HLG Full Year Results for the period ending 1 August 2023
Results announcement
Results for announcement to the market
Name of issuer Hallenstein Glasson Holdings Limited
Reporting Period 12 months to 1 August 2023
Previous Reporting Period 12 months to 1 August 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing operations $409,711 16.7%
Total Revenue $409,711 16.7%
Net profit/(loss) from continuing
operations
$31,977 24.9%
Total net profit/(loss) $31,977 24.9%
Final Dividend
Amount per Quoted Equity Security $0.24000000
Imputed amount per Quoted Equity
Security
$0.07000000
Record Date 8 December 2023
Dividend Payment Date 15 December 2023
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.60 $1.51
A brief explanation of any of the
figures above necessary to enable
the figures to be understood
For further information refer to the attached:
Group CEO’s announcement
Financial Statements and the Independent
Auditor’s Report
Authority for this announcement
Name of person
authorised to make
this announcement
Stuart Duncan
Contact person for this
announcement
Stuart Duncan
Contact phone number +64 21 528 184
Contact email address Stuartd@glassons.com
Date of release through MAP
29 September 2023
Audited financial statements accompany this announcement.
---
New Zealand Stock Exchange Listing Rules
Disclosure Full Year Report
For the year ending 1 August 2023
Contents
Media Release
Results Announcement
Audited Financial Statements & Audit Report
Distribution Notice
---
1
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 1 AUGUST 20 23
Note2 02 3
2022
$'000
$'000
Sales Revenue2.1409,711
351,214
Cost of Sales
2.1(174,863)
(148,950)
Gr os s P r o f it234,848
202,264
Other Operating Income
2.2253
439
Selling Expenses
(140,462)
(126,947)
Distribution Expenses
(14,008)
(12,043)
Administration Expenses
(32,825)
(26,658)
Total Expenses
(187,295)
(165,648)
Operating Profit47,806
37,055
Finance Incom e
2.11,171
177
Finance Expense
2.1, 2.2(3,556)
(2,146)
Profit Before Income Tax45,421
35,086
Income Tax Expense6.1(13,444)
(9,481)
Net Profit after Tax attributable to the Shareholders
of the Holding Company2.131,977
25,605
Other Comprehensive Income
- Items that will not be reclassified to profit or loss
Gains (net of tax) on Revaluation of Land and Buildings
6.11,632
48
Increase in Share Option Reserve
6.1135
168
-
It
ems that may be subsequently reclassified to profit or loss
Fair Value Gain (net of tax) in Cash Flow Hedge Reserve
6.1367
125
Total Comprehensive Income for the year attributable to the Shareholders
of the Holding Company34,111
25,946
Earnings Per Share
Basic and diluted Earnings per Share
2.453.61
42.93
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
2
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 1 AUGUST 20 23
Note2 02 3
2022
$'000
$'000
Equit y
Contributed Equity
5.128,140
27,805
Asset Revaluation Reserve
26,526
24,894
Cashflow Hedge Reserve
999
632
Share Option Reserve
294
228
Retained Earnings
40,362
36,894
Total Equity96,321
90,453
Represented by
Curr ent As se ts
Cash and Cash Equivalents
3.132,478
35,113
Trade and Other Receivables
318
466
Advances to Employees
160
242
Prepayments
5,431
5,275
Taxation Receivable
-
572
Inventories
3.231,005
33,441
Derivative Financial Instruments
7.51,452
1,188
Total Current Assets70,844
76,297
Non-Curr ent As se ts
Property, Plant and Equipment
4.256,367
50,415
Right of use Assets
4.165,285
67,146
Investment Property
4.33,208
3,372
Intangible As s ets
717
601
Deferred Tax
6.26,148
7,364
Tota l Non-Cur re nt Ass ets131,725
128,898
Total Assets202,569
205,195
Current Liabilities
Trade Payables
8,104
13,288
Employee Benefits
7.17,294
7,252
Other Payables
13,888
16,503
Lease Liabilities
4.125,147
24,655
Derivative Financial Instruments
7.547
289
Ta xa ti o n Pa ya b l e
590-
Total Current Liabilities55,070
61,987
Non-Current Liabilities
Lease Liabilities
4.151,178
52,755
Total Liabilities106,248
114,742
Ne
t
As se ts96,321
90,453
______________________________Director ______________________________Director Date29 September 2023
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
The Financial Statements are signed f or and on behalf of the Board and w ere authorised f or issue on 29 September 2023.
