HLG Full Year Results for the period ending 1 August 2021
New Zealand Stock Exchange Listing Rules
Disclosure Full Year Report
For the year ending 1 August 2021
Contents
Press Release
Results Announcement
Audited Financial Statements & Audit Report
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Results announcement
Results for announcement to the market
Name of issuer Hallenstein Glasson Holdings Limited
Reporting Period 12 months to 1 August 2021
Previous Reporting Period 12 months to 1 August 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing operations $350,759 21.9%
Total Revenue $350,759 21.9%
Net profit/(loss) from continuing
operations
$33,320 20.0%
Total net profit/(loss) $33,320 20.0%
Final Dividend
Amount per Quoted Equity Security
The Directors consider it prudent to defer the declaration
of the final dividend until Auckland and the Australian
states of NSW and VIC have come out of their respective
lockdowns and retail stores can trade again.
Imputed amount per Quoted Equity
Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.49 $1.45
A brief explanation of any of the
figures above necessary to enable
the figures to be understood
For further information refer to the attached:
Group CEO’s announcement
Financial Statements and the Auditors
Independent Review Report
Authority for this announcement
Name of person
authorised to make
this announcement
Stuart Duncan
Contact person for this
announcement
Stuart Duncan
Contact phone number +64 21 528 184
Contact email address Stuartd@glassons.com
Date of release through MAP
30 September 2021
Audited financial statements accompany this announcement.
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30 September 2021
HALLENSTEIN GLASSON HOLDINGS LIMITED
RESULTS FOR FULL YEAR ENDED 1 AUGUST 2021
The Company advises that Group sales for the 12 months to 1 August 2021 were $350.76 million which
were +21.9% up on the prior year ($287.76 million).
The audited net profit after tax for the
12 months was $33.32 million, an increase of 20.0% on the prior
corresponding period ($27.77 million).
Overall the sales growth experienced compared to the prior corresponding period was pleasing in an
extremely challenging environment. All brands experienced strong growth as stores reopened from the
2020 lockdowns, with the Groups inventory management
ensuring that our stores were well stocked with
product the customers wanted. Online sales have continued to grow throughout the year and have been
supported by the release of the Glassons App and the establishment of a USA website to sell direct to US
based customers. The increased sales on
the prior year also compares to the periods where stores were
closed in 2020.
The Gross Margin declined during the year due to a number of factors including unfavourable exchange
rates with the US Dollar in both New Zealand and Australia as well as challenges with freight costs
resulting from the
ongoing global impact of COVID‐19. During the financial period additional controls
were implemented post the lockdowns including reducing operating costs, claiming of Australian
government subsidies, working with our suppliers on payment terms where appropriate, placing capital
projects on hold, and negotiating rent relief with landlords. This resulted in costs
being well controlled.
As in the previous financial year the Group continues to take steps to preserve liquidity, most importantly
managing stock levels and costs across the business. During the financial year a number of rental
negotiations were settled with landlords for the previous lockdown periods. There are still a number
of
negotiations ongoing for these and the more recent lockdowns.
Glassons – New Zealand & Australia
Sales in New Zealand for the year were $119.91 million, an increase of 16.88% on the prior year. Net
profit after tax was $11.55 million, a decrease of 5.3% on the prior corresponding period
($12.20 million,
included $1.01 million gain on sale).
Over the last year the Nelson store was refurbished in June, and the Sylvia Park, Auckland store was
extended and refurbished in July. The outlet store in Onehunga, Auckland was also refurbished in July.
Sales in Australia were $133.65 million which was an increase of 38.23% on the corresponding period.
Net profit after tax was $16.42 million, an increase of 75.5% on the prior corresponding period ($9.36
million).
During the year, one new store was opened in Broadway, Sydney. The Chatswood, Sydney store was
closed
and re‐opened in a new location and the Chermside, Brisbane store was refurbished. In July, a
store in Greensborough, Melbourne was closed. The business continues to look for opportunities for new
stores in Australia with a number of sites currently under review, to support planned growth. A store in
Marion, Adelaide has been opened post year end in September.
During the year additional space was taken adjacent to the current Fulfilment Centre in Sydney to
increase capacity and ensure that the significant growth in online sales was adequately supported.
With the large increases in online sales there has been significant investment in digital including the
launch of an omni‐channel Glassons app in October which has seen more than 300,000 downloads, and a
specific Glassons USA website to serve our growing US customer base. The sales to US customers for the
completed financial year were fulfilled from both New Zealand
and Australia, but are presently fulfilled
just from Australia.
Glassons continues to bring the latest trends that customers want to the market through stores and
online. The team have found new ways of working to ensure they are agile as well as maintaining a focus
on sustainability. Glassons carries on the
focus on putting the customer first by using digital solutions to
engage and listen. This helps Glassons to maintain a strong brand position in both established markets
and new markets.
Hallenstein Brothers
Sales for the 12 month period were $97.20 million (including Australia), an increase of 9.86% on the prior
period. Net profit after tax was $4.82 million, an increase of 7.5% on the prior corresponding period
($4.48 million).
Stores in Napier and Taupo were refreshed during the year and new fixtures to better display product
was rolled out to key stores.
Sales showed a promising increase compared to the
prior year and it was pleasing to see growth in casual
categories, which largely offset the move away in menswear from more formal dressing. Covid‐19 has
been the trigger for a significant shift in consumer habits with a far more casual approach taken to what
would traditionally be worn in
the office and events, and the business has been able to pivot and adapt
accordingly. Casual categories continue to outperform over the financial year with the team continuing
to focus on current trends and must have products.
With product quality improved with sustainability in mind, product continues to be essential
to our
performance. Customer service and engagement continues to be integral to our success with new service
training programs introduced and better web site design.
E‐Commerce
Online sales grew over the period by 31.27% against the prior year with significant growth experienced
during periods of store closures. Online sales now represent 24.04% of total sales for the full financial
year, up from 21.88% in the prior year. The growth in online sales have continued into
the new financial
year being ahead of last year, again supported by COVID‐19 enforced store closures across the network.
Investment continues in digital to ensure we are ahead of the market in our functionality and technology
as well as our web fulfillment in Distribution Centers. There is also focus
on digital marketing and
customer experience to continue to accelerate our online sales growth.
Dividend
The Directors consider it prudent to defer the declaration of the final dividend until Auckland and the
Australian states of NSW and VIC have come out of their respective lockdowns and retail stores can trade
again.
Future Outlook
Following New Zealand moving to Level 4 at 11:59pm on Tuesday 17 August, all Hallenstein Brothers and
Glassons stores in New Zealand were closed. On Wednesday 8 September, all stores outside of Auckland
were reopened as the rest of New Zealand entered Level 2. Auckland stores remain
closed until further
notice in line with current Government regulations. Twelve stores in Victoria and Fourteen stores in New
South Wales Australia have been closed since restrictions were placed on the states earlier in the year.
Stores will be re‐opened in line with the various State Government guidelines.
The first
eight weeks of the new financial year have seen Group sales decline ‐18.90% on the prior year,
this has been driven predominantly by multiple store closures across both New Zealand and Australia in
response to the recent COVID‐19 outbreaks in both countries. With a date for reopening the Auckland
stores still uncertain, and with NSW and VIC expecting to open in October and November respectively,
the Group anticipates profitability in the current year will be adversely impacted compared to the period
just completed. We will continue to be cautious in regard to the future impacts of COVID‐19.
An update
will be provided at the Annual Meeting of Shareholders in December 2021.
Stuart Duncan
Group CEO
+64 21 528 184
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1
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 1 AUGUST 2021
Note2021
2020
$'000
$'000
Sales Revenue2.1350,759
287,763
Cost of Sales
2.1(149,549)
(118,514)
Gross Profit201,210
169,249
Other Operating Income
2.2477
1,498
Selling Expenses
(117,236)
(99,221)
Distribution Expenses
(11,328)
(8,609)
Administration Expenses
(23,847)
(23,742)
Total Expenses
(152,411)
(131,572)
Operating Profit49,276
39,175
Finance Income
2.1106
125
Finance Expense
2.1, 2.2(2,430)
(2,569)
Profit Before Income Tax46,952
36,731
Income Tax Expense6.1(13,632)
(8,957)
Net Profit after Tax attributable to the Shareholders
of the Holding Company2.133,320
27,774
Other Comprehensive Income
-
It
ems that will not be reclassified to profit or loss
Gains (net of tax) on Revaluation of Land and Buildings
6.14,921
1,506
Increase in Share Option Reserve
6.1109
26
-
It
ems that may be subsequently reclassified to profit or loss
Fair Value Gain / (Loss) (net of tax) in Cash Flow Hedge Reserve
6.12,385
(2,973)
Total Comprehensive Income for the year attributable to the Shareholders
of the Holding Company40,735
26,333
Earnings Per Share
Basic and diluted Earnings per Share
2.455.86
46.56
The Notes to the Financial Statements form an integral part of and are to be read in conjunction with these Financial Statements.
