The Warehouse Group 2021 Interim Results Announcement
25 March 2021
NZX Limited
The Warehouse Group Limited
Unaudited results for the 26 weeks ended 31 January 2021
The following are attached in relation to The Warehouse Group’s Interim Result for the period to 31
January 2021:
1. Results Announcement
2. Media Release
3. Investor Presentation
4. Interim Financial Statements for the 26 weeks ended 31 January 2021
5. Auditor’s Independent Review Report
6. Distribution Notice
7. Quarterly Sales Report
Jonathan Oram
Chief Financial Officer
ENDS
Contact details regarding this announcement:
Investors and Analysts: Jonathan Oram, Chief Financial Officer
To be contacted via Kim Russell
+64 9 488 3285 or +64 21 452 860, kim.russell@thewarehouse.co.nz
Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Jordan Schuler
+64 21 143 6930, media.enquiries@thewarehouse.co.nz
The Warehouse Group Limited
26 The Warehouse Way
Northcote, Auckland 0627
PO Box 33470 Takapuna
Auckland, New Zealand 0740
phone +64 9 489 7000
fax +64 9 489 7444
web www.thewarehousegroup.co.nz
---
Results for announcement to the market
Name of issuer The Warehouse Group Limited
Reporting Period 26 weeks to 31 January 2021
Previous Reporting Period 26 weeks to 26 January 2020
Currency New Zealand dollars
$1,808,255
$1,808,255
$54,965
$54,965
Interim Dividend
Record Date 07 April 2021
Dividend Payment Date 22 April 2021
Contact phone number
Contact email address
Date of release through MAP
Unaudited financial statements accompany this announcement.
up 88.5 %
Imputed amount per
Quoted Equity Security
Total net profit/(loss)
25 March 2021
$0.13000000
$0.05055556
Authority for this announcement
Name of person authorised to
make this announcement
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Jonathan.Oram@thewarehouse.co.nz
81.1 cents (31 January 2021) 66.9 cents (26 January 2020)
The investor presentation and media release which accompany this
announcement, provide information and commentary to explain the financial
performance of the Group for the 26 week period ended 31 January 2021.
09 217 7651
up 7.4 %
Contact person for this
announcement
Jonathan Oram (Group Chief Financial Officer)
Jonathan Oram (Group Chief Financial Officer)
Current period
Net tangible assets per
Quoted Equity Security
Amount per Quoted Equity
Security
Prior comparable period
The Warehouse Group Limited
Results for announcement (for Equity and Debt Security issuer)
Amount (000s)Percentage change
Revenue from continuing
operations
Net profit/(loss) from
continuing operations
up 83.6 %
Total Revenue
up 7.4 %
---
______________________________________________________________
To: Market Information Services Section
NZX Limited
_________________________________________________________________________________
Auckland, Thursday 25 March 2021
The Warehouse Group half year Net Profit After Tax up 88.5% on previous corresponding period
1
Highlights
• Group sales up 7.4% to $1,808.3m
• Gross profit margin up 260 basis points to 36.2%
2
with Operating Profit
3
up 125.4% to
$153.0m
• Four brands including The Warehouse, Noel Leeming, Warehouse Stationery and Torpedo7
all reported record operating profits
• Adjusted Net Profit After Tax
4
of $111.0m for the half year, an increase of 140.2%
• Reported Net Profit After Tax of $55.0m for the half year, an increase of 88.5%
• Interim dividend of 13c per share declared, following special dividend of 5 cents per share
declared in February 2021
The Warehouse Group confirmed today a record half year result for the FY21 first half (“FY21 H1”) with
Adjusted Net Profit After Tax of $111.0m, up 140.2% on the previous corresponding period. Group sales
were up 7.4% to $1,808.3m with online sales growth of 50.3%, making up 11.9% of total Group sales.
Group CEO Nick Grayston said the record result was pleasing following the 2020 financial year of
disrupted trading conditions.
“Despite the interruption to trading by the Auckland COVID-19 level 3 lockdown of last August, the
business performed well, demonstrating the ability to adapt and flex amid business interruption”, said
Mr Grayston. “As a result of the hard work to execute our transformation by our whole team over the
last few years, we were able to drive significant gross profit improvement and cost leverage. I want to
thank the team for their resilience and dedication during this difficult period”.
The 7.4% increase in sales revenue contributed to Gross Profit increasing 15.8% to $655m. Group Gross
Profit Margin increased 260 basis points to 36.2%. Major contributors to Gross Profit Margin included
increased customer demand, continued benefit from everyday low pricing (EDLP) and investment in
improved sourcing capability in The Warehouse. Other brands benefited from better inventory
management, leading to improved sell-through. Group Operating Profit increased 125.4% on the prior
period to $153.0m.
Reported Net Profit After Tax, including unusual items, increased 88.5% from $29.2m to $55m. Unusual
items include the repayment of the $67.6m (before tax) wage subsidy in December 2020, while $11.3m
(before tax) relates to restructuring costs and continued investment in our transformation, which is
expected to have ongoing benefits.
1
26 weeks ending 31 January 2021 compared to 26 weeks ending 26 January 2020.
2
Gross Profit margin adjusted for rebates, freight to store and changes in stock provisioning.
3
Adjusted for unusual and non-trading items as presented on slide 18 of the FY21 Interim results presentation
and Note 5 of the Interim Financial Statements for the half year ended 31 January 2021.
4
Adjusted Net Profit After Tax adjusted for unusual items
The Warehouse sales increased 3.0% to $967.3m despite the Auckland region experiencing 18.5 days of
COVID-19 lockdown in August when stores were unable to trade. During the period of the lockdown in
August The Warehouse sales were down 17.4% year on year.
Warehouse Stationery continued to build on its momentum from FY20, delivering another record profit
with first half sales of $136.6m, an increase of 2.1% on the prior period.
Noel Leeming had another record first half with sales growth of 15.7% to $593.2m. “We were particularly
pleased with Noel Leeming’s online sales increase of 85% and a 93% rise in Click & Collect fulfilment with
the majority utilising our 1-hour service, showing that customers are increasingly comfortable with online
purchases since COVID-19 lockdowns,” said Mr Grayston.
Torpedo7 also experienced strong online sales growth with an increase of 66% and total Torpedo7 sales
for the period increasing 29.0% on the same period as last year to $84.9m. “Simon West and the team
have started to see the benefit of all of their hard work reversing profit losses as we get to scale and
improve merchandising and operations”.
TheMarket.com has continued to scale and now offers 2.5 million active products, and 4,490 brands from
more than 600 merchants. 9.2 million online sessions were completed in FY21 H1, up 268% compared
to the same period last year. “We continue to invest strongly in this growth platform to provide
increasing choice and convenience to customers,” said Mr Grayston.
Across the Group customer demand continues to be strong with stock levels and supply remaining well
controlled. While we see isolated issues with suppliers and our supply chain around categories such as
whiteware, we will continue to monitor and manage appropriately.
The Group’s strong financial performance and tight inventory management has resulted in cash on hand
at half year end of $183.6m and total liquidity including cash and available facilities of $513.6m (FY20 H1:
$236.7m).
Chair Joan Withers confirmed an interim dividend for the FY21 half year of 13 cents per share. “The
interim dividend follows the special dividend we declared in February 2021 of 5 cents per share and
reflects the strong Christmas trading and a continuation of elevated consumer spending in retail
combined with the benefits of operational leverage as a result of our transformation investment”, Ms
Withers said.
The dividend will be fully imputed and paid on 22 April to Shareholders on the Group’s share register as
at the close of business on 7 April.
Due to the continued uncertainty in the trading environment the Board does not consider it
appropriate to provide guidance at this time. The Board will continue to assess this position
ahead of year end.
ENDS
Contact details regarding this announcement:
Investors and Analysts: Jonathan Oram, Chief Financial Officer
To be contacted via Kim Russell
+64 9 488 3285 or +64 21 452 860, kim.russell@thewarehouse.co.nz
Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Jordan Schuler
+64 21 143 6930, media.enquiries@thewarehouse.co.nz
---
The Warehouse Group
FY21 Interim Results
25 March 2021
We have
transformed –
Helping Kiwis
live better
every day
2
CHAIR’S UPDATE03
Joan Withers
GROUP UPDATE07
Nick Grayston
GROUP FINANCIALS13
Jonathan Oram
DIVISIONAL PERFORMANCE23
Jonathan Oram
OUTLOOK29
Joan Withers
CHAIR’S
4
2.2m
average customer
store visits per week
1.Adjusted Net Profit After Tax (NPAT) is before unusual itemsand is a non-GAAP measure. A reconciliation between Adjusted and Statutory NPAT is located on slide 18.
2.Liquidity is calculated as cash plus undrawn bank facilities of $330m.
50.3%
growth in
online sales
106.3%
growth in Click &
Collect fulfilment
Group Sales ($m)
+7.4%
Strong Cash Position ($m)
$183.6m
Adjusted NPAT
(1)
($m)
+140.2%
Gross Profit ($m)
+15.8%
33.6%36.2%
Increased Gross Profit Margin
$236.7m$513.6m
Increased Liquidity and no Debt
(2)
Dividend cancelled
due to COVID-19
Special 5.0cps
Interim 13.0cps
Return to paying dividends
7.9%11.9%
Online Sales as % of total sales
Performance and operating update
•Following a year of interrupted and uncertain trading conditions in 2020, and despite Auckland entering another Level 3 lockdown
for two weeks in August 2020, the six months ending January 2021 (“FY21 H1”) has delivered a record result and strong platform
for the FY21 financial year.
•The Warehouse Group (“the Group”) total retail sales were $1,808.3 million for FY21 H1, up 7.4% on the prior period
(1)
, with online
sales continuing its growth trend of last year, increasing 50.3% and making up 11.9% of all Group sales.
•The Group delivered Reported Net Profit After Tax of $55.0 million in FY21 H1, up 88.5% on the prior period, and Adjusted Net
Profit After Tax
(2)
of $111.0 million, up 140.2% on the prior period.
•Increased customer demand in FY21 H1, along with continued execution of Every Day Low Price (“EDLP”) in The Warehouse and
less discounting across other brands, contributed to significant margin increase. Operating Profit
(3)
was $153.0 million in FY21 H1,
up 125.4% on the prior period, and Operating Profit Margin increased from 4.0% to 8.5%.
