Preliminary Results of Cooks Global Foods

(CGF) : Cooks Global Foods Limited
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 29 June 2020

11689609_1


Results for announcement to the market
Name of issuer Cooks Global Foods Limited
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$4,001 1.7%
Total Revenue $7,164 20.7%
Net profit/(loss) from
continuing operations
$(3,259) 13.2%
Total net profit/(loss) $(4,566) 4.9%
Interim/Final Dividend
Amount per Quoted Equity
Security
It is not proposed to pay a dividend.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(0.0166) $(0.0124)
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to attached commentary.
Authority for this announcement
Name of person

authorised
to make this announcement
Keith Jackson
Contact person for this
announcement
Keith Jackson
Contact phone number 021 702 509
Contact email address Keith.jackson@cooksglobalfoods.com
Date of release through MAP

29 June 2020

Unaudited financial statements accompany this announcement.

NZX & Media Release 29 June 2020

PRELIMINARY FINANCIAL RESULTS FOR THE 12 MONTHS TO 31 MARCH 2020
Cooks reports positive operating income from
continuing business

SUMMARY

• Total group revenue from continuing activities increases 1.7% to $4 million
• Operating income before depreciation, amortisation & finance charges $1.1m profit
compared to prior year loss of $2.3m
• Operating profit from continuing operations after tax improves to $0.4 million from net loss
of $2.6 million last year reflecting a restructuring of the Group’s loss-making business
units.
• The Covid-19 impact in all markets applied from mid-March with the revenue declines
supported by various levels of government support packages that mitigated the full impact.
• There has been a slowing of new store growth as openings have been deferred due to the
Covid closed downs mandated by various governments.
• While there have been delays there have been no closures of existing stores or withdrawal
from opening plans of any new stores through the global network attributable to Covid-19.

Revenue from ongoing continuing operations was $4.0m which was 1.7% ahead of last year’s
comparative numbers, total Group total revenue for the 12 months rose 20.7% to $7.2m as
we saw the full year impact of the short term holding of 3 stores in the UK contribute to the
sales value growth. These stores along with the Middle East company operations and the New
Zealand FMCG operations have been determined to be non-core and either have been or are
being sold as part of the drive to improve cash profitability.
Net income before tax from continuing operations improved to $0.4 million from a loss of $2.6
million in the same period a year ago, reflecting the benefits of prior restructuring and reduction
of costs.
Cooks Executive Chairman Keith Jackson said: The group is focused on profitably growing
core business and divesting non-core activities and this has resulted in benefits during FY20
which will be further evidenced in FY21 and beyond.

“The UK business was re-organised in FY20 with a focus on developing regional master
franchisees and the strengthening of operational management. To date three regions have
been sold and the results of this were beginning to show through with faster growth in the as
local developers ramped up activity. This has slowed in the Covid period but is regaining
momentum as controls are relaxed”.

As discussed above 3 stores were held & operated by the company for various periods during
FY19 & FY20 as part of a plan to sell the businesses to new franchisees. This process is well
advanced and the stores are classified as discontinued business.

The focus on the core business has meant that we are now focussed exclusively on internal
design for our own franchised cafes and we have seen cost savings from these initiatives
flowing through to our results with the design operations breaking even financially and
providing excellent service to our international operations.

The company has restructured the Middle East operations and are now working with key
supply partners to provide local servicing to our franchisees rather than having our own
operations and staff in the region. This has resulted in cost reduction whilst aligning supply
sources with our UK and Irish businesses.

With no café operations in New Zealand that provided synergies for the FMCG business
operated under the Scarborough Fair tea and Grounded coffee brands it was determined that
these were non-core and a conditional sale agreement has been reached with completion of
the sale expected by the end of June 2020.

The major focus of the business is cafes in UK, Ireland & Europe plus providing support to our
master franchise partners in the Middle East, Pakistan, Canada & Indonesia.

Within this definition the acquisition of Triple Two Coffee provides a significant benefit to our
scale and critical mass in the UK. Triple Two is a fast-growing café chain in the UK with a very
similar philosophy and vision to CGF. The initial stages of the sale agreement were concluded
for shares in CGF and the vendors will stay in the company for at least 3 years and have the
chance to obtain further consideration by improved performance. Triple Two adds 13 stores
to the existing 44 store UK network and provides vital critical mass.

This announcement is based on unaudited financial statements. The group financial
statements are in the process of being audited. The auditor of the prior year financial
statements issued a disclaimer of opinion, this will impact the current year audit opinion.

