2019 Annual Report
1
COOKS GLOBAL FOODS LIMITED
ANNUAL REPORT
31 MARCH 2019
COOKS GLOBAL FOODS LIMITED
2
Contents to Consolidated Financial Statements
Contents 2
Executive Chairman’s Report 3
Directors’ Report 8
Independent Auditors’ Report 9
Consolidated Statement of Profit or Loss and Other
Comprehensive Income 11
Consolidated Statement of Changes in Equity 12
Consolidated Statement of Financial Position 13
Consolidated Statement of Cash Flows 14
Statement of Accounting Policies 15
Notes to the Consolidated Financial Statements 15
Statutory Information and Corporate Governance 57
Company Directory 65
COOKS GLOBAL FOODS LIMITED
3
Executive Chairman’s Report
Cooks has over the last year continued to make progress putting its operations on a long-term
footing. We have delivered strong growth in our global coffee operations; however, the gains
have been diluted by restructuring initiatives and changes in reporting standards as we drive
towards positive cashflow and earnings.
Revenue for the 12 months to 31 March 2019 fell 11.8% to $5.9 million from $6.7 million in the
same period a year ago. Revenue was supported by a 10.9% increase in constant currency
sales from the global coffee store network to $49.3 million from $44.5 million in the same
period a year ago as store numbers expanded from 93 to 117.
The gains were offset by restructuring initiatives aimed at building growth momentum,
including changes to the structuring of royalty programmes in the United Kingdom. The gains
were also masked by new accounting standards that require Cooks to recognise revenue from
new franchise agreements across the life of the agreement rather than in the year they are
received. The 2018 financial year’s figures have not been restated to reflect these changes.
Net losses before tax from continuing operations increased to $4.8 million from $1.6 million in
the same period a year ago, reflecting lower revenue, costs associated with new initiatives to
drive growth in the UK and Europe, a non-cash share of the Chinese associate’s losses and
write off’s associated with the company’s Romanian operations.
Higher finance and legal charges and costs associated with the proposed but ultimately
unsuccessful acquisition of the Mojo chain of coffee stores towards the end of the half year
also weighed on earnings.
During the second half of the year the company focused on strengthening the core businesses
in UK and Ireland, which collectively generated more than 70% of the group’s total revenue in
2019. The UK business was reorganised with a focus on developing regional master
franchisees and the strengthening of operational management. To date two regions have been
sold and the results are beginning to show through with faster growth in the current financial
year as local developers ramp up activity.
As signalled at the half year, the focus on the core business saw Cooks withdraw from the
external design market and the closure of the Design Environments business. We are now
focussed exclusively on internal design for our own franchised cafes and we are seeing cost
savings from these initiatives flowing through to our results in the current financial year.
STATEMENT OF FINANCIAL POSITION
Cooks fully repaid its debt facilities with ANZ in early April with the majority repaid before 31
March 2019. At the end of the financial year the company had bank debt of $0.15 million down
from $1.2 million at the same time last year.
Borrowings increased to $5.7 million from $3.1 million at the same time a year ago and include
loans from entities associated with Keith Jackson as well as certain convertible loan notes.
Cooks continues to pursue alternative funding options to better reflect the appropriate mix of
equity and debt requirements for the business.
COOKS GLOBAL FOODS LIMITED
4
CHINA BUSINESS CARRYING VALUE
Following discussions with the Financial Markets Authority, Cooks commissioned an
independent valuation of the Chinese associate company, which valued Cooks’ 21% stake at
between $5.6 million and $6.8 million.
This figure is well in excess of the $2.7 million carrying value in the company’s accounts.
However, the Board resolved not to adjust the value at this time.
NZX MIGRATION AND GOVERNANCE
Cooks migrated to the NZX on 24 June 2019 and believes the move will help to lift its profile
and boost liquidity in our shares. The approval follows the appointment of Paul Elliot to the
board as an independent non-executive director.
Mr Elliot has a strong financial background and has served as a Director of both publicly listed
and privately held companies. He has held several senior executive positions including Chief
Financial Officer with major New Zealand corporates and is a welcome addition to the board.
Meanwhile the board would also like to thank the Cooks team for the considerable efforts of
the last year especially during the recent restructure.
OUTLOOK
Directors are confident about the prospects for the business in the year ahead.
Recent restructuring initiatives began to deliver real benefits in the second half of the 2019
financial year and are continuing into the new financial year. We expect these improvements
to build momentum and drive Cooks towards generating positive cash flow and earnings.
BUSINESS PERFORMANCE
THE UNITED KINGDOM
UK store numbers increased to 41 at the end of March up from 35 at the same time a year
ago. Meanwhile, constant currency coffee store sales for the year increased 17% to $20.6
million from $17.6 million in the same period a year ago. The region also saw a 10% increase
in transaction volumes and a 7% increase in average transaction values.
The UK business has a new strategy to establish regional franchises and as part of this, it has
restructured the regional franchise fee and royalty schedule to better incentivise franchisees.
This change – coupled with the change in accounting standard - has had a short-term effect
of lowering Cooks revenues in the UK segment, which fell to $2.6 million from $3.0 million in
the same time a year ago. However, over the longer term, the royalty changes are projected
to significantly accelerate revenue and profit growth.
Operating losses in the UK division were $0.8 million, down from an operating profit of $0.2
million in the same period a year ago. In addition to the change in the royalty schedule and
the accounting standards, the fall reflected the costs associated with the opening of a
company-owned flagship store in Putney in South West London.
COOKS GLOBAL FOODS LIMITED
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The store has a strong local community engagement, and a high level of food focus. It is
setting the standard for Esquires in the UK. It also serves as a hub for regional training and
administration.
EUROPE (IRELAND)
Constant currency total store sales in the region were $16.4 million, 19.4% ahead of the same
period a year ago. This result was driven by 16% growth constant currency store sales in
Ireland itself as three new stores came on stream late in the period.
Cooks revenue in the European segment increased to $1.2 million from $1.0 million in the
same period a year ago, despite the change to the accounting standards.
However, the gains were diluted by difficulties in the Romanian business where the regional
franchisee has failed to live up to expectations. Consequently, the region posted an operating
loss of $0.2 million compared to an operating profit of $0.2 million in the same period a year
ago.
GLOBAL
Constant currency sales of the Esquires Coffee store network included in the global segment
increased 5.6% to $9.4 million from $8.9 million in the same period a year ago. Strong gains
in the Middle East and Asia were offset by weakness in Canada. Pakistan had a positive first
year of operations and is cautiously expanding.
Cooks operating revenue in the segment fell from $1.9 million to $1.4 million, with the fall
largely due to the revenue accounting standard. The global business posted an operating loss
of $0.1 million compared to an operating profit of $0.4 million in the same period a year ago,
again reflecting the change to the accounting standard.
SUPPLY AND CORPORATE
Revenue at the supply businesses was largely flat on the same period a year ago at $0.8
million with strong gains in revenue in the new carbon-neutral Grounded coffee brand offset
by weakness in Scarborough Fair’s other brands. The Crux supply business also recorded
weaker sales, and this was due largely to the timing of shipments to and from its customers
offshore.
Operating losses rose to $0.35 million compared to $0.30 million at the same time a year ago
with the increase relating to investment in the Grounded coffee brand. Corporate costs rose
by 12% to $1.6 million from $1.4 million last year, due to the costs associated with the planned
acquisition of Mojo.
CHINA
The Chinese business is now treated as an equity-accounted associate. Cooks has an
effective 21% stake in the business and booked a $0.4 million non-cash share of the venture’s
losses for the year.
After a long period of reorganisation momentum is building in China. In the three-month period
to the end of March 2019 the Chinese business opened 21 outlets, all of which were the new
COOKS GLOBAL FOODS LIMITED
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style ‘express’ outlets. Total outlets at the end of the period increased to 31 from 18 at the
same time a year ago.
ESQUIRES OPERATING METRICS
GLOSSARY OF TERMS USED RELATING TO ESQUIRES OPERATING METRICS:
Constant Currency:
All references to sales and transaction values are constant currency. This means prior year figures
are converted at the same exchange rate as the current year to eliminate the effects of foreign
exchange rate fluctuations.
Network (Store) Sales:
Total store sales are the aggregate of sales of all Esquires branded coffee stores, whether franchised
or partially/fully owned, across the company’s global brand network. Cooks derives income from its
franchised stores from franchise related fees, primarily related to these sales levels as well as store
sales for those stores directly owned by the company, except in China.
Total network store sales, therefore, have a correlation to the portion of revenue earned by Cooks
Global Foods relating to recurring franchise fees. Chinese sales are also indicative of the potential value
residing in the Chinese venture. However, total network sales are not and should not be confused with
COOKS GLOBAL FOODS LIMITED
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the revenue of Cooks Global Foods which is reported in its financial statements as the two do not
directly correlate.
Same Store Sales:
Same store sales are the aggregate of all Esquires-branded coffee stores, whether franchised or owned
across the company’s global brand network that have been operational for at least a full two-year period
for the purposes of like-for-like comparison between current and prior periods.
The metric measures the improvement in existing store sales within the brand network, excluding new
stores opened in the previous 24 months. Same store sales are not the same as revenue in the financial
statements for Cooks Global Foods group but can indicate stable revenue growth in the brand network.
Transactions:
Transactions relate to the total individual transactions, which occur within Esquires branded coffee
stores, whether franchised or owned. A transaction is defined as a single financial transaction for food,
beverage or product that is processed through the point-of-sale system within a coffee store.
Average Transaction Value:
Average transaction values are derived by dividing total Esquires coffee store sales by total transactions
recorded over the period.
Total (Store) Network:
All stores whether owned, (in full or as part of an associate, such as in the case of the China
business), or franchised, which operate under a brand owned by companies within the Cooks Global
Foods
COOKS GLOBAL FOODS LIMITED
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Directors’ report
The directors of Cooks Global Foods Limited are pleased to present to shareholders the
Annual Report and consolidated financial statements for Cooks Global Foods Limited and its
controlled entities (together the “Group”) for the year ended 31 March 2019.
The directors are responsible for presenting consolidated financial statements in accordance
with New Zealand law and generally accepted accounting practice, which give a true and fair
view of the financial position of the Group as at 31 March 2019 and their financial performance
and cash flows for the year ended on that date.
The directors consider that the consolidated financial statements of the Group have been
prepared using appropriate accounting policies, consistently applied and supported by
reasonable judgements and estimates and that all relevant financial reporting and accounting
standards have been followed.
The directors believe that proper accounting records have been kept which enable, with
reasonable accuracy, the determination of the financial position of the Group and facilitate
compliance of the consolidated financial statements with the Financial Reporting Act 2013.
The directors consider they have taken adequate steps to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The directors note that there were no material changes in the nature of the business
undertaken by the Company in the past year.
Going Concern
The directors consider that using the going concern assumption is appropriate having
reviewed cash flow projections of the Group which are based on several key assumptions
such as the outcome of current funding discussions.
Greater detail of the going concern assumptions and the cash generating initiatives currently
underway are detailed in Note 4 of the consolidated financial statements.
Donations & Audit Fees
The Group made no donations during the past year. Amounts paid to BDO Auckland for audit
and other services are shown in Note 21 of the consolidated financial statements.
Other Statutory Information
Additional information required by the Companies Act 1993 is set out in the Regulatory
Disclosures and Shareholder Information sections.
The directors present the consolidated financial statements set out in pages 11 to 56, of Cooks
Global Foods Limited and its controlled entities for the period 1 April 2018 to 31 March 2019.
The Board of Directors of Cooks Global Foods Limited authorised these consolidated financial
statements for issue on 8 August 2019.
Keith Jackson Paul Elliot
Executive Chairman Director
BDO Auckland
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF COOKS GLOBAL FOODS LIMITED
Report on the Audit of the Consolidated Financial Statements
Disclaimer of Opinion
We were engaged to audit the consolidated financial statements of Cooks Global Foods Limited (“the
Company”) and its controlled entities (together, “the Group”), which comprise the consolidated statement of
financial position as at 31 March 2019, and the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies.
We do not express an opinion on the accompanying consolidated financial statements of the Group. Because of
the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have
not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these
consolidated financial statements.
Basis for Disclaimer of Opinion
(a) Going Concern
As disclosed in Note 4 to the consolidated financial statements, the consolidated financial statements have
been prepared on a going concern basis, the validity of which depends on a number of assumptions as set out
in Note 4 and includes the ability of related parties to continue to provide funding as required. As these
assumptions give rise to multiple uncertainties for which the outcomes, their possible interaction and
cumulative effect on the consolidated financial statements are unknown, we were unable to obtain sufficient
appropriate audit evidence to support the viability of the underlying assumptions in Note 4, and upon which to
form an opinion as to whether the application of the going concern assumption in the preparation and
presentation of the consolidated financial statements is appropriate.
(b) Investment in Associate
The Group’s investment in Shanghai Yinshi Food and Beverage Management Company Limited (“the
Associate”), a foreign associate and accounted for by the equity method, is carried at $2,688,000 on the
consolidated statement of financial position as at 31 March 2019, and the Group’s share of the Associate’s net
loss of $399,000 is included in the Group’s consolidated statement of profit or loss for the year then ended.
The Directors were unable to gain access to the underlying books and records of the Associate. We were
unable to obtain sufficient appropriate audit evidence to support the carrying amount of the Group’s
investment in the Associate as at 31 March 2019, the Group’s share of the Associate’s net loss for the year, and
related disclosures. Consequently, we were unable to determine whether any adjustments to these amounts
and disclosures were necessary.
(c) Adoption of IFRS 15 Revenue from Contracts with Customers (“IFRS 15”)
The Group’s has adopted IFRS 15 from 1 April 2018. The impact of the adoption is disclosed in Note 3.4 and the
revenue recognition policies are disclosed in Note 3.9 to the consolidated financial statements. The Group’s
assessment of the impact was incomplete and did not provide sufficient analysis of the standard and its
contracts with customers. We were unable to obtain sufficient appropriate audit evidence to support the
impact of the adoption of IFRS 15 and the appropriateness of the revenue recognition policies adopted.
Consequently, we were unable to determine whether any adjustments to these amounts and disclosures were
necessary.
We consider the impact of the above matters to be material and pervasive to the consolidated financial
statements of the Group.
9
BDO Auckland
Directors’ Responsibilities for the Consolidated Financial Statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of the
consolidated financial statements in accordance with New Zealand equivalents to International Financial
Reporting Standards, and for such internal control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of the Group 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 Consolidated Financial Statements
Our responsibility is to conduct an audit of the Group’s consolidated financial statements in accordance with
International Standards on Auditing (New Zealand) and to issue an auditor’s report. However, because of the
matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated financial
statements.
We are independent of the Company in accordance with Professional and Ethical Standard 1 (Revised) Code of
Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group.
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 Blair Stanley.