2
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 1 AUGUST 2021
Note2021
2020
$'000
$'000
Equity
Contributed Equity
5.127,357
29,059
As s e t R e va l u a ti o n R e s e rve
24,846
19,925
Cashflow Hedge Reserve
507
(1,878)
Share Option Reserve
101
64
Retained Earnings
36,342
39,932
Total Equity89,153
87,102
Represented by
Curr ent Assets
Cash and Cash Equivalents
3.139,204
49,642
Trade and Other Receivables
239
2,343
Advances to Employees
291
291
Prepayments
1,559
1,040
Inventories
3.227,810
24,637
Derivative Financial Instruments
7.4715
19
Total Current Assets69,818
77,972
Non-Cur r e nt As se ts
Property, Plant and Equipment
4.252,025
48,958
Right of use Assets
4.167,223
73,628
Inves tm ent Property
4.33,372
3,212
Intangible As s ets
566
420
Deferred Tax
6.26,474
7,234
Total Non-Current Assets129,660
133,452
Total Assets199,478
211,424
Current Liabilities
Trade Payables
8,826
12,771
Em ployee Benefits
7.17,131
5,586
Other Payables
13,124
14,196
Lease Liabilities
4.122,991
27,027
Derivative Financial Instruments
7.41
2,661
Taxation Payable
4,611
3,445
Total Current Liabilities56,684
65,686
Non-Current Liabilities
Lease Liabilities
4.153,641
58,636
Total Liabilities110,325
124,322
Net Assets89,153
87
,
102
1
______________________________Director Date30 September 2021
______________________________Director Date30 September 2021
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
The Financial Statements are signed f or and on behalf of the Board and w ere authorised f or issue on 30 September 2021.
3
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 1 AUGUST 2021
Note
Share CapitalT reasury StockAsset
Revaluation
Reserve
Cash Flow Hedge
Reserve
Share Option
Reserve
Retained
Earnings
Total Equity
$000$000$000$000$000$000$000
Balance at 1 August 201929,279(305)18,4191,0955826,45475,000
Comprehensive Income
Profit for Year-----27,77427,774
Revaluation net of Tax
6.1
--1,506---1,506
Cash Flow Hedges net of Tax
6.1
---(2,973)--(2,973)
Increase in Share Option Reserve
6.1
----26-26
Total Comprehensive Income --1,506(2,973)2627,77426,333
Transactions with Owners
Dividends
2.3, 5.1
-27---(14,316)(14,289)
Transfer to Employee Advances
5.1
-58----58
Transfer of Share Option Reserve to
Retained Earnings ----(20)20-
Total Transactions with Owners-85--(20)(14,296)(14,231)
Balance at 1 August 202029,279(220)19,925(1,878)6439,93287,102
Comprehensive Income
Profit for Year
-----33,32033,320
Revaluation net of Tax
6.1--4,921---4,921
Cash Flow Hedges net of Tax
6.1---2,385--2,385
Increase in Share Option Reserve
6.1----109-109
Total Comprehensive Income --4,9212,38510933,32040,735
Transactions with Owners
Purchase of Treasury Stock
5.1, 5.2 -(1,964)----(1,964)
Dividends
2.3, 5.1-74---(36,982)(36,908)
Transfer to Employee Advances
5.1-188----188
Transfer of Share Option Reserve to
Retained Earnings
----(72)72-
Total Transactions with Owners-(1,702)--(72)(36,910)(38,684)
Balance at 1 August 202129,279(1,922)24,84650710136,34289,153
The Notes to the Financial Statements form an integral part of and are to be read in conjunction with these Financial Statements.
4
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 1 AUGUST 2021
Note
2021
2020
Cash Flows from Operating Activities$'000
$'000
Cash was provided from:
Sales to Customers
351,355
287,780
Rent Received
2.2260
229
Government Grants
2.23,875
8,424
Interest Income
2.196
113
Interest on Debtors
2.110
12
355,596
296,558
Cash was applied to:
Payments to Suppliers
1.3219,095
156,025
Payments to Employees
59,115
54,241
Interest Paid on Leases
2.22,430
2,569
Taxation Paid
13,523
12,408
294,163
225,243
Net Cash Flows from Operating Activities61,433
71,315
Cash Flows from Investing Activities
Cash was provided from:
Proceeds from Sale of Property, Plant and Equipment and Intangible Assets
113
4,798
Repayment of Employee Advances
189
139
302
4,937
Cash was applied to:
Purchase of Property, Plant and Equipment and Intangible Assets
4.27,890
11,835
7,890
11,835
Net Cash Flows (applied to) Investing Activities(7,588)
(6,898)
Cash Flows from Financing Activities
Cash was provided from:
Sale of Treasury Stock and Dividends
5.1, 5.274
27
74
27
Cash was applied to:
Dividend Paid
2.336,982
14,316
Lease Liability Payments
4.125,411
16,992
Purchase of Treasury Stock
5.1, 5.21,964-
64,357
31,308
Net Cash Flows (applied to) Financing Activities(64,283)
(31,281)
Net Increase / (Decrease) in Funds held(10,438)
33,136
Cash and cash equivalents at the beginning of the year49,642
16,506
Cash and cash equivalents at the end of the year3.139,204
49,642
The Notes to the Financial Statements form an integral part of and are to be read in conjunction with these Financial Statements.
5
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CASH FLOWS (continued)
FOR THE YEAR ENDED 1 AUGUST 2021
RECONCILIATION OF PROFIT AFTER TAXATIONNote2021
2020
TO CASH FLOWS FROM OPERATING ACTIVITIES$'000
$'000
Net Profit after Taxation33,320
27,774
Add / (deduct) items classified as Investing or Financing activities
(Gain)/loss on Sale of Plant and Equipment
2.248
(947)
Add / (deduct) Non Cash Items
Depreciation and Amortisation
2.235,167
31,725
Net Fair Value Gain on Investment Property
2.2(160)
(244)
Deferred Taxation
6.2(1,058)
(2,998)
Impairment Expense
2.2253-
Share Option Expense
109
26
Add / (deduct) movements in Working Capital Items
Taxation Payable
1,166
(452)
Trade and Other Receivables and Prepayments
1,585
2,804
Trade and Other Payables and Employee Benefits
(5,824)
14,253
Inventories
(3,173)
(626)
Net Cash Flows from Operating Activities61,433
71,315
The Notes to the Financial Statements form an integral part of and are to be read in conjunction with these Financial Statements.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
6
1. Basis of preparation
This section presents a summary of information considered relevant and material to assist the reader in understanding the
foundations on which the financial statements as a whole have been compiled. Accounting policies specific to notes shown in other
sections are disclosed in a shaded box and are included as part of that particular note.
1.1 General information
Reporting entity
Hallenstein Glasson Holdings Limited (“Company” or “Parent”) together with its subsidiaries (the “Group”) is a retailer of men’s and
women’s clothing in New Zealand and Australia.
The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is Level
3, 235-237 Broadway Newmarket, Auckland.
Statutory base
Hallenstein Glasson Holdings Limited is a company registered under the Companies Act 1993 and is a FMC reporting entity under
Part 7 of the Financial Markets Conduct Act 2013. The Company is also listed on the New Zealand Stock Exchange (NZX). The
financial statements of the Group have been prepared in accordance with the requirements of Part 7 of the Financial Markets
Conduct Act 2013 and the NZX Main Board Listing Rules.
The financial statements were approved for issue by the Board of Directors on 30 September 2021.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
7
1.2 General accounting policies
Statement of compliance
These financial statements for the year ended 1 August 2021 have been prepared in accordance with Generally Accepted
Accounting Practice (GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other New Zealand accounting standards and authoritative notices that are applicable to entities that apply NZ
IFRS. The financial statements comply with International Financial Reporting Standards (IFRS).
Basis of preparation of financial statements
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
The reporting currency used in the preparation of these financial statements is New Zealand dollars, rounded where
necessary to the nearest thousand dollars.
