporated by
     reference herein.
***  Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
     K, filed with the Commission on September 14, 1998, and incorporated by
     reference herein.
  +  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 by
     reference herein.

                                      63
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
  Number
 -------
 <C>      <S>
  3.1*    Memorandum and Articles of Association.
  4.1*    Form of Specimen of American Depositary Receipt.
  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.
 10.1*    Executive Share Option Plan.
 10.2*    1997 Share Option Plan.
 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.
 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.
 10.5*    Deeds of purchase of Registrant's headquarters facility and assembly
          operations facility.
 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.
 10.7+    Contract for the sale of land for the Registrant's warehousing and
          distribution facility.
 10.8**   WCMA(R) Note, Loan and Security Agreement No. 231-07T10, as amended.
 10.9**   Deeds of purchase of Regisrant's headquarters facility and assembly
          operations facility, as amended.
 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.
 10.11*** Contract for the sale of land for the Registrant's warehousing and
          distribution operations.
 23.1     Consent of KPMG.
 24.1     Powers of Attorney (see page 65).
</TABLE>
--------
  *  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 by reference herein.
 **  Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
     K, filed with the Commission on June 15, 1998, and incorporated by
     reference herein.
***  Previously filed in the Registrant's Report of Foreign Issuer on Form 6-
     K, filed with the Commission on September 14, 1998, and incorporated by
     reference herein.
  +  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 by
     reference herein.

                                      64
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Barbeques Galore, a corporation
organized and existing under the laws of the Commonwealth of Australia, has
duly caused this Annual Report on Form 20-F to be signed on its behalf by the
undersigned, thereunto duly authorised on May 1, 2000.

                                          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:

<TABLE>
<S>                                  <C>                           <C>
          /s/ Sam Linz               Chairman of the Board and       May 1, 2000
____________________________________  Director (Principal
              Sam Linz                Executive Officer)

        /s/ David James              Principal Financial and         May 1, 2000
____________________________________  Accounting Officer
            David James

       /s/ Robert Gavshon            Deputy Chairman of the Board    May 1, 2000
____________________________________  and Director
           Robert Gavshon

         /s/ John Price              Director                        May 1, 2000
____________________________________
             John Price

        /s/ Edgar Berner             Director                        May 1, 2000
____________________________________
            Edgar Berner

       /s/ Gordon Howlett            Director                        May 1, 2000
____________________________________
           Gordon Howlett

       /s/ Sydney Selati             Director and Authorized U.S.    May 1, 2000
____________________________________  Representative
           Sydney Selati
</TABLE>

                                      65