Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Operating Segments

v3.19.2
Operating Segments
12 Months Ended
Jan. 31, 2019
Operating Segments  
Operating Segments

10 Operating Segments

 

Segment information

 

Identification of reportable operating segments

 

The consolidated entities’ Director 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.

  

Identification of reportable operating segments

 

E-commerce

 

This segment covers the group’s online retail activities. E-commerce revenue for the periods ended 31 January 2019, 31 January 2018 and 31 January 2017 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 underlying 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 with in “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:

    For the 
Year Ended 
31 January 2019 
NZ$000’s
    For the 
Year Ended 
31 January 2018 
NZ$000’s
    For the
7 Months Ended 
31 January 2017 
NZ$000’s
    For the
Year Ended 
30 June 2016 
NZ$000’s
 
Total segment revenue     136,842       156,311       113,031       176,145  
Intersegment eliminations     (24,922 )     (24,923 )     (16,747 )     (32,855 )
Other revenue     -       -       -       7,710  
Total revenue     111,920       131,388       96,284       151,000  

   

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

 

The Board 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.

 

    For the 
Year Ended 
31 January 2019 
NZ$000’s
    For the 
Year Ended 
31 January 2018 
NZ$000’s
    For the
7 Months Ended 
31 January 2017 
NZ$000’s
    For the
Year Ended 
30 June 2016 
NZ$000’s
 
Segment EBITDA     (25,602 )     (24,053 )     (2,126 )     10,470  
Income tax (expense)/benefit     1,274       (60 )     (865 )     (5,546 )
Other revenue     -       -       -       7,710  
Any other reconciling items     (24,892 )     (13,480 )     (12,988 )     (33,380 )
Total net loss after tax     (49,220 )     (37,593 )     (15,979 )     (20,746 )

 

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.

 

  (b) 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.

  

    For the 
Year Ended 
31 January 2019 
NZ$000’s
    For the
Year Ended 
31 January 2018 
NZ$000’s
    For the 
7 Months Ended 
31 January 2017 
NZ$000’s
    For the
Year Ended 
30 June 2016 
NZ$000’s
 
New Zealand     40,703       46,665       30,676       62,109  
Australia     32,065       38,208       32,913       53,193  
United States     34,156       32,323       23,146       19,167  
Europe     4,996       14,192       9,549       16,531  
      111,920       131,388       96,284       151,000  

 

The revenues resulting from the Naked business combination are included in the United States segment shown above.

  

  (c) Segment performance

 

For the year ended 31 January 2019   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 
NZ$000’s
 
Revenue from external customers     31,801       18,547       7,154       11,491       5,798       4,996       32,133       -       111,920  
Service income     -       -       -       -       -       -       -       -       -  
      31,801       18,547       7,154       11,491       5,798       4,996       32,133       -       111,920  
Cost of sales     (15,424 )     (9,192 )     (6,372 )     (8,498 )     (5,222 )     (4,490 )     (21,248 )     (4,034 )     (74,480 )
Gross margin     16,377       9,355       782       2,993       576       506       10,885       (4,034 )     37,440  
Other segment expenses*     (13,537 )     (11,003 )     (912 )     (4,495 )     (2,724 )     (1,536 )     (11,247 )     -       (45,454 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (1,050 )     (1,050 )
Corporate expenses     -       -       -       -       -       -       -       (17,947 )     (17,947 )
Other foreign exchange gain/loss     -       -       -       -       -       -       -       1,409       1,409  
EBITDA     2,840       (1,648 )     (130 )     (1,502 )     (2,148 )     (1,030 )     (362 )     (21,622 )     (25,602 )
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (10,075 )     (10,075 )
Finance expense     -       -       -       -       -       -       -       (4,041 )     (4,041 )
Impairment expense     -       -       -       -       -       -       -       (8,173 )     (8,173 )
Depreciation and amortisation     -       -       -       -       -       -       -       (2,382 )     (2,382 )
Fair value gain/(loss) on foreign exchange contracts     -       -       -       -       -       -       -       (1,704 )     (1,704 )
Unrealised foreign exchange gain/(loss)     -       -       -       -       -       -       -       2,258       2,258  
Fair value gain/(loss) on Convertible Notes derivative     -       -       -       -       -       -       -       (775 )     (775 )
Loss before income tax expense     2,840       (1,648 )     (130 )     (1,502 )     (2,148 )     (1,030 )     (362 )     (46,514 )     (50,494 )
Income tax expense     -       -       -       -       -       -       -       1,274       1,274  
Loss after income tax expense     2,840       (1,648 )     (130 )     (1,502 )     (2,148 )     (1,030 )     (362 )     (45,240 )     (49,220 )

 

For the year ended 31 January 2018   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 
NZ$000’s
 
