HLG Full Year Results for the period ending 1 August 2019

New Zealand Stock Exchange Listing Rules
Disclosure Full Year Report


For the year ending 1 August 2019



Contents

Press Release
Appendix 1
Appendix 7
Audited Financial Statements & Audit Report

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Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)

Results for announcement to the market
Name of issuer Hallenstein Glasson Holdings Limited
Reporting Period 12 months to 1 August 2019
Previous Reporting Period 12 months to 1 August 2018
Currency NZD

Amount (000s) Percentage change
Revenue from continuing operations $287,550 3.4%
Total Revenue $287,550 3.4%
Net profit/(loss) from continuing
operations
$29,020 6.1%
Total net profit/(loss) $29,020 6.1%
Final Dividend
Amount per Quoted Equity Security $ 0.24
Imputed amount per Quoted Equity
Security
$0.09333 cents
Record Date 10 December 2019
Dividend Payment Date 17 December 2019
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.25 $1.14
A brief explanation of any of the
figures above necessary to enable
the figures to be understood
For further information refer to the attached:
 Group Managing Director’s announcement
 Financial Statements and the Auditors
Independent Review Report
Authority for this announcement
Name of person

authorised to make
this announcement
Stuart Duncan
Contact person for this
announcement
Stuart Duncan
Contact phone number +64 21 528 184
Contact email address Stuartd@glassons.com
Date of release through MAP

27
th
September 2019

Audited financial statements accompany this announcement.

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EMAIL: announce@nzx.com
Notice of event affecting securities
HALLENSTEIN GLASSON HOLDINGS LIMITED
Stuart DuncanDirector's Resolution
021 528 18409 306 252327092019
NZHLGE 0001S4
In dollars and cents
Retained Earnings
$0.240
Ordinary Shares
Enter N/A if not
applicable
NZ DOLLARS$0.042353
$14,315,775
Date Payable
17 December, 2019
$$0.016667$0.093333
$
10 December, 201917 December, 2019

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HALLENSTEIN GLASSON HOLDINGS LIMITED
RESULTS FOR FULL YEAR ENDED 1 AUGUST 2019
The Company advises that the audited net profit after tax for the 12 months to 1 August 2019 was $29.02
million, an increase of 6.06% over the corresponding period last year ($27.36 million).
Group sales were $287.55 million, an increase of 3.36% over the corresponding period last year ($278.20
million). Sales have been amended and restated for last year in line with the requirements of NZ IFRS 15
to account for freight charges paid by our online customers. This has no impact on profit.
The 2018/19 financial year has seen margin pressure across the Group, the main factors being the lower
USD exchange rate and the increased promotional activity across both the New Zealand and Australian
markets. The gross margin has fallen by 130 basis points from 61.3% to 60.0%. Expenses have been well
controlled across the Group and this is being carried on into the new trading year.
Segment Results
Glassons New Zealand
Sales for the year were $100.73 million, an increase of 3.91% on the prior year. Sales growth in the
second half continued to build and improve on the growth in the first half of the year.
Fashion remains the key focus for Glassons, and the brand continues to bring to market the products
customers want with speed and agility. Ongoing investment in digital is enhancing the customer
engagement both online and in store.
During the year, refurbishments were completed in the flagship Newmarket Store (Auckland), Bayfair
(Tauranga), Palmerston North and Te Rapa (Hamilton). The Hornby Outlet Store (Christchurch) has just
completed an upgrade in the current financial year. To support the increase in online sales, a new
Fulfilment Centre is currently under construction in Christchurch. This is due for completion in October in
time for peak trade in the lead up to Christmas.
Glassons Australia
Sales for the year were $89.50 million, an increase of 13.89% on the prior year including the new store
openings. By continuing to deliver great customer service, evolving our product offer and improving our
speed to market we have enhanced our strong brand position.
During the year stores in Parramatta (Sydney) and Highpoint (Melbourne) were refurbished and the
footprint of the Bondi store (Sydney) was expanded. New stores opened in The Glen in Melbourne and
Liverpool in Sydney. A move to a new Fulfilment Centre in Sydney is planned for early next year. This will
support the planned growth in the Australian market in both online and physical store sales.
Further investment is proceeding in Australia in the current financial year, with a new store opening in
Robina on the Gold Coast and a larger refurbished store is planned for Eastgardens in Sydney. A number
of other stores are currently being considered.
Hallenstein Brothers
Sales for the year were $97.33 million (including Australia), an increase of 0.26% on the prior year. The
second half of the year proved much tougher for Hallenstein Brothers. This was due in part to the milder
winter, as well as some challenges with the product offering. A great deal of work has been done to
improve the product offer and we are already seeing an upturn in sales and positive customer feedback
for the new season.