BDO Auckland
Auckland
New Zealand
8 August 2019
10
COOKS GLOBAL FOODS LIMITED
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 31 March 2019
11
Restated
31-Mar
31-Mar
2019
2018
Notes
$'000
$'000
Continuing operations
Revenue
5
5,936
6,728
Other income
103
37
Raw materials and consumables used
(1,171)
(1,069)
Depreciation and amortisation
15,16
(264)
(244)
Property related costs
(719)
(475)
Net foreign exchange (losses)/gains
(238)
655
Employee costs
6
(3,085)
(3,018)
Other expenses
7
(4,219)
(3,505)
Operating loss
(3,657)
(891)
Finance costs
8
(753)
(449)
Share of net loss of associate accounted for using the equity
method
14.2
(399)
(279)
Loss before income tax
(4,809)
(1,619)
Income tax expense
9
(4)
-
Loss for the year from continuing operations
(4,813)
(1,619)
Net loss for the year from discontinued operations
13.2
-
(2,243)
Net loss for the year
(4,813)
(3,862)
Loss attributable to:
- Shareholders of the parent
(4,803)
(3,731)
- non-controlling interests
(10)
(131)
(4,813)
(3,862)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Change in foreign currency translation reserve
150
(1,072)
Change in share based equity reserve
19.3
575
339
Exchange differences on translation of discontinued operations
13.2
-
416
Other comprehensive income after tax
725
(317)
Total comprehensive loss for the year
(4,088)
(4,179)
Attributable to:
- Shareholders of the parent
(4,078)
(4,387)
- non-controlling interests
(10)
(131)
(4,088)
(4,518)
Loss from discontinued operations attributable to:
- Shareholders of the parent
13
-
(2,120)
- non-controlling interests
13
-
(123)
-
(2,243)
Loss per share:
Basic and diluted loss per share (New Zealand Cents) from
continuing and discontinued operations:
19.2
(0.98)
(0.79)
Basic and diluted loss per share (New Zealand Cents) from
continuing operations:
19.2
(0.98)
(0.27)
This statement should be read in conjunction with the notes to the consolidated financial statements.
COOKS GLOBAL FOODS LIMITED
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
12
Attributable to Equity holders of the Company
Restated
Share
Capital
Foreign
currency
translation
reserve
Share
based
payment
reserve
Accumulated
Losses
Total
Non-
controlling
interest
Total
Equity
Notes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 April 2017
37,875
755
-
(38,804)
(174)
371
197
Adjustment to share based equity reserve
19.3
- -
1,249
-
1,249
-
1,249
Comprehensive loss for the year
Loss for the year
- - -
(3,731)
(3,731)
(131)
(3,862)
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss:
Change in foreign currency translation reserve
-
(656)
-
-
(656)
-
(656)
Change in share based payment reserve
-
-
339
-
339
-
339
Total comprehensive income/(loss) for the year
-
(656)
339
(3,731)
(4,048)
(131)
(4,179)
Transactions with owners of the Company
Issue of ordinary shares
19
4,642
- - -
4,642
-
4,642
Ordinary shares to be issued
19
170
-
-
-
170
-
170
Total contributions by owners of the Company
4,812
-
-
-
4,812
-
4,812
Non-controlling interests fund's introduced
-
-
-
-
-
83
83
Non-controlling interests disposed of
-
-
-
-
-
(391)
(391)
Total non-controlling interests
-
-
-
-
-
(308)
(308)
Balance at 31 March 2018
42,687
99
1,588
(42,535)
1,839
(68)
1,771
Balance at 1 April 2018
42,687
99
1,588
(42,535)
1,839
(68)
1,771
IFRS 15 Revenue adjustment to Accumulated
Losses
3.4
-
-
-
(1,212)
(1,212)
-
(1,212)
Adjusted balance at 1 April 2018
42,687
99
1,588
(43,747)
627
(68)
559
Comprehensive loss for the year
Loss for the year
-
-
-
(4,803)
(4,803)
(10)
(4,813)
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss:
Change in foreign currency translation reserve
-
150
-
-
150
-
150
Change in share based payment reserve
19.3
-
-
575
-
575
-
575
Total comprehensive income/(loss) for the year
-
150
575
(4,803)
(4,078)
(10)
(4,088)
Transactions with owners of the Company
Ordinary shares to be issued
19
(170)
-
-
(170)
(170)
Total contributions by owners of the Company
(170)
-
-
-
(170)
-
(170)
Balance at 31 March 2019
19
42,517
249
2,163
(48,550)
(3,621)
(78)
(3,699)
This statement should be read in conjunction with the notes to the consolidated financial statements.
COOKS GLOBAL FOODS LIMITED
Consolidated Statement of Financial Position
As at 31 March 2019
13
Restated
31-Mar
31-Mar
2019
2018
Notes
$'000
$'000
Assets
Current Assets
Cash and cash equivalents
10
450
714
Trade and other receivables
11
296
2,760
Inventories
12
219
154
Other current assets
11
761
616
Current Assets
1,726
4,244
Non-Current Assets
Intangible assets
15
2,842
2,948
Property, plant and equipment
16
787
359
Investments accounted for using the equity method
14.2
2,688
3,087
Other non-current financial assets
15
15
Non-current assets
6,332
6,409
Total Assets
8,058
10,653
Liabilities
Current Liabilities
Trade and other payables
17
4,565
4,604
Bank overdraft
10
148
1,180
Contract liabilities
163
-
Borrowings and other liabilities
18
5,514
2,737
Current liabilities
10,390
8,521
Non-Current Liabilities
Contract liabilities
1,146
-
Borrowings and other liabilities
18
221
361
Non-current liabilities
1,367
361
Total Liabilities
11,757
8,882
Net Assets
(3,699)
1,771
Equity
Share capital
19.1
42,517
42,687
Accumulated losses
(48,550)
(42,535)
Foreign currency translation reserve
249
99
Share based equity reserve
2,163
1,588
Equity attributable to owners of the parent
(3,621)
1,839
Non-controlling interests
(78)
(68)
Total equity
(3,699)
1,771
Director Director
The consolidated financial statements were approved for issue for and on behalf of the Board as at
8 August 2019.
This statement should be read in conjunction with the notes to the consolidated financial statements.
COOKS GLOBAL FOODS LIMITED
Consolidated Statement of Cash Flows
For the year ended 31 March 2019
14
31-Mar31-Mar
20192018
Notes$'000$'000
Operating activities
Cash was provided from:
Receipts from customers
5,8938,066
Cash was applied to:
Interest cost
(289)(423)
Payments to suppliers & employees(8,008)(9,067)
Net cash applied to operating activities
22
(2,404)(1,424)
Investing activities
Cash was applied to:
Net cash disposed on de-recognition
-(193)
Purchase of property, plant and equipment(194)(135)
Payment for funds owed for business acquisitions-(137)
Net cash applied to investing activities(194)(465)
Financing activities
Cash was provided from:
Proceeds from borrowings
3,2591,650
Proceeds from share issue1,1392,679
Cash was applied to:
Repayment of borrowings
(1,032)(1,262)
Net cash provided from financing activities3,3663,067
Net increase/(decrease) in cash and cash
equivalents held
7681,178
Cash & cash equivalents at beginning of the year
(466)(1,644)
Cash & cash equivalents at end of the year10302(466)
This statement should be read in conjunction with the notes to the consolidated financial statements.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
15
1. Nature of operations
Cooks Global Foods Limited and its controlled entities (the Group) principal activity is the food
and beverage industry.
2. General information and statement of compliance
Cooks Global Foods Limited is the Group’s ultimate parent company, is incorporated and
domiciled in New Zealand and is listed on the NZX Alternate Market board of the New Zealand
stock exchange.
The address of its registered office and its principal place of business is 3 City Road, Auckland,
New Zealand.
Cooks Global Foods Limited is a company registered under the Companies Act 1993 and is an
FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013. The consolidated
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 Alternative Market Listing Rules.
The consolidated financial statements comprise the Company, its controlled entities and its
associates (together the “Group”). See Note 3.4.
For the purposes of complying with NZ GAAP, the Group is a Tier 1 for-profit entity. The
Company’s consolidated financial statements comply with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS). They comply with the International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and IFRIC interpretations.
The information in the consolidated financial statements is presented in New Zealand dollars
which is the functional currency of the ultimate parent company. Amounts in the consolidated
financial statements have been rounded off to the nearest thousand, or in certain cases, the
nearest dollar.
The consolidated financial statements for the year ended 31 March 2019 were approved and
authorised for issue by the Board of Directors on 8 August 2019.
3. Summary of accounting policies
3.1. Going concern
The directors have prepared the consolidated financial statements on the going concern basis.
In doing so significant judgement has been applied. For further details of these assumptions
and other associated material uncertainties refer to Note 4.
3.2. Overall considerations
The principal accounting policies applied in the preparation of these financial statements are
set out in the accompanying notes where an accounting policy choice is provided by NZ IFRS,
is new or has changed, is specific to the Group’s operations or is significant or material.
These policies have been consistently applied to all the years presented, unless otherwise
stated.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
16
The consolidated financial statements have been prepared using the historic cost basis with
the exception of financial assets and liabilities which are carried at fair value through the profit
or loss. The measurement bases are more fully described in the accounting policies below.
3.3. New standards, amendments and interpretations
The Group has applied the following standards for the first time for their annual reporting period
commencing 1 April 2018; NZ IFRS 9 Financial Instruments and NZ IFRS 15 Revenue from
Contracts with Customers. Impact of the adoption of these standards is covered in more detail
below, see Note 3.4.
The following standard has been published but is not yet effective, and has not been early
adopted by the Group:
NZ IFRS 16: Leases
NZ IFRS 16 Leases (Effective date: periods beginning on or after 1 January 2019) replaces the
current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. Under NZ IAS 17, a lessee was required to make a distinction
between a finance lease (on Statement of Financial Position) and an operating lease (off
Statement of Financial Position). NZ IFRS 16 requires a lessee to recognise a lease liability
reflecting future lease payments and a ‘right-of-use asset’ (ROU) for virtually all lease contracts.
Included is an optional exemption for certain short-term leases and leases of low value assets.
From the date of adoption, the Statement of Profit or Loss and Other Comprehensive Income
will also be impacted by the removal of operating lease expenses, the recognition of an interest
expense applicable to the future lease payment obligations and the recognition of a
depreciation expense in respect of the ROU asset.
NZ IFRS 16 will change the accounting for the Group’s operating leases and recognition,
measurement and presentation of certain amounts recognised in the Statement of Financial
Position and Statement of Profit or Loss and Other Comprehensive Income. As at reporting
date, the Group had non-cancellable operating lease commitments of $23.7 million (See Note
20). Upon adoption, NZ IFRS 16 will have a material impact on a number of elements of the
Group’s Statement of Financial Position and Statement of Profit or Loss and Other
Comprehensive Income. There will also be an impact to both operating and financing activities
within the Group cash flow statement, although there is no impact to the net movement on the
Group’s cash flows.
In relation to the new standard, the company is evaluating its particular lease structure within
the UK and Ireland businesses whereby the Esquires businesses normally hold store leases in
their name as the head lessee, with all the associated risks and obligations. They then enter
into sub-lease arrangements with the franchisees which mirror the risks and obligations of the
head lease agreement. All rental, OPEX and other associated property costs are passed onto
the sub-tenant so that the position in terms of cash flow is neutral apart from occasional timing
differences.
The Group will introduce a technology solution to calculate the full quantitative impact of IFRS
16 on the existing leases as at 1 April 2019, being the date of adoption, to assist in providing
calculations showing the financial impact of the new standard for future reporting periods.
Management are required to make various key judgements, including:
• Incremental borrowing rate (IBR) used to discount the ROU assets and the future lease
payment obligations;
• lease terms including any potential rights of renewals;
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
17
• foreign exchange conversion rates; and
• Application of practical expedients and recognition exemptions allowed by the new
standard, including in respect of low value assets and short-term lease exemptions.
The new standard allows a choice of transition methods. Management has determined that the
most appropriate approach for the Group is to use the modified retrospective approach method.
Using this transition method allowed the Group to retrospectively value the ROU asset on a
lease by lease basis. The impact on the Statement of Financial Position is approximately $18.7
million increase in lease liabilities, a $19.3 million increase in ROU assets, resulting in a $0.6
million adjustment to equity. The future lease liability will be significantly higher than the lease
commitments disclosed in Note 20 primarily due to management decisions regarding rights of
renewals expected to be exercised and the discount rate used on future lease payment
obligations.
The financial impact on the Statement of Profit or Loss and Other Comprehensive Income for
the year of adoption is estimated to be an approximate reduction in the operating result of
$134,000. This is made up of the following estimated differences:
• A $3.057 million decrease in operating lease rental expenses (removed);
• A $1.880 million increase in depreciation (relating to the ROU asset); and
• A $1.043 million increase in interest expense (relating to lease liability finance costs).
There will be no change applicable to the Group’s cash flows as a result of adopting the new
standard, as operating lease payments will continue to be paid as usual. However, due to
classification changes both the operating and financing activities within the cash flow statement
will be affected. The adjustments above are only for financial reporting purposes.
The estimated potential financial adjustments above are expected to be different from the result
as new leases are entered into, current lease payments are re-negotiated, expectation of
exercising rights of lease renewals change and the IBR used is updated.
3.4. Changes in accounting policies
Except as described below, the accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 March 2018.
There were two new standards applied during the year. This note explains the impact of the
adoption of NZ IFRS 9 Financial Instruments and NZ IFRS 15 Revenue from Contracts with
Customers on the Group’s financial statements and discloses the new accounting policies
that have been applied from 1 April 2018.
Impact on the financial statements
The Group has elected to adopt the new accounting standards with cumulative transition
adjustments being recognised in the opening equity balance at transaction date. As a result,
comparative information has not been impacted and has not been restated, in line with the
permitted transitional provisions.
The following tables show the adjustments recognised for adoption of the new standards.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
18
Equity reconciliation
$'000
Closing accumulated losses at 31 March 2018
(42,535)
IFRS 15: Deferral of revenue on sale of master
franchise agreements
(1,212)
Opening accumulated losses at 1 April 2018
(43,747)
NZ IFRS 9: Financial Instruments
NZ IFRS 9 Financial Instruments (NZ IFRS 9) replaces NZ IAS 39 Financial Instruments:
Recognition and Measurement. NZ IFRS 9 addresses the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial liabilities
and impairment of financial assets. The Group transitioned to NZ IFRS 9 with a date of initial
application of 1 April 2018. This resulted in changes to accounting policies and the
classification of financial instruments. No material adjustments were raised.
The new accounting policies are set out in Note 3.13. In accordance with the transitional
provisions in NZ IFRS 9, comparative figures have not been restated.
The adoption of NZ IFRS 9 has the following impact on the classification within the financial
statements. Amounts previously disclosed as loans and receivables (cash and bank
balances, trade receivables and other current assets) have been reclassified to the amortised
cost category. Refer to Note 28. No financial liabilities that are held by the Group were
impacted by the adoption of NZ IFRS 9. NZ IFRS 9 replaces the ‘incurred loss’ impairment
model in NZ IAS 39 with an ‘expected credit loss’ (ECL) model. The ECL model requires an
entity to account for the ECL and changes in those ECLs at each reporting date to reflect
changes in the credit risk since initial recognition. The Group has applied the simplified
impairment model and has recognised the lifetime ECL on its financial assets.