Entities reporting
The financial statements are the Consolidated Financial Statements of the Group comprising Hallenstein Glasson
Holdings Limited and subsidiaries, together they are referred to in these financial statements as ‘the Group’. The parent
and its subsidiaries are designated as for-profit entities for financial reporting purposes.
Principles of consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Investments in subsidiaries
Principal SubsidiariesPrincipal activities
20212020
Hallenstein Bros Limited
100%
100%Retail of menswear in New Zealand
Hallenstein Brothers Australia Limited
100%
100%Retail of menswear in Australia
Glassons Limited
100%
100%Retail of womenswear in New Zealand
Glassons Australia Limited
100%
100%Retail of womenswear in Australia
Retail 161 Limited
100%
100%Non trading company
Retail 161 Australia Limited
100%
100%Non trading company
Hallenstein Properties Limited
100%
100%Property ownership in New Zealand
Interest held by parent
and group
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
8
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of land
and buildings and financial assets and liabilities (including derivative instruments) measured at fair value.
Critical accounting estimates, judgements and assumptions
The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
Property, plant and equipment: The Group has assessed whether the carrying value of its property, plant and equipment
has suffered any impairment since they were acquired. The recoverable amounts of cash generating units (at a subsidiary
level) have been determined based on value in use calculations. These calculations require the use of estimates and
projections of future operating performance.
Inventory provision: The Group assess the inventory provision using management judgement which considers a range of
factors including the review of historical data, the age of inventory and current selling price trends to determine the
appropriateness of the provision.
Revaluation of Land and Buildings: The fair value of the Group’s land and buildings is determined by the Board following
an independent valuation undertaken at least every three years. The basis of the valuation is assessed within a range
indicated by two valuation approaches: discounted cash flow analysis and an income capitalisation approach. The key
assumptions are disclosed in note 4.2. The Valuers have reported on the basis of 'market uncertainty' meaning that there
remains uncertainty in the market because of the longer term economic impacts of COVID-19 but not to the extent that there
is a "material valuation uncertainty" as in the prior year. The Valuers commented in the valuation report that, for the avoidance
of doubt, the inclusion of the 'market uncertainty' declaration does not mean that the valuation cannot be relied upon. Rather,
it has been used in order to be clear and transparent with all parties that, the current extraordinary circumstances, there is a
higher degree of uncertainty than would otherwise be the case. Further, the Valuers continue to state that values may change
more rapidly and significantly than during standard market conditions, and recommend their valuations are reviewed
periodically to reflect the duration and severity of impaction COVID-19 has on New Zealand's economy.
Revaluation of Investment Property: The fair value of the Group’s investment property is determined by the Board following
an independent valuation undertaken annually. The basis of the valuation is assessed within a range indicated by two
valuation approaches: discounted cash flow analysis and an income capitalisation approach. The key assumptions are
disclosed in note 4.3. The Valuers have reported on the basis of 'market uncertainty' meaning that there remains uncertainty
in the market because of the longer term economic impacts of COVID-19 but not to the extent that there is a "material valuation
uncertainty" as in the prior year. The Valuers commented in the valuation report that, for the avoidance of doubt, the inclusion
of the 'market uncertainty' declaration does not mean that the valuation cannot be relied upon. Rather, it has been used in
order to be clear and transparent with all parties that, the current extraordinary circumstances, there is a higher degree of
uncertainty than would otherwise be the case. Further, the Valuers continue to state that values may change more rapidly
and significantly than during standard market conditions, and recommend their valuations are reviewed periodically to reflect
the duration and severity of impaction COVID-19 has on New Zealand's economy.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s operations are measured using the currency of the primary
economic environment in which it operates (‘the functional currency’). The financial statements are presented in New
Zealand dollars, which is the Group’s presentational currency.
Transactions and balances
The results and financial position of all the Group entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
and
(b) income and expenses for each statement of comprehensive income are translated at average exchange rates.
All resulting exchange differences are recognised in the statement of comprehensive income.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
9
1.3 Significant Events and Transactions
On 11 March 2020, the World Health Organisation declared COVID-19 to be a global pandemic. COVID-19 has impacted the health
and wellbeing of people around the world and in turn the outbreak and the associated restrictions put in place to fight the virus have
brought disruptions and uncertainties to businesses and economies globally.
The New Zealand Government’s overall public health strategy in respect of the COVID-19 pandemic affecting New Zealand was
elimination with the overall goal to stop community transmission in New Zealand.
During the financial year ended 1 August 2021, the Group has been impacted by various restrictions put in place by both the New
Zealand and Australian Governments, resulting in store closures for periods of time aligned to Government’s requirements. The
Group has abided by rules & regulations put in place to ensure the ongoing safety of employees and customers.
Since the outbreak of COVID-19, the Group’s focus has been on remaining agile and meeting the needs of our employees and
customers. During periods of store closures, an increased focus has been placed on the e-commerce side of the business,
resulting in significant year on year growth in online sales. The Group has worked closely with its suppliers to ensure inventory is
well controlled and has worked with landlords to share the impact the store closures have on both parties.
Certain key judgements and estimates are applied in the annual financial statements. The Directors have assessed the impact of
COVID-19 on these judgements and estimates and concluded that limited changes are necessary. The following key matters were
considered and undertaken with regards to the financial impact of COVID-19 on the 1 August 2021 consolidated financial
statements:
– Colliers International, Fordbaker Valuation and TelferYoung Property Valuers & Advisors undertook valuations of the Groups
owned land and buildings as at 1 August 2021. Despite all owned land & buildings being valued in the prior financial year, due to
the conclusions by all valuers of a “material valuation uncertainty”, it was deemed appropriate to have all properties valued again
as at 1 August 2021. All valuers noted the increased “market uncertainty”, however the risk was downgraded from the “material
valuation uncertainty noted in the prior year. This gives the Group greater certainty of the valuation of its owned land & buildings
as at 1 August 2021. Further details are included in note 4.2 Property, plant & equipment, and note 4.3 Investment property.
– As part of its response to COVID-19, the New Zealand and Australian Governments provided wage subsidies over a specific
calendar period to eligible businesses to allow those businesses to retain employees when they were closed or suffered reduced
trading due to COVID-19. The Group has applied NZ IAS 20 Accounting for Government Grants and Disclosure of Government
Assistance in accounting for the funds received from the COVID-19 Wage Subsidy. Government wage subsidies received have
been accounted for as government grants and offset against the expenses to which they relate in the same period as they are
incurred as disclosed in note 2.2.
– Given the impact of COVID-19 the Group performed impairment testing at a store level to ensure there was no risk to the
recoverability of the carrying value of fixed assets and right of use assets. The Group used discounted cash flow forecasts as
required. Following a review of store performance and consideration of other impairment indicators, the Group has identified
three stores where indicators of impairment exist as at 1 August 2021.Further impairment testing was performed with a write down
recognised against the associated stores right-of-use assets. Refer to notes 4.1 and 4.2. No material impairment was identified.
– Due to the ongoing restrictions in both New South Wales and Victoria, and with the Level 4 lockdown in New Zealand subsequent
to year end, the Group assessed its inventory and identified additional provisions were required where items were expected to be
sold at below cost. This additional provision has been recorded in cost of sales in the Statement of Comprehensive Income, and
makes up part of the stock obsolescence provision as shown in note 3.2.
Since the initial impact of COVID-19 the business has taken and continues to take a number of steps to preserve liquidity including:
x Monitoring closely the planned stock intake and aligning it with the sales demand.
x Reducing operating costs.
x Supplier payment terms have been amended. The impact of extended payment terms in 2020 has resulted in an increase
in payments to suppliers in 2021.
x Applying for the New Zealand Government funded wage subsidy and Australian Jobkeeper payments.
x Placing capital projects on hold where appropriate.
x Rent relief was applied for from all landlords for the periods the stores were unable to trade. At 1 August 2021 there are
still negotiations to conclude due to the ongoing disruptions throughout the year.
x Negotiating with landlords to align appropriate arrangements to reflect the changing market conditions.
x Directors, Executives and Leadership Teams agreed to a short-term reduction of their salaries in 2020.
x No interim dividend was declared in April 2020. The interim dividend was reassessed after the end of the Groups previous
financial year and was paid on 4 September 2020.
x The announcement of the final dividend for the year ended 1 August 2021 has been delayed while the impact of the
current restrictions in both New Zealand and Australia are assessed.
The above actions have resulted in a strong liquidity position as disclosed in note 3.1 Cash and cash equivalents.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
10
2. Performance
2.1 Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors. The
Board of Directors is the chief operating decision maker and is responsible for allocating resources and assessing
performance of the operating segments and they delegate that authority through the Group Chief Executive Officer.