3
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 1 AUGUST 2023
Note
Share CapitalTreasury StockAsset
Revaluation
Reserve
Cas h Flow Hedge
Reserve
Share Option
Reserve
Retained
Earnings
Total Equity
$000$000$000$000$000$000$000
Balance at 1 August 202129,279(1,922)24,84650710136,34289,153
Comprehensive Income
Profit for Year-----25,60525,605
Revaluation net of Tax
6.1
--48---48
Cash Flow Hedges net of Tax
6.1
---125--125
Increase in Share Option Reserve
6.1
----168-168
Total Comprehensive Income --4812516825,60525,946
Transactions with Owners
Sale of Treasury Stock
5.1, 5.2
-259----259
Dividends
2.3, 5.1
-148---(25,053)(24,905)
Transfer of Share Option Reserve to
Retained Earnings ----(41)41-
(Gain) / Loss on Sale of Treasury Stock
transferred to Retained Earnings
5.1
-41 - - -(41) -
Total Transactions with Owners-448--(41)(25,053)(24,646)
Balance at 1 August 202229,279(1,474)24,89463222836,89490,453
Comprehensive Income
Profit for Year
-----31,97731,977
Revaluation net of Tax
6.1--1,632---1,632
Cash Flow Hedges net of Tax
6.1---367--367
Increase in Share Option Reserve
6.1----135-135
Total Comprehensive Income --1,63236713531,97734,111
Transactions with Owners
Sale of Treasury Stock
5.1, 5.2-303----303
Dividends
2.3, 5.1-86---(28,632)(28,546)
Transfer of Share Option Reserve to
Retained Earnings
----(69)69-
(Gain) / Loss on Sale of Treasury Stock
transferred to Retained Earnings
5.1-(54)---54-
Total Transactions with Owners-335--(69)(28,509)(28,243)
Balance at 1 August 202329,279(1,139)26,52699929440,36296,321
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
4
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CASH FLOW S
FOR THE YEAR ENDED 1 AUGUST 20 23
Note
2023
2022
Cash Flows from Operating Activities$'000
$'000
Cash w as provided from:
Sales to Customers
409,444
351,569
Rent Received
2.2253
249
Governm ent Grants
2.2243
2,362
Interes t Incom e
2.11,165
170
Interes t on Debtors
2.16
7
411,111
354,357
Cash was applied to:
Payments to Suppliers
253,254
217,663
Payments to Employees
74,429
66,427
Interes t Paid on Leas es
2.23,556
2,146
Taxation Paid
11,849
15,633
343,088
301,869
Net Cash Flows from Operating Activities68,023
52,488
Cash Flows from Investing Activities
Cash w as provided from:
Proceeds from Sale of Property, Plant and Equipment and Intangible Assets
397
61
Repayment of Employee Advances
82
49
479
110
Cash was applied to:
Purchase of Property, Plant and Equipment and Intangible Assets
4.214,811
8,281
14,811
8,281
Net Cash Flows applied to Investing Activities(14,332)
(8,171)
Cash Flow s from Financing Activities
Cash w as provided from:
Sale of Treasury Stock and Dividends
5.1, 5.2389
407
389
407
Cash was applied to:
Dividend Paid
2.328,632
25,053
Lease Liability Payments
4.128,083
23,762
56,715
48,815
Net Cash Flows applied to Financing Activities(56,326)
(48,408)
Net Decrease in Funds held(2,635)
(4,091)
Cash and cash equivalents at the beginning of the year35,113
39,204
Cash and cash equivalents at the end of the year3.132,478
35,113
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
5
HALLENSTEIN GLASSON HOLDINGS LIMITED
STATEMENT OF CASH FLOW S (c ontinue d)
FOR THE YEAR ENDED 1 AUGUST 20 23
RECONCILIATION OF PROFIT AFTER TAXATIONNote20 23
2022
TO CASH FLOW S FROM OPERATING ACTIVITIES$ '0 00
$'000
Net Profit after Taxation31,977
25,605
Add / (deduct) items classified as Investing or Financing activities
Gain on Sale of Plant and Equipment
2.2(217)
(13)
Add / (deduct) Non Cash Items
Depreciation and Am ortis ation
2.238,111
34,144
Gain on Termination of Lease
2.2(304)-
Net Fair Value Los s on Inves tm ent Property
2.2164 -
Deferred Taxation
6.2435
(969)
Impairment Expense
2.2-
271
Share Option Expense
135
168
Add / (deduct) movements in W orking Capital Items
Taxation Payable
1,162
(5,183)
Trade and Other Receivables and Prepayments
(8)
(3,943)
Trade and Other Payables and Employee Benefits
(5,868)
8,039
Inventories
2,436
(5,631)
Net Cash Flows from Operating Activities68,023
52,488
The Notes to the Financial Statements f orm an integral part of and are to be read in conjunction w ith these Financial Statements.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
6
1. Basis of preparation
This section presents a summary of information considered relevant and material to assist the reader in understanding the
foundations on which the financial statements as a whole have been compiled. Accounting policies specific to notes shown in other
sections are disclosed in a shaded box and are included as part of that particular note.
1.1 General information
Reporting entity
Hallenstein Glasson Holdings Limited (“Company” or “Parent”) together with its subsidiaries (the “Group”) is a retailer of men’s and
women’s clothing in New Zealand and Australia.
The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is Level
3, 235-237 Broadway, Newmarket, Auckland.
Statutory base
Hallenstein Glasson Holdings Limited is a company registered under the Companies Act 1993 and is a FMC reporting entity under
Part 7 of the Financial Markets Conduct Act 2013. The Company is also listed on the New Zealand Stock Exchange (NZX). The
financial statements of the Group have been prepared in accordance with the requirements of Part 7 of the Financial Markets
Conduct Act 2013 and the NZX Main Board Listing Rules.
The financial statements were approved for issue by the Board of Directors on 29 September 2023.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
7
1.2 General accounting policies
Statement of compliance
These financial statements for the year ended 1 August 2023 have been prepared in accordance with Generally Accepted
Accounting Practice (GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other New Zealand accounting standards and authoritative notices that are applicable to entities that apply NZ
IFRS. The financial statements comply with International Financial Reporting Standards (IFRS).
Basis of preparation of financial statements
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
The reporting currency used in the preparation of these financial statements is New Zealand dollars, rounded where
necessary to the nearest thousand dollars.
Entities reporting
The financial statements are the Consolidated Financial Statements of the Group comprising Hallenstein Glasson
Holdings Limited and its subsidiaries, together they are referred to in these financial statements as ‘the Group’. The parent
and its subsidiaries are designated as for-profit entities for financial reporting purposes.