The transition to the standard has not had any material impact on the financial position and
financial performance in the current year, or the respective prior year comparatives.
NZ IFRS 15: Revenue from Contracts with Customers
NZ IFRS 15 Revenue from Contracts with Customers (NZ IFRS 15) replaces NZ IAS 18
Revenue. This resulted in changes to accounting policies. The new accounting policies are set
out in Note 3.9. The Group transitioned to NZ IFRS 15 with a date of initial application of 1 April
2018. The Group applied the modified retrospective approach to transition. This means that
any adjustments arising from adoption are recognized in the opening accumulated loss of the
Group at the date of adoption. Comparative amounts are not restated.
In summary, the following adjustments were made to the amounts recognised in the
accumulated losses at the date of initial application (1 April 2018):
IAS 18 carrying
amount
31 March 2018
$'000
Re-measurements
restated through
accumulated losses
$'000
IFRS 15 carrying
amount
1 April 2018
$'000
Contract liabilities
-1,2121,212
Change in timing of revenue recognition
Revenue for the sale of master and local franchises by the Group was previously recognised
when the sale of a franchise was unconditional. The new standard requires that the Group
recognizes revenue as it satisfies a performance obligation (such as training and operational
support) as identified in the contract over the course of what is normally longer than a single
accounting period. It satisfies that performance obligation by delivering the promised services
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
19
(or goods) to the franchisee over the life of the franchise agreement or the relevant timeframe
as specified in the contract. Revenue relating to franchise agreements will therefore be spread
over the period during which those performance obligations are satisfied, duly accounting for
the delivery of such service where it is not evenly spread over the contracted period of
performance.
NZ IFRS 2 (amendments): Classification and Measurement of Share-Based Payment
Transactions
The Group has also applied NZ IFRS 2 (amendments): Classification and Measurement of
Share-Based Payment Transactions for the first time for the year ended 31 March 2019. This
application did not have a material impact on the consolidated financial statements.
3.5. Basis of consolidation
The Group consolidated financial statements consolidate those of the parent company and all
its controlled entities as of 31 March 2019. The Group controls an entity if it is exposed, 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.
All transactions and balances between Group companies are eliminated on consolidation,
including unrealised gains and losses on transactions between Group companies. Where
unrealised losses on intra-group asset sales are reversed on consolidation, the underlying
asset is also tested for impairment from a Group perspective. Amounts reported in the
consolidated financial statements of controlled entities have been adjusted where necessary
to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of controlled entities acquired or disposed of
during the year are recognised from the effective date of acquisition, or up to the effective date
of disposal, as applicable.
3.6. Investments in associates
Associates are those entities over which the Group has significant influence but not control or
joint control. This is generally the case where the group holds between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity method of
accounting, after initially being recognised at cost.
Under the equity method of accounting, the investments are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of
the investee in profit or loss, and the Group’s share of movements in other comprehensive
income of the investee in other comprehensive income. Dividends received or receivable from
associates are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its
interest in the entity, including any other unsecured long-term receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the
other entity.
Unrealised gains on transactions between the Group and its associates are eliminated to the
extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity accounted investees have been changed where necessary to ensure
consistency with the policies adopted by the Group.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
20
3.7. Foreign currency translation
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective
Group entity, using the exchange rates prevailing at the dates of the transactions (spot
exchange rate). Foreign exchange gains and losses resulting from the settlement of such
transactions and from the remeasurement of monetary items at year end exchange rates are
recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost
(translated using the exchange rates at the date of the transaction).
Foreign operations
In the Group’s consolidated financial statements, all assets, liabilities and transactions of
Group entities with a functional currency other than the NZD are translated into NZD upon
consolidation. The functional currencies of the entities in the Group have remained
unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into NZD at the closing rate at the
reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity
have been treated as assets and liabilities of the foreign entity and translated into NZD at the
closing rate. Income and expenses have been translated into NZD at the average rate (the use
of average rates is appropriate only if rates do not fluctuate significantly) over the reporting
period. Exchange differences are charged/credited to other comprehensive income and
recognised in the currency translation reserve in equity. On disposal of a foreign operation the
cumulative translation differences recognised in equity are reclassified to profit or loss and
recognised as part of the gain or loss on disposal.
3.8. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the IRD. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the Statement of Financial Position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis and, except for the
GST components of investing and financing activities, are disclosed as operating cash flows.
3.9. Revenue
Revenue arises mainly from the sale of food and beverage products from our artisan style
coffee stores that the Group owns directly and from franchise and royalty arrangements that it
has in place with franchise holders.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when and as its performance obligation(s) are satisfied.
Revenue is recognised either at a point in time or over time, or when (or as) the Group
satisfies performance obligations by transferring the promised goods or services to its
customers.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
21
The transaction price for a contract excludes any amounts collected on behalf of third parties.
The Group recognises contract liabilities for consideration received in respect of unsatisfied
performance obligations and reports these amounts as other liabilities in the statement of
financial position.
Goods sold
The Group is in the business of providing artisan style coffee solutions to its customers and
franchisees. Revenue from contracts with customers is recognised when control of the goods
is transferred to the customer or franchisee at an amount that reflects the consideration to
which the Group expects to be entitled in exchange for those goods. The Group has
concluded that it is the principal in its revenue arrangements, because it controls the goods or
services before transferring them to the customer.
Management has determined the performance obligation to deliver the food & proprietary
products is completed when control of goods passes to customer, revenue is recognised at this
time.
Royalty income from Franchise or Master Franchise Agreements (MFAs)
The Group recognises royalty revenue derived from its Franchises and MFAs at a point in time,
based on sales that are reported back to Company on a monthly basis for sales that occurred
in that month. Payment is received on a monthly basis.
Franchise fees
The Group recognises revenue derived from its franchise operations on a straight-line basis
over a period of time that the franchise agreement is in place, which is generally 10 years.
This is the period of time over which the performance obligation is satisfied. Payment is
received upfront upon signing the franchise contract.
The transaction price includes a variable price consideration for the possible transfer of
franchise rights. This is unknown until and if the transaction is completed. Given the high
uncertainty of this transfer, the transaction price for franchise contract is not adjusted for these
transferred franchise rights.
Other revenue
Other revenue includes services to independent franchisees or other third parties received by
the Group. Other revenues are recognised when reliable estimates of the amounts due to the
Group are deemed to be highly probable.
Significant financing components
Using the practical expedient in NZ IFRS 15, the Group does not adjust the promised amount
of consideration for the effects of a significant financing component if it expects, at contract
inception, the period between the transfer of the promised good or service to the customer and
when the customer pays for that good or service will be one year or less.
The accounting policies prior to 1 April 2018, which relate to the comparative numbers, were
as follows.
Goods sold
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value
of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue is recognised when persuasive evidence exists, usually in the form of an executed
sales agreement, that the significant risks and rewards of ownership have been transferred to
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
22
the customer, recovery of the consideration is probable, the associated costs and possible
return of goods can be estimated reliably, there is no continuing management involvement with
the goods, and the amount of revenue can be measured reliably. If it is probable that discounts
will be granted and the amount can be measured reliably, then the discount is recognised as a
reduction of revenue as the sales are recognised.
The timings of the transfers of risk and rewards vary depending on the individual terms of the
sales agreement.
Royalty income
Royalty income, which is generally earned based upon a percentage of sales and is recognised
on an accrual basis.
Other revenue
Other revenue represents services to independent franchisees or other third parties. Services
revenue is recognised in the accounting period in which the services are rendered, by reference
to completion of the specific transaction assessed on the basis of the actual service provided
as a proportion of the total services to be provided.
3.10. Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to or claims from Tax
authorities relating to the current or prior reporting periods, that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in the consolidated
financial statements. Calculation of current tax is based on tax rates and tax laws that have
been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences
between the carrying amounts of assets and liabilities and their tax bases. However, deferred
tax is not provided on the initial recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit. Deferred tax on temporary
differences associated with investments in controlled entities is not provided if reversal of these
temporary differences can be controlled by the Group and it is probable that reversal will not
occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are
expected to apply to their respective period of realisation, provided they are enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be
utilised against future taxable income, based on the Group’s forecast of future operating results
which is adjusted for significant non-taxable income and expenses and specific limits to the use
of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to
set off current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or
expense in profit or loss, except where they relate to items that are recognised in other
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
23
comprehensive income or directly in equity, in which case the related deferred tax is also
recognised in other comprehensive income or equity, respectively.
3.11. Employment benefits
Defined contribution plans
The Group pays fixed contributions into independent entities in relation to several state plans
and insurance for individual employees. The Group has no legal or constructive obligations to
pay contributions in addition to its fixed contributions, which are recognised as an expense in
the period that relevant employee services are received.
Short-term employee benefits
Short-term employee benefits, including annual leave entitlement, are current liabilities
included in employee benefits, measured at the undiscounted amount that the Group expects
to pay as a result of the unused entitlement.
3.12. Impairment testing of other intangible assets, property, plant and equipment and
investments in associates
For impairment assessment purposes, assets are grouped at the lowest levels for which there
are largely independent cash inflows (cash-generating units). As a result, some assets are
tested individually for impairment and some are tested at cash-generating unit level. All other
individual assets or cash-generating units are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit's
carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to
sell and value-in-use. Any reversal of an impairment loss will be limited to what the carrying
amount would have been, net of depreciation or amortisation, if no impairment had taken place.
To determine the value-in-use, management estimates expected future cash flows from each
cash-generating unit and determines a suitable interest rate in order to calculate the present
value of those cash flows. The data used for impairment testing procedures are directly linked
to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors are determined individually for each
cash-generating unit and reflect management’s assessment of respective risk profiles, such as
market and asset-specific risks factors.
Impairment losses for cash-generating units is charged pro rata to the other assets in the cash-
generating unit. All assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. An impairment charge is reversed if the cash-
generating unit’s recoverable amount exceeds its carrying amount.
3.13. Financial instruments
A financial instrument is recognised when the Group becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised when the Group’s contractual
rights to the cash flows from the financial assets expire or when the Group transfers the
financial asset to another party without retaining control or substantially all risks and rewards
of the asset. Regular way purchases and sales of financial assets are accounted for at trade
date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities
are derecognised when the Group’s obligations specified in the contract expire or are
discharged or cancelled.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
24
Financial assets
On adoption of NZ IFRS 9 from 1 April 2018, the Group classifies its financial assets as those
to be measured at amortised cost (loans, receivables and non-derivative financial instruments),
and those to be measured at fair value either through OCI or through profit or loss.
Financial assets that are stated at amortised cost are reviewed individually at balance date. In
relation to the impairment of financial assets, NZ IFRS 9 requires an expected credit loss model
(‘ECL’) as opposed to an incurred credit loss model under NZ IAS 39. The expected credit loss
model requires the Group to account for expected credit losses and changes in those expected
credit losses at each reporting date to reflect changes in credit risk since initial recognition of
the financial assets i.e. a credit event does not have to have occurred before credit losses are
recognised.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade receivables and other debtors, which are
initially recognised at fair value plus transaction costs and subsequently measured at
amortised cost, cash and cash equivalents, loans and borrowings (initially recognised at
fair value plus transaction costs and subsequently measured at amortised cost), and creditors
and accruals which are initially recognised at fair value and subsequently measured at
amortised cost.
Derivative financial instruments
The Group holds derivative financial instruments to manage the exposures that arise due to
movements in foreign currency exchange rates and interest rates arising from operational,
financing and investment activities.
Interest income and expense
Interest income and expenses are reported on an accrual basis using the effective interest
method.
The accounting policies prior to 1 April 2018, which relate to the comparative numbers, were
as follows.
Financial instruments
Classification
The group classifies its financial assets as loans and receivables.
(a) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other
short-term, highly liquid investments that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. The group's loans and receivables comprise ‘trade and
other receivables’ and ‘cash and cash equivalents’ (see Note 10 and 11).
(c) Financial liabilities at fair value through profit or loss
Financial liabilities are carried in the consolidated statement of financial position at fair value
with changes in fair value recognised in the consolidated statement of profit or loss and other
comprehensive income. The Group does not have any liabilities held for trading nor has it
designated any financial liabilities as being at fair value through profit or loss. other than those
identified in Note 29.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
25
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date – the date
on which the Group commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
Loans and receivables are subsequently carried at amortised cost less impairment using the
effective interest method.
Financial liabilities are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest rate method or measured at fair value through profit
and loss.
Financial assets measured at amortised cost (loans and receivables) are assessed at each
reporting date to determine whether there is objective evidence for an impairment. Impairment
provisions are recognised when there is objective evidence (such as significant financial
difficulties on the part of the counterparty or default or significant delay in payment) that the
Group will be unable to collect all of the amounts due under the terms receivable, the amount
of such a provision being the difference between the net carrying amount and the present value
of the future expected cash flows associated with the impaired receivable.
3.14. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses
directly attributable to the manufacturing process as well as suitable portions of related
production overheads, based on normal operating capacity. Costs of ordinarily interchangeable
items are assigned using the first in, first out cost formula. Net realisable value is the estimated
selling price in the ordinary course of business less any applicable selling expenses.
3.15. Intangible assets
Recognition of intangible assets
Acquired intangible assets
Trademarks, global IP rights and rights acquired in a business combination that qualify for
separate recognition are initially recognised as intangible assets at their fair values.
Subsequent measurement
Intangible assets not of an indefinite life are accounted for using the cost model whereby
capitalised costs are amortised on a straight-line basis over their estimated useful lives, as
these assets are considered finite. Residual values and useful lives are reviewed at each
reporting date. In addition, they are subject to impairment testing as described in Note 3.12.
The following useful lives are applied:
• Trademarks: 10-20 years
• Reacquired rights: 10 - 20 years
Amortisation has been included within depreciation and amortisation.
Intangible assets (Global IP rights) of an indefinite life are tested for impairment annually by
comparing their carrying amount with their recoverable amount. An estimate of an assets
recoverable amount made in a preceding period may be used in the impairment test for that
asset in the current period provided certain criteria are met.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the
difference between the proceeds and the carrying amount of the asset and is recognised in
profit or loss within other income or other expenses.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
26
3.16. Property, plant and equipment
Property, plant and equipment (comprising fittings and furniture, plant and equipment and
motor vehicles) are initially recognised at acquisition cost or manufacturing cost, including any
costs directly attributable to bringing the assets to the location and condition necessary for them
to be capable of operating in the manner intended by the Group’s management.
Property, plant and equipment are subsequently measured using the cost model: cost less
subsequent depreciation and impairment losses.
Depreciation is recognised on a straight-line basis to write down the cost less estimated
residual value of property, plant and equipment. The following useful lives are applied:
• Computer equipment: 2-5 years
• Furniture and fittings: 3-12 years
• Plant and equipment: 3-12 years
• Motor vehicles: 5-8 years.