Sales growth continues in Australia with the original three stores achieving incremental year on year
increases over the 12-month period. Towards the end of the year an outlet store was opened in
Harbourtown on the Gold Coast to support the full price stores. Opportunities for expansion into new
Australian sites are now being considered.
In New Zealand, a new store was opened in Frankton in Queenstown and refurbishments have been
completed at Botany (Auckland), Bayfair (Tauranga), Te Rapa (Hamilton). For the current financial year
the Hornby Outlet Store (Christchurch) has just been completed. The Fulfilment Centre in Auckland was
also expanded during the year to support the growth in online sales.
Investment has continued in digital to help drive sales and improve customer engagement with website
developments and an increased use of technology in store.
Properties
Prior to the end of the financial year, the investment property in Lambton Quay was sold resulting in a
gain on sale of approximately $1.1 million after costs.
E-Commerce
Online sales continue to grow significantly ahead of physical stores as a result of the Company’s ongoing
investment in digital and customer demand. Online sales now represent 15% of Group turnover.
Investment will continue in this key strategic area to provide relevant content across mediums to
enhance customer engagement.
Dividend
The Directors have declared a final dividend of 24 cents per share (fully imputed) (24 cents per share last
year) to be paid on 17th December 2019. Together with the interim dividend of 20 cents per share that
was paid on 18th April 2019, the full year dividend is 44 cents per share. The dividend payment is able to
be maintained as the Company’s balance sheet continues to be strong, and inventories well controlled.
Future Outlook
The first eight weeks of the new financial year have seen Group sales grow +7.23% on the prior year
(including new stores). With the recovery of Hallenstein Brothers in New Zealand underway, and with
the consistent growth of Glassons in both markets, the focus on the key strategies of speed to market,
customer service and investment in digital will continue. However, there remains margin pressure caused
by the NZD/USD exchange rate and we are cognisant of the key trading months ahead and the
challenging market environment.

An update will be provided at the Annual Meeting of Shareholders in December 2019.


Mary Devine
Group Managing Director
+64 21 998 351

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PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz


Independent auditor’s report
To the shareholders of Hallenstein Glasson Holdings Limited
The financial statements comprise:
 the statement of financial position as at 1 August 2019;
 the statement of comprehensive income for the year then ended;
 the statement of changes in equity for the year then ended;
 the statement of cash flows for the year then ended; and
 the notes to the financial statements, which include significant accounting policies.

Our opinion
In our opinion, the financial statements of Hallenstein Glasson Holdings Limited (the Company),
including its subsidiaries (the Group), present fairly, in all material respects, the financial position of
the Group as at 1 August 2019, its financial performance and its cash flows for the year then ended in
accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carried out other services for the Group in the areas of tax advisory and tax compliance
services and assisted the branch in Australia with filing the unaudited financial statements of the
branch with the Australian Securities and Investments Commission. The provision of these other
services has not impaired our independence as auditor of the Group.

PwC
34


Our audit approach
Overview

An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall Group materiality: $1,972,100, which represents 5% of profit before
tax.
We chose profit before tax as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most commonly
measured by users, and is a generally accepted benchmark.
We agreed with the Audit and Risk Committee that we would report to
them misstatements identified during our audit above $100,000 as well as
misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.

We have determined that there is one key audit matter:
 Inventory Valuation
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and
our application of materiality. As in all of our audits, we also addressed the risk of management
override of internal controls including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
Our Group audit scope focused on the major operating locations. In aggregate, the locations selected
as part of our audit scoping contributed 98% of the Group’s Revenue and 94% of the Group’s profit
before tax.
Audits of each major operating location are performed by PwC New Zealand at a materiality level
calculated by reference to a proportion of Group materiality appropriate to the relative scale of the
operations concerned. The remaining operations were not considered significant to the Group and
were subject to other procedures including analytical procedures.

PwC
35


Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Inventory Valuation
As at 1 August 2019, the Group held $24
million of inventories. Given the size of the
inventory balance relative to the total
assets of the Group and the estimates and
judgements described below, the valuation
of inventory required significant audit
attention.
As disclosed in Note 3.2, inventories are
held at the lower of cost and net realisable
value determined using the weighted
average cost method. At year end, the
valuation of inventory is reviewed by
management and the cost of inventory is
reduced where inventory is forecast to be
sold below cost.
The determination of whether inventory
will be realised for a value less than cost
requires management to exercise
judgement and apply assumptions.
Management undertake the following
procedures for determining the level of
write down required:
 Use inventory ageing reports together
with historical trends to estimate the
likely future saleability of slow moving
and older inventory lines;
 For inventory aged greater than one
year, management apply a percentage
based write down to inventory. The
percentages are derived from
historical levels of write down; and
 Perform a line-by-line analysis of
remaining inventory to ensure it is
stated at the lower of cost and net
realisable value and a specific write
down is recognised if required.

We have performed the following procedures over the
valuation of inventory:
 For a sample of inventory items, re-performed the
weighted average cost calculation and compared
the weighted average cost to the purchase invoices;
 We tested that the ageing report used by
management correctly aged inventory items by
agreeing a sample of aged inventory items to the
invoices;
 On a sample basis we tested the net realisable
value of inventory lines to recent selling prices;
 We assessed the percentage write down applied to
older inventory with reference to historic inventory
write downs and recoveries on slow moving
inventory;
 We re-performed the calculation of the inventory
write down; and
 We also made enquires of management, including
those outside of the finance function, and
considered the results of our testing above to
determine whether any specific write downs were
required.
From the procedures performed we have no matters to
report.

PwC
36


Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not
cover the other information included in the annual report and we do not, and will not express any form
of assurance conclusion on the other information. At the time of our audit, there was no other
information available to us.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs NZ and ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/

This description forms part of our auditor’s report.

PwC
37


Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.

The engagement partner on the audit resulting in this independent auditor’s report is Keren Blakey.
For and on behalf of:
Chartered Accountants
27 September 2019
Auckland