•Overall we grew slightly ahead of the market
(4)
, focusing on delivering what customers need, when they need it, with top category
sales in consumer electronics, home and outdoor, all while maintaining careful focus on not driving unprofitable sales.
•Due to strong operational performance, sustained sales momentum and strong financial position, the Group was able to repay the
wage subsidy of $67.6 million received in March 2020 for our 11,000 employees.
•Customer demand continues to be strong and stock levels and supply remain well controlled. However, we do see isolated issues
with suppliers’ ability to fulfil inventory requirements and continue to monitor this closely.
5
UPDATE
1.26 weeks ending 31 January 2021 compared to 26 weeks ending 26 January 2020.
2.Adjusted Net Profit After Tax (NPAT) is before unusual itemsand is a non-GAAP measure. A reconciliation between Adjusted and Statutory NPAT is located on slide 18.
3.Adjusted for unusual and non-trading items as presented on slide 18 and refer note 5 of the Interim Financial Statements for thehalf year ended 31 January 2021.
4.Based on market share of total retail spend (including grocery and fuel).
Dividend and review of Dividend Policy
•The Board took a cautious approach to cash preservation in FY20 due to COVID-19 and operational uncertainty, resulting in takingthe
difficult decision to cancel the FY20 interim dividend and declared no FY20 final dividend.
•However, following stronger than expected trading performance in November and December, the Board declared a special dividendof5
cents per share in February 2021.
•The Directors have undertaken a review of the Group dividend policy, including a review of our policy compared to market practice and
other listed retailers, taking into account current and forecast Group operational cashflow, forecast capital expenditure andliquidity
requirements. As a result, the Directors approved a new dividend policy in March 2021.
The new policy is to distribute at least 70% of the Group's full year adjusted net profit, at the discretion of the Board and
subject to trading performance, market conditions and liquidity requirements.
•This dividend policy will provide the Group flexibility to maintain a stable capital structure, allowing for capital expenditureto invest for
future growth, and progressive and sustainable dividends. The payment of special dividends is included within this policy where an
additional dividend may be paid outside the interim and final dividends. The Group maintains a healthy balance of imputation credits.
•In accordance with this new policy the Board has declared a fully imputed FY21 interim dividend of 13.0 cents per ordinary shareto be
paid on 22 April 2021 to all shareholders on the Group's share register at the close of business on 7 April 2021.
6
UPDATE
8
AND CORE VALUES
Think customer
Whakaarohia te kaiutu
We put the customer first in
everything we do
Own it
Kia ngaio
We walk the talk and make
things happen
Do good
Kia oha
We are one team, standing
up for our people, our planet
and our communities
Helping Kiwis live better every day
To build New Zealand’s most sustainable, convenient and customer-first company
Build a customer
ecosystem
Build the future
experience
Invest in our
infrastructure to excel
in retail fundamentals
Customer-first service and
product offering
Ethical and Sustainable
performance
Customer-first offering
powered by data
Frictionless on-demand
shopping experience
9
PRIORITIES
Engage new and existing
customers by better solving
their needs and wants
Offer a seamless and
frictionless customer
experience
Build a
customer
ecosystem
Build the future
experience
Invest in our
infrastructure
to excel in retail
fundamentals
✓Launched new website for The Warehouse
✓Continued investment in TheMarket.com,
providing 2.5m customer choices
✓Improved inventory management –reducing
in-store SKUs by 11%
✓Enhanced range optimisation
FY21 H1 AchievementsKey Strategic Themes
Meet & exceed
changing
consumer
behaviours
Leverage footprint
and develop
supply chain
“What I want,
where I need it,
when I choose”
✓Developed mass personalisation at scale
✓Established same-day Click & Collect at The
Warehouse
✓Scaled one-hour Click & Collect at Noel
Leeming
✓6 SWAS implementations
Best in NZ retail
performance
metrics
Strong corporate
and brand
reputation
Long term financial
security
✓Decreased stock on hand by 14% to
$497.7m at half year end
✓Reduced aged inventory as percentage of
finished goods to 5.4%
✓#8 in 2020 Colmar Brunton Top 20 Corporate
Reputation Index
✓Liquidity increased to $513.6m, with no debt
ECOSYSTEM
We start everything by focusing on our customers.
We wrap our customer experiences around three
unified enablers –our people, our platforms, our data.
LOYALTY
✓Continued to grow our existing loyalty programmes: myNoelLeeming,
Torpedo7 Club, TheMarket Club, and BizRewards
✓Successfully launched a loyalty programme trial in The Warehouse
ADVERTISING
✓Dedicated media centres to better service and capture supplier
funding
✓Drove +20% increase in retail advertising income (vs. FY20 H1)
FULFILMENT
✓Established same-day click & collect at The Warehouse
✓Scaled one-hour click & collect at Noel Leeming
SERVICES
✓Noel Leeming consultation revenue +375% (vs. H1 FY20)
✓Refreshed The Warehouse & Warehouse Stationery Protection
Service plans with customers with sales up 260%
✓Expanded use of AI, chat bots, and digital humans to drive improved
personalisation and to better solve customer problems, while
increasing team member engagement and effectiveness
PAYMENTS
✓Launched Purple Visa interest-free into The Warehouse and
Warehouse Stationery
✓Expanded our financing solutions now extending from ”buy now, pay
later” to business leasing
SHOPPING
✓Group market share increased 0.2% to 6.6% of total retail spend (vs.
FY20 H1, including grocery and fuel)
✓6 Warehouse Stationery SWAS integrations implemented, bringing
total number to 23
✓Online sales growth 50.3%, driven by 85% in Noel Leeming and 75%
in The Warehouse. Online sales now 11.9% of total Group sales
✓Growth in TheMarket.com –now featuring 4,490 brands and over
2.5m active SKUs
✓Launched new mobile-first e-commerce platform for The Warehouse,
extending our reach through broader partnerships and expanded
customer experiences
✓Launched free, e-waste recycling program in 16 Noel Leeming
stores, making it easier for our customers to live sustainably
10
11
BY BRAND
+3.0%+75%
to 6.3% of total sales
12.7%
630 basis point improvement
+116%
+2.1%+31%
to 12.3% of total sales
12.6%
560 basis point improvement
+230%
+15.7%+85%
to 11.3% of total sales
5.6%
140 basis point improvement
+93%
6.2%
up from Operating Profit Loss of 6.4%
+29.0%+66%
to 30.3% of total sales
+120%
Sales GrowthOperating Profit
Margin
Online Sales
Growth
Growth in Click &
Collect Fulfilment
RangeAudienceTransactions
4,490 brands
2.5m products
154%
72%
9.2m visits
207k subscribers
140k active customers
Orders per customer
25%
268%
373%
236%
Our goal is to make 10,000+ of the most desirable local,
international and niche brands available to all Kiwis.
Significant range and audience growth supported by
increasing purchase frequency has grown merchant orders
by 493% in FY21 H1.
14
For the half year ended 31 January 2021
1.Adjusted for unusual and non-trading items as presented on slide 18 and refer note 5 of the Interim
Financial Statements for the half year ended 31 January 2021.
•Total Group sales were very strong in the first half of FY21 with
growth of 7.4% particularly driven by exceptional growth in Noel
Leeming and Torpedo7.
•Gross Profit increased 15.8%, at a faster rate than sales growth.
Increased Gross Profit Margin is driven by lower clearance and
promotional activity in the half.
•Cost of doing business (“CODB”) as a percentage of sales
decreased, due to efficiencies gained across the supply chain,
and good control of variable costs including lower store labour
costs whilst seeing improvements in both employee and customer
net promoter score.
•Higher Gross Profit Margins and lower CODB resulted in
Operating Profit growth of 125.4% and an improvement in
Operating Profit Margin to 8.5%.
•Operating Cash Flow improved 8.9%, driven by growth in
profitability and tight inventory management, offset by the
repayment of the wage subsidy in December 2020.
•The strong performance in the period has resulted in the Board
declaring a Special Dividend in February of 5.0 cps and an FY21
Interim Dividend of 13.0 cps.
$ million
FY21 H1FY20 H1Variance
Group Sales
1,808.3 1,683.4
7.4%
Gross Profit
655.4 566.1
15.8%
Gross Profit Margin %36.2%33.6%260
CODB
1
502.4 498.2
0.8%
CODB %27.7%29.6%(190)
Operating Profit
1
153.0 67.9
125.4%
Operating Profit Margin %8.5%4.0%450
Continuing NPAT (Reported)
55.0 29.9
83.6%
Continuing NPAT (Adjusted)
1
111.0 46.2
140.2%
NPAT (Reported)
55.0 29.2
88.5%
Operating Cash Flow
110.0 101.0
8.9%
Special dividend (cps)
5.0 -
5.0
Interim dividend (cps)
13.0 -
13.0
PERFORMANCE
SALES TREND
15
Auckland Level 3 Lockdown
Wed 12 Aug –Sun 30 Aug
FY21 Q1FY21 Q2FY21 H1
$mVar %$mVar%$mVar %
The Warehouse
379.52.9%587.83.1%967.33.0%
Warehouse Stationery
61.8(1.9%)74.85.6%136.62.1%
Noel Leeming
250.811.5%342.419.0%593.215.7%
Torpedo7
33.842.0%51.121.7%84.929.0%
Other
1
12.6(10.6%)13.7(24.3%)26.3(18.2%)
Total Group Sales
738.56.3%1,069.88.2%
1,808.3
7.4%
Timing difference of public
holidays and store opening
hours over Christmas / New
Year
1.Other sales include 1-day and commission and other revenue in relation to TheMarket.com
Weekly sales trend compared to same week last year
16
MARGIN
Gross Profit Margin (%) by Brand
Group Half Year Gross Profit Margin (%)
•Gross Profit Margin has been one of the most significant drivers
of Group profitability, particularly in The Warehouse and
Warehouse Stationery.
•Transformation initiatives focused on margin have been
magnified by stronger sales.
•For The Warehouse, a continued focus on EDLP strategy,
combined with more higher value products being sold,
contributed to higher Gross Profit Margins.