Material residual value estimates and estimates of useful life are updated as required, but at
least annually.
Gains or losses arising on the disposal of plant and equipment are determined as the difference
between the disposal proceeds and the carrying amount of the assets and are recognised in
profit or loss within other income or other expenses.
3.17. Operating leases
Where the Group is a lessee, payments on operating lease agreements are recognised as an
expense on a straight-line basis over the lease term. Associated costs, such as maintenance
and insurance, are expensed as incurred. Lease incentives received are recognised in the
profit or loss over the lease term as an integral part of the total lease expense.
3.18. Equity, reserves and dividend payments
Share capital represents the fair value of shares on issue that have been issued. Any
transaction costs associated with the issuing of shares are deducted from share capital, net of
any related income tax benefits.
Other components of equity include the following:
• Foreign currency translation reserve – comprises foreign currency translation differences
arising on the translation of consolidated financial statements of the Group's foreign entities
into NZD (see Note 3.6),
• Accumulated losses include all current and prior period results,
• Non-controlling interests.
Dividend distributions payable to equity shareholders are included in other liabilities when the
dividends have been approved in a general meeting prior to the reporting date.
All transactions with owners of the parent are recorded separately within equity.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
27
3.19. Significant management judgement in applying accounting policies and
estimation uncertainty
When preparing the consolidated financial statements, management undertakes a number of
judgements, estimates and assumptions about the recognition and measurement of assets,
liabilities, income and expenses as follows:
Going concern
The considered view of the Board of Directors of the Company is that, after making enquiries,
we have a reasonable expectation that Cooks Global Foods Limited (the Company) and Group
have access to adequate resources to continue operations for the foreseeable future. For this
reason, the Board of Directors considers the adoption of the going concern assumption in
preparing the consolidated financial statements for the year ended 31 March 2019 to be
appropriate. (See Note 4).
Embedded Derivatives
Where the cash flows required by a contract can be modified by financial or non-financial
variables, the Directors have assessed the fair value of the embedded derivative conversion
features of convertible notes. Estimation uncertainty relates to assumptions and judgements
used as disclosed in Note 29.
China Business
The Directors assessed the fair value at initial recognition on 1 October 2017 in accordance
with New Zealand equivalent to International Financial Reporting Standard 13 (NZ IFRS 13),
Fair Value Measurement. When determining whether fair value at initial recognition equals the
transaction price, the Directors took into account factors specific to the transaction and the
assets and liabilities including: the existence of independent, arms-length parties; neither party
under duress or force of circumstances and the transaction taking place in the most
advantageous market for the business sale. The Board has considered impairment indicators
at 31 March 2018 and 31 March 2019 and take the position that based on a review of all relevant
factors, no impairment in the carrying value of its investment in the associate is warranted at
this time. A third-party valuation expert, Censere Group Limited (Censere), based in Hong Kong
completed their valuation of Cooks 21% equity interest in the China Associate in April 2019 as
pertaining to fair value as at 31 March 2018. See Note 14.2.
Impairment testing of intangible assets
In assessing impairment, management estimates the recoverable amount of each asset or
cash-generating unit based on various valuation models as deemed appropriate. Estimation
uncertainty relates to assumptions and judgements used as disclosed in Note 15.
Carrying value of receivables
The Group performs ongoing reviews of the bad debt risk within its receivables and makes
provisions to reflect its views of the financial condition of its customers and their ability to pay
in full for amounts owing for goods provided. This determination requires significant judgement.
In making this judgement, the Group evaluates amongst other factors whether there is objective
evidence of significant financial difficulty of the customer or other party, whether there has been
breach of contract such as default in payment terms, whether it has become probable that the
customer or other party will enter into bankruptcy or other financial reorganisation, the
disappearance of an active market for that customer because of financial difficulties, and
national or local economic conditions that could impact on the customer (see Notes 11 and
27 .2).
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
28
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the
probability of the Group’s future taxable income against which the deferred tax assets can be
utilised. In addition, significant judgement is required in assessing the impact of any legal or
economic limits or uncertainties in various tax jurisdictions (See Note 9).
4. Going Concern
The Group reported a loss of $4,813,000 (2018: $3,862,000) and operating cash outflows of
$2,404,000 (2018: $1,424,000) for the year ended 31 March 2019.
As at 31 March 2019 the Group has reported net liabilities of $3,699,000 (2018 Net Assets of
$1,771,000) and current liabilities exceed current assets by an amount of $8,664,000 (2018:
$4,277,000).
The ability of the Group to pay its debts as they fall due and to realise their assets and
extinguish their liabilities in the normal course of business at the amounts stated in the
consolidated financial statements has been considered by the Directors in the adoption of the
going concern assumption during the preparation of these financial statements.
The Directors forecast that the Group can manage its cash flow requirements at levels
appropriate to meet its cash commitments for the foreseeable future being a period of 12
months from the date of authorisation of these consolidated financial statements. In reaching
this conclusion, the Directors have considered the achievability of the plans and assumptions
underlying those forecasts. The key assumptions include the:
• Group’s ability to successfully conclude present discussions with overseas funder (and
shareholder) regarding the roll-over of existing debt (NZ$1.6 million) and further debt raising
up to the total of US$1 million;
• Group’s ability to successfully conclude divestment of investment discussions in the United
Kingdom with existing and prospective Regional Franchisors to realise NZ$2 million;
• Group’s ability to maintain the repayment schedules of remaining debt in accordance with
the repayment agreements and comfort provided by related parties of Keith Jackson owed
NZ$2.6 million that they do not intend to/will not call up repayment of that debt; and
• Ability to improve the operating cash flows from continuing operations, most notably the
timing of regional franchise sales in the United Kingdom of NZ$2.2 million.
The Directors acknowledge that there are material uncertainties within the forecast
assumptions noted above. These uncertainties relate predominantly to the success and timing
of current discussions relating to existing debt, further prospective borrowings of US$1 million,
capital raising of NZ$2 million in the United Kingdom, regional franchise sales of NZ$2.2 million
in the United Kingdom, the ability of related parties of Keith Jackson to continue to provide
funding as required, and market conditions which the Group operates in.
Nevertheless, after considering the uncertainties described above the Directors have
reasonable expectation that the Group has sufficient headroom in its cash resources to allow
the Group to continue to operate for the foreseeable future or alternatively it can manage its
working capital requirements to create additional required headroom.
Any significant departure from the above assumptions may cast significant doubt over the
ability to continue as a going concern for the foreseeable future.
Whilst the Directors acknowledge that there are capital raising, credit, exchange and liquidity
risks in the global economic market in which the Group operates, they are confident that
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
29
additional capital or funding will be sourced by the Group. In particular, the Directors have
received a confirmation from related parties of Keith Jackson, that they will continue to
financially support the Group for the foreseeable future. They note the Group has a track record
of obtaining financial support from cornerstone investors and related parties and, where
necessary, negotiating the deferment of debt repayments. The Directors are also confident that
operating cash flows will continue to improve as a result of the restructuring activities that have
been undertaken, most recently in the United Kingdom, and reduce the extent of cash outflow
and improve revenue growth.
The Directors continue to consider other opportunities to further improve the Group’s cash
position which include discussing collaborations with partners overseas, negotiations with
potential strategic equity partners, investigating new facility lines, ongoing discussions in the
UK and Ireland relating to potential acquisitions, rationalising the business wherever possible
to concentrate on core business activity and greater focus on improving existing core business
activities.
After taking into account all available information, the Directors have concluded that there are
reasonable grounds to believe that the forecasts and plans are achievable, the Group will be
able to pay its debts as and when they become due and payable, there is sufficient headroom
in available cash resources, and the basis of preparation of the financial report on a going
concern basis is appropriate.
Should the Group be unable to continue as a going concern it may be required to realise its
assets and discharge its liabilities other than in the normal course of business and at amounts
different to those stated in the consolidated financial statements. The consolidated financial
statements do not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount of liabilities that might result should the Group be unable
to continue as a going concern and meets its debts as and when they fall due.
5. Revenue
The Group’s revenue is analysed as follows for each major category:
Continuing Operations Discontinued Operations
31-Mar
31-Mar
31-Mar
31-Mar
2019
2018
2019
2018
$'000
$'000
$'000
$'000
2,482
1,989
-
1,657
Sale of Kiwifruit and Asparagus produce
-
-
-
46
Sale of goods
2,482
1,989
-
1,703
Royalties
2,369
2,328
-
71
Franchise fees and other revenue
1,085
2,411
-
18
Rendering of services
3,454
4,739
-
89
Group revenue
5,936
6,728
-
1,792
Sale of Beverage product
Under the New Zealand Equivalent to International Financial Reporting Standard 15, Revenue
from Contracts with Customers, (NZ IFRS 15), the Group elected to apply this standard
retrospectively only to contracts that were not completed contracts at the date of initial
application of 1 April 2018.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
30
In the current reporting period, the application of NZ IFRS 15, has resulted in Fees and other
revenue being approximately $180,000 less than would have been reported under the previous
standards and related interpretations in effect before the change. This is the net effect of
revenue from master and regional franchise fees no longer recognised at the time of the master
or regional franchise agreement becoming unconditional but instead deferred over the term
(normally 10 years) of the franchise.
6. Employee costs
Expenses recognised for employee costs are analysed below:
Continuing Operations Discontinued Operations
31-Mar
31-Mar
31-Mar
31-Mar
2019
2018
2019
2018
$'000
$'000
$'000
$'000
Wages, salaries3,005
2,663
-
1,087
Defined contribution funds50
22
-
-
Other staff costs30
333
-
1
3,085
3,018
-
1,088
7. Other expenses
Expenses recognised as other costs are analysed below:
Continuing Operations Discontinued Operations
31-Mar
31-Mar
31-Mar
31-Mar
2019
2018
2019
2018
$'000
$'000
$'000
$'000
Administration and other costs 1,240
695
-
321
Directors fees (Note 23)
82
82
-
-
Selling and distribution costs
38
301
-
38
Management fees180
180
-
(9)
Marketing costs
869
652
-
2
Share-based payment expense
575
339
-
-
Professional and consulting services
833
828
-
26
Travel costs
402
428
-
14
4,219
3,505
-
392
8. Finance costs
Finance costs for the reporting periods consist of the following:
Continuing Operations Discontinued Operations
31-Mar31-Mar31-Mar31-Mar
2019201820192018
$'000$'000$'000$'000
Finance charges1951-1
Interest on bank and other borrowings734398-7
753449-8
Finance costs relate to liabilities at amortised cost. There were no fixed interest rate contracts
outstanding at reporting date (2018: nil).
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
31
9. Income Tax and Deferred Tax
The major components of tax expense and the reconciliation of the expected tax expense
based on the domestic effective tax rate of Cooks Global Foods Limited at 28% and the
reported tax expense in profit or loss are as follows:
31-Mar31-Mar
20192018
$'000$'000
Loss before tax from continuing operations(4,809)(1,619)
Loss before tax from discontinuing operations-(2,242)
(4,809)(3,861)
Domestic tax rate for Cooks Global Foods Limited28%28%
Expected tax expense(1,346)(1,081)
Adjustment for tax-rate differences in foreign
jurisdictions
13962
Adjustment for non-deductible expenses:
Relating to amortisation of intangible assets
2531
Other non-deductible expenses278148
Actual tax expense (income)(904)(840)
Tax expense comprises:
Current tax expense (income)
(904)(840)
Deferred tax expense (income):
- Origination and reversal of temporary differences
15(117)
- Tax Losses not recognised885956
- Utilisation of unused Tax Losses--
Income tax expense(4)(1)
Income tax expense is attributable to:
Loss from continuing operations
(4)-
Loss from discontinued operations-(1)
(4)(1)
The Group has computed tax losses within each jurisdiction since acquisition as follows:
31-Mar31-Mar
20192018
$'000$'000
New Zealand
6,8194,738
United Kingdom
6,7955,444
Ireland9491,068
Canada160145
Australia295283
15,01811,678
Available New Zealand imputation tax credits are $3 (2018: $1,500).
At 31 March 2019, the Group has deferred liabilities relating to reacquired rights in the UK and
Ireland amounting to $655,000 (2018: $743,000) and are offset by deferred tax losses. The
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
32
majority of the deferred tax assets and liabilities are not expected to crystallise within the next
12 months.
10. Cash and cash equivalents
Cash and cash equivalents consist of the following:
31-Mar
31-Mar
2019
2018
$'000
$'000
Cash at bank and in hand:
NZD
53
26
AUD1
7
EUR143
176
GBP242
465
USD11
40
Cash and cash equivalents
450
714
Bank overdraft NZD (Current Liability)(148)
(1,180)
Net Cash and cash equivalents
302
(466)
There are no restrictions on the cash and cash equivalents.
The Group had overdraft banking facilities of $148,000 (2018: $1,180,000). This is secured by
way of a General Security Agreement over the Group assets. For the year ended 31 March
2019, there were no financial covenants with respect to the Group banking facilities. Details of
the two facilities are noted below.
The overdraft facility limit was $48,000 (2018: $425,000). Interest is payable at a variable rate
based on the ANZ Business Bank Indicator Rate (BBIR), interest rate payable at 31 March
2019 was 11.85% (2018: 11.85%). This facility was repaid in full on 1 April 2019.
The commercial flexi overdraft facility limit was $100,000 (2018: $775,000). Interest is payable
at a variable rate based on the ANZ Business Bank Indicator Rate (BBIR), interest rate payable
at 31 March 2018 was 9.95% (2018: 9.83%). This facility was repaid in full on 1 April 2019.
11. Trade and other receivables and other current assets
Trade and other receivables are initially recognised at the fair value of the amounts to be
received, plus transaction costs (if any).
The Group has recognised expected credit losses in the Statement of Profit or Loss and Other
Comprehensive Income by applying the simplified impairment approach, whereby upon initial
measurement of the trade receivables, the Group considers all credit losses that are expected
to occur during the lifetime of the receivable. The Group has reviewed the historical ageing
analysis of gross trade receivables and considered forward looking macro-economic factors,
by geographic region, to determine the expected credit loss rate. This rate is applied to
outstanding gross trade receivables as at 31 March 2019 to calculate the allowance for
expected credit losses.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
33
(a) Trade and other receivables consist of the following:
31-Mar
31-Mar
2019
2018
$'000
$'000
Trade and other receivables
Trade receivables613
1,618
Less: provision for impairment of trade receivables(317)
(160)
296
1,458
Cooks Investment Holdings Limited receivable (Note 23)-
1,302
Net trade and other receivables
296
2,760
As at 31 March the ageing of trade receivables is as follows:
31-Mar
31-Mar
2019
2018
$'000
$'000
Current254
1,042
31 to 60 days148
115
61 to 90 days164
52
> 90 days47
409
Total
613
1,618
(b) Other current assets consist of the following:
Other current assets
Prepayments373
233
Other short-term assets388
383
Other current assets
761
616
12. Inventories
31-Mar
31-Mar
2019
2018
$'000
$'000
Raw materials and consumables31
33
Finished goods188
121
Total inventories
219
154
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
34
13. Assets and liabilities classified as held-for-sale and discontinued operation
The following investment was reclassified as held-for-sale, by the Directors, during the year
ended 31 March 2017, as the Directors had engaged in selling the operating segment as it was
either no longer seen to be core to the business operations or being reorganised to better
capitalise the opportunity in the particular market.
