Half Year Result

RESULTS ANNOUNCEMENT 29 November 2019

10872752_1


Results for announcement to the market
Name of issuer Cooks Global Foods Limited
Reporting Period 6 months to 30 September 2019
Previous Reporting Period 6 months to 30 September 2018
Currency NZD

Amount (000s) Percentage change
Revenue from continuing
operations
$3,891 32.9%
Total Revenue $3,891 32.9%
Net profit/(loss) from
continuing operations
$(1,489) 22.7%
Total net profit/(loss) $(597) 60.7%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.00
Imputed amount per Quoted
Equity Security
$0.00
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(1.68) $(1.02)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please see attached Half Year Report
Authority for this announcement
Name of person

authorised
to make this announcement
Keith Jackson
Contact person for this
announcement
Keith Jackson
Contact phone number +64 9 304 0567 ext. 714
Contact email address keith.jackson@cookglobalfoods.com
Date of release through MAP

29/11/2019

Unaudited financial statements accompany this announcement.

---

1

2

Executive Chairman’s Report

Cooks Global Foods Limited (“Cooks”) has over the 6 months delivered strong growth in our global coffee
operations as we drive towards positive cashflow and earnings.

Revenue for the 6 months to 30 September 2019 increased 32.9% to $3.9 million from $2.9 million in the same
period a year ago. Revenue was supported by a 7.5% increase in constant currency network store sales from
the global coffee store network to $25.9 million from $24.1 million in the same period a year ago as store
numbers expanded from 100 to 114.

Net operating losses decreased to $0.6million from $1.5 million in the same period a year ago, reflecting higher
revenue and lower costs associated with new initiatives to drive growth in the UK and Europe.

During the first half of the financial year the company focused on strengthening the core businesses in UK and
Ireland, which collectively generated more than 70% of the group’s network store sales. The UK business was
reorganised with a focus on developing regional master franchisees and the strengthening of operational
management. The results are beginning to show through with faster growth in the current financial year as local
developers ramp up activity and a lower cost structure. The Irish business grew 17% in coffee network store
sales due to the addition of 3 new stores and same store growth of 7.6%.

The company has confirmed its core focus is the franchised café business internationally and consistent with
this is now focused exclusively on internal design only for our own franchised cafes. The company continues
to review any non-strategic business that does not comply with the above definition.


STATEMENT OF FINANCIAL POSITION

At the end of the financial period the company had a positive bank balance of $0.57 million.

Borrowings excluding IFRS16 adjustments for leases increased to $7 million from $5.7 million from last financial
year. The increase includes additional 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.


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. The
carrying value in the company’s accounts is $2.4 million.


OUTLOOK

The Directors are confident about the prospects for the business in the year ahead.

Restructuring initiatives instituted last year are delivering real benefits in the 2020 financial year. Further
refinement of the core business may lead to divestments over the next twelve months.

3

BUSINESS PERFORMANCE

THE UNITED KINGDOM

UK store numbers were 41 at the end of September up from 38 at the same time a year ago. Meanwhile,
constant currency coffee store sales for the year increased 8.2% to $10.6 million from $9.8 million in the same
period a year ago. The region also saw a 5% increase in transaction volumes and a 3.2% increase in average
transaction values.

The UK business is implementing its strategy to establish regional franchises and as part of this, it has
restructured the regional franchise fee and royalty schedule to better incentivise franchisees over the longer
term. These changes are projected to significantly accelerate revenue and profit growth in the future. Operating
profit in the UK division were $0.15 million, compared to an operating loss of $0.47 million in the same period
a year ago.

EUROPE (IRELAND)

Constant currency total store sales in the region were $8.8 million, 17% ahead of the same period a year ago.
This result was driven by 7.6% growth in same store sales in Ireland itself plus the impact of three new stores
being on stream for the whole period compared to a partial period last year. Operating profit was $0.48 million
up on $0.06 million last year.

Cooks revenue in the European segment increased to $0.97 million from $0.72 million in the same period a
year ago. However, the gains were diluted by difficulties in the Romanian business where the regional
franchisee failed to live up to expectations and the franchise was terminated.

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.

The profit impact of the global franchising & design operations was a reduced operating loss of $0.447 million
compared to $0.475 million last year.