Principles of consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Retail 161 Limited and Retail 161 Australia Limited have been non-trading companies for the last four years since Storm
was disestablished from the Group. During the financial year ended 1 August 2023, these companies were wound up and
deregistered from the New Zealand Companies Register.
Investments in subsidiaries
Principal SubsidiariesPrincipal activities
20232022
Hallenstein Bros Limited
100%
100%Retail of menswear in New Zealand
Hallenstein Brothers Australia Limited
100%
100%Retail of menswear in Australia
Glassons Limited
100%
100%Retail of womenswear in New Zealand
Glassons Australia Limited
100%
100%Retail of womenswear in Australia
Retail 161 Limited
0%
100%Non trading company deregistered in FY23
Retail 161 Aus tralia Lim ited
0%
100%Non trading company deregistered in FY23
Hallenstein Properties Limited
100%
100%Property ownership in New Zealand
Interes t held by parent
and group
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
8
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
investment property, land and buildings and financial assets and liabilities (including derivative instruments) measured at
fair value.
Critical accounting estimates, judgements and assumptions
The preparation of financial statements in conformity with NZ IFRS and IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
Property, plant and equipment: The Group has assessed whether the carrying value of its property, plant and equipment
has suffered any impairment since they were acquired. The recoverable amounts of cash generating units (at a store level)
have been determined based on value in use calculations. These calculations require the use of estimates and projections of
future operating performance.
Inventory provision: The Group assessed the inventory provision using management judgement which considers a range
of factors including the review of historical data, the age of inventory and current selling price trends to determine the
appropriateness of the provision.
Revaluation of Land and Buildings: The fair value of the Group’s land and buildings is determined by the Board following
an independent valuation undertaken at least every three years. The basis of the valuation is assessed within a range
indicated by two valuation approaches: discounted cash flow analysis and an income capitalisation approach. The key
assumptions are disclosed in note 4.2.
Revaluation of Investment Property: The fair value of the Group’s investment property is determined by the Board following
an independent valuation undertaken annually. The basis of the valuation is assessed within a range indicated by two
valuation approaches: discounted cash flow analysis and an income capitalisation approach. The key assumptions are
disclosed in note 4.3.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s operations are measured using the currency of the primary
economic environment in which it operates (‘the functional currency’). The financial statements are presented in New
Zealand dollars, which is the Group’s presentational currency.
Transactions and balances
The results and financial position of all the Group entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
and
(b) income and expenses for each statement of comprehensive income are translated at average exchange rates.
All resulting exchange differences are recognised in the statement of comprehensive income.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
9
1.3 Significant Events and Transactions
The current financial reporting period has not been materially impacted by COVID-19. Comparatively, trade in the first half of the
2022 financial year was significantly disrupted by the COVID-19 pandemic, resulting in 5,432 lost trading days across the Group.
As part of its response to COVID-19, the New Zealand Government provided wage subsidies in the form of the COVID-19 Leave
Support Scheme to eligible businesses to help employers continue to pay their employees that are self-isolating because of COVID-
19 and are unable to work from home. The Group has applied NZ IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance in accounting for the funds received from the COVID-19 Leave Support Scheme. Government wage
subsidies received during the period have been accounted for as government grants and offset against the expenses to which they
relate in the same period as they are incurred as disclosed in note 2.2.
All negotiations with landlords for rent relief for periods where stores were unable to trade due to the various lockdowns in the prior
years have now been resolved.
2. Performance
2.1 Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors. The
Board of Directors is the chief operating decision maker and is responsible for allocating resources and assessing
performance of the operating segments and they delegate that authority through the Group Chief Executive Officer.
The Board of Directors considers the business from both a product and geographic perspective as follows:
- Hallenstein Bros Limited (New Zealand) and Hallenstein Brothers Australia Limited (Australia)
- Glassons Limited (New Zealand)
- Glassons Australia Limited (Australia)
- Hallenstein Properties Limited (New Zealand) (Property)
The reportable segments derive their revenues primarily from the retail sale of clothing. The revenues from external parties reported
to the Board of Directors are measured in a manner consistent with that in the statement of comprehensive income. There are no
significant revenues derived from a single external customer.