13.1. China operation
The Group reclassified its China business as a discontinued operation for the year ended 31
March 2017 after the decision was made to sell a majority share of the business.
At 31 March 2018, the restructure of the China business was substantially complete. A review
of control with respect to that separate business unit under New Zealand International Financial
Reporting Standard 10 (NZ IFRS 10: Consolidated Financial Statements), determined that loss
of control of the business effectively occurred on 1 October 2017.
As a result, the Group treated the trading results for the China operation for the six months to
30 September 2017 as discontinued operations in its Consolidated Statement of Profit or Loss
and Other Comprehensive Income. From 1 October 2017, it recognised its investment in the
new China entity as an Associate in which it held a 21% share and equity accounted from that
point in time. Refer Note 14.2 Interest in Associate.
The prior period financial performance and cash flow information presented are for the six
months ended 30 September 2017.
30-Sep
2017
$'000
Results of discontinued operation
Revenue
1,746
Other income
270
Cost of inventories sold
(804)
Depreciation and amortisation
-
Impairment of goodwill
-
Other expenses(2,429)
Operating loss(1,217)
Finance costs
(8)
Loss before income tax
(1,225)
Income tax expense (1)
Loss on derecognition of subsidiary after income tax(1,086)
Loss for the year from discontinued operation(2,312)
Loss attributable to:
- Shareholders of the parent
(2,189)
- Non-controlling interests
(123)
Cash flows used in discontinued operation
Net cash from operating activities(618)
Net cash used in investing activities-
Net cash used in financing activities-
Net cash flows for the year(618)
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
35
30-Sep
2017
$'000
Details of the de-recognition of subsidiary
Consideration received or receivable:
Investment in associate
3,366
Total disposal consideration
3,366
Carrying amount of net assets de-recognised
(4,036)
Non-controlling interests de-recognised
Loss on de-recognition of subsidiary before income tax
(670)
Income tax expense
-
Loss on de-recognition of subsidiary after income tax
(670)
Other comprehensive income
Exchange differences on translation of discontinued
operations
(416)
Loss on de-recognition of subsidiary after income tax
(1,086)
Carrying amounts of assets and liabilities as at 30 September 2017 (date of sale) were:
30-Sep
2017
$'000
Effect on the financial position of the Group
Inventories
587
Trade and other receivables
384
Other short-term assets
3,024
Cash and cash equivalents
192
Goodwill
673
Intangible asset - reacquired rights
1,391
Trademarks and Intellectual Property
193
Property, plant and equipment
570
Total assets
7,014
Trade and other payables
(2,641)
Current tax liabilities
(53)
Other liabilities
(284)
Total liabilities
(2,978)
Net assets de-recognised
4,036
13.2. Summary of discontinued operations
Progressive
Processors
China
Operation
Total
$'000$'000$'000
Assets classified as held for sale
---
Liabilities classified as held for sale---
Net profit/(loss) from discontinued operations69(2,312)(2,243)
31 March 2018
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
36
14. Interests in other entities
14.1. Interests in subsidiaries and other holdings
CountryPrincipal activity
20192018
Scarborough Fair Foods Pty LimitedAustralia100100Beverage Products
Esquires Coffee Canada LimitedCanada100100Food and beverage
Esquires Coffee International IncCanada100100IP Holding Company
CGF Franchise Development (Canada) LimitedCanada100100Master Franchisor
Shanghai Niuxin Management Company LimitedChina100100Holding Company
Shanghai Yinshi Food and Beverage Management
Company Limited
China
21
100Food and beverage
Bishops Café LimitedEngland100100Food and beverage
Esquires Coffee UK LimitedEngland100100Food and beverage
Esquires Franchising (UK) LimitedEngland100100Holding Company
Esquires HQ (UK) LimitedEngland100100Holding Company
Esquires Real Estate (UK) LimitedEngland100100Store Lease Holding
Cooks Coffee Café Limited Ireland100100Store Lease Holding
Cooks Coffee Houses Ireland LimitedIreland100100Store Lease Holding
Cooks Coffee Houses LimitedIreland100100Store Lease Holding
Cooks Coffee Ireland LimitedIreland100100Store Lease Holding
Cooks Food & Beverages LtdIreland100100Name protection
Cooks Franchise Ireland LimitedIreland100100Name protection
ECH Franchise Development (Europe) LimitedIreland100100Master Franchisor
ECH Franchise Development (Romania) LimitedIreland100100Holding Company
Esquires Coffee Houses Ireland LimitedIreland100100Food and beverage
CGF Employee Share Trust LimitedNZ100100Nominee Services
Cooks Supply Group LimitedNZ100100Holding Company
Crux Products LimitedNZ5050Export
Esquires Asia LimitedNZ100100Name protection
Esquires Bahrain LimitedNZ100100Master Licence Agreement
Esquires Canada IP LimitedNZ100100IP Holding Company
Esquires China LimitedNZ100100Holding Company
Esquires Coffee China LimitedNZ100100IP Holding Company
Esquires Coffee India LimitedNZ100100Holding Company
Esquires Coffee Malaysia IP Holdings LimitedNZ100100IP Holding Company
Esquires Coffee Supply LimitedNZ100100Name protection
Esquires Egypt Limited NZ100100Name protection
Esquires EP and Bahrain LimitedNZ100100Name protection
Esquires Fiji Limited NZ100100Master Licence Agreement
Esquires Global IP Holdings LimitedNZ100100IP Holding Company
Esquires India Limited NZ100100Master Licence Agreement
Esquires Indonesia LimitedNZ100100Name protection
Esquires Iraq IP Holdings Limited NZ100100IP Holding Company
Esquires Jordan LimitedNZ100100Master Licence Agreement
Esquires Kuwait LimitedNZ100100Master Licence Agreement
Esquires Malaysia LimitedNZ100100Master Licence Agreement
Esquires Middle East & Africa IP Holdings Limited NZ100100IP Holding Company
Esquires Northern Cyprus LimitedNZ100100IP Holding Company
Esquires NZ Franchise Holdings LimitedNZ100100Name protection
Esquires Office LimitedNZ100100Office Lease Holding
Esquires Oman Limited NZ100100Master Licence Agreement
Esquires Pakistan LimitedNZ100100Master Licence Agreement
Esquires Port Denarau Marina LimitedNZ100100Name protection
Esquires Portugal LimitedNZ100100Master Licence Agreement
Esquires Qatar LimitedNZ100100Master Licence Agreement
Esquires Saudi Arabia Limited NZ100100Master Licence Agreement
Esquires Turkey LimitedNZ100100Master Licence Agreement
Esquires U.A.E. Limited NZ100100Master Licence Agreement
Esquires UK 1 LimitedNZ100100Master Licence Agreement
Franchise Development LimitedNZ100100Master Franchisor
Franchise Holdings NZ LimitedNZ100100Holding Company
Franchise Management NZ LtdNZ100100Name protection
LSD Global LimitedNZ100100IP Holding Company
Cooks Supply No 2 LimitedNZ100100Fresh Produce
Scarborough Fair LimitedNZ100100Beverage Products
CGF Franchise Development (US) LimitedUSA100100Master Franchisor
% Holding
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
37
14.2. Interest in associate
Set out below, the associate of the Group as at 31 March 2019 which, in the opinion of the
directors, is material to the Group. The entity below has share capital consisting solely of
ordinary shares, which are held directly by the Group. The country of incorporation or
registration is also it’s principle place of business.
Name of entity
Place of
business/country
of incorporation
Nature of
relationship
Measurement
method
2019
2018
2019
2018
%
%
$'000
$'000
Shanghai Yinshi Food
and Beverage
Management Company
Limited
China
21.00% 100.00%
Associate
Equity method
2,688
3,087
% of ownership
interest
Carrying amount
The Board of Directors made the decision more than two years ago to restructure the China
business of Beijing Esquires Management Co Ltd (BEML) and progress formal agreements
involving the introduction of a new local partner to add investment capital to a new company,
Shanghai Yinshi Food and Beverage Management Company Limited (China Associate), and take
a majority share in this company. BEML would become a 100% subsidiary of China Associate.
It was the judgment of the Directors that the Group lost control of BEML with effect from 1 October
2017 and that it was appropriate to no longer treat the entity as a subsidiary but as an associate in
which it has a minority stake and equity account for it from the effective date that control was lost.
While at the time non-binding term sheets had been signed and the restructure of the business
significantly advanced, a formal shareholders agreement and all structural formalities had still to
be completed. These have since all been duly executed with no significant changes from the terms
of the earlier non-binding documents.
When recognising the value of the Group’s investment in its former subsidiary at 1 October 2017,
the Board of Directors assessed its fair value in relation to the new investment of 46.7 million Yuan
by the new Chinese partner(s) into the business and the Group’s proportionate share in the
deemed total value of the business relating to this significant capital injection.
The Directors assessed the fair value at initial recognition on 1 October 2017 in accordance with
New Zealand equivalent to International Financial Reporting Standard 13 (NZ IFRS 13), Fair Value
Measurement. When determining whether fair value at initial recognition equals the transaction
price, the Directors took into account factors specific to the transaction and the assets and liabilities
including: the existence of independent, arms-length parties; neither party under duress or force of
circumstances and the transaction taking place in the most advantageous market for the business
sale.
The Directors also had recourse to estimates, averages and computational short cuts to provide
reasonable approximations of the detailed computations illustrated in New Zealand Equivalent to
International Accounting Standard 36 (NZ IAS 36), Impairment of Assets, to assess the
reasonableness of fair value at initial recognition.
At the end of the financial year 31 March 2018, in accordance with NZ IAS 36, the Directors made
an assessment as to whether there was any indication that the investment in the China Associate
may be impaired. They determined that no such impairment was indicated based on:
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
38
• The entity was undergoing restructuring and there was a reduction in forecast monthly
losses;
• Coffee store businesses were being consolidated and upgraded, and the brand refreshed;
• New related business streams, most notably with respect to coffee machines, were being
investigated to build on the brand and flag ship store experience;
• Cooks representative attending board meetings for the China Associate;
• Cooks continuing to have access to financial reporting and operational data;
• There being a mechanism for Cooks (if it chooses) to protect against further dilution of its
investment in terms of the subscription rights.
After discussions with the Financial Markets Authority the Directors commissioned a third-party
valuation of the carrying value of the China Associate in the financial statements at 31 March 2018
to corroborate their initial assessment. The valuation was also to give assurance that the initial
holding value for the China Associate adequately reflected any control premium that should be
considered with respect to the Chinese partner’s acquisition of the majority share of the China
Associate.
A third-party valuation expert, Censere Group Limited (Censere), based in Hong Kong completed
their valuation of Cooks 21% equity interest in the China Associate in April 2019 as pertaining to
fair value as at 31 March 2018.
The valuation was undertaken on a fair value basis, defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. Censere applied the income approach using discounted cash flow as their
valuation method.
Key assumptions in their report included:
• Management being solely responsible for the contents, estimations and assumptions in the
financial projections. China Associate management provided these to Cooks, which then
arranged translation from Chinese to English before forwarding the information to Censere.
• In relation to the financial projections, that the China Associate will continue to operate as
a going concern with sufficient liquidity; its sales, costs and net profits will continue to grow
in accordance with the projections; it will have sufficient operational resources to support
the projected turnover and profitability; and it will continue to maintain its cost structure in
accordance with the projections.
Any deviation from these assumptions, key inputs and the other normal valuation assumptions,
(such as pertaining to material changes in inflation, interest rates, exchange rates, existing political,
legal or regulatory, fiscal, market or economic conditions), may significantly impact the valuation
results.
Key inputs relating to the valuation model included:
• WACC (discount rate) in the range 19%-21%;
• Minority discount 25%;
• Risk Free rate (China) 3.8%;
• Equity market risk premium for China 5.89%;
• Additional risk premium (Epsilon) 16%-18%;
• Beta risk coefficient 0.63;
• Effective pre-tax costs of debt 4.9%.
Censere valued the 21% equity interest in the China Associate in the range of NZD$5.6 million to
NZD$6.8 million, with a mid-point of $6.2 million.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
39
At the end of the financial year 31 March 2019, in accordance with NZ IAS 36, the Directors
made an assessment as to whether there was any indication that the investment in the China
Associate may be impaired. They determined that no such impairment was indicated based on
no observable indications of a decline in the asset’s value nor significant changes having
occurred which could have an adverse effect on that value. In particular:
• The China business was proceeding to forecast;
• The business is continuing to reduce losses relating to coffee stores with focus on core flag
ship stores with steady development of single store franchise model;
• Coffee machine business is growing to plan;
• Most recent Board meeting in July attended by Cooks representative.
The table below provides summarised financial information for the associate that is material to
the Group. The information disclosed reflects the substance of the financial position of the
associate and not Cooks’ share of those amounts. They have been amended to reflect
adjustments made by the Group when using the equity method.
31-Mar31-Mar
20192018
Summarised statement of comprehensive income$'000$'000
Revenue
1,968
1,225
Loss from continuing operations
(1,904)
(2,554)
Other comprehensive income
-
-
Total comprehensive income
(1,904)
(2,554)
Dividends received from associates
-
-
Shanghai Yinshi Food and Beverage Management
Company Limited
31-Mar31-Mar
20192018
Summarised statement of financial position$'000$'000
Total current assets
1,946
3,528
Non-current assets
1,519
2,781
Total current liabilities
(2,653)
(1,787)
Non-current liabilities
(9)
(1,815)
Net assets
803
2,707
Reconciliation to carrying amounts
Opening net assets 1 April 2018 (2018: 1 October 2017)
1,482
4,036
(1,904)
(2,554)
Other comprehensive income
-
-
Closing net assets
(422)
1,482
Investment in associate at cost
3,366
3,366
Aggregate amount of the groups share of net loss
(678)
(279)
Carrying amount of investment in associate
2,688
3,087
2,520
2,520
Loss for the year (2018: period 1 October 2017 to 31
March 2018)
Included in the carrying amount of the investment is
goodwill arising at acquisition of:
Shanghai Yinshi Food and Beverage Management
Company Limited
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
40
15. Intangible Assets
The Group acquired trademarks, global IP rights and rights through business acquisitions.