SUPPLY AND CORPORATE

Revenue in the supply businesses were largely flat on the same period a year ago at $0.8 million. The Crux
supply business also remained flat, and this was due largely to the timing of shipments to and from its
customers offshore. Operating losses rose to $0.13 million compared to $0.11 million at the same time a year
ago with the increase relating to the marketing investment in the Grounded and Blended coffee brands.

Corporate costs increased to $0.64 million plus finance cost of $0.37 million compared with last year at $0.52
million and finance cost of $0.24 million.

CHINA

The Chinese business is now treated as an equity-accounted associate. Cooks has an effective 21% stake in
the business and booked a $0.27 million non-cash share of the venture’s losses for the period.

After a long period of reorganization, momentum is building in China. In the 6 month period to the end of
September 2019 the Chinese business had 9 remaining full café stores and around 35 new style ‘express’
outlets.

4


APPENDIX

The following are Non-GAAP reporting metrics which are used in this update:

Network (Store) Sales

Total store sales are the aggregate of sales of all Esquires branded coffee stores, whether franchised or 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. Total network store sales, therefore, have a correlation to the portion of revenue earned by Cooks
Global Foods relating to recurring franchise fees. However, they are not and should not be confused with 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.

Constant Currency Network Store Sales

All references to sales and transaction values in this report 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.

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 Group.

Cooks Global Foods Limited
Unaudited Condensed Interim Statement of Comprehensive Income
For the six months ended 30 September 2019
5


Unaudited
6 months
Unaudited
6 months

30
September
30
September

2019 2018

Notes $'000 $'000
Continuing operations

Revenue

3,891 2,928
Other income

2 7
Raw materials and consumables used

(982) (552)
Depreciation and amortisation

(319) (117)
Property related costs

(279) (269)
Net foreign exchange (losses)/gains

187 107
Employee costs

(1,577) (1,781)
Other expenses

(1,520) (1,834)
Operating loss

(597) (1,511)

Finance costs

(623) (254)
Share of net loss of associate accounted for using the equity
method

(269) (161)
Loss before income tax

(1,489) (1,926)
Income tax expense

- -
Loss for the year from continuing operations

(1,489) (1,926)
Net loss for the year from discontinued operations

-

Net loss for the year

(1,489) (1,926)
Loss attributable to:

- Shareholders of the parent

(1,484) (1,926)
- non-controlling interests

(5) -

(1,489) (1,926)
Other comprehensive income

Items that may be subsequently reclassified to profit or loss

Change in foreign currency translation reserve

(254) (106)
Other comprehensive income after tax

(254) (106)

Total comprehensive loss for the year

(1,743) (2,032)


Attributable to:


- Shareholders of the parent

(1,738) (2,032)
- non-controlling interests

(5) -

(1,743) (2,032)

Loss per share:

Basic and diluted loss per share (New Zealand Cents) from
continuing operations: 3 (0.30) (0.39)








The attached notes form part of, and are to be read in conjunction with these financial statements

Cooks Global Foods Limited
Unaudited Condensed Interim Statement of Changes in Equity
For the six months ended 30 September 2019
6





Attributable to Equity holders of the Company


Share
Capital
Foreign
currency
translation
reserve
Share
based
payment
reserve
Accumulated
Losses

Total
Non-
controlling
interest
Total
Equity

Note $'000 $'000 $'000 $'000 $'000 $'000 $'000


Balance at 1 April 2018

42,687 99 1,588 (42,535) 1,839 (68) 1,771
IFRS 15 Revenue adjustment to
Accumulated Losses


-

-

- 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 period

Loss for the period


-

- (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


-

- 575

- 575 - 575
Total comprehensive income/(loss) for
the period

-
150 575 (4,803) (4,078) (10) (4,088)


Transactions with owners of the
Company
Ordinary shares to be issued

(170) - - (170) - (170)
Total contributions by owners of
the Company

(170) - - (170) - (170)


Balance at 31 March 2019

42,517 249 2,163 (48,550) (3,621) (78) (3,699)

-
Comprehensive loss for the period

Loss for the period


-

- - (1,489) (1,489) - (1,489)
Other comprehensive income


Items that may be subsequently
reclassified to profit or loss:


Change in foreign currency
translation reserve

-
(135) 5 -

- (130)

(5) (135)
Change in share based payment reserve
37 37 - 37
Total comprehensive income/(loss) for
the period

(135)
5 37 (1,489) (1,582) (5) (1,587)


Balance at 30 September 2019

42,382 254 2,200 (50,039) (5,203) (83) (5,286)






The attached notes form part of, and are to be read in conjunction with these financial statements.