BALANCE SHEET
Borrowings decreased to $5.5 million from $7.0 million at the same time a year ago. These
include loans from entities associated with Executive Chairman 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.
Lease receivables of $18.3m and right-of-use assets of $2.4m, lease liabilities of $20.8m have
been recognised this year, following the adoption of IFRS 16 Accounting Standard for Finance
Leases from 1 April 2019.

CHINA BUSINESS CARRYING VALUE

The Directors have been carefully reviewing the carrying value of the China investment in
accordance with the current activities of the Chinese company and its future plans and have
decided to re-evaluate the carrying value.

In the later part of 2019, there has been continued restructuring of the business and the closure
of all but 8 cafes due to adverse trading that was further exacerbated during the lockdown
period in China from Covid-19. Of the operational cafes at the end of March 2020, 6 were in
Shandong Province, one in Beijing and the other in Shanghai.

During the FY20 financial year the Chinese company purchased a coffee roastery which has
the capacity of 1,800 tonnes of coffee per annum, the roastery has secured the coffee supply
to a number of high profile café customers in Shanghai.

There are numerous opportunities for growth in all segments and there are a number of new
business opportunities being worked on by the high calibre team based in Shanghai. The
Chinese operations are now undergoing a significant re-focus of their operations under the
lead of the majority shareholders. The Chinese company will no longer seeking to grow a large
franchise operations in China, instead is pursuing an opportunity related to self-serve coffee
outlets. There is no requirement for Cooks Global Foods to provide any funds for this new
investment strategy. However, as a result of this change in business, the Directors have
concluded that it is probable there will be no positive cash-flows from this investment in the
near future, and that no value can be ascribed to any potential future value. As a result, the
Directors have fully impaired the investment in the associate as at 31
st
March 2020.This will
lead to a write down of $2.5m in the FY20 accounts.

OUTLOOK
Mr Jackson said that the FY21 year will be one where there will be a significant impact of the
Covid-19 virus and the related shutdowns in all markets. The major markets that CGF is
present in are UK & Ireland and these countries are slowly emerging from the lockdowns that
have meant that the store sales in these markets for the first quarter will be very small as there
were only certain stores that were able to open for takeaway coffee and food.

The sales impact has been partially offset by government support programmes that have
assisted in covering key cost areas such as Labour and Rent.

The lack of income for the April – June period will impact the earnings and the picture for the
full year will depend on the recovery patterns in the July – March 2021 period which are
unknown and very difficult to predict with any degree of accuracy.

We do not expect that we will see a return to a more normal trading situation until the second
half of FY21.

In the Middle East, Pakistan and Indonesia where we have stores operated by Master
Franchisees the position is similar with the majority of outlets closed by government decree.
Saudi Arabia which is the largest market in terms of store numbers and sales has seen the
temporary closure of the city mall outlets which are the majority of the outlets, the airport stores
which are normally significant sales outlets have continued to be open but the volume of
travellers has been significantly reduced. Saudi Arabia and other countries are beginning to
re-open businesses although it is too early to confirm sales trends compared to last year.
However it is significant that Saudi Arabia is not allowing international visitors to come into the
country for this year’s Haj celebration. Jeddah Airport, where our Master Franchisee has 2
cafes is normally very busy with the influx of international pilgrims but this year will be different
due to the virus impact.

TRIPLE TWO ACQUISITION

CGF has recently acquired the fast growing Triple Two Café chain, Triple Two Coffee
franchises 13 cafes in the UK and has been one of the most highly recruited franchises in the
UK since the start of 2019. Triple Two currently operate across a number of regions in the UK,
with the initial flagship store opening in Swindon in August 2016. They now have several sites
trading in major towns, cities and shopping centres across the UK, such as London,
Colchester, Oxford, Cheltenham, Cirencester and Hove. Due to the unrivalled demand the
brand has seen, there is currently a pipeline of 15 sites expected to open by the end of 2020,
despite the COVID 19 pandemic, the next being in Manchester.

Triple Two originated from seeing an opportunity in the market to create a brand where
customers can enjoy speciality quality coffee alongside freshly prepared grab and go style
food in a relaxing, modern and unique environment.

David Hodgetts, Co-Founder and Managing Director of Triple Two Coffee commented on the
acquisition by Cooks Global Foods.

“The board of directors have been working with the Cooks Global Foods board for 12 months
to secure this transaction. All through this period the chemistry between the 2 organisations
has been exceptional and a major reason this was completed even during these challenging
COVID 19 times.”

“The Triple Two board recognised the strong synergies between the organisations which
together make a fabulous combined business. The exciting brand of Triple Two now has the
backing of a larger organisation from the industry which will enable us to go from strength to
strength with part of the acquisition ensuring that all the Directors will continue driving the
business for years to come.”

