Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

Operating Segment

v3.19.3.a.u2
Operating Segment
6 Months Ended
Jul. 31, 2019
Operating Segment  
Operating Segment

7 Operating Segment

 

Segment information

 

Identification of reportable operating segments

 

The consolidated entity’s Directors examined the group’s performance from both sales channel and geographical perspective and identified seven reportable segments being Australia Retail, New Zealand Retail, Australia wholesale, New Zealand wholesale, US Wholesale, EU Wholesale and e-commerce.

 

Australia retail

 

This segment covers retail and outlet stores located in Australia.

 

New Zealand retail

 

This segment covers retail and outlet stores located in New Zealand.

 

Australia wholesale

 

This segment covers the wholesale of intimates apparel to customers based in Australia

 

New Zealand wholesale

 

This segment covers the wholesale of intimates apparel to customers based in New Zealand.

 

 

US wholesale

 

This segment covers the wholesale of intimates apparel to customers based in the United States of America.

 

Europe wholesale

 

This segment covers the wholesale of intimates apparel to customers based in Europe.

 

E-commerce

 

This segment covers the group’s online retail activities. E-commerce revenue include revenue from a US brand called Fredericks of Hollywood for which Bendon Limited currently has a licence agreement.

 

These operating segments are based on the internal reports that are reviewed and used by the Chief Executive Officer (who is identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources.

 

The CODM reviews segment EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

 

EBITDA is a financial measure which is not prescribed by IFRS and represents the profit adjusted for specific non-cash and significant items. The directors consider EBITDA to reflect the core earnings of the consolidated entity.

 

The information reported to the CODM is on a monthly basis.

 

Other Costs and Business Activities

 

Certain costs are not allocated to our reporting segment results, such as costs associated with the following:

 

- Corporate overheads, which is responsible for centralized functions such as information technology, facilities, legal, finance, human resources, business development, and procurement. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest and tax income and expense.

 

These costs are included within “unallocated” segment in our segment performance.

 

Other assets and liabilities

 

We manage our assets and liabilities on a Group basis, not by segment. CODM does not regularly review any asset or liability information by segment and its preparation is impracticable. Accordingly, we do not report asset and liability information by segment.

 

  (a) Reconciliations

 

Reconciliation of segment revenue to consolidated statements of profit or loss and other comprehensive income:

 

   

6 months to

31 July 2019

NZ $000’s

    6 months to
31 July 2018
NZ $000’s
 
             
Total segment revenue     47,809       65,736  
Intersegment eliminations     (5,715 )     (8,986 )
Total external revenue     42,094       56,750  

 

Intersegment revenue is recognition of inventory moving between New Zealand and Australia

 

  (b) Reconciliations

 

Reconciliation of segment EBITDA to the consolidated statements of profit or loss and other comprehensive income:

 

Management meets on a monthly basis to assess the performance of each segment. Net operating profit does not include non- operating revenue and expenses such as dividends, fair value gains and losses.

 

   

6 months to

31 July 2019

NZ $000’s

    6 months to
31 July 2018
NZ $000’s
 
             
Segment EBITDA     (9,758 )     (15,436 )
Other reconciling items     (18,210 )     (11,069 )
Income tax (expense)/benefit     (761 )     411  
Total net loss after tax     (28,729 )     (26,094 )

 

Any other reconciling items includes brand transition, finance expenses, impairment expense, depreciation and amortisation, fair value gain/loss on foreign exchange contracts, and unrealised foreign exchange gain/loss that cannot be allocated to segments.

 

  (c) Geographical information

 

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers whereas segment assets are based on the location of the assets.

 

   

6 months to

31 July 2019

NZ $000’s

    6 months to
31 July 2018
NZ $000’s
 
             
New Zealand     14,876       20,984  
Australia     9,825       17,570  
United States     17,079       14,383  
Europe     314       3,813  
      42,094       56,750  

 

  (d) Segment performance

 

    NZ Retail NZ$000’s     AU Retail NZ$000’s     NZWholesale NZ$000’s     AUWholesale NZ$000’s     US Wholesale NZ$000’s    

EU

Wholesale NZ$000’s

   