During the financial year ended 1 August 2023 the Group implemented intercompany charges to reflect brand value provided by New
Zealand for the benefit of Australia, procurement services provided by New Zealand to Australia, and management services provided
by one related entity to another. These charges have impacted on profit before income tax of the segments reported and are therefore
not directly comparable to the prior year segment results. These charges have been implemented based on professional advice and
are consistent with comparable industry benchmarks.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
10
Segment results
For the year ended 1 August 2023
Glas s ons
New
Zealand
Glassons
AustraliaHallensteinsPropertyParentTotal Group
$000's $000's $000's $000's $000's $000's
INCOME STATEMENT
Segment Revenue
122,336192,070106,309-753421,468
Intercom pany Segm ent Revenue
(9,888)(841)(275)-(753)(11,757)
Sales Revenue from External Customers
112,448191,229106,034--409,711
Cost of Sales
(51,924)(75,567)(47,372)--(174,863)
Finance Incom e
149487449-861,171
Finance Expenses
(1,268)(1,226)(1,045)-(17)(3,556)
Depreciation and Software Amortisation
(11,518)(15,826)(10,288)(422)(57)(38,111)
Profit/(Los s ) before Incom e Tax
15,14924,6025,425320(75)45,421
Income Tax Expense
(4,256)(7,496)(1,540)(136)(16)(13,444)
Net Profit/(Los s ) after Incom e Tax
10,89317,1063,885184(91)31,977
BALANCE SHEET
Current As s ets
22,83618,35621,6015,5032,54870,844
Non Current Assets
43,45739,07426,70522,489-131,725
Current Liabilities
16,87421,18916,5933793555,070
Non Current Liabilities
20,37017,69413,114--51,178
Purchase of Property, Plant and Equipment and
Intangibles
2,9658,7553,0838-14,811
For the year ended 1 August 2022
Glassons
New
Zealand
Glassons
AustraliaHallensteinsPropertyParentTotal Group
$000's $000's $000's $000's $000's $000's
INCOME STATEMENT
Sales Revenue from External Customers104,368156,93889,908--351,214
Cos t of Sales(49,038)(61,346)(38,566)--(148,950)
Finance Income493288-8177
Finance Expenses(913)(657)(575)-(1)(2,146)
Depreciation and Software Amortisation(11,417)(12,725)(9,560)(418)(24)(34,144)
Profit/(Los s ) before Incom e Tax5,69026,0282,922447(1)35,086
Incom e Tax (Expens e)/Benefit(1,611)(6,915)(830)(125)-(9,481)
Net Profit/(Los s ) after Incom e Tax4,07919,1132,092322(1)25,605
BALANCE SHEET
Current As s ets18,05227,72123,4484,8032,27376,297
Non Current As s ets47,51135,41323,80822,15610128,898
Current Liabilities19,99124,28717,588526961,987
Non Current Liabilities23,73217,30411,719--52,755
Purchase of Property, Plant and Equipment and
Intangibles1,8404,9831,40256-8,281
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
11
2.2 Income and expenses
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services, excluding
Goods and Services Tax, rebates and discounts and after eliminating sales within the Group.
Revenue is recognised as follows:
Sales of goods - retail
Sales of goods are recognised when a Group entity has delivered a product to the customer. For in-store sales, control
passes to the customer at point of sale. For online sales, the order and the delivery to the customer are considered to
comprise a single performance obligation, therefore control passes to the customer when the goods are delivered. Retail
sales are usually in cash, credit card, debit card or by various pay later services. The recorded revenue is the gross amount
of sale (excluding GST), including credit card fees and service fees payable for the transaction. Such fees are included in
selling expenses.
The Group offers customers the option of purchasing gift cards. This is considered deferred revenue until such time where
the customer redeems the gift card on future purchases. A contract liability for the purchase of a gift card is recognised at the
time of the sale. Revenue is recognised when the gift card is redeemed or when they expire. As at 1 August 2023, the gift
card liability balance recognised under “Other payables” was $3.109M (2022: $3.480M, 2021: $3.051M).
Interest income
Interest income is recognised using the effective interest method.
Rental income
Rental income from operating leases (net of any incentives) is recognised on a straight line basis over the lease term.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
12
1
Amount paid in respect of tax compliance and tax advisory services provided in Australia.
2
Wages, salaries and other short term benefits includes wage subsidy benefit from the New Zealand government of $0.24M (2022: $2.36M).
Income and expenses
Profit before income tax includes the following specific income and expenses:
2023
2022
$000
$000
Other Operating Income
Rental Income
253
249
Insurance Proceeds
-
190
Ex pe ns e s
Occupancy Costs
6,156
4,067
Impairment Expense
-
271
Audit of Financial Statements
PwC New Zealand
230
231
Other Services
Performed by PwC Australia
1
21
20
Directors' Fees
647
649
Wages, Salaries and other Short Term Benefits
2
74,229
64,187
Depreciation of Property, Plant & Equipment
10,423
9,554
Depreciation of Right of Use Assets
27,273
24,270
Am ortis ation of Software
415
320
Total Depreciation and Am ortis ation
38,111
34,144
Net Fair Value Loss on Investment Property
164
-
Interest on Leases
3,556
2,146
Gain on Termination of Lease
(304)
-
Gain on Disposal of Property, Plant and Equipment
(217)
(13)
Group
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
13
2.3 Dividends
Provision is made for the amount of any dividend declared on or before the balance date but not distributed at balance date.
Dividends paid were partially imputed. Supplementary dividends of $64,315 (2022: $160,701) were paid to shareholders not resident
in New Zealand for tax purposes for which the Group received a foreign investor tax credit.
2.4 Earnings per share
Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares
issued during the period.
Basic
Basic earnings per share is calculated by dividing the profit after tax of the Group by the weighted average number of ordinary shares
outstanding during the year.
Diluted
Diluted earnings per share is calculated by adjusting profit after tax and the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. There are no options convertible into shares as at 1 August 2023 (2022:
Nil).
Dividends
2023
2022
2023
2022
cents per
Share
cents per
Share
$000's
$000's
Final dividend for the year ended 1 August 2022
24.0014,316
Interim dividend for the year ended 1 August 2023
24.0014,316
Final dividend for the year ended 1 August 202124.0014,316
Interim dividend for the year ended 1 August 202218.0010,737
Total
48.00
42.00
28,632
25,053
Earnings per share
2023
2022
$000's
$000's
Profit after tax
31,977
25,605
Weighted average number of ordinary shares outstanding
59,649
59,649
Basic and diluted earnings per share (cents per share)
53.61
42.93
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
14
3. Working Capital
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, EFTPOS (electronic funds transfer point of sale) transactions which
have not been cleared by the bank at balance date, deposits held at call with financial institutions, other short-term highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Statements of Cash flows
The following are the definitions of the terms used in the statement of cash flows:
(I.) Cash comprises cash and cash equivalents.
(II.) Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment,
investments and employee advances.