The Board of Directors considers the business from both a product and geographic perspective as follows:
- Hallenstein Bros Limited (New Zealand) and Hallenstein Brothers Australia Limited (Australia)
- Glassons Limited (New Zealand)
- Glassons Australia Limited (Australia)
- Hallenstein Properties Limited (New Zealand) (Property)
The reportable segments derive their revenues primarily from the retail sale of clothing. The revenues from external parties reported
to the Board of Directors are measured in a manner consistent with that in the statement of comprehensive income. There are no
significant revenues derived from a single external customer.
Segment results
For the year ended 1 August 2021
Glassons
New Zealand
Glassons
Australia
HallensteinsPropertyParentTotal Group
$000's $000's $000's $000's $000's $000's
INCOME STATEMENT
Sales Revenue from External Customers
119,911133,64797,201--350,759
Cost of Sales
(53,887)(53,855)(41,807)--(149,549)
Finance Income
221569--106
Finance Expenses
(999)(678)(752)-(1)(2,430)
Depreciation and Software Amortisation
(11,372)(12,699)(10,731)(348)(17)(35,167)
Profit/(Loss) before Income Tax
16,07523,5166,690679(8)46,952
Income Tax (Expense)/Benefit
(4,522)(7,095)(1,872)(145)2(13,632)
Net Profit/(Loss) after Income Tax
11,55316,4214,818534(6)33,320
BALANCE SHEET
Current Assets
18,74720,33924,0134,8471,87269,818
Non Current Assets
48,68830,67627,90422,38210129,660
Current Liabilities
18,05620,41117,8163277456,684
Non Current Liabilities
24,26214,87114,508--53,641
Purchase of Property, Plant and Equipment and
Intangibles
2,6273,3521,9074-7,890
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
11
2.2 Income and expenses
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services, excluding
Goods and Services Tax, rebates and discounts and after eliminating sales within the Group.
Revenue is recognised as follows:
Sales of goods - retail
Sales of goods are recognised when a Group entity has delivered a product to the customer. For in-store sales, control
passes to the customer at point of sale. For online sales, the order and the delivery to the customer are considered to
comprise a single performance obligation, therefore control passes to the customer when the goods are delivered. Retail
sales are usually in cash, credit card, debit card or by various pay later services. The recorded revenue is the gross amount
of sale (excluding GST), including credit card fees and service fees payable for the transaction. Such fees are included in
selling expenses.
The Group offers customers the option of purchasing gift cards. This is considered deferred revenue until such time where
the customer redeems the gift card on future purchases. A contract liability for the purchase of a gift card is recognised at the
time of the sale. Revenue is recognised when the gift card is redeemed or when they expire. As at 1 August 2021, the gift
card liability balance recognised under “Other payables” was $3.051M (2020: $2.342M, 2019: $2.017M). $1.053M of the
opening balance was redeemed or expired in the current year.
Interest income
Interest income is recognised using the effective interest method.
Rental income
Rental income from operating leases (net of any incentives) is recognised on a straight line basis over the lease term.
Segment results
For the year ended 1 August 2020
Glassons
New Zealand
Glassons
Aus tralia
HallensteinsPropertyParentTotal Group
$000's $000's $000's $000's $000's $000's
INCOME STATEMENT
Sales Revenue from External Customers102,59796,68688,480--287,763
Cost of Sales(43,918)(37,777)(36,819)--(118,514)
Finance Income372065-3125
Finance Expenses(1,110)(647)(812)--(2,569)
Depreciation and Software Amortisation(10,032)(11,272)(10,064)(357)-(31,725)
Profit before Income Tax16,33613,4136,2287351936,731
Income Tax (Expense)/Benefit(4,136)(4,057)(1,746)986(4)(8,957)
Net Profit after Income Tax12,2009,3564,4821,7211527,774
BALANCE SHEET
Current Assets24,39518,12626,4905,3853,57677,972
Non Current Assets50,09533,54731,09218,70612133,452
Current Liabilities22,74822,26120,2303767165,686
Non Current Liabilities26,17015,67116,795--58,636
Purchase of Property, Plant and Equipment and
Intangibles
6,3673,9591,5027-11,835
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
12
1
Amount paid in respect of tax compliance and tax advisory services provided in New Zealand.
2
Amount paid in respect of tax compliance and tax advisory services provided in Australia.
3
Wages, salaries and other short term benefits includes job keeper benefit from the Australian government of $2.139M (2020: Wage subsidy
benefit from the New Zealand government of $5.079M and job keeper benefit from the Australian government of $4.980M was recognised).
$3.875M was received in cash during the year (2020: $8.424M).
Income and expenses
Profit before income tax includes the following specific income and expenses:
2021
2020
$000
$000
Other Operating Income
Rental Income
260
229
Insurance Proceeds
57
19
Net Fair Value Gain on Investment Property
160
244
Gain on Sale of Land and Buildings
-
1,006
Expenses
Occupancy Costs
1,425
5,731
Impairment Expense
253
-
Audit of Financial Statements
PwC New Zealand
189
169
Other Services
Performed by PwC New Zealand
1
5
12
Performed by PwC Australia
2
20
25
Directors' Fees
695
585
W ages, Salaries and other Short Term Benefits
3
58,521
44,965
Depreciation of Property, Plant & Equipment
9,981
9,816
Depreciation of Right of Use Assets
24,884
21,644
Amortisation of Software
302
265
Total Depreciation and Amortisation
35,167
31,725
Interest on Leases
2,430
2,569
Loss on Disposal of Property, Plant and Equipment
48
59
Group
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
13
2.3 Dividends
Provision is made for the amount of any dividend declared on or before the balance date but not distributed at balance date.
All dividends paid were fully imputed. Supplementary dividends of $373,763 (2020: $175,065) were paid to shareholders not resident
in New Zealand for tax purposes for which the Group received a foreign investor tax credit.
2.4 Earnings per share
Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares
issued during the period.
Basic
Basic earnings per share is calculated by dividing the profit after tax of the Group by the weighted average number of ordinary shares
outstanding during the year.
Diluted
Diluted earnings per share is calculated by adjusting profit after tax and the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. There are no options convertible into shares as at 1 August 2021 (2020:
Nil).
Dividends
2021
2020
2021
2020
cents per
Share
cents per
Share
$000's
$000's
Interim dividend for the year ended 1 August 2020
15.008,947
Final dividend for the year ended 1 August 2020
24.0014,316
Interim dividend for the year ended 1 August 2021
23.0013,719
Final dividend for the year ended 1 August 201924.0014,316
Total
62.00
24.00
36,982
14,316
Earnings per share
2021
2020
$000's
$000's
Profit after tax
33,320
27,774
Weighted average number of ordinary shares outstanding
59,649
59,649
Basic and diluted earnings per share (cents per share)
55.86
46.56
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
14
3. Working Capital
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, EFTPOS (electronic funds transfer point of sale) transactions which
have not been cleared by the bank at balance date, deposits held at call with financial institutions, other short-term highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Statements of Cash flows
The following are the definitions of the terms used in the statement of cash flows:
(I.) Cash comprises cash and cash equivalents.
(II.) Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment,
investments and employee advances.
(III.) Financing activities are those activities which result in changes in the size and composition of the capital structure of
the Group. This includes lease payments, equity and debt not falling within the definition of cash. Dividends paid are
included in financing activities.
(IV.) Operating activities include all transactions and other events that are not investing or financing activities.
The carrying amount of cash and cash equivalents equals the fair value.
3.2 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses,
excluding borrowing costs.
Inventory adjustments are provided at year end for stock obsolescence within cost of sales in the Statement of Comprehensive
Income.
The cost of inventories recognised as an expense and included in cost of sales amounted to $149,308,971 (2020: $118,256,459).
Cash and cash equivalents
2021
2020
$000's
$000's
Cash at Bank
32,692
37,237
Short Term Bank Deposits
6,447
12,342
Cash on Hand
65
63
Total Cash and Cash Equivalents39,204
49,642
Inventories
2021
2020
$000's
$000's
Finished goods
29,235
25,063
Inventory adjustments
(1,425)
(426)
Net inventories27,810
24,637
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
15
4. Long term Assets
4.1 Leases
Right-of-use assets and lease liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the remaining lease payments.
Right-of-use assets are initially recognised on commencement of lease at cost, comprising the initial amount of the lease
liabilities less any lease incentives received. Right-of-use assets are subsequently depreciated using the straight-line method
from the commencement date to the end of the lease term.