Cooks Global Foods Limited
Unaudited Condensed Interim Statement of Financial Position
As at 30 September 2019
7


Unaudited
6 months
Audited
12
months

30 September 31 March

2019 2019

Notes $'000 $'000

Assets

Current Assets

Cash and cash equivalents

566 450
Trade and other receivables

1,033 296
Inventories

193 219
Other current assets 2 2,643 761
Current Assets

4,435 1,726

Non-Current Assets

Intangible assets

2,922 2,842
Property, plant and equipment 2 3,431 787
Investments accounted for using the equity method

2,419 2,688
Other non-current financial assets 2 14,594 15
Non-current assets

23,366 6,332

Total Assets

27,801 8,058

Liabilities

Current Liabilities

Trade and other payables

5,622 4,565
Bank overdraft

- 148
Contract liabilities

54 163
Borrowings and other liabilities 2 4,996 5,514
Current liabilities

10,672 10,390

Non-Current Liabilities

Contract liabilities 1,299 1,146
Borrowings and other liabilities 2 21,116 221
Non-current liabilities

22,415 1,367

Total Liabilities

33,087 11,757

Net Assets

(5,286) (3,699)

Equity

Share capital 3 42,596 42,517
Accumulated losses

(50,253) (48,550)
Foreign currency translation reserve

254 249
Equity attributable to owners of the parent

(7,403) (5,784)
Share based equity reserve / Non-controlling interests

2,200 2,163
Non-controlling interest

(83) (78)
Total equity

(5,286) (3,699)
The attached notes form part of, and are to be read in conjunction with these financial statements.

Cooks Global Foods Limited
Unaudited Condensed Interim Statement of Cash Flows
For the six months ended 30 September 2019

8


Unaudited Audited

30-Sep 31-Mar

2019 2019

Notes $'000 $'000

Operating activities

Cash was provided from:

Receipts from customers

3,518 5,893
Cash was applied to:

Interest cost 2 (663) (289)
Payments to suppliers & employees

(3,573) (8,008)
Net cash applied to operating activities

(718) (2,404)

Investing activities

Cash was applied to:

Net cash disposed on de-recognition

- -
Purchase of property, plant and equipment

(35)

(194)
Payment for funds owed for business acquisitions

- -
Net cash applied to investing activities

(35)

(194)

Financing activities

Cash was provided from:

Proceeds from borrowings

1,122 3,259
Proceeds from share issue

- 1,139
Cash was applied to:

Repayment of borrowings

(105)

(1,032)
Net cash provided from financing activities

1,017 3,366

Net increase/(decrease) in cash and cash equivalents

264 768
Cash & cash equivalents at beginning of the year

302 (466)
Cash & cash equivalents at end of the year

566 302

Composition of cash and cash equivalents:

Bank balances

566 450
Overdraft balances

- (148)

566 302








The attached notes form part of, and are to be read in conjunction with these financial statements.

Cooks Global Foods Limited
Unaudited Condensed Interim Statement of Cash Flows
For the six months ended 30 September 2019

9

The following is a reconciliation between loss after taxation for the period shown in the statement of
comprehensive income and net cash flows from operating activities.

Unaudited Audited
30-Sep 31-Mar
2019 2019
Notes $'000 $'000

Loss after tax (1,489) (4,813)

Add non-cash items:
Depreciation and amortisation 2 319 264
Share of losses of associate 269 399
Losses from discontinued operations - -

Add/(Less) movements in assets/liabilities:
Inventories (26) 65
Trade and other receivables 737 1,162
Other short term assets 2 1,882 (145)
Trade and other payables

(1,057) (39)
Other liabilities 2 (1,506) 540
Contract liabilities 153 163

Net cash flow applied to operating activities (718) (2,404)




















The attached notes form part of, and are to be read in conjunction with these financial statements.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
10




Management currently identifies the Group’s products and service lines in various geographical locations as
its operating segments.