(III.) Financing activities are those activities which result in changes in the size and composition of the capital structure of
the Group. This includes lease payments, equity and debt not falling within the definition of cash. Dividends paid are
included in financing activities.
(IV.) Operating activities include all transactions and other events that are not investing or financing activities.
The carrying amount of cash and cash equivalents equals the fair value.
3.2 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses,
excluding borrowing costs.
Following the publication of IFRS Interpretations Committee (IRFRIC) agenda decision on Costs Necessary to Sell
Inventories, in June 2021, the Group has reconsidered its accounting treatment in relation to which costs to include when
determining the net realisable value of inventory. The Group’s reconsideration of this accounting treatment has not resulted
in any adjustment to how it determines net realisable value.
Inventory adjustments are provided at year end for stock obsolescence within cost of sales in the Statement of Comprehensive
Income.
The cost of inventories recognised as an expense and included in cost of sales amounted to $174,548,112 (2022: $148,661,516).
Cash and cash equivalents
2023
2022
$000's
$000's
Cash at Bank
28,667
33,375
Short Term Bank Deposits
3,739
1,668
Cash on Hand
72
70
Total Cash and Cash Equivalents32,478
35,113
Inventories
2023
2022
$000's
$000's
Finished goods
31,285
33,735
Inventory adjustments
(280)
(294)
Net inventories31,005
33,441
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
15
4. Long term Assets
4.1 Leases
Right-of-use assets and lease liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the remaining lease payments.
Right-of-use assets are initially recognised on commencement of lease at cost, comprising the initial amount of the lease
liabilities less any lease incentives received. Right-of-use assets are subsequently depreciated using the straight-line method
from the commencement date to the end of the lease term.
The Group leases retail stores under non-cancellable operating leases expiring within one to six years. There is a small
portion of lease contracts which contain renewal rights. In considering the lease term for these contracts, the Group has
determined that rights of renewals are not reasonably certain to be exercised due to the nature and location of the stores and
the changing retail environment. It is the Group’s strategy to renegotiate the terms of all leases at their expiry instead of
exercising renewal rights. This agile strategy is enabled by having stores relatively small in size and not highly customised,
and therefore relatively straight forward to move locations. In addition, with the current retail market uncertainty the Group
needs to maintain a degree of flexibility.
Both right-of-use assets and lease liabilities are discounted applying the interest rate implicit in the lease. If that rate cannot
be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
In response to the COVID-19 pandemic the International Accounting Standards Board has issued amendments to IFRS 16
Leases to allow lessees not to account for rent concessions as lease modifications if they are a direct consequence of COVID-
19 and meet certain conditions.
The practical expedient will only apply if:
x the revised consideration is substantially the same or less than the original consideration;
x the reduction in lease payments relates to payments due on or before 30 June 2022; and
x no other substantive changes have been made to the terms of the lease.
The Group adopted this practical expedient in the year ended 1 August 2020 and has applied it to all eligible rent concessions
in the year ended 1 August 2023.
Short term leases where the Group is the lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the
profit and loss in the Statement of Comprehensive Income on a straight line basis over the period of the lease.
The Group is the lessor
Assets leased to third parties under operating leases are included in Investment Property in the Statement of Financial
Position. Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term.
Lease receivables are disclosed under Note 4.3 Investment Property.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
16
The following tables show the movements and analysis in relation to the right-of-use assets and lease liabilities.
Right of Us e Ass ets
2023
2022
$000
$000
Opening net book value
67,146
67,223
Depreciation
(27,273)
(24,270)
Modifications and additions
27,037
23,772
Impairment
-
(271)
Lease Terminations
(1,066)
-
FX im pact
(559)
692
Carrying amount65,285
67,146
Lease liabilities
2023
2022
$000
$000
Opening lease liabilities77,410
76,632
Lease modifications and additions
29,344
26,383
Interes t for the period
3,556
2,146
Lease payments made
(31,639)
(25,908)
COVID-19 rent abatements received to date
(234)
(2,636)
Lease Terminations
(1,370)
-
FX im pact
(742)
793
Closing Lease liabilities76,325
77,410
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
17
Lease commitments:
The Group currently has no non-cancellable short-term operating lease agreements as at 1 August 2023.
Lease liabilities maturity analysis for the year ended 1 August 2023
Minimum
lease
paymentsInterest
Present
va lue
$000's$000's$000's
Due within one year
28,130 (2,983) 25,147
One to two years
22,851 (1,992) 20,859
Two to five years
31,628 (1,924) 29,704
Later than five years
628 (13) 615
Total83,237 (6,912) 76,325
Current
25,147
Non-current
51,178
Total76,325
Lease liabilities maturity analysis for the year ended 1 August 2022
Minimum
lease
paym entsInteres t
Present
va l u e
$000's$000's$000's
Due within one year26,941 (2,286) 24,655
One to two years21,994 (1,557) 20,437
Two to five years31,985 (1,619) 30,366
Later than five years2,006 (54) 1,952
Total
82,926 (5,516) 77,410
Current24,655
Non-current52,755
Total
77,410
Lease related expenses included in the income statement:
2023
2022
$000
$000
Depreciation
27,273
24,270
Rent on short-term leases
6,390
6,703
COVID-19 rent abatements received to date
(234)
(2,636)
Gain on lease termination
(304)
-
Interes t on leas es
3,556
2,146
Total
36,681
30,483
Lease payments included in the cash flow statement:
2023
2022
$000
$000
Interes t paid on leas es (operating activities )
3,556
2,146
Payments for lease liabilities principal (financing activities)
28,083
23,762
Total cash outflows from leases
31,639
25,908
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
18
4.2 Property, plant and equipment
Recognition and measurement
Land and buildings were valued on 1 August 2023 by Telfer Young (Hawkes Bay) Ltd, Fordbaker Valuation Limited and Colliers
International who are independent registered valuers and associates of The New Zealand Institute of Valuers. The valuers have
recent experience in the location and category of the item being valued. The fair values of the assets represent the estimated
price for which a property could be sold on the date of valuation in an orderly transaction between market participants.