The group leases retail stores under non-cancellable operating leases expiring within one to eight years. There is a small
portion of lease contracts which contain renewal rights. In considering the lease term for these contracts, the Group has
determined that rights of renewals are not reasonably certain to be exercised due to the nature and location of the stores and
the changing retail environment. It is the Group’s strategy to renegotiate the terms of all leases at their expiry instead of
exercising renewal rights. This agile strategy is enabled by having stores relatively small in size and not highly customised,
and therefore relatively straight forward to move locations. In addition, with the current retail market uncertainty and the
continuing growth of online sales compared to store sales, the Group needs to maintain a degree of flexibility.
Both right-of-use assets and lease liabilities are discounted applying the interest rate implicit in the lease. If that rate cannot
be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
In response to the COVID-19 pandemic the International Accounting Standards Board has issued amendments to IFRS 16
Leases to allow lessees not to account for rent concessions as lease modifications if they are a direct consequence of COVID-
19 and meet certain conditions.
The practical expedient will only apply if:
x the revised consideration is substantially the same or less than the original consideration;
x the reduction in lease payments relates to payments due on or before 30 June 2022; and
x no other substantive changes have been made to the terms of the lease.
The Group adopted this practical expedient in the year ended 1 August 2020 and has applied it to all eligible rent concessions
in the year ended 1 August 2021.
Short term leases where the Group is the lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the
profit and loss in the Statement of Comprehensive Income on a straight line basis over the period of the lease.
The Group is the lessor
Assets leased to third parties under operating leases are included in Investment Property in the Statement of Financial
Position. Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.
Lease receivables are disclosed under Note 4.3 Investment Property.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
16
The following tables show the movements and analysis in relation to the right-of-use assets and lease liabilities.
Right of use Assets
2021
2020
$000
$000
Opening net book value
73,628
75,845
Depreciation
(24,884)
(21,644)
Additions
19,026
18,805
Im pairm ent
(253)
-
FX im pact
(294)
622
Carrying amount67,223
73,628
Lease liabilities
2021
2020
$000
$000
Opening lease liabilities85,663
82,796
Lease modifications and additions
19,149
20,411
Interes t for the period
2,430
2,569
Lease payments made
(27,841)
(19,561)
Covid-19 rent abatements received to date
(2,369)
(1,281)
FX impact
(400)
729
Closing Lease liabilities76,632
85,663
Current lease liability
22,991
27,027
Non-current lease liability
53,641
58,636
Total future lease liabilities 76,632
85,663
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
17
Lease liabilities maturity analysis for the year ended 1 August 2021
Minimum
lease
paymentsInterest
Present
va lue
$000's$000's$000's
Due within one year
24,820 (1,829) 22,991
One to two years
20,739 (1,224) 19,515
Two to five years
32,706 (1,248) 31,458
Later than five years
2,710 (42) 2,668
Total80,975 (4,343) 76,632
Current
22,991
Non-current
53,641
Total76,632
Lease liabilities maturity analysis for the year ended 1 August 2020
Minimum
lease
paymentsInterest
Present
va l u e
$000's$000's$000's
Due within one year29,097 (2,070) 27,027
One to two years21,411 (1,434) 19,977
Two to five years35,307 (1,641) 33,666
Later than five years5,122 (129) 4,993
Total
90,937 (5,274) 85,663
Current27,027
Non-current58,636
Total
85,663
Lease related expenses included in the income statement:
2021
2020
$000
$000
Depreciation
24,884
21,644
Rent on s hort-term leas es
3,794
7,012
Covid-19 rent abatem ents received to date
(2,369)
(1,281)
Interes t on leas es
2,430
2,569
Total
28,739
29,944
Lease payments included in the cash flow statement:
2021
2020
$000
$000
Interes t paid on leas es (operating activities )
2,430
2,569
Payments for lease liabiities principal (financing activities)
25,411
16,992
Total cash outflows from leases
27,841
19,561
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
18
Lease commitments:
The Group currently has no non-cancellable short-term operating lease agreements as at 1 August 2021.
Lease commitments
2021
2020
At balance date the future aggregate minimum lease commitments was as follows:
$000's
$000's
Due within one year
-
1,286
Total operating lease commitments-
1,286
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
19
4.2 Property, plant and equipment
Recognition and measurement
Land and buildings were valued on 1 August 2021 by Telfer Young (Hawkes Bay) Ltd, Fordbaker Valuation Limited and Colliers
International who are independent registered valuers and associates of The New Zealand Institute of Valuers. The valuers have
recent experience in the location and category of the item being valued. The fair values of the assets represent the estimated
price for which a property could be sold on the date of valuation in an orderly transaction between market participants.
The adopted valuation has been assessed within a range indicated by two valuation approaches: Income capitalisation
approach and discounted cash flow analysis.
The following table summarises the valuation approach and key assumptions used by the valuers to arrive at fair value.
Valuation approach Description of the valuation approach
Income Capitalisation Approach
A valuation methodology which determines fair value by capitalising a property’s
sustainable net income at an appropriate, market derived capitalisation rate (yield).
Unobservable inputs within the income capitalisation approach include:
a) Net Market Rent which is the annual amount for which a tenancy within a
property is expected to achieve under a new arm’s length leasing transaction
after deducting a fair share of property operating expenses
b) Capitalisation Rate (yield) which is the rate of return, determined through analysis
of comparable, market related sales transactions which is applied to a property’s
sustainable net income to derive value.
Discounted Cash Flow analysis With the discounted cash flow approach (DCF) a cash flow budget is established for the
property over a ten-year time horizon. Within the cash flow an allowance is made for rental
growth as well as deducting costs associated with property ownership. A terminal value is
also estimated and the cash flows are discounted at a market rate to arrive at a net
present value.
Unobservable inputs within the discounted cash flow approach include:
a) The discount rate which is the rate determined through analysis of comparable
market related sales transactions which is applied to a property’s future net cash
flows to convert those cash flows into a present value.
b) The terminal capitalisation rate which is the rate which is applied to a property’s
sustainable net income at the end of an assumed holding period to derive an
estimated market value.
c) Rental growth rate which is the annual growth rate applied to market rent over an
assumed holding period.
d) Expenses growth which is the annual amount applied to property operating
expenses over an assumed holding period.
The revaluation surplus net of applicable deferred income taxes was credited to other comprehensive income and is shown in
the asset revaluation reserve in shareholders’ equity.
At each reporting date, where a valuation report is not obtained the most recent valuation reports are reviewed by the
management team. The review focuses on checking material movements and ensuring all additions and disposals are captured
and that there have been no material changes to the underlying assumptions on which the valuations are based.
Due to the impact of COVID-19 on the local and global economy, valuations have been completed noting varying degrees of
“market uncertainty” exist. A market value is “as at the valuation date” and is based on events and evidence up to that date.
Land and building measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers
between levels of the fair value hierarchy.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
20
Both the income capitalisation approach and discounted cash flow analysis contain unobservable inputs in determining fair
value. These are summarised in the table below:
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and
shown as an asset revaluation reserve in shareholders’ equity. Decreases that offset previous increases of the same asset are
charged in other comprehensive income and debited against the asset revaluation reserve directly in equity; all other decreases
are charged to the statement of comprehensive income.
All other property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. This cost includes labour attributable to bringing the assets
to the location and working condition for its intended use.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of
their residual values, over their estimated useful lives, as follows:
- Buildings 67 years
- Plant and equipment 2 - 5 years
- Furniture, fittings and office equipment 5 - 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each balance date.
Impairment
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable, for example a planned store closure,
withdrawal from a business segment, or assessment of loss making stores. Assets are grouped at the lowest levels for which
there are separately identifiable cash flows; a stores assets is the relevant cash generating unit. If, in a subsequent period, the
amount of the impairment loss decreases and it can be related objectively to an event occurring after the impairment was
recognised, the reversal of the previously recognised impairment loss is recognised in the consolidated statement of
comprehensive income.
The value in use calculation evaluates recoverability based on the stores’ forecasted discounted cash flows, which incorporate
estimated sales, margin & expense growth based upon current plans for the store. Key assumptions in the determination of
recoverable amount are:
• the estimate of future cash flows of the store incorporating reasonable sales growth and margin improvement; and
• the discount rate incorporating the rates of return based on the risk and uncertainty inherent in the forecast cash flows.