The franchise coffee store business, operating under the Esquires brand, covers geographic segments in the
UK, Ireland and Global (covering the NZ Franchise trading entity and all regions owned by third party Master
Franchisees). Principal income streams for the franchise business are royalties, coffee product and other retail
sales, design and other franchise fees. The supply segment represents the supply of tea/coffee/beverages
(through the Scarborough Fair business) and facilitates trade between China and New Zealand and other
countries (using its Crux Products business).

Segment information for the reporting period is as follows:



Continuing operations
30 September 2019

Global
franchising
& design
UK
franchising
& retail
Ireland
franchising
& retail Supply Corporate Total
Global operational splits $'000 $'000 $'000 $'000 $'000 $'000

Revenue
Other income
Cost of inventories sold
Depreciation and amortisation
Other expenses
95 2,087 966 743 - 3,891
- - - - 2 2
(1) (305) (3) (673) - (982)
(12) (262) (3) (2) (40) (319)
(529) (1,375) (485) (203) (597) (3,189)
Operating (loss)/profit

(447) 145 475 (135) (635) (597)

Non-current assets

Intangible assets
Property, plant and equipment
62 873 482 - 1,505 2,922
17 2,958 25 11 420 3,431




Continuing operations
30 September 2018

Global
franchising
& design
UK
franchising
& retail
Ireland
franchising
& retail Supply Corporate Total
Global operational splits $'000 $'000 $'000 $'000 $'000 $'000

Revenue
Other income
Cost of inventories sold
Depreciation and amortisation
Other expenses
404 1,387 720 417 - 2,928
- 5 - 2 - 7
(37) (191) (2) (322) - (552)
(15) (81) (18) - (4) (118)
(827) (1,588) (637) (208) (517) (3,777)
Operating (loss)/profit

(475) (468) 63 (111) (521) (1,512)

Non-current assets

Intangible assets
Property, plant and equipment
62 873 482 - 1,480 2,897
23 247 28 2 23 323

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
11


1. General information

Cooks Global Foods Limited (“Company” or “Parent”), together with its subsidiaries (the “Group”) operate
in the food and beverage industry.

The Company is a limited liability company incorporated and domiciled in New Zealand and is listed on the
NZX Main Market board of the New Zealand stock exchange, having transitioned from the Alternative
Market Board during the half year.

Statutory base
The Company is registered under the Companies Act 1993 and is a FMC reporting entity under part 7 of
the Financial Markets Conduct Act 2013.

Reporting framework
The unaudited interim financial statements have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International
Financial Reporting Standards (“IFRS”) and other applicable New Zealand Reporting Standards as
appropriate for profit-oriented entities. The financial statements comply with IFRS. These policies have been
consistently applied to all periods presented, unless otherwise noted.

These financial statements for the six months ended 30 September 2019 have been prepared in accordance
with NZ IAS 34, Interim Financial Reporting and should be read in conjunction with the financial statements
published in the Annual Report for the year ended 31 March 2019. They also comply with the International
Accounting Standard 34 interim Financial Reporting (IAS 34).


Details of entities over which control has been gained or lost during the period
N/A

Details of associates and joint venture entities entered into during the period
N/A


2. Changes in significant accounting policies

Except as described below, the accounting policies applied by the Group in these consolidated interim
financial statements are the same as those applied by the Group in its consolidated financial statements for
the year ended 31 March 2019. The Group has not applied any standards, amendments and interpretations
that are not yet effective.

The changes in accounting policies are also expected to be reflected in the Group’s consolidated financial
statements as at and for the year ending 31 March 2020.

The Group has initially adopted NZ IFRS 16 Leases from 1 April 2019.