The adopted valuation has been assessed within a range indicated by two valuation approaches: Income capitalisation approach
and discounted cash flow analysis.
The following table summarises the valuation approach and key assumptions used by the valuers to arrive at fair value.
Valuation approach Description of the valuation approach
Income Capitalisation
Approach
A valuation methodology which determines fair value by capitalising a property’s
sustainable net income at an appropriate, market derived capitalisation rate (yield).
Unobservable inputs within the income capitalisation approach include:
a) Net Market Rent which is the annual amount for which a tenancy within a
property is expected to achieve under a new arm’s length leasing transaction
after deducting a fair share of property operating expenses.
b) Capitalisation Rate (yield) which is the rate of return, determined through analysis
of comparable, market related sales transactions which is applied to a property’s
sustainable net income to derive value.
Discounted Cash Flow analysis With the discounted cash flow approach (DCF) a cash flow budget is established for the
property over a ten-year time horizon. Within the cash flow an allowance is made for rental
growth as well as deducting costs associated with property ownership. A terminal value is
also estimated and the cash flows are discounted at a market rate to arrive at a net
present value.
Unobservable inputs within the discounted cash flow approach include:
a) The discount rate which is the rate determined through analysis of comparable
market related sales transactions which is applied to a property’s future net cash
flows to convert those cash flows into a present value.
b) The terminal capitalisation rate which is the rate which is applied to a property’s
sustainable net income at the end of an assumed holding period to derive an
estimated market value.
c) Rental growth rate which is the annual growth rate applied to market rent over an
assumed holding period.
d) Expenses growth which is the annual amount applied to property operating
expenses over an assumed holding period.
Land and building measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers
between levels of the fair value hierarchy.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
19
Both the income capitalisation approach and discounted cash flow analysis contain unobservable inputs in determining fair value.
These are summarised in the table below:
Range of significant unobservable inputs
Class of property
Inputs used to measure
fair value 2023 2022 Sensitivity
Land and Buildings -
Retail Net Market Rent $359 per m2 $345 per m2
The higher the market rent
and growth rate, the higher
the fair value
Rental growth rate 1.50% - 2.50% 1.50% - 2.15%
Capitalisation rate (yield) 6.56% 6.00%
The higher the capitalisation
rates and discount rate, the
lower the fair value.
Discount Rate 7.80% 7.02%
Terminal Capitalisation Rate 7.25% 6.50%
Expenses growth 1.8% - 4.4% 2.0% - 5.9%
The higher the expenses, the
lower the fair value.
Land and Buildings -
Warehouse
2023 2022
Net Market Rent $128 - $210 $110 - $146
The higher the market rent
and growth rate, the higher
the fair value
Rental growth rate 1.70% - 3.10% 2.00% - 3.00%
Capitalisation rate (yield) 5.25% - 6.75% 3.88% - 5.75%
The higher the capitalisation
rates and discount rate, the
lower the fair value.
Discount Rate 7.38% - 7.75% 5.25% - 5.75%
Terminal Capitalisation Rate 5.50% - 6.75% 4.13% - 6.75%
Expenses growth 0.00% - 5.00% 0.20% - 2.20%
The higher the expenses, the
lower the fair value.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and
shown as an asset revaluation reserve in shareholders’ equity. Decreases that offset previous increases of the same asset are
charged in other comprehensive income and debited against the asset revaluation reserve directly in equity; all other decreases
are charged to the statement of comprehensive income.
All other property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. This cost includes labour attributable to bringing the assets
to the location and working condition for its intended use.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of
their residual values, over their estimated useful lives, as follows:
- Buildings 67 years
- Plant and equipment 2 - 5 years
- Furniture, fittings and office equipment 5 - 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each balance date.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
20
Impairment
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable, for example a planned store closure,
withdrawal from a business segment, or assessment of loss making stores. Assets are grouped at the lowest levels for which
there are separately identifiable cash flows; a stores assets is the relevant cash generating unit. If, in a subsequent period, the
amount of the impairment loss decreases and it can be related objectively to an event occurring after the impairment was
recognised, the reversal of the previously recognised impairment loss is recognised in the consolidated statement of
comprehensive income.
The value in use calculation evaluates recoverability based on the stores’ forecasted discounted cash flows, which incorporate
estimated sales, margin & expense growth based upon current plans for the store. Key assumptions in the determination of
recoverable amount are:
• the estimate of future cash flows of the store incorporating reasonable sales growth and margin improvement; and
• the discount rate incorporating the rates of return based on the risk and uncertainty inherent in the forecast cash flows.
No store impairment was recognised at 1 August 2023.