Trademarks
Global IP
Rights
Re-
acquired
Rights
Total
$'000
$'000
$'000
$'000
Cost
Balance at 1 April 2017
62
1,481
1,762
3,305
Additions
24
-
-
24
Balance at 31 March 2018
86
1,481
1,762
3,329
Balance at 1 April 201886
1,481
1,762
3,329
Balance at 31 March 2019
86
1,481
1,762
3,329
Accumulated amortisation
Balance at 1 April 2017
(12)
-
(258)
(270)
Amortisation charge for the year
(23)
-
(88)
(111)
Transfer to assets held-for-sale
-
-
-
-
Balance at 31 March 2018
(35)
-
(346)
(381)
Balance at 1 April 2018(35)
-
(346)
(381)
Amortisation charge for the year
(18)
-
(88)
(106)
Balance at 31 March 2019
(53)
-
(434)
(487)
Carrying amounts
At 1 April 2017
50
1,481
1,504
3,035
At 31 March 2018
51
1,481
1,416
2,948
At 31 March 2019
33
1,481
1,328
2,842
Management assessed the recoverable amounts of the Group’s Global IP Rights and
Reacquired Rights assets using fair value less costs to sell and ‘value in use’ calculations to
assess for any impairment.
For Esquires Global Intellectual Property Rights, data from comparable recent franchise chain
sales, converted to a per store average value, were used as a measure of assessing the
recoverable value for the intellectual property rights carried by the Group. Based on this work
the recoverable amount for intellectual property was assessed by management to be above its
existing carrying value with no impairment required. This fair value measurement is categorised
as Level 2 within the fair value hierarchy outlined in the Fair Value Measurement standard, NZ
IFRS 13.
Reacquired Rights were tested for impairment using discounted cash flow projections based
on management approved forecasts for a maximum 10-year period matching the term of
existing franchise agreements. Key assumptions in the models were: annual growth in total
network sales of up to 21% (2018: 25%); exchange rates of 0.60 (2018:0.61) (NZD/EURO) and
0.52 (2018: 0.54) (NZD/GBP); and a discount rate of up to 20% (2018: 20%) per annum. Based
on this work the recoverable amount for reacquired rights was assessed by management to be
above its existing carrying value with no impairment required.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
41
16. Property, plant and equipment
Furniture &
Fittings
Plant &
Equipment
Computer
Equipment
Motor
Vehicles
Work in
progress
Total
$'000
$'000
$'000
$'000
$'000
$'000
Cost
Balance at 1 April 2017
72
248
203
-
75
598
Additions
196
17
93
4
-
310
Disposals
-
-
(3)
-
(75)
(78)
Balance at 31 March 2018
268
265
293
4
-
830
Balance at 1 April 2018268
265
293
4
-
830
Additions-
581
13
-
-
594
Disposals
(7)
(1)
-
-
-
(8)
Balance at 31 March 2019
261
845
306
4
-
1,416
Accumulated depreciation
Balance at 1 April 2017
(36)
(162)
(140)
-
(4)
(342)
Depreciation
(75)
(11)
(47)
-
-
(133)
Disposals
-
-
-
-
4
4
Balance at 31 March 2018
(111)
(173)
(187)
-
-
(471)
Balance at 1 April 2018(111)
(173)
(187)
-
-
(471)
Depreciation
(100)
(11)
(47)
-
-
(158)
Balance at 31 March 2019
(211)
(184)
(234)
-
-
(629)
Carrying amounts
At 1 April 2017
36
86
63
-
71
256
At 31 March 2018
157
92
106
4
-
359
At 31 March 2019
50
661
72
4
-
787
Leased assets
Computers and software include the following amounts where the Group is a lessee under a
finance lease (refer to Note 20 for further details):
31-Mar
31-Mar
2019
2018
$'000
$'000
Leased equipment
Cost
55
50
Accumulated depreciation
(46)
(40)
Net carrying amount9
10
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
42
17. Trade and other payables
Trade and other payables recognised are all short-term and consist of the following:
31-Mar
31-Mar
2019
2018
$'000
$'000
Current
- Trade payables
2,658
2,436
- Other payables1,907
2,168
4,565
4,604
The carrying value of trade and other payables classified as financial liabilities
measured at amortised cost approximates fair value. Refer to Note 27 on foreign
currency risk
18. Borrowings and other liabilities
Current Non-Current
Current Non-Current
2019
2019
2018
2018
$'000
$'000
$'000
$'000
Convertible loan (a), comprising
- Host Debt
1,212
-
-
-
- Embedded Derivative538
Finance Loans (b) 1,121
221
982
361
Related Party Loans (c)2,621
-
1,725
-
Hire Purchase-
-
8
-
CVA Creditors (UK) (d)22
-
22
-
5,514
221
2,737
361
(a) A convertible loan agreement was entered into with CGF Cooks Global L.P. (SPV) on 4
July 2018, where the SPV will advance monies to Cooks Global Foods Limited (Cooks).
The first advance of USD$500,000 was received on 30 October 2018, with each
subsequent advance under the facility agreement to be at least USD$100,000 and the
principal amount of the loan is not to exceed USD$1,500,000. Each advance is for a period
of 12 months from the date of receipt. At 31 March 2019, USD$1,030,000 has been
advanced under this loan agreement. Interest accrues daily on the principal amount due at
18% per annum and is payable either on the maturity date of each advance or quarterly
after receipt of the relevant advance.
The SPV may elect that all or part of an advance be repaid in full or to convert all or part of
an advance into ordinary shares at (i) the issue price per share under any capital raising
transaction which raises at least $2 million for Cooks or (ii) at an amount equal to 85% of
the volume weighted average price of shares in Cooks on the NZX over the 50 Business
Day period commencing on: (a) Cooks receiving 30 days’ notice to convert all or part of
the advance into Shares or (b) if no notice has been received with regards the election of
conversion or repayment of an advance, the relevant advance will convert into shares.
The convertible loan has been assessed as a hybrid contract containing a host financial
liability and embedded derivative liabilities which could cause cash flows required by the
contract to be modified by financial or non-financial variables. In this case, foreign exchange
and share option variables. As such, the convertible loan has been disclosed in its separate
components in accordance with the Financial Instruments reporting standard (NZ IFRS 9).
(b) Finance loans represent advances from various lenders. Interest rates payable on the loans
vary from 9% to 15% (2018: 9% to 13%). Finance loans include a redeemable convertible
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
43
note of $250,000, that expires on 9 December 2019. Interest is payable quarterly at 9%
(2018: 9%). On maturity this note can be redeemed in cash or converted to ordinary shares.
(c) Related party loans represent the Nikau Trust at 31 March 2019 and 31 March 2018.
Interest on the loan varies from 8.25% to 10% (2018: 8.25% to 10%) and is payable
monthly. The loans are payable on demand.
(d) Prior to the acquisition of Esquires Coffee (UK) Limited the business entered into company
voluntary arrangement (CVA). As a result, the business has an obligation to repay the
creditors that existed at the date it entered into CVA over a period of five years. The CVA
formally ended in 2018 and this is a remaining residual balance to be cleared.
Summary of cash and non-cash changes to borrowings and other liabilities, as per the
movements in the Consolidated Statement of Cash Flows:
Financing
activities
Investing
activities
Operating
activities
Conversion
to Shares
Foreign
exchange
movements
Fair
value
changes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Short-term borrowings and other
liabilities
2,737
3,259
-
-
(998)
(10)
526
5,514
Long-term borrowings and other
liabilities
361
-
-
-
-
-
(140)
221
Bank overdraft
1,180
(1,032)
-
-
-
-
-
148
Total movement
4,278
2,227
-
-
(998)
(10)
386
5,883
Movements on Consolidated
Statement of Cash Flows
Proceeds from borrowings3,259
Repayment of borrowings(1,032)
2,227
Cash flows included in:Non-cash changes:
31 Mar
2018
Net
Debt
31 Mar
2019
Net
Debt
31-Mar31-Mar
20192018
$'000$'000
Currency borrowings are denominated in:
NZD
3,9633,076
GBP
2222
USD
1,750-
5,7353,098
31-Mar31-Mar
20192018
$'000$'000
Interest rates payable
Convertible loans
18.00%N/A
Related party loans
10.00%10.00%
Financing loans
9% to 18%9% to 13%
Hire purchase1% to 10%1% to 10%
Hire purchase borrowings are secured over the underlying assets financed, all other borrowings
are unsecured. The Group has no available undrawn facilities. At year end there were no
lending covenants in place.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
44
All facilities expiring within one year are subject to a review by the lenders. Refer Note 4.
Fair value
The fair value of current borrowings approximates to the fair value and the impact of discounting
is not significant.
19. Equity
19.1. Share Capital
The share capital of Cooks Global Foods Limited consists of issued ordinary shares, each
share representing one vote at the company’s shareholder meetings. All shares are equally
eligible to receive dividends and the repayment of capital.
Movements of share capital31-Mar-1931-Mar-18
Number of Shares issued:No. of Shares No. of Shares
Ordinary shares opening balance489,509,248416,595,863
Ordinary shares issued-73,022,583
Ordinary shares bought back on-market and cancelled-(109,198)
Total ordinary shares authorised at 31 March489,509,248489,509,248
Movements of share capital31-Mar-1931-Mar-18
Value of Shares issued:$'000$'000
Ordinary shares opening balance42,68737,875
Ordinary shares issued less share issue expenses-4,650
Ordinary shares bought back on-market and cancelled-(8)
Ordinary shares to be issued(170)170
Total ordinary shares authorised at period end42,51742,687
At 31 March 2019, there was no ordinary share capital unpaid (2018: $1,301,773).
During the year ended 31 March 2019, the company issued no new shares (2018: 73,022,583)
and no shares were cancelled (2018: 109,198).
During the year ended 31 March 2018, the company purchased and cancelled 109,198 ordinary
shares on-market in order to reduce the company’s holders of small share parcels. The buy-
back and cancellation was approved by shareholders at last year’s annual shareholders
meeting. The shares were acquired at an average price of $0.0707 per share, with prices
ranging from $0.060 to $0.076. The total cost of $7,724 was deducted from share capital.
19.2. Loss per share
The calculation of basic loss per share for the year ended 31 March 2019 was based on the
weighted average number of ordinary shares on issue. The calculation of diluted earnings per
share for the year ended 31 March 2019 was based on the weighted average number of
ordinary shares.
31-Mar-1931-Mar-18
Weighted average ordinary shares issued489,509,248470,790,428
Basic and diluted loss per share (New Zealand
Cents) from continuing and discontinued
operations:
(0.98)
(0.79)
Basic and diluted loss per share (New Zealand
Cents) from continuing operations:
(0.98)
(0.27)
Net tangible assets per share (New Zealand Cents)
(1.34)
(0.34)
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
45
19.3. Share based payment reserve & prior period adjustment
The earn-out relating to the acquisition of the Irish business (Esquires Coffee Houses Ireland)
in 2013, has been reclassified this year as Equity and the appropriate prior year adjustments
made to record the earn-out estimate as Equity rather than a Non-Current Liability.
This is a correction of the treatment of the transaction arising from a review of the reporting
requirement of Share-based Payments in accordance with the NZ IFRS 2 accounting
standard. The original recognition was reviewed during the year and it was determined that
the earn-out was an equity settled share-based payment arrangement as the earn out payment
is settled by the issue of shares in Cooks. The standard requires equity settled share-based
payments to be recorded as equity. Accordingly, the error is a reclassification from non-current
liability to equity.
The conditions of key terms of the earn-out payment as specified in the 2013 Sale and
Purchase Agreement for the Irish business were:
• Calculation of the Earn-Out to be four times the Earnings Before Income Tax (EBIT)
for the Irish franchise business either for the average of the three financial years prior
to the earn-out payment date or the financial year immediately prior to the earn-out
payment date;
• The earn-out payment date could be triggered by formal notification from the vendor
any time up to October 2020;
• The earn-out payment was contingent on the principal owner and operator of the Irish
business remaining as an employee within the business after the acquisition date.
• The earn-out payment will be settled by the issue of Cooks shares.
The Group has presumed that the services to be rendered by the employee as consideration
for the shares will be received in the future over the estimated expected vesting period of 78
months based on the most likely outcome of the performance condition associated with
increasing the EBIT for the business.
As required by IFRS 2, the Group has been recognising an amount for the earn-out during the
78 month vesting period based on the best available estimate of the final earn-out number and
revising this estimate where necessary annually where the latest estimate has varied
materially from previous ones.
Movement in Share based payment reserve
31-Mar 31-Mar
2019 2018
$000's $000's
Esquires Coffee Ireland Limited share-based payment
Opening balance
1,588 1,249
Amount expensed during current vesting period
369 253
Adjustment based on best available estimate
206 86
Closing balance
2,163 1,588
As a result of the change in treatment, annual movement in the amount provided for the earn-
out is now also included in Other Comprehensive Income.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
46
20. Leases
20.1. Operating leases as Head Lessee
The Group leases an office and production building in New Zealand under an operating lease.
In the United Kingdom and Ireland, the Group leases an office and is the head lessee on
operating leases relating to both owned and franchised stores.
The future minimum lease payments are as follows:
Within 1 year
1 to 5 years
After 5 years
Total
$’000
$’000
$’000
$’000
31 March 2019
3,057
10,096
10,582
23,734
31 March 20182,901
9,574
11,616
24,091
Minimum lease payments due
The nominal lease payments are considered a reasonable approximation of present value.
Lease expense for the Group (excluding payments made on leases that are sub leased to
franchisees and paid by the franchisees) during the period amounted to $199,000 (2018:
$295,000) representing the minimum lease payments.
The rental contracts have non-cancellable terms ranging from 5 months up to 19 years.
20.2. Operating leases with Sub Lessees
In the United Kingdom and Ireland, the Group holds the head lease over the rental properties
of many its franchisees. The franchisees hold a sub-lease, are guarantors to the agreement
and pay the monthly rental costs associated with the property.
The future minimum lease payments and income receivable relating exclusively to these sub
leases (and included in the numbers in the note above) are as follows:
Within 1 year
1 to 5 years
After 5 years
Total
$’000
$’000
$’000
$’000
31 March 2019
2,446
8,418
9,059
19,923
31 March 2018
2,626
8,870
10,560
22,056
Within 1 year
1 to 5 years
After 5 years
Total
$’000
$’000
$’000
$’000
31 March 2019
2,446
8,418
9,059
19,923
31 March 2018
2,626
8,870
10,560
22,056
Minimum lease payments due
Minimum lease income due
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
47
21. Fees paid to auditor
The Auditor of the Group is BDO Auckland.
31-Mar
31-Mar
2019
2018
$'000
$'000
Audit of financial statements
- Statutory Audit120
111
- Overseas network firms28
63
Total fees paid to auditor
148
174
22. Reconciliation of cash flows from operating activities
31-Mar
31-Mar
2019
2018
$'000
$'000
Loss after tax
(4,813)
(3,862)
Add non-cash items:
Depreciation and amortisation264
495
Share of losses of associate399
279
Losses from discontinued operations-
609
Add/(Less) movements in assets/liabilities:
Inventories65
73
Trade and other receivables1,162
(251)
Other short-term assets(145)
(93)
Trade and other payables(39)
1,672
Other liabilities540
(346)
Contract liabilities163
-
Net cash flow applied to operating activities
(2,404)
(1,424)
23. Related party transactions
The Group’s related parties include the directors and senior management personnel of the
Group and any associated parties as described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and
no guarantees were given or received.