NZ IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as
a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease
liabilities representing its obligation to make lease payments. As a lessor, the Group has recognised lease
receivables representing its right to receive lease payments.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
12


The Group has applied NZ IFRS 16 using the modified retrospective approach, under which the cumulative
effect of initial application is recognised in retained earnings at 1 April 2019. Accordingly, the comparative
information presented for 2019 has not been restated – i.e. it is presented, as previously reported, under
NZ IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below.

a) Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or contained a lease
under NZ IFRIC 4 Determining Whether an Arrangement contains a Lease. The Group now assesses
whether a contract is or contains a lease based on the new definition of a lease. Under NZ IFRS 16, a
contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a
period of time in exchange for consideration.

On transition to NZ IFRS 16, the Group elected to apply the practical expedient to grandfather the
assessment of which transactions are leases. It applied NZ IFRS 16 only to contracts that were previously
identified as leases. Contracts that were not identified as leases under NZ IAS 17 and IFRIC 4 were not
reassessed for whether there is a lease. Therefore, the definition of a lease under NZ IFRS 16 was only
applied to contracts entered into or changed on or after 1 April 2019.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease and non-lease component on the basis of their relative stand-
alone prices.

b) As a lessee

The Group leases store and office properties. As a lessee, the Group previously classified these leases as
operating or finance leases based on its assessment of whether the lease transferred significantly all of the
risks and rewards incidental to ownership of the underlying asset to the Group. Under NZ IFRS 16, the
Group recognises right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance
sheet.

However, the Group has elected not to recognise right-of-use assets and lease liabilities for some leases
of low-value assets (e.g. IT equipment). The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.

Significant accounting policies

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-
of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and
impairment losses and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by
lease payment made. It is remeasured when there is:
 a change in future lease payments arising from a change in an index or rate;
 a change in the estimate of the amount expected to be payable under a residual value guarantee;
 changes in assessment of whether a purchase or extension option is reasonably certain to be exercised
or a termination option is reasonably certain not to be exercised; or
 any other change in the future lease payments or the lease term due to a lease modification that’s not
accounted for as a separate lease.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
13



The Group has applied judgement to determine the lease term for some lease contracts in which it is a
lessee that include renewal or termination options. The assessment of whether the Group is reasonably
certain to exercise such options impact the lease term, which significantly affects the amount of lease
liabilities and right-of-use assets recognised.

Transition

Previously, the Group classified all its leases as operating leases under NZ IAS 17. These include store
and office properties. The lease terms of these leases typically range from 10 to 20 years. Some leases
include an option to renew the lease for an additional period after the end of the non-cancellable period, or
an option to terminate the lease prior to the end of the non-cancellable period. Some leases provide for
additional rent payments that are based on changes in local price indices or market rental rates.

At transition, for leases classified as operating leases under NZ IAS 17, lease liabilities were measured at
the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate
as at 1 April 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by
the amount of any prepaid or accrued lease payments.

The Group used the following practical expedients when applying NZ IFRS 16 to leases previously classified
as operating leases under NZ IAS 17:
 applied a single discount rate to a portfolio of leases with reasonably similar characteristics;
 applied the exemption to not recognise right-of-use assets and liabilities of leases for which the
underlying assets are of low value; and
 excluded initial direct costs from measuring the right-of-use asset at the date of initial application.


c) As a lessor

The Group subleases the majority of its leased store properties to its franchisees. The Group has classified
these subleases as finance leases.

The accounting policies applicable to the Group as a lessor are not different from those under NZ IAS 17.
However, when the Group is an intermediate lessor the subleases are classified with reference to the right-
of-use asset arising from the head lease, not with reference to the underlying asset.

Significant accounting policies

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or
an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially
all of the risks and rewards incidental to ownership of the underlying asset, or the right-of-use asset in the
case of a sublease. If this is the case, then the lease is a finance lease; if not, then it is an operating lease.
As part of this assessment, the Group considers certain indicators such as whether the lease is for the
major part of the economic life of the asset.

Where the lease is classified as an operating lease, the Group recognises the lease payments from the
operating lease as income on a straight-line basis.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
14


Where the lease is classified as a finance lease, the Group recognises the assets held under a finance
lease in its statement of financial position and present them as a lease receivable at an amount equal to
the net investment in the lease. The net investment in the lease is initially measured at the present value of
the lease payments that are not paid at the commencement date, discounted using the interest rate implicit
in the lease, or in the case of a sublease, if the interest rate implicit in the sublease cannot be readily
determined, the discount rate used for the head lease (adjusted for any initial direct costs associated with
the sublease). The lease receivable is subsequently increased by the interest income on the lease
receivable and decreased by lease payment received. It is remeasured when there is a lease modification
that is not accounted for as a separate lease.