Disposal
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the
Statement of Comprehensive Income.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
21
If land and buildings were stated on a historical cost basis, the amounts would be as follows:
Year ended 1 August 2023
$000's
Land at fair
value
Buildings at
fair value
Fix t ur e s &
Fittings
Plant &
EquipmentTOTAL
Opening NBV11,04518,36316,2924,71550,415
Additions - - 10,7793,50214,281
Dis pos als - - (142)(38)(180)
Depreciation - (519)(7,140)(2,764)(10,423)
Revaluations(20)2,294 - - 2,274
Closing NBV11,02520,13819,7895,41556,367
Cost/Valuation11,02520,13870,00626,482127,651
Accum ulated depreciation - - (50,217)(21,067)(71,284)
Closing NBV11,02520,13819,7895,41556,367
Year ended 1 August 2022
$000's
Land at fair
value
Buildings at
fair value
Fix t ur e s &
Fittings
Plant &
Equipm e ntTOTAL
Opening NBV
11,04518,81416,8085,35852,025
Ad d i ti o n s
- - 5,7352,1917,926
Disposals
- - (35)(14)(49)
Depreciation - (518)(6,216)(2,820)(9,554)
Revaluations - 67 - - 67
Closing NBV11,04518,36316,2924,71550,415
Cost/Valuation
11,04518,81471,70226,255127,816
Accumulated depreciation
- (451)(55,410)(21,540)(77,401)
Clos ing NBV
11,04518,36316,2924,71550,415
2023
2022
$000's
$000's
Land
4,270
4,270
Buildings
12,792
12,792
Cost
17,062
17,062
Accumulated depreciation
(2,737)
(2,482)
Net book amount
14,325
14,580
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
22
4.3 Investment Property
Recognition and measurement
Investment property consists of a portion of land and buildings for the purpose of retail. Land and buildings were valued on 1
August 2023 by Telfer Young (Hawkes Bay) Ltd who are independent registered valuers and associates of The New Zealand
Institute of Valuers. The valuers have recent experience in the location and category of the item being valued. The fair values of
the assets represent the estimated price for which a property could be sold on the date of valuation in an orderly transaction
between market participants.
The adopted valuation has been assessed within a range indicated by two valuation approaches: Income capitalisation approach
and discounted cash flow analysis. These valuation approaches and the key assumptions used by the valuers in order to arrive at
fair value have been summarised in note 4.2.
The table in note 4.2 summarises the valuation approach and key assumptions used by the valuers to arrive at fair value.
The loss on the fair value revaluation of Investment Property was recognised as an operating expense in the Statement of
Comprehensive Income (2022: Nil). Subsequent revaluation surpluses or losses will be recognised through Statement of
Comprehensive Income.
Land and building measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers
between levels of the fair value hierarchy.
Both the income capitalisation approach and discounted cash flow analysis contain unobservable inputs in determining fair value.
These are summarised in Note 4.2
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably.
Lease receivables:
The Group owns rental property that it leases under non-cancellable operating lease agreements to external parties. Leases reflect
normal commercial arrangements with varying terms and renewal rights.
The future minimum rental payments receivable under these leases is as follows:
Investment Property
2023
2022
$000's
$000's
Opening balance
3,372
3,372
Net los s from fair value adjus tm ent
(164)
-
Closing balance3,208
3,372
Lease receivables
2023
2022
$000's
$000's
Due within one year
207
206
One to two years
74
199
Two to five years
-
70
Total lease receivables281
475
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
23
5. Equity
5.1 Share capital
Ordinary shares are classified as capital, net of treasury stock.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Treasury stock
Shares purchased on market under the executive share scheme are treated as treasury stock on acquisition at cost. On
vesting to the employee, treasury stock shares are credited to equity and an employee loan is recorded initially at fair value
and subsequently at amortised cost.
Reserves
The asset revaluation reserve records revaluations of property, net of tax. The cash flow hedge reserve records the fair value
of derivative financial instruments, net of tax that meet the hedge accounting criteria. The Share Option reserve is used to
record the accumulated value of unvested share rights arising from the executive share scheme which have been recognised
in the statement of comprehensive income.
All shares are fully paid and rank equally.
Contributed Equity
2023
2022
2023
2022
Shares
Shares
$000's
$000's
Balance at beginning of year
59,402,061
59,352,061
27,805
27,357
Sale of Treasury Stock
50,000
50,000
303
259
Dividends
-
-
86
148
Loss/(Gain) on sale of Treasury Stock transferred to Retained
Earnings
-
-
(54)
41
Balance at end of year
59,452,061
59,402,061
28,140
27,805
Representing:
Share Capital
59,649,061
59,649,061
29,279
29,279
Treasury Stock (net of Dividends)
(197,000)
(247,000)
(1,139)
(1,474)
Total
59,452,061
59,402,061
28,140
27,805
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
24
5.2 Executive Share Scheme
Equity settled share-based compensation benefits are provided to employees in accordance with the Group’s executive share
scheme. The fair value of share rights granted under the scheme is recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the share rights.
The fair value at grant date of the share rights are determined using a Black Scholes Pricing model that takes into account the
exercise price, the term of the share right, the vesting and performance criteria, the non-tradable nature of the share right, the
share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the share right.
At each balance date, the Group revises its estimate of the number of share rights that are expected to become exercisable.
The employee benefit expense recognised each period takes into account the most recent estimate.
Upon the vesting of share rights, the balance of the share option reserve relating to the share rights is transferred to retained
earnings.
The Company operates an employee share scheme for certain senior executives to purchase ordinary shares in the Company.
The Company provides the employees with limited recourse loans on an interest free basis to assist employees’ participation.
The loans are applied to purchase shares on market and the shares are treated as treasury stock.
The loan amount is the total market value of the shares plus any commission applicable on the date of purchase.
Any dividends payable on the shares are applied towards the repayment of the advance.
Shares purchased under the scheme are held by two directors as custodians and vest three years from the date of purchase. In
the event the employee leaves the company during the vesting period, the loan is repaid by selling the shares on market. Any
gain or loss arising from the sale of shares is included in equity. Refer to note 5.1 for further detail on treasury stock.