Following a review of store performance and consideration of other impairment indicators, the Group has identified two stores
where indicators of impairment exist as at 1 August 2021. Further impairment testing was performed with a write down
recognised against the associated stores right-of-use assets. Refer to note 4.1. No material impairment was identified.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
21
Disposal
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the
Statement of Comprehensive Income.
If land and buildings were stated on a historical cost basis, the amounts would be as follows:
Year ended 1 August 2021
$000's
Land at fair
value
Buildings at fair
value
Fixtures &
Fittings
Plant &
EquipmentTOTAL
Opening NBV8,30316,21618,4835,95648,958
Additions - - 5,1172,3217,438
Disposals - - (122)(37)(159)
Depreciation - (429)(6,670)(2,882)(9,981)
Revaluations2,7423,027 - - 5,769
Closing NBV11,04518,81416,8085,35852,025
Cost/Valuation11,04518,81466,20024,208120,267
Accumulated depreciation - - (49,392)(18,850)(68,242)
Closing NBV11,04518,81416,8085,35852,025
Year ended 1 August 2020
$000's
Land at fair
value
Buildings at fair
value
Fixtures &
Fittings
Plant &
EquipmentTOTAL
Opening NBV9,48715,63318,5205,89949,539
Additions - 2,0146,6322,94311,589
Disposals(1,650)(2,059)(68)(74)(3,851)
Depreciation
- (403)(6,601)(2,812)(9,816)
Revaluations
466 1,031 - - 1,497
Closing NBV
8,30316,21618,4835,95648,958
Cost/Valuation8,30316,21662,63422,495109,648
Accumulated depreciation - - (44,151)(16,539)(60,690)
Closing NBV8,30316,21618,4835,95648,958
2021
2020
$000's
$000's
Land
4,270
4,270
Buildings
12,792
12,792
Cost
17,062
17,062
Accumulated depreciation
(2,226)
(1,970)
Net book amount
14,836
15,092
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
22
4.3 Investment property
Recognition and measurement
Investment property consists of a portion of land and buildings for the purpose of retail. Land and buildings were valued on 1
August 2021 by Telfer Young (Hawkes Bay) Ltd who are independent registered valuers and associates of The New Zealand
Institute of Valuers. The valuers have recent experience in the location and category of the item being valued. The fair values of
the assets represent the estimated price for which a property could be sold on the date of valuation in an orderly transaction
between market participants.
The adopted valuation has been assessed within a range indicated by two valuation approaches: Income capitalisation approach
and discounted cash flow analysis. These valuation approaches and the key assumptions used by the valuers to arrive at fair
value have been summarised in Note 4.2.
The revaluation surplus of Investment Property was credited to other income in the Statement of Comprehensive Income.
Subsequent revaluation surpluses or losses will be recognised through Statement of Comprehensive Income.
Land and building measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers
between levels of the fair value hierarchy.
Both the income capitalisation approach and discounted cash flow analysis contain unobservable inputs in determining fair value.
These are summarised in Note 4.2.
Due to the impact of COVID-19 on the local and global economy, valuations have been completed noting varying degrees of “market
uncertainty” exist. A market value is “as at the valuation date” and is based on events and evidence up to that date.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably.
Lease receivables:
The Group owns rental property that it leases under non-cancellable operating lease agreements to external parties. Leases reflect
normal commercial arrangements with varying terms and renewal rights.
The future minimum rental payments receivable under these leases is as follows:
Investment Property
2021
2020
$000's
$000's
Opening balance
3,212
2,968
Net gain / (loss) from fair value adjustment
160
244
Closing balance3,372
3,212
Lease receivables
2021
2020
$000's
$000's
Due within one year
229
193
One to two years
162
148
Two to five years
201
304
Total lease receivables592
645
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
23
5. Equity
5.1 Share capital
Ordinary shares are classified as capital, net of treasury stock.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Treasury stock
Shares purchased on market under the executive share scheme are treated as treasury stock on acquisition at cost. On
vesting to the employee, treasury stock shares are credited to equity and an employee loan is recorded initially at fair value
and subsequently at amortised cost.
Reserves
The asset revaluation reserve records revaluations of property, net of tax. The cash flow hedge reserve records the fair value
of derivative financial instruments, net of tax that meet the hedge accounting criteria. The Share Option reserve is used to
record the accumulated value of unvested share rights arising from the executive share scheme which have been recognised
in the statement of comprehensive income.
All shares are fully paid and rank equally.
Contributed Equity
2021
2020
2021
2020
Shares
Shares
$000's
$000's
Balance at beginning of year
59,563,060
59,529,827
29,059
28,974
Purchase of Treasury stock
(297,000)
-
(1,964)
-
Dividends
--74
27
Share Options Exercised
86,001
33,233
188
58
Balance at end of year
59,352,061
59,563,060
27,357
29,059
Representing:
Share Capital
59,649,061
59,649,061
29,279
29,279
Treasury Stock (net of Dividends)
(297,000)
(86,001)
(1,922)
(220)
Total
59,352,061
59,563,060
27,357
29,059
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
24
5.2 Executive Share Scheme
Equity settled share-based compensation benefits are provided to employees in accordance with the Group’s executive share
scheme. The fair value of share rights granted under the scheme is recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the share rights.
The fair value at grant date of the share rights are determined using a Black Scholes Pricing model that takes into account the
exercise price, the term of the share right, the vesting and performance criteria, the non-tradable nature of the share right, the
share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the share right.
At each balance date, the Group revises its estimate of the number of share rights that are expected to become exercisable.
The employee benefit expense recognised each period takes into account the most recent estimate.
Upon the vesting of share rights, the balance of the share option reserve relating to the share rights is transferred to retained
earnings.
The Company operates an employee share scheme for certain senior executives to purchase ordinary shares in the Company.
The Company provides the employees with limited recourse loans on an interest free basis to assist employees’ participation.
The loans are applied to purchase shares on market and the shares are treated as treasury stock.
The loan amount is the total market value of the shares plus any commission applicable on the date of purchase.
Any dividends payable on the shares are applied towards the repayment of the advance.
Shares purchased under the scheme are held by two directors as custodians and vest three years from the date of purchase. In
the event the employee leaves the company during the vesting period, the loan is repaid by selling the shares on market. Any
gain or loss arising from the sale of shares is included in equity. Refer to note 5.1 for further detail on treasury stock.
In accordance with NZ IFRS 2 this scheme is an equity-settled scheme.
The model inputs for shares issued during the year ended 1 August 2021 included a share issue price ranging between $6.01 -
$7.60, an expected price volatility ranging between 33% - 42%, a risk free interest rate ranging between 0.10% - 0.54% and an
estimated 3 year vesting period (2020: No shares were issued).
Executive share scheme
Number of
shares
Average
exercise price
per share
option
Number of
shares
Average
exercise price
per share
option
Balance at beginning of financial year
86,001$3.49
119,234$3.35
Purchased on market during the year
297,000$6.61
--
Exercised during the year
(86,001)$3.49
(33,233)$3.01
Balance at end of financial year
297,000$6.61
86,001$3.49
Percentage of total shares held by scheme
0.50%
0.14%
Year ended 1 August 2020
Year ended 1 August 2021
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
25
6. Taxation
6.1 Income tax expense
The income tax expense or revenue for the period is the tax payable or receivable on the current period’s taxable income
based on the notional income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements and unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences
if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in operations where the company is able to control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Goods and Services Tax (GST)
The statement of comprehensive income and statement of cash flows have been prepared so that all components are stated
exclusive of GST. All items in the statement of financial position are stated net of GST, with the exception of receivables and
payables, which include GST invoiced.
The effective tax rate for the year was 29.0% (2020: 24.6%). The Group has no tax losses (2020: Nil) and no unrecognised temporary
differences (2020: Nil).