 

e-commerce NZ$000’s

    Unallocated NZ$000’s     Total  
For the 6 months ended 31 July 2019                                                                        
Revenue from external customers     12,498       6,502       1,569       3,289       3,242       314       14,680       -       42,094  
      12,498       6,502       1,569       3,289       3,242       314       14,680       -       42,094  
Cost of sales     (6,820 )     (3,007 )     (820 )     (2,545 )     (2,374 )     (130 )     (10,417 )     (2,016 )     (28,129 )
Gross margin     5,678       3,495       749       744       868       184       4,263       (2,016 )     13,965  
Other segment expenses*     (5,028 )     (2,618 )     (636 )     (1,299 )     (1,303 )     (127 )     (6,169 )     -       (17,180 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (558 )     (558 )
Corporate expenses     -       -       -       -       -       -       -       (5,656 )     (5,656 )
Other foreign exchange loss     -       -       -       -       -       -       -       (329 )     (329 )
EBITDA     650       877       113       (555 )     (435 )     57       (1,906 )     (8,559 )     (9,758 )
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (5,846 )     (5,846 )
Finance expense     -       -       -       -       -       -       -       (2,230 )     (2,230 )
Impairment expense     -       -       -       -       -       -       -       (6,849 )     (6,849 )
Depreciation and amortisation     -       -       -       -       -       -       -       (4,567 )     (4,567 )
Fair value gain on foreign exchange contracts     -       -       -       -       -       -       -       729       729  
Unrealised foreign exchange gain/(loss)     -       -       -       -       -       -       -       553       553  
Fair value gain on Convertible Note derivative     -       -       -       -       -       -       -       -       -  
Profit/(loss) after income tax     650       877       113       (555 )     (435 )     57       (1,906 )     (26,769 )     (27,968 )
Income tax expense     -       -       -       -       -       -       -       (761 )     (761 )
Profit/(loss) after income tax     650       877       113       (555 )     (435 )     57       (1,906 )     (27,530 )     (28,729 )

 

* Other segment expenses relate to brand management expenses and some corporate expenses.

 

  (e) Segment performance

 

    NZ Retail NZ$000’s     AU Retail NZ$000’s    

NZ

Wholesale NZ$000’s

   

AU

Wholesale NZ$000’s

   

US

Wholesale NZ$000’s

   

EU

Wholesale NZ$000’s

    e-commerce NZ$000’s     Unallocated NZ$000’s     Total  
For the 6 months ended 31 July 2018     15,571       8,758       4,556       6,757       3,047       3,813       14,248       -       56,750  
Revenue from external customers     15,571       8,758       4,556       6,757       3,047       3,813       14,248       -       56,750  
Cost of sales     (7,612 )     (4,246 )     (3,695 )     (5,246 )     (2,923 )     (3,007 )     (10,234 )     (2,109 )     (39,072 )
Gross margin     7,959       4,512       861       1,511       124       806       4,014       (2,109 )     17,678  
Other segment expenses*     (6,856 )     (5,644 )     (672 )     (1,726 )     (1,187 )     (1,166 )     (5,375 )     -       (22,626 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (661 )     (661 )
Corporate expenses     -       -       -       -       -       -       -       (10,672 )     (10,672 )
Other foreign exchange gain/loss     -       -       -       -       -       -       -       845       845  
EBITDA     1,103       (1,132 )     189       (215 )     (1,063 )     (360 )     (1,361 )     (12,597 )     (15,436 )
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (5,157 )     (5,157 )
Finance expense     -       -       -       -       -       -       -       (2,454 )     (2,454 )
Impairment expense     -       -       -       -       -       -       -       (4,182 )     (4,182 )
Depreciation and amortisation     -       -       -       -       -       -       -       (1,190 )     (1,190 )
Fair value gain on foreign exchange contracts     -       -       -       -       -       -       -       2,306       2,306  
Unrealised foreign exchange gain/(loss)     -       -       -       -       -       -       -       383       383  
Fair value gainon Convertible Note derivative     -       -       -       -       -       -       -       (775 )     (775 )
Profit/(loss) before income tax     1,103       (1,132 )     189       (215 )     (1,063 )     (360 )     (1,361 )     (23,666 )     (26,505 )
Income tax benefit     -       -       -       -       -       -       -       411       411  
Profit/(loss) after income tax     1,103       (1,132 )     189       (215 )     (1,063 )     (360 )     (1,361 )     (23,255 )     (26,094 )

 

* Other segment expenses relate to brand management expenses and some corporate expenses