•Warehouse Stationery Gross Profit Margin benefited from less
discounting in the half year, however more lower value products
were sold which by nature are at a lower margin, offset some of
the margin benefits.
17
DOING BUSINESS
•Approximately 67% of employee expenses are related to stores,
fulfilment centres and distribution centres which has all been
managed well throughout a period of elevated sales.
•In particular, store labour has declined 1.5% compared to the
prior half year period, driven by the efficiency gains from the
labour operating model update in The Warehouse stores
ensuring our stores are most staffed when our customer want to
shop.
•Combined Depreciation and Lease costs have declined slightly
with a reduction of 4 stores as part of Group store footprint
optimisation.
•Major components of other costs include technology costs, credit
card commission, store other costs and A&P which has declined
as a result of our paid media investments delivering better
returns and our overall media mix changing based on our
proprietary media mix modelling.
Cost of Doing Business (CODB) as percentage of Sales
18
REPORTED RESULTS
Continuing EBITContinuing NPAT
$ million
FY21 H1FY20 H1FY21 H1FY20 H1
Adjusted Earnings
1
153.0 67.9 111.0 46.2
Gain on property disposal
-0.1 -0.1
Restructuring costs
(11.3)(22.0)(8.2)(15.9)
Ineffective hedge derivatives
(0.2)-(0.1)-
COVID-19 wage subsidy
(67.6)-(48.6)-
NZIFRS16
2
20.5 19.7 0.9 (0.5)
Reported earnings
94.4 65.7 55.0 29.9
Discontinued
-(0.7)
Attributable to Shareholders
55.0 29.2
1.To improve the understanding of underlying business performance, the Group adjusts profit for unusual and non-trading
items. Unusual items include profits from the sale of assets and losses associated with adjustments in carrying value of
assets, M&A activity, restructuring costs and the non-cash impact of applying the NZIFRS 16 lease accounting standard.
2.The NZIFRS16 adjustment of $20.5m in FY21 H1 (FY20 H1: $19.7m) represents the difference between the depreciation on
Right-of-use-Assets and old NZGAAP rent expense. Refer to note 4 and note 15 of the Interim Financial Statements for the
half year ended 31 January 2021.
•The Group has continued its transition to an Agile
way of working. The restructuring costs incurred
in the current half year relate to fees paid to
consultants assisting the Group throughout the
Agile transition and additional redundancy costs
connected with the Group's restructure
announced last year and finalised in FY21 H1.
•The Group has a commitment to incur further
consultancy fees (maximum $3.0 million) upon
the achievement of specified milestones and
targets.
•In December 2020, the Group made the voluntary
decision to repay the Government COVID-19
wage subsidy it received for its 11,000 employees
in March 2020.
For the half year ended 31 January 2021
19
SHEET
$ million
FY21 H1FY20 H1Variance
Inventory
497.7 581.3
(83.6)
Trade and other receivables
86.1 99.8
(13.7)
Trade and other payables
(501.6)(440.6)
(61.0)
Provisions
(83.9)(72.2)
(11.7)
Working Capital
(1.7)168.3
(170.0)
Fixed assets
272.6 271.2
1.4
Funds Employed
270.9 439.5
(168.6)
Tax assets
93.0 86.6
6.4
Derivatives
(31.8)(12.4)
(19.4)
Goodwill and brands
73.0 75.5
(2.5)
Right of use assets
751.4 814.0
(62.6)
Capital Employed
1,156.5 1,403.2
(246.7)
Shareholders equity
431.2 364.5
66.7
Minority interests
(1.2)0.5
(1.7)
Net debt / (Cash)
(183.6)68.6
(252.2)
Lease liabilities
910.1 969.6
(59.5)
Sources of Funds
1,156.5 1,403.2
(246.7)
Book gearing
62.8%74.0%112bps
Liquidity
513.6236.7276.9
•Inventory is significantly lower at the end of the half year, following
strong customer demand through the Christmas holiday period,
better inventory management, and the impacts of COVID-19
which included global supply chain challenges and port
congestion.
•Higher trade and other payables are due to higher New Zealand
trade creditors and higher payroll accruals impacted by the timing
of balance date which occurred a week later in the payment cycle
compared to last year.
•The strong trading performance and an improved working capital
position helped the Group improve from a net debt position of
$68.6 million at the end of FY20 H1 to cash on hand of $183.6
million.
•The Group considers it appropriate in the current uncertain
economic environment to maintain high levels of liquidity. The
Group has undrawn bank debt facilities of $330 million, which
together with cash on hand provide a liquidity buffer of $513.6
million.
As at 31 January 2021 (comparative 26 January 2020)
20
MANAGEMENT
•Inventory levels have decreased significantly in FY21 H1
compared to prior year averages, due to increased demand,
improved inventory management but also due to COVID-19
driven global supply chain challenges.
•Inventory management has been a key focus of The Group’s
transformation journey, and is now delivering tangibles benefits:
oAged inventory has continued to decrease with increased
sales and controlled purchases, with aged inventory
(1)
decreasing from 8.7% at FY20 H1 to 5.4% at FY21 H1.
oClearance stock has decreased 24% on prior year –
reducing the need for clearance activity and therefore
increasing margin.
oThe Group achieved further SKU reduction in the period
with SKUs at the close of the half year down 11% on prior
period.
oThrough a continued focus on our EDLP strategy in The
Warehouse and less discounting across our other Brands,
we have reduced unprofitable sales and improved our
buying and inventory management processes.
Closing inventory at half year ($m)
1.Aged inventory is stock on hand greater than 26 weeks.
Stockturn by Brand
21
FLOW
$ million
FY21 H1FY20 H1Variance
Trading EBITDA
1
247.0 163.6
83.4
Restructuring costs
(11.3)(22.0)
10.7
Wage subsidy
(67.6)-
(67.6)
Taxes Paid
(23.1)(14.8)
(8.3)
Interest Paid
2
(22.5)(23.5)
1.0
Working Capital
(13.2)(1.8)
(11.4)
Other items
0.7 (0.5)
1.2
Operating Cash Flow
110.0 101.0
9.0
Capital Expenditure
(39.4)(30.6)
(8.8)
Lease principal repayments
(48.6)(47.0)
(1.6)
Divestments
0.1 11.8
(11.7)
Dividends Received
-0.1
(0.1)
Dividends Paid
-(28.0)
28.0
Other
(6.6)0.3
(6.9)
Net Cash Flow
15.5 7.6
7.9
Opening Net Debt
168.1 (76.2)
244.3
Closing Net Debt
183.6 (68.6)
252.2
•Operating Cash Flow was $110.0 million compared with $101.0
million in prior period driven by significant increase in operating
performance offset by the repayment of the Wage Subsidy in
December 2020 and a decline in working capital.
•Restructuring costs this half year relate to the Agile transformation
programme, and redundancies occurring in the prior period.
•Capital expenditure increased compared to prior period, with
particular increased spend on customer digital and core system
initiatives including the Group ecommerce platform and ERP
finance and inventory systems.
•Cash flow from divestments in prior period relate to proceeds from
sale of land at the Auckland Support Office received in FY20.
•No dividends were paid in FY21 H1 due to the uncertainty around
the impact of COVID-19 resulting in the cancellation of the
declared FY20 interim dividend and no FY20 final dividend.
A special dividend was declared in February and paid in March
2021 (after half year end).
•The Group ended FY21 H1 with net cash of $183.6m, compared
with net debt of $68.6 million at the end of FY20 H1. Cash Flow
post balance date continues to be strong with net cash levels
exceeding $100 million.
1.Trading EBITDA represents Earnings before interest, taxation, unusual items, depreciation and
amortisation.
2.Interest paid includes $19.2m (FY20 H1: $20.4m) interest on lease liabilities. Refer to note 14 of the
Interim Financial Statements for the half year ended 31 January 2021.
For the half year ended 31 January 2021
22
CAPEX SPEND
•FY21 half year capex was $40.0 million, compared to $29.9 million for
the same period in FY20 half year.
•The Group’s major investments in the half were in customer focused
digital initiatives (including re-platforming the eCommerce sites onto a
Group platform and development of TheMarket.com) and our Core
Systems (including ERP finance and inventory systems, continued
investment in our Warehouse Management System, and deploying
cloud-based Master Data Management).
•Store renewals include the new OrminstonWarehouse store to be
opened in March and the roll out of 6 Store-within-a-store (“SWAS”)
integrations in H1 FY21 –Masterton, Kilbirnie, Whanganui, Oamaru,
Riccarton, and TeAwamutu.
•The Group had provided guidance of capital expenditure to be in the
range of $100 -$120 million in FY21.While we are tracking below
this guidance due to timings particularly of store developments and
resource allocation, we do expect capex to pick up more in the
second half.
•We now expect FY21 capex to be between $80 and $100 million,
lower than initially budgeted, but higher than the average last three
years of $65 million as we strive to invest in future growth of the
business.
Digital and Customer$ 9.1m
Core Systems$ 7.5m
Store Renewals$ 5.1m
Supply Chain$ 3.2m
Other$15.1m
Capex
Spend
$40.0m
Torpedo7
$84.9m
24
The
Warehouse
$967.3m
Noel
Leeming
$593.2m
Warehouse
Stationery
$136.6m
The
Warehouse
$122.6m
$62.8m
1.Other sales include 1-day and commission and other revenue in relation to TheMarket.com
2.Other Group operations and inter segment eliminations were $(3.0) million in FY21 H1.
Other
1
$29.3m
53.5%
32.8%
7.6%
4.7%
FY21 H1 Group Sales
$1,808.3m
SUMMARY
FY21 H1 Operating Profit
3.0%15.7%2.1%29.0%
Noel
Leeming
$33.1m
$11.7m
Warehouse
Stationery
$17.2m
$7.9m
Torpedo7
$5.2m
$9.4m
Other
($15.8m)
$5.0m
Total Group
$153.0m
$85.1m
11.3%
TheMarket
$(9.2)m
$1.5m
The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 all achieved record H1 results in FY21 H1.