Keith Jackson is a director of Cooks Investment Holdings Limited, Dairyland Products Limited,
Jackson & Associates Limited and Tasman Capital Limited, Weihai Station Limited and a
trustee of Nikau Trust.
Andrew Kerslake is a director of ADG Investments Limited and HMFIC Investments Limited.
Mike Hutcheson is a director of Image Centre Limited and Lighthouse Ventures Holdings
Limited.
Peihuan Wang is a director of Jiajiayue Holding Group Limited and Weihai Station Limited.
Tony McVerry is a director of Esquires Coffee Houses Ireland Limited.
Craig Brown is a director of most of the Group’s subsidiary companies.
Doug Williamson is a director of several the Group’s UK subsidiary companies.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
48
As a major shareholder, Yunnan Metropolitan Construction Investment Co Ltd have a right to
appoint a director to the Group’s Board. Their representative on the Board resigned during the
year and a new appointment has subsequently been made.
Ellen Zhang (Shu Xin Zhang) was the CEO of the China business but has since left the
company during the year.
Number of shares held by directors and other related parties:
31-Mar
31-Mar
2019
2018
$'000
$'000
Jiajiayue Holding Group
148,203,944
148,203,944
Yunnan Metropolitan Construction Investment Group Co Ltd
100,719,640
100,719,640
Cooks Investment Holdings Limited
30,562,207
47,823,091
ADG Investments Limited
42,199,758
42,199,758
Keith & Patricia Jackson & PM Picot
50,051,530
37,173,719
Shu Xin Zhang & Jian Ming Zhou
9,013,773
7,095,225
Tasman Capital Limited
2,362,780
2,362,780
Hmfic Investments Limited
2,189,525
-
CGF Employee Share Trust
562,486
562,486
Maretha McVerry
573,687
573,687
Lighthouse Ventures Holdings Limited
455,533
455,533
Mike Hutcheson
367,671
367,671
Craig Bruce Brown & Annette Ruth Brown
125,625
125,625
23.1. Transactions with related parties
The following transactions occurred with related parties during the year:
31-Mar
31-Mar
2019
2018
$'000
$'000
Purchases of goods and services
Purchase of management services
185
373
Property rental agreement with related party
-
221
Purchase of other services
-
398
Interest paid to related party
205
81
Other transactions
Satisfaction of related party receivables
998
-
Subscriptions for new ordinary shares
-
5,592
Funding loans advanced by related parties
1,728
1,625
Subscriptions for ordinary shares to be issued
-
170
The above values are exclusive of GST or VAT if any.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
49
23.2. Balances outstanding with related parties
31-Mar
31-Mar
2019
2018
$'000
$'000
Outstanding balances arising from
purchases of goods and services
Entities controlled by key management personnel
256
333
Other related parties
2,621
1,768
Loans to/from related parties
Loans to related party (1)
Beginning of the year
1,302
1,623
Satisfaction of related party receivables
-
(321)
Loan reduction
(1,302)
-
End of period
-
1,302
Loans from related party
Beginning of the year
1,725
2,564
Loans advanced
1,728
1,737
Satisfaction of related party receivables
(998)
(2,576)
Interest charged
205
81
Interest paid
(39)
(81)
End of period
2,621
1,725
The above values are inclusive of GST or VAT if any.
(1) Keith Jackson has entered into an underwrite agreement with CIHL for any unsubscribed
shares in this investment vehicle. As at 31 March 2019, all shares in CIHL were subscribed
for and there was no outstanding amount (2018: $1,301,773) owing to CGF under the terms
of this agreement. Refer to Note 11.
23.3. Transactions with directors and senior management personnel
Key management of the Group are the executive members of Cooks Global Foods Limited’s
Board of Directors and senior management. Directors and senior management personnel
payments (exclusive of GST if any) made during the year includes the following expenses:
31-Mar31-Mar
20192018
$'000$'000
Directors fees
8082
Salaries, wages and contractor payments
1,3531,282
1,4331,364
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
50
24. Segment reporting
Management currently identifies the Groups product and service lines in various geographical
locations as its operating segments.
The Esquires franchising & retail segment receives two main income streams: Retail Sales
from owned stores (UK and China) and Royalties from and Product Sales to Franchisees (UK,
Ireland, Middle East and China). The supply segment represents the supply of
tea/coffee/beverages and fresh produce.
Segment information for the reporting period is as follows:
Continuing operations
31 March 2019
Global franchising &
design
UK
franchising
& retail
Ireland
franchising
& retail
Supply
Corporate
Total
Global operational splits
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
1,360
2,591
1,167
818
-
5,936
Other income
1
-
-
1
101
103
Cost of inventories sold
(56)
(435)
(2)
(678)
-
(1,171)
Depreciation and
amortisation
(29)
(188)
(36)
(1)
(10)
(264)
Other expenses
(1,985)
(2,797)
(1,337)
(487)
(1,655)
(8,261)
Operating (loss)/profit
(709)
(829)
(208)
(347)
(1,564)
(3,657)
Non-current assets
Intangible assets
50
845
467
-
1,481
2,843
Property, plant and
equipment
19
715
24
12
17
787
31 March 2018
Global franchising &
design
UK
franchising
& retail
Ireland
franchising
& retail
Supply
Corporate
Total
Global operational splits
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
1,937
2,964
989
838
-
6,728
Other income
-
36
-
-
1
37
Cost of inventories sold
(205)
(192)
-
(672)
-
(1,069)
Depreciation and
amortisation
(35)
(162)
(35)
(1)
(11)
(244)
Other expenses
(1,264)
(2,452)
(762)
(464)
(1,401)
(6,343)
Operating (loss)/profit
433
194
192
(299)
(1,411)
(891)
Non-current assets
Intangible assets
69
901
498
-
1,480
2,948
Property, plant and
equipment
27
285
25
3
19
359
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
51
Discontinued operations
China franchising & retail
Supply
Total
Global operational splits
$'000
$'000
$'000
30 Sep 2017 14 Apr 2017
Revenue
1,746
46
1,792
Other income
270
45
315
Cost of inventories sold
(804)
(11)
(815)
Other expenses
(2,429)
(11)
(2,440)
Operating (loss)/profit
(1,217)
69
(1,148)
Loss on sale of the
subsidiary after income
tax
(1,086)
-
(1,086)
(2,303)
69
(2,234)
Non-current assets
Intangible assets
2,317
-
2,317
Property, plant and
equipment
570
-
570
25. Contingencies
Contingent Liabilities
There are no contingent liabilities as at 31 March 2019 (2018: $nil).
26. Capital commitments
There were no capital commitments as at 31 March 2019 (2018: $nil).
27. Financial risk management
Due to the broad range of the Group’s activities, there is exposure to a variety of financial risks:
• Market risk (including currency risk and interest rate risk);
• Credit risk; and
• Liquidity risk
The Group’s risk management programme focuses on minimising the potential adverse effects
of these risks. The Group’s business is primarily denominated in foreign currencies. The Group
holds New Zealand dollars and other currencies to settle transactions in the normal course of
business.
27.1. Market risk
Foreign Currency Risk
The Group operates internationally and is exposed to foreign currency risk arising from various
currency exposures. The majority of the Group's product, manufacturing and logistics costs are
settled in NZD. Though the NZD remains the main currency for corporate funding and Group
reporting, it will continue to diminish as a proportion of total Group as product sales outstrip
growth in the New Zealand market. A significant amount of the Group’s transactions are carried
out other than in New Zealand Dollars. Exposures to currency exchange rates arise from the
Group’s overseas company holdings (Australia, Canada, China, Ireland and United Kingdom),
and foreign currency denominated income for New Zealand domiciled companies (royalties,
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
52
store openings, design and other franchise fees, product sales). These are primarily
denominated in Australian dollars (AUD), Canadian Dollars (CAD), European currency
(EURO), Pound Sterling (GBP) and US dollars (USD).
The below tables show the impact on pre-tax loss for the year, if the major currencies that the
Group transacts in weaken/strengthen by 10% to the NZD, with other variables held constant.
The impact would mainly result in foreign exchange gains or losses on the conversion of cash,
receivables and payables. The same movement on equity would be expected. 10% was chosen
as a reasonable sensitivity given the historically volatile markets for foreign exchange.
NZ$000s
Carrying
amount at
31 March
2019
NZD +10%
Profit/Equity
NZD -10%
Profit/Equity
Carrying
amount at
31 March
2018
NZD +10%
Profit/Equity
NZD -10%
Profit/Equity
AUD cash1--71(1)
AUD accounts receivable434(5)444(5)
AUD accounts payable(56)5(6)(32)3(4)
Total AUD9(11)8(10)
CAD cash---1--
CAD accounts receivable---333(4)
CAD accounts payable(36)3(4)(63)6(7)
Total CAD3(4)9(11)
EURO cash14313(16)17616(19)
EURO accounts receivable30428(34)26524(29)
EURO accounts payable(130)12(14)(95)9(11)
Total EURO53(64)49(59)
GBP cash24222(26)46542(52)
GBP accounts receivable36533(41)67661(75)
GBP accounts payable(1,175)107(131)(954)87(106)
Total GBP162(198)190(233)
USD cash111(1)1936(7)
USD accounts receivable17015(19)30227(34)
USD accounts payable18517(21)1,847168(205)
Total USD33(41)201(246)
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
53
Interest Rate Risk
The Group currently has an overdraft facility and had cash deposits in various currencies at
reporting date as follows:
Local currencyNZD EquivalentLocal currencyNZD Equivalent
$'000
$'000
$'000
$'000
Cash bank and in hand:
NZD53
53
26
26
AUD1
1
7
7
EUR86
143
103
176
GBP126
242
238
465
USD7
11
29
40
Cash and cash equivalents450
714
Bank overdraft NZD (Current liability)(148)
(148)
(1,180)
(1,180)
Short term financing(1,121)
(1,121)
(982)
(982)
(819)
(1,448)
31 March 201931 March 2018
The impact of a 1% increase / decrease in interest rates over a one-year period on the closing
net cash balance would result in an increase / decrease in consolidated pre-tax profit and equity
of $55,110 (2018: $35,340). 1% was chosen as a reasonable sensitivity given changeable
interest rate markets.
27.2. Credit Risk
Credit risk is managed on a Group basis. The Group generally trades with customers and
banking counterparties who are well established. Receivables balances are managed by and
reported regularly to senior management according to the Company’s credit management
policies and procedures. The amount outstanding at reporting date represents the maximum
exposure to credit risk.
Cash and cash equivalents of the Group are deposited with a number of trading banks in New
Zealand and overseas: $53,000 is deposited with a NZ trading bank (2018: $26,000), $242,000
(2018: $465,000) with a British trading bank and $143,000 (2018: $176,000) with an Irish
trading bank. The Group uses banks with credit ratings of AA – BB.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
54
27.3. Liquidity Risk
The Group maintains regular forecasts of liquidity based on expected cash flows. The table
below analyses the Group’s financial liabilities into relevant groups based on the remaining
period at the reporting date to the end of the contractual date. The amounts disclosed are the
contractual undiscounted cash flows.
At 31 March 2019
Less
than 1 year
Between
1 and
2 years
Between
2 and 5
years
Over
5
years
$'000
$'000
$'000
$'000
Bank overdraft148
-
-
-
Trade payables
2,658
-
-
-
Other payables
1,907
-
-
-
Short term finance loan
1,121
221
-
-
Related party loan
2,621
-
-
-
Convertible loan
1,781
-
-
-
CVA Creditors (UK)
22
-
-
-
10,258
221
-
-
At 31 March 2018
Less than 1
year
Between
1 and
2 years
Between
2 and
5 years
Over
5
years
$'000
$'000
$'000
$'000
Bank overdraft
1,180
-
-
-
Trade payables
2,436
-
-
-
Other payables
2,168
-
-
-
Short term finance loan
982
361
-
-
Related party loan
1,725
-
-
-
Hire Purchase
8
-
-
-
CVA Creditors (UK)
22
-
-
-
8,521
361
-
-
For further details in relation to the liquidity risk refer to Note 4.
27.4. Capital risk management
The Group’s objectives when managing capital is to safeguard the Group’s ability to continue
as a going concern in order to provide returns to shareholders and benefits to other
stakeholders and to maintain an optimal capital structure. The Group currently monitors capital
based on cash requirements and, in order to maintain or adjust the capital structure, generally
issues new shares to investors through share issues. The Group and the Company have not
been subject to any externally imposed capital requirements during the period. The Group is
currently in need of additional capital injections to be able to execute its strategy, for further
details of this refer to Note 4.
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
55
28. Financial instruments by category
31-Mar
31-Mar
2019
2018
$'000
$'000
Financial assets at amortised cost
Cash and cash equivalents450
714
Trade and other receivables613
2,920
1,063
3,634
Financial liabilities at amortised cost
Trade payables2,658
2,436
Borrowings and other liabilities5,735
2,958
8,393
5,394
Finacial liabilities at fair value through profit or loss
Embedded derivative liabilities
538
-
COOKS GLOBAL FOODS LIMITED
Notes to the Consolidated Financial Statements
56
29. Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. 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).
Level 1
Level 2
Level 3
Total
At 31 March 2019
$'000
$'000
$'000
$'000
Assets per the statement of financial position-
-
-
-
Liabilities per the statement of financial position
Embedded Derivative Liabilities
-
538
-
-
-
538
-
-
The fair value for the embedded derivative conversion features (foreign exchange and share
options) of the convertible note raised during the current financial year, (refer Note 18.a), has
been assessed using Level 2 valuation methods. The value of the embedded derivatives was
based on valuation models forecasting predicted forward currency rates and future share price
for the share options. Key assumptions in determining the fair value of the embedded
derivatives were: risk free rate 1.45%; share exercise rate 6.63 cents; share price volatility
77.9%; implied IR 4.32% - 4.63% per month; average period FX rate (USD) 0.681; end of year
FX rate (USD) 0.685. Annual coupon interest rate is 18%, and the monthly effective interest
rate is 5.77% - 6.08%
31-Mar
31-Mar
2019
2018
Movement in fair value estimation
$'000
$'000
Embedded Derivative Liabilities
Opening balance-
-
Value at initial recognition636
-
Expensed during the year(98)
-
Closing balance
538
-
30. Prior period error
Refer to Note 19.3 for details of the prior period error and restatement.
31. Post-reporting date events
Nikau Trust, a vehicle associated with Keith Jackson, has advanced short-term funds of $822k
to the company subsequent to reporting date on normal commercial terms. See Note 18(c).
There have been no other events subsequent to reporting date which have a material effect on
these consolidated financial statements.
COOKS GLOBAL FOODS LIMITED
57
STATUTORY INFORMATION AND CORPORATE GOVERNANCE
Directors Relevant Interests in Company Securities as at 31 March 2019
Substantial Security Holder Shares Held
Graeme Keith Jackson, Patricia Frances Jackson
& Philip Mack Picot
50,051,530
Mike Hutcheson 367,671
Total Number of Shares Held: 50,419,201
Director Dealings in Company Securities
There have been the following transactions in respect of Cooks Global Foods Limited (CGF or
Company) securities by directors of the Company (Directors) in the 12 months ending 31 March
2019:
Director Dealings
Mr. Graeme Keith Jackson
• Mr. Graeme Keith Jackson is the beneficial holder
of 12,877,811 ordinary shares in the Company
currently held by Graeme Keith Jackson, Patricia
Frances Jackson & Philip Mack Picot.