“The Triple Two model is to create a business that gives customers an experience where they
can get great coffee and fantastic food. We will also look to accelerate our focus in our 'cafe
bar' style sites, retail range, online coffee subscriptions and international expansion, with our
first unit in Paris anticipated to still open this year.”

The acquisition fits with building scale and critical mass in our core UK market area. Refer to
previous NZX announcement dated 19
th
June 2020 for further details.


BUSINESS PERFORMANCE

THE UNITED KINGDOM
UK store numbers increased to 44 at the end of March up from 39 at the same time a year
ago. During the year we opened 7 stores and closed 2. Constant currency coffee store sales
for the year increased to $20.9 million from $20.6 million in the same period a year ago. Most
of the new stores were opened in the second half of FY20 and sales for the first 2 months of
the final quarter were 9.2% up on FY19 but this was offset by the closures due to Covid-19 in
March when sales were 73% of FY19.

The UK business has a strategy to establish regional franchise developers and as part of this,
it has restructured the regional franchise fee and royalty schedule to better incentivise
franchisees.

Continuing operations in the UK division demonstrate positive operating profits of $0.2 million,
with discontinued operations representing operating losses of $0.8 million.

Triple Two profitability prior to the acquisition was $1.1m for the 2019 calendar year. It is
expected to be additive to earnings and cash flows post acquisition in FY21.

As the UK recovers from the Covid-19 impact we look forward to seeing the momentum return
and with the combined Esquires and Triple Two brands we believe we are well placed to
deliver strong and sustainable results.


IRELAND & EUROPE
Constant currency total store sales in Ireland were $16.4 million, 4.5% ahead of FY19 despite
the impact of COVID-19 on March 2020 sales. During the year we added one new store in
Ireland and that was only opened for 4 days in March before it had to close due the government
regulations. Prior to this constant stores were 5.1% ahead of the prior year in local currency.

The region posted an operating profit of $0.2 million compared against an operating loss of
$0.2 million in the same period a year ago, resulting from increased revenue in Ireland offset
against increased costs representing further investment in the European region than the
previous year.

GLOBAL
Cooks operating revenue in the segment fell from $1.4 million to $1.3 million, with the fall
relating to discontinued international product sales to the Middle East. The global business
posted a favourable operating profit of $0.8 million compared to an operating loss of $0.1
million in the same period a year ago, largely due to significantly lower staffing costs, legal
and consulting fees than incurred in the prior year. In particular, there was a significant
reduction in staffing related to the Design business, equating to a comparative cost saving of
$0.7 million.

SUPPLY AND CORPORATE
Revenue at the supply businesses increased to $1.2 million from 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.

Supply operating losses rose to $0.4 million compared to $0.3 million at the same time a year
ago. Corporate operating losses were $0.9 million, improved from an operating loss of $1.6
million last year due to overall reduced expenses, particularly in relation to legal and consulting
fees.

SUMMARY
CGF generated significant momentum in the second half of FY20 and this had begun to show
benefits in scale and profitability. The first stages of these benefits are evidenced in the result
for the FY20 year. The timing of the Covid-19 pandemic has been unfortunate to say the least
and at this time we cannot accurately determine the impact. We believe that the business
model is sound with the focus on clearly defined core business areas that we can scale and
we are well placed to emerge from the outbreak with our ability to respond to local customer
preferences through the franchise network placing us well for the recovery.


For further information:
INVESTORS
KEITH JACKSON
Executive Chairman
+64 21 702 509

ABOUT COOKS GLOBAL FOODS
Cooks Global Foods operates in world markets and is listed on the NZX market operated by
NZX Limited in New Zealand under the code CGF. It owns the intellectual property and master
franchising rights to Esquires Coffee Houses worldwide (excluding New Zealand and
Australia). Cooks currently operates or franchises Esquires Coffee in Canada, the United
Kingdom, Ireland, Portugal, Bahrain, Kuwait, Saudi Arabia, Jordan, Pakistan, Indonesia and
China. For more information visit: www.cooksglobalfoods.com

1
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 the revenue of Cooks Global Foods which is reported
in its financial statements as the two do not directly correlate.