For the half year ended 31 January 2021
25
$millionFY21 H1FY20 H1Variance
Sales
967.3 938.8
3.0%
Same Store Sales6.1%1.6%450 bps
Gross Profit
408.4 364.1
12.2%
Gross Profit Margin %42.2%38.8%340 bps
Cost of doing business (CODB)
285.8 304.3
(6.1%)
CODB %29.5%32.4%(290 bps)
Operating Profit
122.6 59.8
105.0%
Operating Profit Margin %12.7%6.4%630 bps
Stores
90 92
(2)
•Sales for the first half of FY21 were up 3.0% against FY20 H1, despite
the Auckland Region experiencing 18.5 days of COVID-19 lockdown in
August when stores were unable to trade. Over this period, sales were
down 17.4% year on year. Despite a strong lift in online and in stores
sales outside the Auckland Region, these were unable to offset the loss
of Auckland store sales.
•Online sales increased 75% compared to prior period, partly helped by a
strong surge in demand during the Auckland Region lockdown in August.
Click & Collect Sales grew 116% with the introduction of same day
collection.
•Gross Profit Margin % was up 340bps as we saw a decrease in
clearance and promotional activity. Managing stockturn on product lines
with limited stock through disciplined promotional activity also
contributed to the improved Gross Profit Margin.
•CODB improved by 6.1% driven by the benefits derived from the Labour
Operating Model Update in stores. This has led to a 6.9% decline in
Store Labour costs whilst also seeing early improvements in both
employee and customer NPS.
•FY21 H1 Retail Operating Profit of $122.6m was up 105.0% relative to
FY20 H1 with strong top line sales growth and increased Gross Profit
Margins. As a result, Operating Profit Margin % grew 630bps to 12.7%.
•In the 12 months from January 2020 to January 2021, we closed three
The Warehouse stores (Birkenhead, Dunedin and Johnsonville) and
opened one new store in Lunn Ave, Auckland.
•Warehouse Stationery continued to build on the momentum established
in FY20, delivering a strong FY21 H1 performance.
•Sales were up 2.1% on prior period, and despite total transactions
declining compared to FY20 H1, both average basket and conversion
were strong.
•Gross Profit increased 13.7% on FY20 H1 through higher sales volumes
and an improvement in Gross Profit Margin of 500 bps, despite trade
being impacted by the August 2020 COVID-19 lockdown in Auckland.
Gross Profit Margin continues to benefit from a decrease in clearance
and promotional activity.
•Operating Profit increased 84.4% to $17.2m, a record H1 result for the
brand, with Operating Profit Margin improving a significant 560 bps to
12.6%.
•Office Furniture was the standout category in Sales which has benefited
from improved stock levels both during and following the post COVID
lockdown.
•The momentum of online sales in FY20 H2 has continued in FY21 H1
with online sales growing 31% on FY20 H1 as customers continue to
embrace our omni-channel programme with Click & Collect fulfilment
increasing significantly by 230%.
•In the 12 months from January 2020 to January 2021, one new
Warehouse Stationery store was opened in Lunn Ave, Auckland.
•In addition, 6 SWAS integrations were implemented in FY21 H1 –
Masterton, Kilbirnie, Whanganui, Oamaru, Riccarton, and TeAwamutu –
bringing the total to 23.Current performance is positive, with the latest
integration at Riccarton proving particularly successful.
26
* Includes 23 SWAS integrations. 6 integrations implemented in FY21 H1.
$ millionFY21 H1FY20 H1Variance
Sales
136.6 133.8
2.1%
Same Store Sales Growth2.5%(1.2)%370 bps
Gross Profit
66.4 58.4
13.7%
Gross Profit Margin %48.6%43.6%500 bps
Cost of doing business (CODB)
49.2 49.1
0.3%
CODB %36.0%36.6%(60 bps)
Operating Profit
17.2 9.3
84.4%
Operating Profit Margin %12.6%7.0%560 bps
Stores*
7170
1
For the half year ended 31 January 2021
27
$millionFY21 H1FY20 H1Variance
Sales
593.2 512.8
15.7%
Same Store Sales Growth14.2%3.4%1,080 bps
Gross Profit
134.7 115.8
16.4%
Gross Profit Margin %22.7%22.6%10 bps
Cost of doing business (CODB)
101.6 94.4
7.7%
CODB %17.1%18.4%(130 bps)
Operating Profit
33.1 21.4
54.3%
Operating Profit Margin %5.6%4.2%140 bps
Stores
7376
(3)
For the half year ended 31 January 2021
•Noel Leeming continued the strong momentum seen in FY20 H2 with
FY21 H1 sales growing 15.7% on FY20 H1.
•Mitigating the Auckland COVID-19 lockdown in the first month of the
period, we saw a very strong adoption of online shopping. This evolution
in shopping habits and the increase in demand for home related
products saw strong trading through the lockdown period.
•Noel Leeming online sales increased 85% with Click & Collect fulfilment
increasing 93%, stimulated by the introduction of same day click and
collect.
•Same store sales growth of 14.2% was driven by the growth of online
sales notably during the lockdown period, and with Black Friday and
Boxing Day events both hitting record high sales. Our B2B
(Commercial) division continues to grow from strength to strength
recording significant year on year sales growth.
•Top performing categories with double digit sales growth on prior period
included Communications, Computers, Whiteware, Television and Small
Appliances.
•Gross Profit Margin was 10 bps higher to 22.7%, reflecting a slight shift
in the sales mix towards high margin products.
•Operating Profit increased by 54.3% to $33.1m with Operating Profit
Margin increasing by 140 bps to 5.6%.
•In the 12 months from January 2020 to January 2021, we closed five
Noel Leeming stores and opened two new stores in Lunn Ave, Auckland
and Northlink, Christchurch.
28
$millionFY21 H1FY20 H1Variance
Sales
84.9 65.8
29.0%
Same Store Sales Growth24.4%15.2%920 bps
Gross Profit
32.1 18.6
72.0%
Gross Profit Margin %37.8%28.3%950 bps
Cost of doing business (CODB)
26.9 22.8
17.4%
CODB %31.6%34.7%(310 bps)
Operating Profit
5.2 (4.2)
223.5%
Operating Profit Margin %6.2%(6.4%)1,260 bps
Stores
20 20
-
For the half year ended 31 January 2021
Torpedo7 financial results (FY21 H1 and comparatives) include Torpedo7 only, and exclude
1-day which are now included in “TheMarket” results in the Group financial statements.
•Sales increased 29.0% in FY21 H1 to $84.9m, with strong same store
sales growth of 24.4%. There was a strong customer response to
increased targeted media and refreshed instore campaigns, supported
by favourable domestic tourism.
•As with other brands across the Group, Torpedo7 also experienced
strong online sales growth in FY21 H1, up 66% on prior period,
particularly during the Auckland lockdown in August 2020, and this trend
also continued for the rest of the period.
•Gross Profit increased 72.0% to $32.1m, due to strategic initiatives
which improved margins, and reduced discounting. The strong growth in
sales and slower inwards goods driven by short term supply chain
disruption lifted stock turn.
•CODB has improved as percentage of sales by 310bps on the prior
period with efficiencies gained across the supply chain.
•Additional store rollouts were paused whilst initiatives were undertaken
to improve same store sales and margin quality. New store opportunities
have been identified commencing with Torpedo7 Napier which opened in
Q3 of this financial year.
•FY21 H1 Operating Profit of $5.2m is a significant improvement
compared to Operating loss of $4.2m in FY20 H1 which was driven in
part by sales growth, but primarily from margin improvement in line with
strategy for Torpedo7.
•In the 12 months from January 2020 to January 2021, we closed the
Torpedo7 No1 Fitness store in Christchurch, but this was replaced with
the new Torpedo7 store in Northlink.
30
and DIVIDEND
•For the first four weeks of the second half, we experienced Group sales growth of 2.3% on the same period in FY20.This is inclusive
of the most recent Auckland Level 3 lockdown.However, for three weeks into March 2021 we cycle a comparative period in March
2020 which saw increased COVID-19 uncertainly and unseasonal increased demand and sales as New Zealanders faced impending
lockdowns.As a result, sales for the first 7 weeks of the second half are relatively flat year on year.
•Compared to the first 7 weeks of the second half of FY19, which is a more comparable period being unaffected by COVID-19, sales in
FY21 are up 9.7%.
•While the Group has traded well through recent Auckland Level 3 lockdowns, there remains significant uncertainty as the COVID-19
environment evolves, including:
•The sustainability of heightened consumer retail spending levels
•Constraints on global supply chains, as consumers in other parts of the world experience relaxed COVID-19 lockdown
restrictions
•Retailers building stock levels ahead of retail demand.
•Due to the continued uncertainty in the trading environment, the Board does not consider it appropriate at this time to provide guidance
for the full year FY21 result.The Board will continue to reassess this position as we get closer to year end.
•The Board are pleased to declare a fully imputed interim dividend for FY21 of 13.0 cents per share, payable on 22 April 2021 and
based on a record date of 7 April 2021.
This presentation may contain forward looking statements
and projections. There can be no certainty of the outcome
and projections involve known and unknown risks,
uncertainties, assumptions and other important factors
that could cause the actual outcomes to be materially
different from the events or results expressed or implied
by such statements and projections.
While all reasonable care has been taken in the
preparation of this presentation, The Warehouse Group
Limited does not make any representation, assurance or
guarantees as to the accuracy or completeness of any
information in this presentation. The forward-looking
statements and projections in this report reflect views held
at the date of this presentation.
Except as required by applicable law or any applicable
Listing Rules, the Relevant Persons disclaim any
obligation or undertaking to update any information in this
presentation.
A number of non-GAAP financial measures are used in
this presentation. You should not consider any of these in
isolation from, or as a substitute for, the information
provided in the audited financial statements, which are
available at www.thewarehousegroup.co.nz.
This presentation does not constitute investment advice,
or an inducement, recommendation or offer to buy or sell
any securities in The Warehouse Group Limited.