Interests Register
CGF has D&O insurance which ensures that generally, Directors and officers will incur no monetary
loss as a result of actions undertaken by them. CGF has entered an indemnity in favour of its
Directors for the purposes of Section 162 of the Companies Act 1993.
Use of Company Information
The Board received no notices from Directors wishing to use Company information received in
their capacity as Directors which would not have been ordinarily available.
COOKS GLOBAL FOODS LIMITED
58
Other Director Interests
Other directorship appointments during the financial year ended 31 March 2019 held by CGF
Directors:
Graeme Keith Jackson
Arana Holdings Limited Esquires Middle East & Africa IP Holdings Limited
CFG Employee Share Trust Limited Esquires Northern Cyprus Limited
Cooks Global Foods Limited Esquires NZ Franchise Holdings Limited
Cooks Investment Holdings Limited Esquires Office Limited
Cooks Supply Limited Esquires Oman Limited
Cotterill & Rouse Limited Esquires Pakistan Limited
Crux Products Limited Esquires Port Denarau Marina Limited
Dairy Farm Investments (Brucknell) Limited Esquires Portugal Limited
Dairy Farm Investments (Management) Limited Esquires Qatar Limited
Dairy Farm Investments (Ruawhata) Limited Esquires Romania Limited
Dairy Farm Investments Limited Esquires Saudi Arabia Limited
Dairyland Products Limited Esquires Supply No 2 Limited
DFI (Brucknell) Limited Esquires Turkey Limited
Esquires Asia Limited Esquires U.A.E. Limited
Esquires Bahrain Limited Esquires UK 1 Limited
Esquires Canada IP Limited Franchise Development Limited
Esquires China Limited Franchise Holdings NZ Limited
Esquires Coffee China Limited Franchise Management NZ Limited
Esquires Coffee India Limited Himatangi Farms Limited
Esquires Coffee Malaysia IP Holdings Limited Independent Dairy Producers Limited
Esquires Coffee Supply Limited Jackson & Associates Limited
Esquires Egypt Limited Last Tree Standing Limited
Esquires EP & Bahrain Limited LSD Global Limited
Esquires Fiji Limited Nikau Trust
Esquires Global IP Holdings Limited Resnik Corporation Limited
Esquires India Limited Scarborough Fair Limited
Esquires Indonesia Limited Science in Sport Asia Pacific Limited
Esquires Iraq IP Holdings Limited Tasman Capital Limited
Esquires Jordan Limited TRS Investments Limited
Esquires Kuwait Limited Weihai Station Limited
Esquires Malaysia Limited
Michael George Rae Hutcheson
2 Life Limited Lighthouse Ventures Limited
Boston Digital Limited Lonely Cow Wines Holdings Limited
Cooks Global Foods Limited On Digital Limited
Eunoia Holdings Limited Raye Blumenthal Trust
Hotfoot Retail Services Limited Scarborough Fair Limited
Ice Capital Partners Limited Tangible Media Limited
Image Centre Holdings Limited The Lighthouse Ideas Company Limited
Image Centre Publishing Limited Tradewinds Investment Trust
Lighthouse Ideas Limited
COOKS GLOBAL FOODS LIMITED
59
Paul Valentine Mark Elliott
Agribusiness Investments NZ Limited Elliott Capital Advisors Limited
Agribusiness Solutions NZ Limited Parawai Point Trustees Limited
Cooks Global Foods Limited Time Capital NZ Limited
EFT Trustees Limited Simple Properties Limited
Peihuan Wang
Cooks Global Foods Limited Shandong Jialianduo Industry Limited
Crux Products Limited Shandong Shangyue Department Store Limited
Jiajiayue Group Limited. (China) Shandong Shibale Supermarket Limited
Jiajiayue Holding Group Limited (CHINA) Spar China Group LTD.
Shandong Esquires Management Limited Weihai Jiajiayue Real Estate Development Limited
Shandong Jiajiayue Logistics Limited Weihai Station Limited
Shandong Jiajiayue Supermarket Limited
Spread of Quoted Security Holders as at 11 July 2019:
RANGE
SHAREHOLDERS SHARES
NUMBER % NUMBER %
1-1,000 269 44.54 267,611 0.05
1,001-5,000 70 11.59 189,791 0.04
5,001-10,000 20 3.31 159,061 0.03
10,001-50,000 111 18.38 3,101,623 0.63
50,001-100,000 30 4.97 2,151,740 0.44
100,001 and over 104 17.21 483,639,422 98.81
TOTAL 604 100.00 489,509,248 100.00
COOKS GLOBAL FOODS LIMITED
60
20 Largest Holdings of Equity Securities
As at 11 July 2019:
Rank Investor Name Total Units
%
Issued
Capital
1 Jiajiayue Holding Group Limited 148,203,944 30.28
2
Yunnan Metropolitan Construction Investment Group
Co Ltd 100,719,640 20.58
3
Graeme Keith Jackson & Patricia Frances Jackson &
Phillip Mack Picot 50,051,530 10.22
4 ADG Investments Limited 42,199,758 8.62
5 Cooks Investment Holdings Limited 30,562,207 6.24
6 Suhua He 13,915,182 2.84
7 Shuxin Zhang 9,013,773 1.84
8 PKB Trustees Limited 6,453,562 1.32
9
Graham Maxwell Drury & Gloria Kaye Drury & Srhb
2006 Trustee Company Ltd 6,451,135 1.32
10 Peter James Kirton 5,005,723 1.02
11 Anne Margaret Mervis 4,521,477 0.92
12 Emma Jane Waite 3,275,333 0.67
13 Real Action Group Limited 3,251,334 0.66
14 Ruby Cove Holdings Limited 3,009,068 0.61
15
Lewis Andrew Deeks & Wendy May Stanley &
Pompallier Investment Management Limited
2,960,000 0.6
16
Neil Robert Butler & Kim Maree Green & Oac
Trustees Limited
2,500,000 0.51
17 Just Cabins Limited 2,490,723 0.51
18 Tasman Capital Limited 2,362,780 0.48
19 New Zealand Central Securities Depository Limited 2,357,239 0.48
20 HMFIC Investments Limited 2,189,525 0.45
441,493,933 90.17
SUBSTANTIAL PRODUCT HOLDERS
The following information is provided in compliance with section 293 of the Financial Markets
Conduct Act 2013 and is stated as at 26 July 2019. The total number of voting financial products
of Cooks Global Foods Limited at that date was 489,509,248 and ordinary shares are the only such
product on issue.
Holder Name
Number Ordinary
Shares held
Disclosure date
Michael George Rae Hutcheson
and Michelle Marie Hutcheson
986,980 20 May 2019
Graeme Keith Jackson & Patricia
Frances Jackson & Phillip Mack
Picot
82,976,517
12 November 2018
Graeme Keith Jackson & Patricia
Frances Jackson & Phillip Mack
Picot
85,170,065
29 August 2018
COOKS GLOBAL FOODS LIMITED
61
Graeme Keith Jackson & Patricia
Frances Jackson & Phillip Mack
Picot
85,170,065
20 July 2018
Andrew Malcolm Kerslake 44,389,283 20 July 2018
EMPLOYEE REMUNERATION
During the accounting period, the following number of CGF’s employees/independent contractors
(not being a director) received remuneration and other benefits in that person’s capacity as
employee/independent contractor of CGF, the value of which exceeded $100,000 per annum:
Remuneration ranges
For CGF Group:
Number of
employees
2019
Number of
employees
2018
100,000 – 109,999 1 -
110,000 – 119,999 2 -
140,000 – 149,999 - 2
150,000 – 159,999 1 -
160,000 – 169,999 1 1
170,000 – 179,999 2 -
180,000 – 189,999 1 -
190,000 – 199,999 - 1
280,000 – 289,999 - 1
DIRECTOR REMUNERATION AND OTHER BENEFITS
During the accounting period, the Directors of the Company received the following remuneration:
Name
Directors’
Fees
Executive
Salary
Share based
payments
Andrew Malcolm Kerslake
40,000 - -
Mike Hutcheson
40,000 - -
Graeme Keith Jackson -
180,000 -
Paul Elliot
- - -
Peihuan Wang
- - -
Donations
No donations were made in the 12-month financial period ended 31 March 2019.
COOKS GLOBAL FOODS LIMITED
62
CORPORATE GOVERNANCE STATEMENT
ETHICAL STANDARDS
The Board Charter, Code of Ethics and Code of Conduct establish the standards of ethical
behaviour expected of Directors and staff. The Board expects Directors, management and staff
to personally subscribe to these values and use them as a guide to make decisions. The Audit
and Risk Committee has responsibility for monitoring compliance with internal processes,
including compliance with the Code of Ethics.
Directors are expected to ensure the potential for conflicts of interests is minimised by
restricting involvement in other businesses or in private capacities that could lead to a conflict.
In considering matters affecting the Company, Directors are required to disclose any actual or
potential conflicts. Where a conflict or potential conflict is disclosed, the Director takes no
further part in receipt of information or participation in discussions on that matter. The Board
maintains an interests’ register and it is reviewed at each board meeting.
Directors, officers, employees and contractors are restricted in their trading of Cooks Global
Foods securities and must comply with the Financial Products Trading Policy and Guidelines
which is available on the Website.
Should any member of staff have concerns regarding practices that may conflict with the Code
of Conduct they are able to raise the matter with the Chief Executive (CEO) or Chair, as
appropriate, on a confidential basis. Directors would raise any concerns regarding compliance
with the Code of Ethics with the Chair. The Chair of the Board and the Chair of the
Audit and
Risk Committee note there have been no financial matters raised in this respect in the 2019
financial year.
ROLE OF THE BOARD
The Board of Directors of the Company is elected by the shareholders to supervise the
management of the Company. The Board establishes the Company's objectives, overall policy
framework within which the business of the Company is conducted and confirms strategies for
achieving these objectives. The Board also monitors performance and ensures that procedures
are in place to provide effective internal financial control.
The Board is responsible for guiding the corporate strategy and direction of the Company and
has overall responsibility for decision making. The Board has delegated responsibility for
implementing the Board’s strategy and for managing the operations of the Company to the
Chairman.
BOARD COMPOSITION AND PERFORMANCE
The Board currently comprises of five Directors including the Chairman & Chief Executive
Officer, Keith Jackson.
The Board met once during the year on a formal basis. One subcommittee, being the Audit and
Finance Committee, was held outside these meetings on a regular basis as required.
COOKS GLOBAL FOODS LIMITED
63
The Chairman’s role includes managing the Board; ensuring the Board is well informed and
effective; implementing the Company’s present strategy; and ensuring effective communication
with shareholders.
The Company does not have a formal Director training programme at present.
DIVERSITY
Cooks recognises the wide-ranging benefits that diversity brings to an organisation and its
workplaces. Cooks endeavours to ensure diversity at all levels of the organisation to ensure a
balance of skills and perspectives are available in the service of our shareholders and
customers. To this end, the Board is committed to fostering a culture that embraces diversity.
The Board also has the responsibility of monitoring and promoting the diversity of staff and
associated corporate culture, including requiring that recruitment and selection processes at all
levels are appropriately structured so that a diverse range of candidates are considered and to
avoid conscious and unconscious biases that might discriminate against certain candidates.
The gender balance of the Group’s Directors, officers and all employees were as follows:
As at 31 March 2019 As at 31 March 2018
Directors Officers Employees Directors Officers Employees
Female - - 29 - - 15
Male 5 1 15 5 1 15
Total 5 1 44 5 1 30
At 31 March 2019, the Group’s Directors, officers and all employees 15 nationalities are
represented.
REPORTING AND DISCLOSURE
The Board monitors:
• available cash in the Company to ensure there are sufficient funds available to satisfy
debts as they fall due; and
• the continued support of the Company’s principal creditors, to ensure their continued
support of the Company and continued intention to not call up amounts owing to them.
The Board is committed to keeping the market and its shareholders informed of all material
information relating to the Company through meeting the obligations imposed under the Listing
Rules and relevant legislation such as the Financial Markets Conduct Act 2013.
Cooks’
seeks to make disclosures in a timely and balanced way to ensure transparency in the
market and equality of information for investors. The Company also recognises the benefits of
providing other releases that broaden the market’s knowledge of the Company’s business and
financial performance and seeks, where appropriate, to use communications that achieve this
COOKS GLOBAL FOODS LIMITED
64
objective. The Website is a key channel for the distribution of Cooks’ information and is
updated after documents are disclosed on the NZX.
The Chair of the Board and the CEO are responsible for the day to day management of
ensuring these obligations are met. The Board will review compliance with the continuous
disclosure obligations at every board meeting.
Directors
Name Status Current/Resigned
Sub- committee
membership
Attendance*
Keith
Jackson
Chairman &
CEO Executive
Appointed 18/8/08 Audit & Finance 5
Andrew
Kerslake
Non-Executive
Appointed 3/10/13
Resigned 8/03/19
Audit & Finance 5
Mike
Hutcheson
Non-Executive
Independent
Appointed 3/10/13 Audit & Finance 5
Peihuan
Wang
Non-Executive
Independent
Appointed 29/4/16
- 2
Zei Hui
Non-Executive
Independent
Appointed 29/4/16
Resigned 27/09/18
- 1
RISK MANAGEMENT
The Board reviews practices in relation to identification and management of significant
business risk areas and regulatory compliance in the context of the Company’s prevailing
business strategy.
Under its constitution, the Company may obtain directors' and officers' liability insurance to
cover directors acting on behalf of the Company.
SHAREHOLDER RELATIONS
The Company aims to ensure that shareholders are informed of all major developments
affecting the Company affairs. Information is communicated to shareholders in the Annual
Report, Interim Report, and regular NZX announcements, including major share transactions,
acquisitions, store expansion and new franchises and any personnel changes of significance.
STAKEHOLDER INTERESTS
The Board is cognisant of stakeholder interests as they develop and considers policies to deal
with different stakeholders accordingly. The Company will maintain public information as
described in these policies to give stakeholders access to relevant information.
COOKS GLOBAL FOODS LIMITED
65
Directory
Company number: 2089337
Year of incorporation: 2008
Registered office: Level 5, 3 City Road
Auckland 1010
Nature of business: Food & beverage industry
Directors:
Graeme Keith Jackson
Michael George Rae Hutcheson
Peihuan Wang
Paul Valentine Mark Elliot (Appointed 30 May 2019)
Qiang Kui (Appointed 27 February 2019)
Andrew Malcolm Kerslake (Resigned 8 March 2019)
Zhe Hui (Resigned 27 September 2018)
Solicitors: Duncan Cotterill
Wellington
Bankers: ANZ Bank, Auckland
Auditors: BDO Auckland
Auckland
Share registry: Link Market Services Limited
Auckland
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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