Income tax expense
2021
2020
$000's
$000's
Income tax expense
The tax expense comprises:
Current tax expense
14,667
11,941
Deferred tax expense (note 6.2)
- Future tax benefit current year
(1,035)
(3,036)
- Prior period adjustment
-
52
Total income tax expense
13,632
8,957
Reconciliation of income tax expense to tax rate applicable to profits
Profit before income tax expense
46,952
36,731
Tax at 28% (2020: 28%)
13,147
10,285
Tax effect of:
- Income not subject to tax
(45)
(236)
- Expenses not deductible for tax
49
26
- Adjustment due to different rate in different jurisdictions
481
280
- Prior period adjustment
-
52
- Reinstatement of tax base on buildings
-
(1,450)
Total income tax expense
13,632
8,957
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
26
The tax (charge)/credit relating to components of other comprehensive income are as follows:
6.2 Deferred tax
6.3 Imputation credits
The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted for:
x Imputation credits that will arise from the payment of the provision for income tax;
x Imputation debits that will arise from the payment of dividends recognised as liabilities at the reporting date; and
x Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
2021
2020
$000's
$000's
Before Tax
Tax (charge)
/ CreditAfter Tax
Before Tax
Tax (charge)
/ CreditAfter Tax
Gains (net of tax) on revaluation of land and buildings
5,769(848)4,921
1,49791,506
Reserve
3,355(970)2,385
(4,176)1,203(2,973)
Increase in Share Option Reserve
109-109
26-26
De fe rre d ta x
2021
2020
$000's
$000's
Amounts recognised in profit or loss
Depreciation
4,601
3,888
Provisions and accruals
1,625
1,698
Net lease liability
1,302
876
7,528
6,462
Amounts recognised directly in equity
Asset revaluation reserve
(848)
9
Cash flow hedges
(206)
763
Total amount recognised
6,474
7,234
Movements
Balance at beginning of year
7,234
3,024
Credited to the Income Statement
1,058
2,998
(Charged)/Credited to equity
(1,818)
1,212
Balance at end of the year
6,474
7,234
2021
2020
$000's
$000's
Imputation credits available for subsequent reporting periods
3,777
17,131
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
27
7. Other
7.1 Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
7.2 Contingencies
Contingent liabilities under contracts, guarantees and other agreements arising in the ordinary course of business on which no loss
is anticipated are as follows:
Letters of Credit
Bank letters of credit issued to secure future purchasing requirements are matched to a contingent asset of the same value
representing inventories purchased.
7.3 Related party transactions
During the year, the Company advanced and repaid loans to its subsidiaries by way of internal current accounts. In presenting the
financial statements of the Group, the effect of transactions and balances between fellow subsidiaries and those with the Parent
have been eliminated. All transactions with related parties were in the normal course of business and provided on commercial terms.
The Group undertook transactions with the related interests of the majority shareholder as detailed below:
Employee benefits
2021
2020
$000's
$000's
Holiday pay accrual and other benefits
7,131
5,586
2021
2020
$000's
$000's
Financial guarantee
456
466
Bank guarantee provided to the New Zealand Stock Exchange Limited
75
75
2021
2020
T C Glasson
$000
$000
Rent on retail premises based on independent valuations
2,017
1,800
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
28
The following Directors received Directors’ fees and dividends in relation to shares held personally as follows:
The Company paid consultants fees to close family members of the Board of Directors during the year ended 1 August 2021. The
total consultants’ fees for close family members was $159K (2020: $34K).
Key management compensation was as follows:
The Company operates an employee share scheme for certain senior executives and is outlined in Note 5.2.
Related party transactions
2021
2020
2021
2020
$000
$000
$000
$000
Mr T C Glasson
90
89
6,895
2,669
Mr W J B e ll
135
133
4
2
Ms K B yc r of t
95
93
-
-
Mr M Donovan**
85
84
58
22
Mr G Popplewell
88
84
117
45
Mr M F or d
105
103
6
2
Ms M D evine *
28
-
-
-
Ms S Vincent
69
-
28
-
Directors' feesDividends
* Ms M Devine received Non-Executive Directors' Fees from 1 April 2021. Prior to this date, Ms Devine was employed by the Group as
Managing Director. Short term employee benefits paid to Ms M Devine prior to 1 April 2021 are included in key management compensation
below.
** Mr M Donovan's directorship ceased on 20th July 2021.
Payments to Mr G Popplewell
2021
2020
$000
$000
Consulting fees
50
103
2021
2020
$000
$000
Short term employee benefits
2,821
2,865
Termination benefits
-
334
Share Scheme Benefit
109
26
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
29
7.4 Financial risk management
Fair value estimation
Fair value estimates are classified in a hierarchy based on the inputs to valuation techniques used to measure fair value.
The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that caused the transfer.
The Group has financial instruments that are classified as Level 2 within the fair value hierarchy. The fair value of financial
instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely
as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable,
the instrument is included within Level 2. Under Level 2 the Group holds forward foreign exchange contracts. The fair value
of these forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the
resulting value discounted back to present value. Refer to note 7.4.4.
The Group's land and buildings within property, plant and equipment and investment property is classified as Level 3 in the
fair value hierarchy as one or more of the significant inputs into the valuation are not based on observable market data.
Refer to notes 4.2 and 4.3 for more information.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-
measured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The company designates certain
derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);
or (2) hedges of highly probable forecast transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items,
as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of
hedged items.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the profit and loss component of Statement of Comprehensive Income.
Amounts accumulated in equity are recycled in the Statement of Comprehensive Income in the periods when the hedged
item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability,
the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial
cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the Statement of Comprehensive Income. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the profit and loss
component of the Statement of Comprehensive Income.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of these derivative instruments
are recognised immediately in the Statement of Comprehensive Income.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
30
7.4.1 Financial risk factors
The Group’s activities expose it to various financial risks including, liquidity risk, credit risk, and market risk (including currency risk
and cash flow interest rate risk). The Group’s risk management strategy is to minimise adverse effects on Comprehensive Income.
Derivative financial instruments are used to hedge currency risk.
7.4.2 Liquidity Risk
Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves, and by regularly monitoring cash flow.
At balance date, the Group had $39.204 million (2020: $49.642 million) in cash reserves and accordingly, management consider
liquidity risk to be relatively low.
The table below analyses the Group’s financial liabilities and gross-settled derivatives into relevant maturity groupings based on the
remaining period from the statement of financial position to the contractual maturity date. The cash flow hedge “outflow” amounts
disclosed in the table are the contractual undiscounted cash flows liable for payment by the Group in relation to all forward foreign
exchange contracts in place at balance date. The cash flow hedge “inflow” amounts represent the corresponding inflow of foreign
currency back to the Group as a result of the gross settlement on those contracts, converted using the spot rate at balance date.
The carrying value shown is the net amount of derivative financial liabilities and assets as shown in the statement of financial
position.
Trade payables are shown at carrying value in the table. No discounting has been applied as the impact of discounting is not
significant.
7.4.3 Credit Risk
Credit risk is the risk of the failure of a debtor or counterparty to honour its contractual obligations resulting in financial loss to the
Group. The Group incurs credit risk from trade receivables and transactions with financial institutions. The Group places its cash,
short-term investments and derivative financial instruments with high credit quality financial institutions. Retail sales are
predominantly settled in cash or by using major credit cards. 0.1% (2020: 0.2%) of sales give rise to trade receivables. This
maximum exposure to credit risk is the carrying amount of trade receivables.
Concentration of credit risk with respect to debtors is limited due to the large number of customers included in the Group’s customer
base.
The Group does not require collateral or other security to support financial instruments with credit risk.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
31
7.4.4 Market Risk
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposure predominantly with the US dollar with the purchase
of inventory from overseas suppliers.
The Board has established a Treasury Risk Policy to manage the foreign exchange risk. The policy is reviewed on a regular basis,
and management report monthly to the Board to confirm policy is adhered to. All committed foreign currency requirements are fully
hedged, and approximately 59% (2020: 59%) of anticipated foreign currency requirements are hedged on a rolling twelve month
basis.
The Group uses forward exchange contracts with major retail banks only to hedge its foreign exchange risk arising from future
purchases.
As at 1 August 2021
Less than 3
months
3-12
monthsTotal
Carrying
value
$000's $000's $000's $000's
Trade and other payables21,950-21,95021,950
21,950-21,95021,950
Forw ard foreign exchange contracts
Cash flow hedges:
- outflow(12,943)(10,982)(23,925)(23,925)
- inflow13,19011,40724,59724,639
- Net247425672714
As at 1 August 2020Less than 3
months
3-12
monthsTotal
Carrying
va l u e
$000's $000's $000's $000's
Trade and other payables26,967-26,96726,967
26,967-26,96726,967
Forward foreign exchange contracts
Cash flow hedges:
- outflow(22,463)(49,888)(72,351)(72,351)
- inflow21,90647,71869,62469,709
- Net(557)(2,170)(2,727)(2,642)
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
32
Forward exchange contracts – cash flow hedges
These contracts are used for hedging committed or highly probable forecast purchases of inventory. The contracts are timed to
mature during the month the inventory is shipped and the liability settled. The cash flows are expected to occur at various dates
within one year from balance date.