Revenue from external customers     34,269       18,236       10,453       15,512       6,390       14,192       32,234       -       131,286  
Service income     -       -       -       -       -       -       -       102       102  
      34,269       18,236       10,453       15,512       6,390       14,192       32,234       102       131,388  
Cost of sales     (16,488 )     (9,457 )     (8,213 )     (12,545 )     (6,438 )     (10,221 )     (20,974 )     (3,123 )     (87,459 )
Gross margin     17,781       8,779       2,240       2,967       (48 )     3,971       11,260       (3,021 )     43,929  
Other segment expenses*     (13,451 )     (11,329 )     (1,068 )     (3,781 )     (3,301 )     (2,904 )     (11,520 )     -       (47,354 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (1,101 )     (1,101 )
Corporate expenses     -       -       -       -       -       -       -       (19,150 )     (19,150 )
Other foreign exchange gain/loss     -       -       -       -       -       -       -       (377 )     (377 )
EBITDA     4,330       (2,550 )     1,172       (814 )     (3,349 )     1,067       (260 )     (23,649 )     (24,053 )
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (3,272 )     (3,272 )
Finance expense     -       -       -       -       -       -       -       (8,791 )     (8,791 )
Impairment expense     -       -       -       -       -       -       -       (1,914 )     (1,914 )
Depreciation and amortisation expense     -       -       -       -       -       -       -       (3,030 )     (3,030 )
Fair value gain/(loss) on foreign exchange contracts     -       -       -       -       -       -       -       (502 )     (502 )
Unrealised foreign exchange (gain)/loss     -       -       -       -       -       -       -       1,636       1,636  
Fair value (gain)/loss on Convertible Note derivative     -       -       -       -       -       -       -       2,393       2,393  
Loss before income tax expense     4,330       (2,550 )     1,172       (814 )     (3,349 )     1,067       (260 )     (37,129 )     (37,533 )
Income tax expense     -       -       -       -       -       -       -       (60 )     (60 )
Loss after income tax expense     4,330       (2,550 )     1,172       (814 )     (3,349 )     1,067       (260 )     (37,189 )     (37,593 )

 

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

 

For the 7 months ended 31 January 2017   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 
NZ$000’s
 
                                                       
Revenue from external customers     21,953       12,053       7,484       18,091       9,015       9,548       18,140       -       96,284  
      21,953       12,053       7,484       18,091       9,015       9,548       18,140       -       96,284  
Cost of sales     (9,707 )     (5,592 )     (4,961 )     (11,431 )     (6,934 )     (6,277 )     (11,902 )     (340 )     (57,144 )
Gross margin     12,246       6,461       2,523       6,660       2,081       3,271       6,238       (340 )     39,140  
Other segment expenses*     (7,480 )     (6,196 )     (475 )     (2,089 )     (2,065 )     (2,013 )     (3,654 )     (8,068 )     (32,040 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (541 )     (541 )
Corporate expenses     -       -       -       -       -       -       -       (8,082 )     (8,082 )
Other foreign exchange gain/loss     -       -       -       -       -       -       -       (603 )     (603 )
EBITDA     4,766       265       2,048       4,571       16       1,258       2,584       (17,634 )     (2,126 )
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (1,321 )     (1,321 )
Finance expense     -       -       -       -       -       -       -       (6,238 )     (6,238 )
Impairment expense     -       (281 )     -       -       -       -       -       (11 )     (292 )
Depreciation and amortisation expense     -       -       -       -       -       -       -       (1,842 )     (1,842 )
Fair value gain/(loss) on foreign exchange contracts     -       -       -       -       -       -       -       (2,135 )     (2,135 )
Unrealised foreign exchange (gain)/loss     -       -       -       -       -       -       -       (568 )     (568 )
Fair value (gain)/loss on Convertible Note derivative     -       -       -       -       -       -       -       (592 )     (592 )
Loss before income tax expense     4,766       (16 )     2,048       4,571       16       1,258       2,584       (30,341 )     (15,114 )
Income tax expense     -       -       -       -       -       -       -       (865 )     (865 )
Loss after income tax expense     4,766       (16 )     2,048       4,571       16       1,258       2,584       (31,206 )     (15,979 )

 

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

  

For the year ended 30 June 2016   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 
NZ$000’s
 
                                                       
Revenue from external customers     37,389       20,680       15,071       28,021       18,876       16,531       6,722       -       143,290  
Service income     -       -       -       -       -       -       -       7,702       7,702  
Other income     -       -       -       -       -       -       -       8       8  
      37,389       20,680       15,071       28,021       18,876       16,531       6,722       7,710       151,000  
Cost of sales     (16,053 )     (8,930 )     (10,721 )     (18,056 )     (14,540 )     (11,658 )     (3,582 )     15       (83,525 )
Gross margin     21,336       11,750       4,350       9,965       4,336       4,873       3,140       7,725       67,475  
Other segment expenses*     (12,263 )     (9,835 )     (709 )     (3,520 )     (2,817 )     (3,204 )     (2,039 )     (13,975 )     (48,362 )
Unallocated expenses                                                                        
Administrative expenses     -       -       -       -       -       -       -       (801 )     (801 )
Corporate expenses     -       -       -       -       -       -       -       (13,002 )     (13,002 )
Other foreign exchange gain/loss     -       -       -       -       -       -       -       5,160       5,160  
EBITDA     9,073       1,915       3,641       6,445       1,519       1,669       1,101       (14,893 )     10,470  
Brand transition, restructure and transaction expenses     -       -       -       -       -       -       -       (2,232 )     (2,232 )
Finance expense     -       -       -       -       -       -       -       (10,409 )     (10,409 )
Impairment expense     -       -       -       -       -       -       -       -       -  
Depreciation and amortisation expense     -       -       -       (2,157 )     -       -       -       (3,289 )     (5,446 )
Fair value gain/(loss) on foreign exchange contracts     -       -       -       -       -       -       -       (7,660 )     (7,660 )
Unrealised foreign exchange (gain)/loss     -       -       -       -       -       -       -       77       77  
Loss before income tax expense     9,073       1,915       3,641       4,288       1,519       1,669       1,101       (38,406 )     (15,200 )
Income tax expense     -       -       -       -       -       -       -       (5,546 )     (5,546 )
Loss after income tax expense     9,073       1,915       3,641       4,288       1,519       1,669       1,101       (43,952 )     (20,746 )

 

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