31
DISCLAIMER
---
For and on behalf of the Board
Joan WithersDean Hamilton
ChairChair of the Audit and Risk Committee
24 March 2021
The Warehouse Group Limited
For the 26 weeks ended 31 January 2021
Interim Financial Statements
Consolidated Income Statement
Unaudited Unaudited Audited
26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Continuing operations
Retail sales
4
1,808,255 1,683,393 3,172,830
Cost of retail goods sold(1,152,874)(1,117,340)(2,137,950)
Gross profit655,381 566,053 1,034,880
Other income2,639 4,892 16,369
Employee expenses(286,678)(286,193)(559,299)
Depreciation and amortisation expenses
4
(73,550)(75,986)(154,652)
Other operating expenses(124,378)(121,193)(247,087)
Operating profit from continuing operations
4
173,414 87,573 90,211
Unusual items
5
(79,036)(21,918)14,471
Earnings before interest and tax from continuing operations94,378 65,655 104,682
Net interest expense(18,886)(23,681)(46,710)
Profit before tax from continuing operations75,492 41,974 57,972
Income tax expense(21,250)(12,410)(14,305)
Net profit for the period from continuing operations54,242 29,564 43,667
Discontinued operations
(Loss) / profit from discontinued operations (net of tax)- (781)31
Net profit for the period54,242 28,783 43,698
Attributable to:
Shareholders of the parent54,965 29,155 44,472
Minority interests(723)(372)(774)
Net profit for the period54,242 28,783 43,698
Profit attributable to shareholders of the parent relates to:
Profit from continuing operations
5
54,965 29,936 44,441
Loss from discontinued operations- (781)31
Profit attributable to shareholders of the parent54,965 29,155 44,472
Earnings per share attributable to shareholders of the parent:
Basic earnings per share15.9 cents 8.4 cents 12.9 cents
Basic earnings per share - continuing operations15.9 cents 8.7 cents 12.9 cents
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
26 Weeks 26 Weeks 52 Weeks
Ended Ended Ended
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Net profit for the period54,242 28,783 43,698
Items that may be reclassified subsequently to the Income Statement
Movement in foreign currency translation reserve(45)(28)(184)
Movement in hedge reserves (net of tax)(640)(8,244)(11,787)
Total comprehensive income for the period53,557 20,511 31,727
Attributable to:
Shareholders of the parent54,280 20,883 32,501
Minority interest(723)(372)(774)
Total comprehensive income53,557 20,511 31,727
Attributable to:
Total comprehensive income from continuing operations53,557 21,292 31,696
Total comprehensive income from discontinued operations- (781)31
Total comprehensive income53,557 20,511 31,727
Total comprehensive income from continuing operations attributable to:
Shareholders of the parent54,280 21,664 32,470
Minority interest(723)(372)(774)
Total comprehensive income53,557 21,292 31,696
2
Consolidated Statement of Changes in Equity
Foreign
Currency
Share Treasury Hedge Translation Retained Minority Total
(Unaudited)
Note
Capital Stock Reserves Reserve Earnings Interest Equity
For the 26 weeks ended 31 January 2021
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Balance at the beginning of the period365,517 (5,456)(13,017)(170)30,259 (794)376,339
Profit for the half year- - - - 54,965 (723)54,242
Movement in foreign currency translation reserve- - - (45)- - (45)
Movement in derivative cash flow hedges- - 2,256 - - - 2,256
Movement in monetised hedges- - (3,145)- - - (3,145)
Tax related to movement in hedge reserve- - 249 - - - 249
Total comprehensive income- - (640)(45)54,965 (723)53,557
Share rights charged to the income statement- - - - - 72 72
Minority put option exercised- 94 - - (361)267 -
Balance at the end of the period365,517 (5,362)(13,657)(215)84,863 (1,178)429,968
Foreign
Currency
Share Treasury Hedge Translation Retained Minority Total
(Unaudited)
Capital Stock Reserves Reserve Earnings Interest Equity
For the 26 weeks ended 26 January 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
365,517 (5,456)(1,230)14 122,469 719 482,033
Adjustment on adoption of NZIFRS 16- - - - (109,972)(38)(110,010)
Restated balance at the beginning of the period365,517 (5,456)(1,230)14 12,497 681 372,023
Profit for the half year- - - - 29,155 (372)28,783
Movement in foreign currency translation reserve- - - (28)- - (28)
Movement in derivative cash flow hedges- - (11,614)- - - (11,614)
Movement in monetised hedges- - 164 - - - 164
Tax related to movement in hedge reserve- - 3,206 - - - 3,206
Total comprehensive income- - (8,244)(28)29,155 (372)20,511
Share rights charged to the income statement- - - - - 229 229
Dividends paid- - - - (27,747)(81)(27,828)
Treasury stock dividends received- - - - 115 - 115
Balance at the end of the period365,517 (5,456)(9,474)(14)14,020 457 365,050
Foreign
Currency
Share Treasury Hedge Translation Retained Minority Total
(Audited)
Capital Stock Reserves Reserve Earnings Interest Equity
For the 53 weeks ended 2 August 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
365,517 (5,456)(1,230)14 122,469 719 482,033
Adjustment on adoption of NZIFRS 16- - - - (109,972)(38)(110,010)
Restated balance at the beginning of the period365,517 (5,456)(1,230)14 12,497 681 372,023
Profit for the year- - - - 44,472 (774)43,698
Movement in foreign currency translation reserve- - - (184)- - (184)
Movement in derivative cash flow hedges- - (16,598)- - - (16,598)
Movement in monetised hedges- - 226 - - - 226
Tax related to movement in hedge reserve- - 4,585 - - - 4,585
Total comprehensive income- - (11,787)(184)44,472 (774)31,727
Contributions by and distributions to owners:-
Share rights charged to the income statement- - - - - 350 350
Share rights exercised- - - - 922 (922)-
Dividends paid- - - - (27,747)(129)(27,876)
Treasury stock dividends received- - - - 115 - 115
Balance at the end of the period365,517 (5,456)(13,017)(170)30,259 (794)376,339
Balance at the beginning of the period as
previously reported
Balance at the beginning of the period as
previously reported
3
Consolidated Balance Sheet
Unaudited Unaudited Audited
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
ASSETS
$ 000 $ 000 $ 000
Current assets
Cash and cash equivalents
16
183,585 56,690 168,068
Trade and other receivables
8
86,129 99,766 84,263
Inventories
7
497,740 581,347 393,610
Derivative financial instruments
17
77 2,886 243
Total current assets767,531 740,689 646,184
Non-current assets
Property, plant and equipment
11
195,839 212,700 197,131
Right of use assets
13
751,380 813,986 774,175
Intangible assets
12
149,745 133,963 135,566
Deferred taxation97,211 87,957 101,805
Total non-current assets1,194,175 1,248,606 1,208,677
Total assets1,961,706 1,989,295 1,854,861
LIABILITIES
Current liabilities
Borrowings
16
- 125,262 -
Trade and other payables
9
501,644 440,586 420,805
Derivative financial instruments
17
31,742 8,323 27,091
Taxation payable4,255 1,374 10,982
Lease liabilities
14
96,287 92,350 106,467
Provisions
10
63,029 51,161 60,991
Total current liabilities696,957 719,056 626,336
Non-current liabilities
Derivative financial instruments
17
- 6,866 -
Lease liabilities
14
813,861 877,275 828,321
Provisions
10
20,920 21,048 23,865
Total non-current liabilities834,781 905,189 852,186
Total liabilities1,531,738 1,624,245 1,478,522
Net assets429,968 365,050 376,339
EQUITY
Contributed equity360,155 360,061 360,061
Reserves(13,872)(9,488)(13,187)
Retained earnings84,863 14,020 30,259
Total equity attributable to shareholders431,146 364,593 377,133
Minority interest(1,178)457 (794)
Total equity429,968 365,050 376,339
4
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended
31 January 26 January 2 August
Note
2021 2020 2020
Cash flows from operating activities
$ 000 $ 000 $ 000
Cash received from customers1,808,006 1,672,262 3,182,661
COVID-19 Wage subsidy(67,550)- 67,768
Payments to suppliers and employees(1,584,811)(1,532,918)(2,775,928)
Income tax paid(23,139)(14,806)(19,879)
Interest paid(22,467)(23,496)(46,616)
Net cash flows from operating activities110,039 101,042 408,006
Cash flows from investing activities
Proceeds from sale of property, plant and equipment104 11,817 12,008
Purchase of property, plant, equipment and software(39,431)(30,594)(64,513)
Net cash flows from investing activities(39,327)(18,777)(52,505)
Cash flows from financing activities
Repayment of fixed rate senior bond- - (125,000)
Cost of closing out ineffective hedge derivatives(6,622)- -
Lease principal repayments(48,573)(47,023)(83,833)
Treasury stock dividends received - 115 115
Dividends paid to parent shareholders- (27,883)(27,883)
Dividends paid to minority shareholders- (81)(129)
Net cash flows from financing activities(55,195)(74,872)(236,730)
Net cash flow15,517 7,393 118,771
Opening cash position168,068 49,297 49,297
Closing cash position183,585 56,690 168,068
Reconciliation of Operating Cash Flows
Profit after tax54,242 28,783 43,698
Non-cash items
Depreciation and amortisation expenses
4
73,550 75,986 154,652
Property, plant, equipment and software impairment
11
- - 14,142
Brand asset impairment
12
- - 2,545
Share based payment expense72 229 350
Interest capitalisation- 217 384
COVID-19 landlord rent relief- - (8,246)
Movement in deferred tax3,960 (3,451)(15,907)
Change in fair value of derivatives that are not hedge effective- - 6,427
Movement in monetised derivative hedge reserve(2,264)118 163
Total non-cash items75,318 73,099 154,510
Items classified as investing or financing activities
Net loss on disposal of property, plant and equipment99 290 1,206
Loss/(gain) on lease terminations78 (151)553
Supplementary dividend tax credit- 136 136
Loss on closing out ineffective hedge derivatives195 - -
Total investing and financing adjustments372 275 1,895
Changes in assets and liabilities
Trade and other receivables(1,866)(20,146)(4,643)
Inventories(104,130)(63,589)124,148
Trade and other payables93,737 91,791 75,314
Provisions(907)(9,833)2,815
Income tax(6,727)662 10,269
Total changes in assets and liabilities(19,893)(1,115)207,903
Net cash flows from operating activities110,039 101,042 408,006
5
Notes to the Interim Financial Statements
1. GENERAL INFORMATION
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3. SIGNIFICANT TRANSACTIONS AND EVENTS IN THE PERIOD
The interim financial statements of the Group have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand
(GAAP). They comply with New Zealand Equivalent to the International Accounting Standard 34 Interim Financial Reporting(NZIAS 34) and
International Accounting Standard 34 Interim Financial Reporting(IAS 34) and consequently, do not include all the information required for full
financial statements. These Group interim financial statements should be read in conjunction with the annual report for the 53 weeks ended 2
August 2020.