When forward exchange contracts have been designated and tested as an effective hedge the portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is recognised directly in equity. These gains or losses will be released
in the profit and loss in the Statement of Comprehensive Income at various dates over the following year as the hedged risk
crystallises.
At balance date the Group had entered into forward exchange contracts to sell the equivalent of NZ$23.925 million (2020:
NZ$72.351 million), primarily in US Dollars. At balance date these contracts are represented by net assets of $0.714 million (2020:
liabilities of $2.642 million). When foreign exchange contracts are not designated and tested as an effective hedge, the gain or loss
on the foreign exchange contract is recognised in the profit and loss in the Statement of Comprehensive Income.
At balance date there are no such contracts in place (2020: $Nil).
Interest rate risk
The Group has no interest bearing liabilities. Exposure to interest rate risk arises only from the impact on income from operating
cash flows as a result of interest bearing assets, such as cash deposits.
Sensitivity analysis
Based on historical movements and volatilities and management’s knowledge and experience, management believes that the
following movements are ‘reasonably possible’ over a 12 month period:
x Proportional foreign exchange movement of -10% (depreciation of NZD) and +10% (appreciation of NZD) against the
USD, from the year end rate of $0.7013 (2020: $0.6706).
x Proportional foreign exchange movement of -10% (depreciation of NZD) and +10% (appreciation of NZD) against the
AUD, from the year end rate of $0.948 (2020: $0.9283).
x A parallel shift of +1% / -1% in the market interest rates from the year end deposit rate of 0.25% (2020: 0.25%).
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
33
If these movements were to occur, the post-tax impact on profit and loss and equity for each category of financial investment:
The parent is not exposed to any interest rate or foreign exchange risk.
7.4.5 Capital risk management
The Group’s objectives when managing capital are to maximise the value of shareholder equity and ensure that the Group continues
to safeguard its ability to continue as a going concern. Group capital consists of share capital, reserves and retained earnings. In
order to meet these objectives, the Group may adjust the amount of dividend payment made to shareholders. The Group has no
specific banking or other arrangements which require that the Group maintain specific equity levels.
As at 1 August 2021
ProfitEquityProfitEquityProfitEquityProfitEquity
$000's $000's $000's $000's $000's $000's $000's $000's $000's
Financial assets
Loans and receivables
Cash and cash equivalents
39,204(392)(392)3923921,8901,890(1,546)(1,546)
Accounts receivable
239--------
Advances to Employees
291--------
Financial liabilities
Liabilities at amortised cost
Trade and other payables
21,950----(1,098)(1,098)898898
Derivatives used for Hedging
Derivatives designated as cash flow hedges (forward foreign exchange contracts)
(714)-----1,968-(1,610)
TOTAL INCREASE/DECREASE(392)(392)3923927922,760(648)(2,258)
As at 1 August 2020
Carrying
amount
-1% +1%-10% +10%
ProfitEquityProfitEquityProfitEquityProfitEquity
$000's $000's $000's $000's $000's $000's $000's $000's $000's
Financial assets
Loans and receivables
Cash and cash equivalents49,642(496)(496)4964962,2612,261(1,850)(1,850)
Accounts receivable2,343--------
Advances to Employees291--------
Financial liabilities
Liabilities at amortised cost
Trade and other payables26,967----(1,457)(1,457)1,1921,192
Derivatives used for Hedging
Derivatives designated as cash flow hedges (forward foreign exchange contracts)
2,642-----5,508-(4,619)
TOTAL INCREASE/DECREASE
(496)(496)4964968046,312(658)(5,277)
Carrying
amount
Interest rateForeign exchange rate
-1% +1%-10% +10%
Foreign exchange rateInterest rate
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2021
34
7.5 Events subsequent to balance date
At 11:59pm on 17 August 2021 New Zealand re-entered Level 4 lockdown due to an outbreak of the Delta variant. The Group
announced it had closed all Hallenstein Brothers stores and Glassons stores in New Zealand. On 7 September 2021 the rest of
New Zealand outside of Auckland entered level 2 and the non-Auckland stores for both Hallensteins Brothers and Glassons were
re-opened with strict protocols in place in line with the Governments recommendations. On 21 September 2021 Auckland entered
Level 3. Auckland stores will be reopened in accordance with the New Zealand Governments regulations.
At the time of signing these accounts the Glassons stores in Victoria and New South Wales remain closed. The stores will reopen
in line with Australian Government recommendations.
Subsequent to year end, the Group has and will continue to apply for available wage subsidy relief from the respective New
Zealand and Australian governments where all applicable criteria have been met.
The Directors consider it prudent to defer the declaration of the final dividend until Auckland and the Australian states of NSW and
VIC have come out of their respective lockdowns and retail stores can trade again.
7.6 Standards, amendments and interpretations to existing standards
There have been no changes in accounting policies or standards.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000,
www.pwc.co.nz
Independent auditor’s report
To the shareholders of Hallenstein Glasson Holdings Limited
Our opinion
In our opinion, the accompanying financial statements of Hallenstein Glasson Holdings Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 1 August 2021, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's financial statements comprise:
●the statement of financial position as at 1 August 2021;
●the statement of comprehensive income for the year then ended;
●the statement of changes in equity for the year then ended;
●the statement of cash flows for the year then ended; and
●the notes to the financial statements, which include significant accounting policies and other
explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of tax compliance and tax advisory
services. In addition, certain partners and employees of our firm may deal with the Group on normal
terms within the ordinary course of trading activities of the Group. These relationships and provision
of other services has not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
PwC 36
Description of the key audit matter How our audit addressed the key audit matter
Inventory valuation
As at 1 August 2021, the Group held
$27.8 million (2020: $24.6 million) of
finished goods, net of inventory
adjus
tments of $1.4 million (2020: $0.4
million). Given the size of the inventory
balance relativ
e to the total assets of the
Group and the estimates and judgements
described below, the valuation of
inventory required significant
audit attention and is a key audit matter.
As disclosed in Note 3.2, inventory is held
at the lower of cost and net
realisable value (NRV) determined using
the weighted average cost method. At
year end, the valuation of inventory is
reviewed by management and the
carrying value of inventory is
reduced
where inventory is forecast to be sold
below cost.
The inventory adjustment is determined
based on various factors including
historical data, current trends and product
information from buyers. Determining the
appropriate level of provisioning involves
judgement and the application of
assumptions including management’s
expectations of f uture sales levels and
estimation of selling price adjustments.
We have performed the following procedures over
the valuation of inventory:
●For a sample of inventory items, tested costing to
supplier invoices and shipping documents;
●We tested that the ageing report used by
management correctly aged inventory items by
agreeing a sample of aged inventory items to the
date of purchase as shown on third party invoices;
●On a sample basis we tested the net realisable
value of inventory items to recent selling prices;
●We assessed the percentage write down applied
to older inventory with reference to historic
inventory write downs and recoveries on slow
moving inventory;
●We re-perfomed the calculation of the inventory
write down;
●Considered the impact of COVID-19 on the
inventory valuation by discussing the impact with
management and considering the impact on slow
moving items on the NRV calculations;
●We also made enquires of management, including
those outside of the finance function, and
considered the results of our testing above to
determine whether any specific write downs were
required; and
●Reviewed the appropriateness of disclosures in
the financial statements.
From the procedures performed no material
exceptions were identified.
PwC 37
Our audit approach
Overview
Overall group materiality: $2.3 million, which represents
approximately 5% of Group profit before tax.
We chose Group profit before tax as the benchmark because, in our
view, it is the benchmark against which the performance of the
Group is most commonly measured by users, and is a generally
accepted benchmark.
Our Group audit scope focused on the major operating locations. In
aggregate, the locations selected as part of our audit scoping
contributed 98% of the Group’s Revenue and 99% of the Group’s
profit before tax.
We agreed with the Audit and Risk Committee that we would report
to them any misstatements identified during our audit above
$100,000 as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
As reported above, we have one key audit matter, being:
●Inventory valuation
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other
matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and in aggregate, on the financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opi
nion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
PwC 38
Audits of each major operating location are performed by PwC New Zealand at a materiality level
calculated by reference to a proportion of Group materiality appropriate to the relative scale of the
operations concerned. The remaining operations were not considered significant to the Group and
were subject to other procedures including analytical procedures.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the financial statements and our
auditor's report thereon. The Annual report is expected to be made available to us after the date of this
auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the Directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a
whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
PwC 39
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Keren Blakey.
For and on behalf of:
Chartered Accountants Auckland
30 September 2021
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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