B: Cooks Global Foods Limited
Preliminary announcement for the year ended 31 March 2020
Preliminary unaudited full year report on consolidated results (including the results for the previous corresponding
year) in accordance with Listing Rule 10.4.2.
This report has been prepared in a manner which complies with generally accepted accounting practice and
gives a true and fair view of the matters to which the report relates and is based on unaudited financial statements.
The accounting policies used in the preparation of these financial statements are consistent with those used
in the interim financial statements for the six months ended 30 September 2019 and in the audited financial
statements for the year ended 31 March 2019.
The Listed Issuer has a formally constituted Audit & Risk Committee of the Board of Directors.
UnauditedAudited.
C: Consolidated Statement of Financial PerformanceMar-20Up / DownMar-19
$NZ '000%$NZ '000
Revenue4,0011.7%3,936
Cost of sales(133)88.6%(1,171)
Gross profit3,86839.9%2,765
Operating expenses and staff costs(2,789)46.1%(5,173)
Other income0-100.0%103
Operating profit before depreciation and amortisation1,079146.8%(2,305)
Depreciation and amortisation(700)-165.7%(264)
Operating profit/(loss)379114.8%(2,569)
Share of net loss of associates accounted for using the equity method(168)57.9%
(399)
Impairment of investment of associates(2,520)0.0%
-
Finance costs(925)-22.8%(753)
Net loss for the year from continuing operations(3,234)13.2%(3,725)
Net loss for the year from discontinued operations
(1,307)
-20.1%(1,088)
Net loss for the year(4,541)5.6%(4,813)
Earnings Per Share (Cents per share):(0.87)(0.98)
UnauditedAudited
D: Consolidated Statement of Financial PositionMar-20Up / DownMar-19
$NZ '000%$NZ '000
Assets
Cash and cash equivalents253450
Trade and other receivables1,487296
Inventories96219
Other current assets608761
Property, plant and equipment 664787
Deferred tax assets
507-
Investment in Associates
-2,688
Right-of-use assets
2,394-
Lease receivables18,3230
Other non-current assets
15
15
Total tangible assets24,347366.8%5,216
Intangible assets2,840-0.1%2,842
Total assets27,187237.4%8,058
Liabilities
Trade and other payables6,7814,565
Bank overdraft0148
Lease liabilities20,8030
Borrowings and other liabilities5,4957,044
Total liabilities33,079181.4%11,757
Net (liabilities)/assets(5,892)59.3%(3,699)
Equity
Share capital45,54942,517
Accumulated losses(53,116)(48,550)
Foreign currency translation reserve(435)249
Share based equity reserve2,1632,163
Total equity attributable to equity holders of the Company(5,839)61.3%(3,621)
Non-controlling interests(53)(78)
Total equity (5,892)59.3%(3,699)
CentsCents
Net tangible assets per share (1.66)(1.24)

UnauditedAudited
E: Statement of Changes in EquityMar-20Up / DownMar-19
$NZ '000%$NZ '000
Loss for the period(4,566)5.1%(4,813)
Net increase in issued share capital3,032405
Foreign currency translation reserve(684)150
Non-controlling interests
25
0
Movements in equity for the period(2,193)48.5%(4,258)
Equity at start of the period(3,699)1,771
IFRS 15 Revenue adjustment to Accumulated Losses
(1,212)
Equity at end of the period(5,892)59.3%(3,699)
UnauditedAudited
F: Consolidated Statement of Cash FlowsMar-20Up / DownMar-19
$NZ '000%$NZ '000
Loss for the period(4,541)5.6%(4,813)
Add/(Less):
Depreciation & amortisation834264
Impairment of intangibles
2,520-
Share of losses of associates168399
Net movements in working capital(274)1,746
Net cash flow from operating activities(1,293)46.2%(2,404)
Net cash flow from investing activities 490352.3%(194)
Net cash flow from financing activities 755-77.6%3,366
Net (decrease)/increase in cash held(49)-106.3%768
Opening bank balance302(466)
Closing bank balance25316.1%302
Made up as follows:
Cash and cash equivalents253450
Bank overdraft0(148)
25316.2%302
G:Material Acquisition of SubsidiariesN/A
H:Material Disposal of SubsidiariesN/A
I:Material Investment in Associate
(a) Name of associate entity
(b)Percentage of ownership held20.97%
(c)Contribution to consolidated loss for the period
-$2,688,000
(d)Date from which such contribution has been calculated1/04/2019
(e)Contribution to consolidated profit/(loss) for the
previous corresponding period
-$399,000
(f)Date from which such contribution has been calculated1/04/2018
(g)Date of disposalN/A
Shanghai Yinshi Food and
Beverage Management Company
Limited