These interim financial statements have been prepared under the historical cost convention except for the revaluation of certain financial
instruments (including derivative instruments). The reporting currency used in the preparation of the interim financial statements is New Zealand
dollars, rounded to the nearest thousands unless otherwise stated. Certain comparative amounts have been reclassified to conform with the current
period presentation.
Accounting standards
The accounting policies that materially affect the measurement of the interim financial statements have been applied on a consistent basis with
those used in the audited financial statements for the 53 weeks ended 2 August 2020 and the unaudited interim financial statements for the 26
weeks ended 26 January 2020.
Non-GAAP financial information
The Group uses operating profit, earnings before tax and interest, unusual items and adjusted net profit to describe financial performance as it
considers these line items provide a better measure of underlying business performance. These non-GAAP measures are not prepared in
accordance with New Zealand Equivalent to International Financial Reporting Standards (NZIFRS) and may not be comparable to similarly titled
amounts reported by other companies. The Group’s policy regarding unusual items and adjusted net profit are detailed in note 5.0.
Critical accounting judgements, estimates and assumptions
The preparation of the interim financial statements requires the Group to make judgements, estimates and assumptions that effect the reported
amounts of assets and liabilities at balance date and the reported amounts of revenues and expenses during the half year. The same significant
judgements, estimates and assumptions that are summarised in the audited financial statements for the 53 weeks ended 2 August 2020 were
applied in the preparation of these interim financial statements.
Seasonality
The Group's revenue and profitability follow a seasonal pattern with higher sales and operating profits typically achieved in the first half of the
financial year as a result of additional sales generated during the Christmas trading period.
Approval of Interim Financial Statements
These consolidated interim financial statements were approved for issue by the Board of Directors on 24 March 2021. Unless as otherwise stated,
the interim financial statements have been reviewed by our Auditors, but are not audited.
The Warehouse Group Limited (the Company) and its subsidiaries (together the Group) trade in the New Zealand retail sector. The Company is a
limited liability company incorporated and domiciled in New Zealand. The Group is registered under the Companies Act 1993 and is an FMC
Reporting Entity under Part 7 of the Financial Markets Conduct Act (FMCA) 2013. The address of its registered office is Level 4, 4 Graham Street,
PO Box 2219, Auckland. The Company is listed on the New Zealand Stock Exchange (NZX).
Impact of COVID-19
The impact of the ongoing COVID-19 pandemic during the half year had a number of positive impacts on the retail sector. In contrast to market
expectations, post year end the retail sector continued to experience high customer demand, above what was expected from pent up demand post
lockdown, buoyed by government support packages and spend benefit from the cancellation of overseas holidays amongst a number of other
contributing factors. These positive factors in combination with Group's transformation initiatives resulted in a sales uplift of 7.4% compared to the
previous half year.
Another consequence of the pandemic was the disruption to international supply chains causing stock shortages, which meant there was lower than
normal discounting activity across the sector and for the Group this resulted in a strong sell through of seasonal stock. The Group ended Christmas
understocked rather than overstocked. The outcome of these two influences in combination with the Group's own working capital and margin
improvement transformation initiatives meant inventory was 14.4% lower than the previous half year and gross profit margin at 36.2% was 260
basis points higher the previous half year.
The risk of a resurgence of COVID-19 creates a continued level of uncertainty, however based on the Group’s previous experience and subsequent
measures taken to increase balance sheet resilience the Group considers it is appropriately positioned to respond to different levels of lockdown.
COVID-19 Wage subsidy
In December 2020, due to strong trading through the current half year and the weeks leading up to Christmas, the Group made the voluntary
decision to repay the Government COVID-19 wage subsidy it received of $67.6 million. The Group classified the repayment of the wage subsidy as
an unusual item as it did not relate to the Group’s normal trading activities and similarly restated the prior full year result to classify the initial receipt
of the subsidy in March 2020 as an unusual item. This prior year reclassification has the effect of reducing 'other income' and decreasing the
'unusual item' expense on the Income Statement by $67.6 million for the year ended 2 August 2020. The prior year reclassification also reduced the
Group's adjusted net profit (refer note 5) from $80.7 million to $32.1 million for the year ended 2 August 2020.
1-day reclassification
The 1-day business was moved from Torpedo7 to TheMarket as a result of an organisational change and is now reported as part of TheMarket
segment (refer note 4) with the comparative segment information similarly reclassified to reflect the change.
Group structure
The Group structure was unchanged during the half year, except for 1-Day where the operating business was transferred from Torpedo7 Limited to
the previously dormant 1-Day Limited shell company and the Group's interest in TheMarket.com increased from 89.3% to 90.7% when a put option
was exercised in accordance with TheMarket.com share right plan. Details of the share right plan can be found in last year’s annual report.
6
Notes to the Interim Financial Statements - continued
4. SEGMENT INFORMATION
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited)
26 Weeks 26 Weeks 53 Weeks 26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended Ended Ended Ended
31 January 26 January 2 August 31 January 26 January 2 August
Note
2021 2020 2020 2021 2020 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000
The Warehouse967,300 938,784 1,706,036 122,616 59,810 54,903
Warehouse Stationery 136,578 133,828 268,845 17,154 9,304 17,513
Warehouse segment1,103,878 1,072,612 1,974,881 139,770 69,114 72,416
Noel Leeming 593,176 512,778 1,009,975 33,069 21,429 34,160
Torpedo784,855 65,783 129,901 5,221 (4,226)(17,708)
TheMarket29,292 33,023 62,520 (9,237)(7,664)(14,820)
Other Group operations3,977 3,721 6,673 (15,799)(10,757)(24,796)
Inter-segment eliminations(6,923)(4,524)(11,120)
Group1,808,255 1,683,393 3,172,830 153,024 67,896 49,252
Adjustment for NZIFRS 16 (Leases)
15
20,390 19,677 40,959
Operating profit from continuing operations173,414 87,573 90,211
Unusual items
5
(79,036)(21,918)14,471
Earnings before interest and tax from continuing operations94,378 65,655 104,682
Operating margin
The Warehouse (%)12.7 6.4 3.2
Warehouse Stationery (%)12.6 7.0 6.5
Noel Leeming (%)5.6 4.2 3.4
Torpedo7 (%)6.2 (6.4)(13.6)
Total Retail Group (%)8.5 4.0 1.6
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited)
26 Weeks 26 Weeks 53 Weeks 26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended Ended Ended Ended
31 January 26 January 2 August 31 January 26 January 2 August
Note
2021 2020 2020 2021 2020 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Warehouse segment20,000 22,056 44,340 30,033 22,328 47,829
Noel Leeming 4,032 4,395 8,624 6,317 4,037 8,349
Torpedo71,059 866 1,846 891 1,808 3,138
TheMarket1,104 852 1,924 2,638 1,550 3,362
Other Group operations705 725 1,502 109 219 444
Property, plant, equipment and software
11
26,900 28,894 58,236 39,988 29,942 63,122
Right of use assets
13
46,650 47,092 96,416
Total73,550 75,986 154,652
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited)
26 Weeks 26 Weeks 53 Weeks 26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended Ended Ended Ended
31 January 26 January 2 August 31 January 26 January 2 August
2021 2020 2020 2021 2020 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Warehouse segment33,488 34,368 70,414 625 - 11,347
Noel Leeming 9,154 9,417 18,990 - - 257
Torpedo73,435 3,079 6,503 - - 5,083
TheMarket396 53 150 - - -
Other Group operations177 175 359 - - -
Total46,650 47,092 96,416 625 - 16,687
(Note 13)
Impairment and right of use asset depreciation
NON-CURRENT ASSET IMPAIRMENT
Operating performance
Capital expenditure and depreciation
REVENUEOPERATING PROFIT
DEPRECIATION & AMORTISATIONCAPITAL EXPENDITURE
RIGHT OF USE ASSET DEPRECIATION
Operating segments
The Group has four operating segments trading in the New Zealand retail sector and an online market-place (includes 1-day - refer note 3). These
segments form the basis of internal reporting used by senior management and the Board of Directors to monitor and assess performance and assist
with strategy decisions. The Group has disclosed its segment operating profit performance that excludes the impacts of NZIFRS 16 Leases, which is
consistent with internal reporting and the way the Group monitors financial performance.
Each of the four main retail segments represent a distinct retail brand that operate throughout New Zealand. Customers can purchase product from
the retail chains either online or through the Group’s physical retail store network. At period end the Group’s physical store network consists of 90 The
Warehouse stores, 71 Warehouse Stationery stores, 73 Noel Leeming stores and 20 Torpedo7 stores. The Warehouse predominantly sells general
merchandise and apparel, Noel Leeming sells technology and appliance products, Torpedo7 sells outdoor and sporting equipment and the
Warehouse Stationery sells stationery products.
Other Group operations include a property company, a chocolate factory and the residual cost of unallocated support office functions.
Non-current asset impairments (2 August 2020)
The non-current asset impairments relate to intangible assets ($2.545 million – Torpedo7 brand) and property, plant, equipment and computer
software ($14.142 million).
