Operating Segments

6 Months Ended

Jul. 31, 2018

Operating Segment - Disclosure Of Reconciliation Of Segment Ebitda To Profit Or Loss And Other Comprehensive Income

Operating Segments

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 2018 NZ $000’s			6 months to 31 July 2017 NZ $000’s
Total segment revenue		65,736			71,095
Intersegment eliminations		(8,986	)		(11,308	)
Total revenue		56,750			59,787

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.

	6 months to 31 July 2018 NZ $000’s			6 months to 31 July 2017 NZ $000’s
Segment EBITDA		(15,436	)		(16,285	)
Income tax (expense)/benefit		411			(174	)
Other revenue					-
Any other reconciling items		(11,069	)		(2,754	)
Total net loss after tax		(26,094	)		(19,213	)

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.

	6 months to 31 July 2018 NZ $000’s		6 months to 31 July 2017 NZ $000’s
New Zealand		20,984		19,940
Australia		17,570		16,197
United States		14,383		15,496
Europe		3,813		8,154
		56,750		59,787

(c) 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
Revenue from external customers		15,571			8,758			4,556			6,757			3,047			3,813			14,248			-			56,750
Service income		-			-			-			-			-			-			-			-			-
		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)/loss on foreign exchange contracts		-			-			-			-			-			-			-			2,306			2,306
Unrealised foreign exchange gain/(loss)		-			-			-			-			-			-			-			383			383
Fair value gain/(loss) on Convertible Note derivative		-			-			-			-			-			-			-			(775	)		(775	)
Loss before income tax expense		1,103			(1,132	)		189			(215	)		(1,063	)		(360	)		(1,361	)		(23,666	)		(26,505	)
Income tax expense		-			-			-			-			-			-			-			411			411
Loss after income tax expense		1,103			(1,132	)		189			(215	)		(1,063	)		(360	)		(1,361	)		(23,255	)		(26,094	)

	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 2017
Revenue from external customers		15,072			8,030			4,092			6,497			4,803			8,154			13,139			-			59,787
		15,072			8,030			4,092			6,497			4,803			8,154			13,139			-			59,787
Cost of sales		(7,027	)		(4,085	)		(3,250	)		(6,294	)		(4,092	)		(6,308	)		(9,152	)		-			(40,207	)
Gross margin		8,045			3,946			842			203			711			1,846			3,987			-			19,580
Other segment expenses*		(6,462	)		(5,335	)		(449	)		(1,997	)		(1,507	)		(1,504	)		(5,407	)		-			(22,661	)
Unallocated expenses
Administrative expenses		-			-			-			-			-			-			-			(320	)		(320	)
Corporate expenses		-			-			-			-			-			-			-			(10,241	)		(10,241	)
Other foreign exchange gain/loss		-			-			-			-			-			-			-			(2,643	)		(2,643	)
EBITDA		1,583			(1,389	)		393			(1,794	)		(796	)		342			(1,420	)		(13,204	)		(16,285	)
Brand transition, restructure and transaction expenses		-			-			-			-			-			-			-			(1,112	)		(1,112	)
Finance expense		-			-			-			-			-			-			-			(4,776	)		(4,776	)
Depreciation and amortisation expense		-			-			-			-			-			-			-			(1,821	)		(1,821	)
Fair value (gain)/loss on foreign exchange contracts		-			-			-			-			-			-			-			(1,600	)		(1,600	)
Unrealised foreign exchange (gain)/loss		-			-			-			-			-			-			-			3,309			3,309
Fair value (gain)/loss on Convertible Note derivative		-			-			-			-			-			-			-			3,246			3,246
Loss before income tax expense		1,583			(1,389	)		393			(1,794	)		(796	)		342			(1,420	)		(15,958	)		(19,039	)
Income tax expense		-			-			-			-			-			-			-			(174	)		(174	)
Loss after income tax expense		1,583			(1,389	)		393			(1,794	)		(796	)		342			(1,420	)		(16,132	)		(19,213	)

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