J:Issued and Quoted Securities at End of Current Period
Category of Securities IssuedNumberQuoted
ORDINARY SHARES:
Total number of shares in issue525,979,949 525,979,949
Issued during the current period36,470,701 -
K:Comments by Directors
If no report in any section, state NIL. If insufficient space below, provide details in the form of notes to be attached to this report.
(a)Material factors affecting the revenues and expenses of the group for the current full year or half year
Refer to Commentary.
(b)Significant trends or events since the end of the current full year or half year
Refer to Commentary.
(c) Changes in accounting policies since last Annual Report and/or last Half Yearly to be disclosed:
NZ IFRS 16 "Leases"
a) Definition of a lease
b) As a lessee
Transition
c) As a lessor
Transition
The Group has initially adopted NZ IFRS 16 Leases from 1 April 2019. This adoption was reflected within the last Half Yearly results for
the six months ended 30 September 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.
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 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.
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.
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.
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.
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.

d) Impact on financial statements
Impacts on transition
1-Apr
2019
$‘000
Right-of-use assets
2,828
Lease receivables
14,751
Lease liabilities
-17,579
Impacts for the period
(d) Critical Accounting Policies - Management believes the following to be critical accounting policies. That is they are both important
to the portrayal of the Issuer's financial condition and results, as they require management to make judgments and estimates
about matters that they are inherently uncertain
Impairment of Assets
Amortisation of Intangibles
Discontinued Operations
NZ IFRS 16 "Leases"
a) As a lessee
b) As a lessor
(e) Management's discussion and analysis of financial condition, result and/or operations (optional) - this section should contain
forward looking statements that should outline where these involve risk and uncertainty
Refer to Commentary.
29-Jun-20
(signed by) Authorised Officer of Listed Issuer(date)
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.
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.
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:
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.
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.
As a result of initially applying NZ IFRS 16, in relation to the leases that were previously classified as operating leases, the Group
recognised $2,993,000 of right-of-use assets, $18,323,000 of lease receivables, and $20,804,000 of lease liabilities as at 31 March
2020.
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 year ended 31 March 2020, the Group recognised $578,000 of depreciation expense,
$1,213,000 of interest expense, and $1,054,000 of interest income from these leases.
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.
- 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
SEGMENT INFORMATION
FOR THE YEAR ENDED 31 MARCH 2020
UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited
Global
franchising
& design
UK
franchising
Europe
franchising
& retail
Supply CorporateTotal
Global operational splits$'000$'000$'000$'000$'000$'000
Revenue
1,0781,4911,1541711074,001
Cost of inventories sold(3)(6)(13)(111)-(133)
Other expenses(168)(818)(972)(6)(825)(2,789)
Operating profit/(loss) before depreciation &
amortisation for the year
90766716954(718)1,079
Depreciation and amortisation(15)(521)(6)-(158)(700)
Operating profit/(loss) for the year89214616354(876)379
Non-current assets
Intangible assets47845467-1,4812,840
Property, plant and equipment 152,70425-3053,049
FOR THE YEAR ENDED 31 MARCH 2020
UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited
UK retail
Middle
East
franchising
& retail
USA
franchising
& retail
Canada
franchising
& retail SupplyTotal
Global operational splits$'000$'000$'000$'000$'000$'000
Revenue1,899222--1,0423,163
Cost of inventories sold(605)---(1,009)(1,614)
Other expenses(1,949)(243)(33)(1)(496)(2,722)
Operating profit/(loss) before depreciation &
amortisation for the year
(655)(21)(33)(1)(463)(1,173)
Depreciation and amortisation(131)---(3)(134)
Operating profit/(loss) for the year(786)(21)(33)(1)(466)(1,307)
Non-current assets
Intangible assets------
Property, plant and equipment ----99
FOR THE YEAR ENDED 31 MARCH 2019
AuditedAuditedAuditedAuditedAuditedAudited
Global
franchising
& design
UK
franchising
& retail
Ireland
franchising
& retail
Supply Corporate Total
Global operational splits$'000$'000$'000$'000$'000$'000
Revenue1,3602,5911,167818-5,936
Other income1--1101103
Cost of inventories sold(56)(435)(2)(678)-(1,171)
Other expenses(1,410)(2,797)(1,337)(487)(1,655)(7,686)
Operating profit/(loss) before depreciation &
amortisation for the year
(105)(641)(172)(346) (1,554)(2,818)
Depreciation and amortisation(29)(188)(36)(1)(10)(264)
Operating profit/(loss) for the year(134)(829)(208)(347) (1,564)(3,082)
Non-current assets
Intangible assets50845467-1,4812,843
Property, plant and equipment 19715241217787
Continuing operations
Continuing and discontinued operations
Discontinued operations