7
Notes to the Interim Financial Statements - continued
4. SEGMENT INFORMATION - (Continued)
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited)
As at As at As at As at As at As at
31 January 26 January 2 August 31 January 26 January 2 August
Note
2021 2020 2020 2021 2020 2020
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Warehouse segment504,396 582,274 425,015 384,163 373,577 319,992
Noel Leeming 203,682 200,948 169,297 176,272 115,382 161,367
Torpedo743,115 60,105 39,627 16,685 15,291 16,656
TheMarket21,099 22,936 18,761 7,605 5,964 6,704
Other Group operations84,205 86,012 84,914 868 2,581 942
Operating assets / liabilities856,497 952,275 737,614 585,593 512,795 505,661
Unallocated assets / liabilities
Cash and borrowings
16
183,585 56,690 168,068 - 125,262 -
Derivative financial instruments
17
77 2,886 243 31,742 15,189 27,091
Right of use assets / Lease liabilities
13, 14
751,380 813,986 774,175 910,148 969,625 934,788
Intangible goodwill and brands72,956 75,501 72,956 - - -
Taxation97,211 87,957 101,805 4,255 1,374 10,982
Total1,961,706 1,989,295 1,854,861 1,531,738 1,624,245 1,478,522
5. ADJUSTED NET PROFIT
(Unaudited)(Unaudited)(Audited)
26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Adjusted net profit111,013 46,215 32,108
Less: Unusual items
Gain on property disposal- 88 88
Restructuring costs - Rise- (22,006)(22,006)
Restructuring costs - Agile(11,291)- (22,189)
Brand impairment (Torpedo7)- - (2,545)
Ineffective hedge derivatives
17
(195)- (6,427)
COVID-19 wage subsidy(67,550)- 67,550
Unusual items(79,036)(21,918)14,471
Adjustment for NZIFRS 16 (Leases)
15
1,191 (692)(154)
Income tax relating to above unusual items21,797 6,331 (4,009)
Income tax relating to building depreciation- - 2,025
Unusual items after taxation(56,048)(16,279)12,333
Net profit from continuing operations attributable to shareholders of the parent54,965 29,936 44,441
Adjusted net profit reconciliation
Balance sheet information
TOTAL ASSETSTOTAL LIABILITIES
Certain transactions can make the comparison of profits between years difficult. The Group uses adjusted net profit as a key indicator of
performance and considers it a better measure of underlying business performance. Adjusted net profit makes allowance for the after tax effect of
unusual items which are not directly connected with the Group’s normal trading activities. The Group defines unusual items as any gains or losses
from property disposals, goodwill and brand impairment, costs relating to business acquisitions or disposals, ineffective hedge derivatives and
costs connected with restructuring the Group. Following the adoption of NZIFRS 16 the non-cash impact relating to the lease accounting standard
are also excluded from adjusted net profit. The repayment of the COVID-19 wage subsidy during the half year is considered a non-trading item,
together with the corresponding receipt in the prior year and are classified as unusual items (refer note 3).
Restructuring costs
The Group has continued its transition to an Agile way of working as detailed in last year's financial statements. The costs incurred in the current half
year relate to fees paid to a consultancy firm assisting the Group throughout the first 18 months of the Agile transition and additional redundancy
costs connected with the Group's restructure announced last year. The Group has a commitment to incur further consultancy fees (maximum $3.0
million) upon the achievement of specified milestones and targets.
COVID-19 Wage subsidy
In December 2020, the Group made the voluntary decision to repay the Government COVID-19 wage subsidy it received in March 2020.
8
Notes to the Interim Financial Statements - continued
6. DIVIDENDS
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited)
26 Weeks 26 Weeks 53 Weeks 26 Weeks 26 Weeks 53 Weeks
Ended Ended Ended Ended Ended Ended
31 January 26 January 2 August 31 January 26 January 2 August
2021 2020 2020 2021 2020 2020
$ 000 $ 000 $ 000
Prior year final dividend- 8.0 8.0 - 27,747 27,747
Total dividends paid- 8.0 8.0 - 27,747 27,747
7. INVENTORIES
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Finished goods452,249 542,626 382,380
Inventory provisions(27,162)(27,259)(36,943)
Retail stock425,087 515,367 345,437
Goods in transit from overseas72,653 65,980 48,173
Inventory497,740 581,347 393,610
8. TRADE AND OTHER RECEIVABLES
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Trade receivables43,215 55,860 40,035
Prepayments13,122 17,371 14,764
Rebate accruals and other debtors29,792 26,535 29,464
Total trade and other receivables86,129 99,766 84,263
9. TRADE AND OTHER PAYABLES
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Local trade creditors and accruals307,257 225,667 285,226
Overseas trade creditors146,591 167,245 75,479
Capital expenditure creditors1,807 1,989 1,250
Goods and services tax5,365 18,725 14,329
Reward schemes, lay-bys, Christmas club deposits and gift vouchers20,798 17,612 20,503
Payroll accruals19,826 9,348 24,018
Total trade and other payables501,644 440,586 420,805
Trade and other receivables
Trade and other payables
Inventories
CENTS PER SHAREDIVIDENDS PAID
Dividends paid
The Group did not declare a final dividend and cancelled its interim dividend relating to the 2020 financial year.
Subsequent events
As a result of a stronger than expected trading performance and following the decision not to pay any dividends for the 2020 financial year the Board
declared a fully imputed special dividend of 5.0 cents per ordinary share. The special dividend was paid on 4 March 2021 to all shareholders on the
Group's share register at the close of business on 17 February 2021.
The Directors approved a new dividend policy in March 2021 after completing a review of the previous policy which included benchmarking that policy
against the policies of other listed retailers. The new policy is to distribute at least 70% of the Group's full year adjusted net profit, at the discretion of
the Board and subject to trading performance, market conditions and liquidity requirements. Previously the distribution range was set between 75% to
85%. In accordance with this new policy the Board declared a fully imputed interim dividend of 13.0 cents per ordinary share on 24 March 2021 to be
paid on 22 April 2021 to all shareholders on the Group's share register at the close of business on 7 April 2021.
9
Notes to the Interim Financial Statements - continued
10. PROVISIONS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Current liabilities63,029 51,161 60,991
Non-current liabilities20,920 21,048 23,865
Total provisions83,949 72,209 84,856
Provisions consist of:
Employee entitlements69,561 58,828 69,616
Make good provision8,718 7,832 8,651
Sales returns provision5,670 5,549 6,589
Total provisions83,949 72,209 84,856
11. PROPERTY, PLANT, EQUIPMENT AND COMPUTER SOFTWARE
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Property, plant and equipment195,839 212,700 197,131
Computer software
12
76,789 58,462 62,610
Carrying amount272,628 271,162 259,741
Movement in property, plant, equipment and software
Carrying amount at the beginning of the period259,741 271,172 271,172
Capital expenditure
4
39,988 29,942 63,122
Depreciation and amortisation
4
(26,900)(28,894)(58,236)
Impairment
4
- - (14,142)
Disposals(201)(1,058)(2,175)
Carrying amount at the end of the period272,628 271,162 259,741
12. INTANGIBLE ASSETS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Computer software
11
76,789 58,462 62,610
Brands15,500 18,045 15,500
Goodwill57,456 57,456 57,456
Net book value149,745 133,963 135,566
Movement in Brands
Balance at the beginning of the period15,500 18,045 18,045
Impairment (Torpedo7)
4
- - (2,545)
Balance at the end of the period15,500 18,045 15,500
13. RIGHT OF USE ASSETS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Movement in right of use assets
Carrying amount at the beginning of the period774,175 834,491 834,491
Additions
14
17,285 31,971 66,202
Depreciation
4
(46,650)(47,092)(96,416)
Reassessment of lease terms
14
9,182 - (21,960)
Impairments
4
(625)- (1,576)
Lease surrenders and terminations(1,987)(5,384)(6,566)
Carrying amount at the end of the period751,380 813,986 774,175
Intangible assets
Property, plant, equipment and computer software
Right of use assets
Provisions
The Group performs a detailed impairment assessment of intangible assets prior to the end of each financial year and at each interim reporting date
considers if there are any indicators of impairment which could have a bearing on the impairment assessments. The Group’s interim review did not
identify any significant indicators of impairment in respect of the cash generating units connected with the Group’s material intangible assets.
10
Notes to the Interim Financial Statements - continued
14. LEASE LIABILITIES
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Movement in lease liabilities
Carrying amount at the beginning of the period934,788 990,213 990,213
Additions
13
17,285 31,971 66,202
Interest for the period
15
19,199 20,369 41,113
Reassessment of lease terms
13
9,182 - (21,960)
COVID-19 landlord rent relief- - (8,246)
Lease repayments(67,772)(67,393)(124,946)
Lease surrenders and terminations(2,534)(5,535)(7,588)
Balance at the end of the period910,148 969,625 934,788
Lease liability maturity analysis
Within one year96,287 92,350 106,467
One to two years93,377 92,312 82,885
Two to five years247,883 261,685 249,172
Beyond five years472,601 523,278 496,264
Total lease liabilities910,148 969,625 934,788
Current liabilities96,287 92,350 106,467
Non-current liabilities813,861 877,275 828,321
Total lease liabilities910,148 969,625 934,788
15. ADJUSTMENT FOR NZIFRS 16 (LEASES)
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
Note
2021 2020 2020
$ 000 $ 000 $ 000
Pre NZIFRS 16 Rent67,118 66,618 136,352
Right of use asset amortisation
13
(46,650)(47,092)(96,416)
Loss/(gain) on lease terminations(78)151 1,023
Impact on operating profit
4
20,390 19,677 40,959
Lease liability interest
14
(19,199)(20,369)(41,113)
Impact on net profit before tax
5
1,191 (692)(154)
16. BORROWINGS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Cash on hand and at bank183,585 56,690 168,068
Fixed rate senior bond (coupon: 5.30%)- 125,000 -
Fair value adjustment relating to effective interest- 429 -
Unamortised capitalised costs on senior bond- (167)-
Current bank borrowings- 125,262 -
Net cash/(Net debt)183,585 (68,572)168,068
Committed bank credit facilities at balance date are:
Bank debt facilities330,000 180,000 330,000
Bank facilities used- - -
Unused bank debt facilities330,000 180,000 330,000
Letter of credit facilities18,000 23,000 18,000
Letters of credit(1,243)(1,194)(2,249)
Unused letter of credit facilities16,757 21,806 15,751
Total unused bank facilities346,757 201,806 345,751
Net cash/(Net debt)
Lease liabilities
Adjustment for NZIFRS 16 (Leases)
Externally imposed capital requirements
The Group removed the waiver it received from its funding providers last year requiring consent to declare shareholder distributions and allowing the
Group to avoid meeting minimum interest cover covenants specified in the Group’s negative pledge deed. All debt covenants provided by the Group
to its funding providers have now been reinstated. The Group has been in compliance with all aspects of the negative pledge covenants throughout
the half year.