Transition
Previously, the Group classified all its subleases as operating leases under NZ IAS 17. On transition to NZ
IFRS 16, these leases were reassessed and classified as finance leases, since the subleases were for the
whole of the remaining terms of the head leases. These subleases have been accounted for as new finance
leases entered into at the date of initial application.

At transition, the right-of-use assets recognised from the head leases were disposed by entering into finance
leases. Since the interest rate implicit in the subleases cannot be readily determined, the discount rates
used for the head leases were used for measuring the lease receivables associated with the subleases.
Since the sublease contracts are further like-for-like when compared to the head leases (e.g. same duration
and payments), no gain or loss was recognised on the disposal of the right-of-use assets and the initial
recognition of the lease receivables. Subsequently, the interest income from the subleases is further equal
to the interest expense incurred on the related head leases.

Impact on financial statements

Impacts on transition

On transition to NZ IFRS 16, the Group recognised additional right-of-use assets, lease receivables and
lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised
below.
1 April
2019
$‘000
Right-of-use assets 2,854
Lease receivables 14,494
Lease liabilities (17,347)

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted
lease payments using its incremental borrowing rate at 1 April 2019. When measuring lease receivables for
subleases that were classified as finance leases, the Group discounted lease payments using the discount
rates used in the head leases.

Impacts for the period

As a result of initially applying NZ IFRS 16, in relation to the leases that were previously classified as
operating leases, the Group recognised $2,896,000 of right-of-use assets, $15,973,000 of lease
receivables, and $18,671,000 of lease liabilities as at 30 September 2019.

Also in relation to those leases under NZ IFRS 16, the Group has recognised depreciation expense and
interest expense instead of operating lease expense. For subleases classified as finance leases under NZ
IFRS 16, the Group has recognised interest income instead of rent income. During the six months ended
30 September 2019, the Group recognised $248,000 of depreciation expense, $557,000 of interest
expense, and $494,000 of interest income from these leases.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
15


3. Loss per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding for the period.

Diluted loss per share is determined by dividing the loss attributable to ordinary shareholders and the
weighted average number of shares outstanding for the effects of any dilutive potential ordinary shares.

Net tangible assets per share is determined by dividing the net asset value of the Group, adjusted by the
intangible assets, and the number of shares issued at the end of the period.


30-Sep-19 31-Mar-19

Weighted average ordinary shares issued

489,509,248 489,509,248
Basic and diluted loss per share (New
Zealand Cents) from continuing and
discontinued operations:

(0.30) (0.98)
Basic and diluted loss per share (New
Zealand Cents) from continuing operations:

(0.30) (0.98)
Net tangible assets per share (New Zealand Cents) : (1.68) (1.34)




4. 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. The par value is nil (2019: nil). All shares
are equally eligible to receive dividends and the repayment of capital.

Movements of share capital

30-Sep-19 31-Mar-19
Number of Shares issued:

No. of Shares No. of Shares
Ordinary shares opening balance

489,509,248 489,509,248
Ordinary shares issued

- -
Ordinary shares bought back on-market and cancelled - -
Total ordinary shares authorised at 31 March 489,509,248 489,509,248

Movements of share capital

30-Sep-19 31-Mar-19
Value of Shares issued:

$'000 $'000
Ordinary shares opening balance

42,517 42,687
Ordinary shares issued less share issue expenses - -
Ordinary shares bought back on-market and cancelled - -
Ordinary shares to be issued

- (170)
Total ordinary shares authorised at period end 42,517 42,517


At 30 September 2019, $nil of the ordinary share capital is unpaid (31 March 2019: $nil).

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
16


5. 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, TRS Investments Limited, Dairy Farm
Investments Limited, Dairy Farm Investments (Ruawhata) Limited, Jackson & Associates Limited, Weihai
Station Limited and a trustee of Nikau Trust.

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.