11
Notes to the Interim Financial Statements - continued
17. DERIVATIVE FINANCIAL INSTRUMENTS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
$ 000 $ 000 $ 000
Current assets77 2,886 243
Current liabilities(31,742)(8,323)(27,091)
Non-current liabilities- (6,866)-
Total derivative financial instruments(31,665)(12,303)(26,848)
Derivative financial instruments consist of:
Current assets77 2,319 243
Current liabilities(31,742)(8,323)(17,624)
Foreign exchange contracts(31,665)(6,004)(17,381)
Current assets- 567 -
Current liabilities- - (9,467)
Non-current liabilities- (6,866)-
Interest rate swaps- (6,299)(9,467)
Total derivative financial instruments(31,665)(12,303)(26,848)
Classified as:
Cash flow hedges(15,824)(12,590)(18,080)
Fair value hedges(15,841)287 (2,341)
Fair value of hedges that are not hedge effective- - (6,427)
Total derivative financial instruments(31,665)(12,303)(26,848)
US Dollar forward contracts
Notional amount (NZ$000)378,767 401,452 394,115
Average contract rate ($)0.6589 0.6523 0.6334
Spot rate used to determine fair value ($)0.7191 0.6611 0.6628
Forecast next twelve month USD hedge level (percentage)71.7 67.2 74.1
18. COMMITMENTS
(Unaudited)(Unaudited)(Audited)
As at As at As at
31 January 26 January 2 August
2021 2020 2020
Capital commitments
$ 000 $ 000 $ 000
Within one year11,228 2,542 4,762
19. RELATED PARTIES
20. CONTINGENT LIABILITIES
Commitments
Derivative financial instruments
Capital expenditure contracted for at balance date but not recognised as liabilities is
set out below:
The Group has no material contingent liabilities other than those arising in the normal course of business, being primarily letters of credit
issued to secure future purchasing requirements and store lease commitments.
Except for Directors' fees, key executive remuneration and dividends paid by the Group to its Directors, there have been no other related party
transactions during the period.
The Group continues to manage its foreign exchange risks in accordance with the policies and parameters detailed in the 2020 Annual Report.
The Group’s foreign exchange contracts hedge forecast inventory purchases priced in US dollars over the next 12 months. The following table lists
the key inputs used to determine the fair value of the Group's foreign exchange contracts and hedge levels at balance date.
Fair value
The Group’s derivatives are not traded in an active market which means quoted prices are not available to determine the fair value. To determine
the fair value the Group uses valuation techniques which rely on observable market data. The fair value of forward exchange contracts are
determined using the forward exchange market rates at the balance date. For accounting purposes (NZIFRS 13) these valuations are deemed to
be Level 2 fair value measurements as they are not derived from a quoted price in an active market but rather, a valuation technique that relies on
other observable market data.
Interest rate swaps
The Group closed out its interest rate swaps in August 2020 which were held to manage the Group's exposure to interest rate volatility that were no
longer required following the repayment of the Group's borrowings. There was an additional cost to close out the ineffective portion of these swaps
($0.195 million refer note 5) which had not been recognised in the prior financial year. The portion of the interest rate swaps ($3.145 million) which
was deemed as still effective is held in the hedge reserve and is expected to be recognised as an interest expense during the 2022 to 2025
financial years.
12
---
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, www.pwc.co.nz
Independent auditor’s review report
To the shareholders of The Warehouse Group Limited
Report on the interim financial statements
Our conclusion
We have reviewed the interim financial statements of The Warehouse Group Limited (the Company)
and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 January
2021, and the consolidated income statement, consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
period ended on that date, and significant accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying interim financial statements of the Group do not present fairly, in all material respects,
the financial position of the Group as at 31 January 2021, and its financial performance and cash flows
for the 26 weeks period then ended, in accordance with International Accounting Standard 34 Interim
Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibility is further described in the Auditor’s responsibility for the
review of the interim financial statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New
Zealand relating to the audit of the annual financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these ethical requirements. In addition to our role as auditor, our
firm carries out other services for the Group in the areas of providing independent market
remuneration benchmarking, as well as the agreed upon procedures at the Annual Shareholder
Meeting and over the calculations of the Negative Pledge Agreement. In addition, certain partners and
employees of our firm may deal with the Group on normal terms within the ordinary course of trading
activities of the Group. These relationships and other services have not impaired our independence.
Directors’ responsibility for the interim financial statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair
presentation of these interim financial statements in accordance with IAS 34 and NZ IAS 34 and for
such internal control as the Directors determine is necessary to enable the preparation and fair
presentation of interim financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s responsibility for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review.
NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our attention that
causes us to believe that the interim financial statements, taken as a whole, are not prepared in all
material respects, in accordance with IAS 34 and NZ IAS 34. A review of interim financial statements
in accordance with NZ SRE 2410 (Revised) is a limited assurance engagement. We perform
procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures.
PwC 14
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing and International Standards on
Auditing (New Zealand) and consequently does not enable us to obtain assurance that we might
identify in an audit. Accordingly, we do not express an audit opinion on these interim financial
statements.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our review work has been
undertaken so that we might state to the Company’s shareholders those matters which we are
required to state to them in our review 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 shareholders, as a body,
for our review procedures, for this report, or for the conclusion we have formed.
The engagement partner on the review resulting in this independent auditor’s review report is Lisa
Crooke.
For and on behalf of:
Chartered Accountants Auckland
24 March 2021
---
Name of issuer THE WAREHOUSE GROUP LIMITED
Financial product description Ordinary Shares (346,843,120)
NZX ticker code WHS
ISIN NZWHSE0001S6
Type of distribution Full Year Quarterly
(please mark with an X in the relevant box/es) Half Year
X
Special
DRP Applies Not Applicable
Record date 07 April 2021
Ex-Date (one business day before the record date) 06 April 2021
Payment date 22 April 2021
Total monies associated with the distribution $45,089,606
Source of distribution Operating cashflows
Currency New Zealand dollars
Gross distribution $0.18055556
Gross taxable amount $0.18055556
Total cash distribution $0.13000000
Excluded amount $0.00000000
Supplementary distribution amount $0.02294118
Is this distribution imputed? Fully imputed
28%
$0.05055556
$0.00902778
Date of release through MAP
The Warehouse Group Limited
Corporate Action Notice (for a Distribution)
Name of person authorised to
make this announcement
Jonathan Oram (Group Chief Financial Officer)
Contact phone number 09 217 7651
Imputation tax credits per financial product
Section 5: Authority for this announcement
Contact person for this announcement Jonathan Oram (Group Chief Financial Officer)
Contact email address Jonathan.Oram@thewarehouse.co.nz
25 March 2021
Section 1: Issuer Information
Section 2: Distribution amounts per financial product
Section 3: Imputation credits and resident withholding tax
Resident withholding tax amount per financial product
If fully or partially imputed, please state imputation
rate as % applied
Section 4: Distribution re-investment plan (if applicable)
Not Applicable
---
Quarterly Sales
Reporting Period 26 weeks to 31 January 2021
Previous Reporting Period 26 weeks to 26 January 2020
Quarterly Retail Sales information:
SalesSales
(3 August 2020 to 1 November 2020)
20212020
($ Million) ($ Million)
The Warehouse
379.5 368.9
+ 2.9 % + 8.1 %
Warehouse Stationery61.8 63.0
- 1.9 % + 0.5 %
Noel Leeming250.8 225.0
+ 11.5 % + 9.1 %
Torpedo733.8 23.8
+ 42.0 % + 39.2 %
SalesSales
(2 November 2020 to 31 January 2021)
20212020
($ Million) ($ Million)
The Warehouse
587.8 569.9
+ 3.1 % + 4.9 %
Warehouse Stationery74.8 70.8
+ 5.6 % + 4.0 %
Noel Leeming342.4 287.8
+ 19.0 % + 19.1 %
Torpedo751.1 42.0
+ 21.7 % + 17.0 %
SalesSales
(3 August 2020 to 31 January 2021)
20212020
($ Million) ($ Million)
The Warehouse
967.3 938.8
+ 3.0 % + 6.1 %
Warehouse Stationery136.6 133.8
+ 2.1 % + 2.5 %
Noel Leeming593.2 512.8
+ 15.7 % + 14.2 %
Torpedo784.9 65.8
+ 29.0 % + 24.4 %
Store Numbers
20212020202120202021202020212020
Start Quarter 2
909273 77 71 70 20 19
End Quarter 2
909273 76 71 70 20 20
20212020202120202021202020212020
Start Quarter 2
487,884 500,342 77,795 80,254 65,849 69,976 27,030 25,676
End Quarter 2
487,884 499,756 77,795 79,790 65,849 69,865 27,030 26,489
- - - -
- - - -
- - - -
- - - -
Note:
1) Sales for the Torpedo7 segment have been adjusted to exclude sales relating to the 1-day online business which will be reported as part of TheMarket segment in the
current financial year.
Same store sales definition
The same store sales percentage represents annual store sales growth calculated by month for comparable stores (same stores). Non comparable stores (changed and
temporary changed stores) which, by virtue of a change in footprint, catchment or other known factors cause a stores sales to be impacted, are deemed to be changed
stores and excluded from the same store sales calculation.
All stores are categorised as either a same store or a changed store or a temporary changed store. Web stores (online) for the purposes of calculating same store sales
are included in the same store sales calculation providing there has been no fundamental changes to its operating activities during the prior comparable period.
COVID lockdown adjustments
Where the Groups physical stores are unable to open to the public as COVID-19 Alert Levels have been set at Levels 3 and 4, the impacted stores are treated as changed
stores for the period of the lockdown and excluded from same store sales calculations. The same store sales calculations have been adjusted to exclude Auckland stores
which were closed as a result of a 19 day COVID-19 lockdown period which commenced on 12 August 2020 and ended on 30 August 2020.
First quarter sales
Change in
sales
Change in
same store
sales
Year to date sales
Change in
sales
Change in
same store
sales
Second quarter sales
Change in
sales
Change in
same store
sales
Noel Leeming
Warehouse StationeryTorpedo7
The Warehouse
Store
closure
Extension/
reduction
The Warehouse
Warehouse Stationery
Warehouse StationeryTorpedo7
Noel Leeming
Store footprint
(Square Metres)
The Warehouse Group Limited
Supplementary Information
The Warehouse
Noel Leeming
Torpedo7
Store changes during the quarter
New
store
Replacement
store
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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