Transactions with related parties


The value of transactions with related parties during the periods were:


30-Sep 31-Mar

2019 2019

$'000 $'000

Purchases of goods and services

Purchase of management services

120 185
Property rental agreement with related party

- -
Purchase of other services

- -

Interest paid to related party

182 205

Other transactions

Satisfaction of related party receivables

- 998
Subscriptions for new ordinary shares

- -
Funding loans advanced by related parties

1,122 1,728
Subscriptions for ordinary shares to be issued

- -

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
17


Balances outstanding with related parties

30-Sep 31-Mar

2019 2019

$'000 $'000

Outstanding balances arising from purchases of
goods and services

Entities controlled by key management personnel 252 256
Other related parties

3,889 2,621

Loans to/from related parties

Loans to related party

Beginning of the year

- 1,302
Loan reduction

- (1,302)
End of period

0 0

Loans from related party

Beginning of the year

2,621 1,725
Loans advanced

1,122 1,728
Satisfaction of related party receivables

- (998)
Interest charged

182 205
Interest paid

(36) (39)
End of period

3889 2621



6. Capital Commitments, Contingent Liabilities

There were no capital commitments as at 30 September 2019 (31 March 2019: $nil).

There were no changes in capital commitments, contingent liabilities and contingent assets that would
require disclosure for the six months ended 30 September 2019 (31 March 2019: $nil).

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
18


7. Going Concern

The Group reported a loss of $1,489,000 (2018: $1,926,000) and operating cash outflows of $718,000
(2018: $964,000) for the six-month period to 30 September 2019.

As at 30 September 2019 the Group has reported net liabilities of $5,286,000 (2018: Net Liabilities of
$3,231,000) and current liabilities exceed current assets by an amount of $6,237,000 (2018: $7,258,000).

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 6 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 an 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 investment discussions in the United Kingdom with existing
and prospective Regional Franchisors to realise NZ$1.2 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$3.67 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.
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 up to NZ$2 million in the
United Kingdom, regional franchise sales of NZ$1.2 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 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.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
19



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.

8. Subsequent Events

The Company has agreed to extend the date out to 31 March 2020 by which Cooks Investment Holdings
Limited (CIHL), a company associated with Executive Chairman Keith Jackson, must satisfy the terms of
the equity underwriting agreement entered into in March 2017. This to enable the underwritten shares to be
available as part of the broader funding discussions being currently undertaken with other potential funding
parties.

There were no other material events subsequent to the end of the six-month period ended 30 September
2019 that would require disclosure.


9. NZ IFRS 15 “REVENUE FROM CONTRACT WITH CUSTOMERS”
NZ IFRS 15 Introduces a five-step process for revenue recognition with the core principle being for entities
to recognise revenue to depict the transfer of goods and services to customers in amounts that reflect the
consideration to which the entity expects to be entitled in exchange for those goods or services.
The Group elected to apply the retrospective cumulative effect method, with no restatement of comparative
period amounts. The cumulative effect of applying the new standard was included as an adjustment to the
opening balance of retained earnings recognised in the Statement of Changes in Equity for the 12 months
ended 31 March 2019.
From the 1st April 2018 any new franchise income or licence fee income was spread over the life of the
agreement.

The above treatment does not have a direct correlation with cashflows relating to the Group and the change
is for financial reporting purposes only.

Cooks Global Foods Limited
Notes to and forming part of the Unaudited Interim Financial Statements
For the six months ended 30 September 2019
20




10. NZ IFRS 9 “FINANCIAL INSTRUMENTS”
NZ IFRS 9 introduces new requirements for the classification and measurement of financial assets and
liabilities. These requirements improve and simplify the approach for classification and measurement of
financial assets compared with the requirements of NZ IAS 39.

The Group considers financial assets to be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual amounts in full. Based on historic information
and experience, the Group has assessed that there is low risk with its financial assets. The Group has not
made any further adjustments for the application of the new standard for the six months ended 30
September 2019 other than those made at 31 March 2019.

21

Company 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 Elliott (Appointed 30 May 2019)
Qiang Kui



Solicitors: Duncan Cotterill
Wellington


Bankers: ANZ Bank, Auckland


Auditors: BDO Auckland
Auckland


Share registry: Link Market Services Limited
Auckland