In accordance with NZ IFRS 2 this scheme is an equity-settled scheme.
There were no shares issued during the 2023 financial year (2022: Nil).
Executive share scheme
Num be r of
shares
Average
exercise price
per share
option
Number of
shares
Ave ra g e
exercise price
per share
option
Balance at beginning of financial year
247,000$6.62
297,000$6.61
Forfeited during the year
(50,000)$6.06
(50,000)$5.18
Balance at end of financial year
197,000$6.74
247,000$6.62
Percentage of total s hares held by s chem e
0.33%
0.41%
Year ended 1 August 2022
Year ended 1 August 2023
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
25
6. Taxation
6.1 Income tax expense
The income tax expense or revenue for the period is the tax payable or receivable on the current period’s taxable income
based on the notional income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements and unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each
jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences
if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in operations where the company is able to control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Goods and Services Tax (GST)
The statement of comprehensive income and statement of cash flows have been prepared so that all components are stated
exclusive of GST. All items in the statement of financial position are stated net of GST, with the exception of receivables and
payables, which include GST invoiced.
The effective tax rate for the year was 29.6% (2022: 27.0%). The Group has no tax losses (2022: Nil) and no unrecognised temporary
differences (2022: Nil).
2023
2022
$000's
$000's
Income tax expense
The tax expense comprises:
Current tax expense
12,954
11,391
Prior period adjustment
55
(941)
Deferred tax expense (note 6.2)
- Future tax expense/(benefit) current year
435
(969)
Total income tax expense
13,444
9,481
Reconciliation of income tax expense to tax rate applicable to profits
Profit before income tax expense
45,421
35,086
Tax at 28% (2022: 28%)
12,718
9,824
Tax effect of:
- Expenses not deductible for tax
144
60
- Adjus tm ent due to different rate in different juris dictions
527
538
- Prior period adjustment
55
(941)
Total income tax expense
13,444
9,481
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
26
The tax (charge)/credit relating to components of other comprehensive income are as follows:
6.2 Deferred tax
6.3 Imputation credits
The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted for:
x Imputation credits that will arise from the payment of the provision for income tax;
x Imputation debits that will arise from the payment of dividends recognised as liabilities at the reporting date; and
x Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
2023
2022
$000's
$000's
Before Tax Tax chargeAfter Tax
Before TaxTax chargeAfter Tax
Gains (net of tax) on revaluation of land and
buildings
2,274(642)1,632
67(19)48
Fair Value Gain (net of tax) in Cas h Flow Hedge
Reserve
506(139)367
185(60)125
Increase in Share Option Reserve
135-135
168-168
2023
2022
$000's
$000's
Amounts recognised in profit or loss
Depreciation
3,937
4,455
Provisions and accruals
1,710
1,773
Net lease liability
1,551
1,422
7,198
7,650
Amounts recognised directly in equity
Asset revaluation reserve
(642)
(19)
Cash flow hedges
(408)
(267)
Total amount recognised
6,148
7,364
Movements
Balance at beginning of year
7,364
6,474
(Charged)/Credited to the Incom e Statem ent
(435)
969
Charged to equity
(781)
(79)
Balance at end of the year
6,148
7,364
2023
2022
$000's
$000's
Imputation credits available for subsequent reporting periods
4,172
2,701
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
27
7. Other
7.1 Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
7.2 Contingencies
Contingent liabilities under contracts, guarantees and other agreements arising in the ordinary course of business on which no loss
is anticipated are as follows:
Letters of Credit
Bank letters of credit issued to secure future purchasing requirements are matched to a contingent asset of the same value
representing inventories purchased.
7.3 Capital expenditure commitments
Employee benefits
2023
2022
$000's
$000's
Holiday pay accrual and other benefits
7,294
7,252
2023
2022
$000's
$000's
Financial guarantee
1,200
1,235
Bank guarantee provided to the New Zealand Stock Exchange Limited
75
75
20232022
$000's $000's
Com m itm ents in relation to s tore fitouts
1,043-
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
28
7.4 Related party transactions
During the year, the Company advanced and repaid loans to its subsidiaries by way of internal current accounts. In presenting the
financial statements of the Group, the effect of transactions and balances between fellow subsidiaries and those with the Parent
have been eliminated.
The Group undertook transactions with the related interests of the majority shareholder as detailed below:
The following Directors received Directors’ fees and dividends in relation to shares held personally as follows:
Total remuneration of $440K was paid by the Company to close family members of the Board of Directors for individuals that were
either employed or engaged as consultants by the Company in the year ended 1 August 2023 (2022: $376K).
Key management compensation was as follows:
The Company operates an employee share scheme for certain senior executives and is outlined in Note 5.2.
2023
2022
T C Glas s on
$000
$000
Rent on retail premises based on independent valuations
2,166
2,039
2023
2022
2023
2022
$000
$000
$000
$000
Ms J Appleyard
62
-
-
-
Mr W J B e l l
135
135
-
3
Ms K Bycroft
95
95
-
-
Ms M D e vi n e
-
57
-
-
Mr M D o n o va n
-
7
-
-
Mr M Fo r d
100
100
4
4
Mr J C Gl a s s o n
-
-
20
17
Mr T C Gl a s s o n
85
85
5,338
4,671
Mr G Popplewell
85
85
91
80
Ms S Vi n c e n t
85
85
22
19
Directors' feesDividends
Payments to Karen Bycroft2023
2022
$000
$000
Consulting fees
9
21
2023
2022
$000
$000
Short term employee benefits
2,912
2,799
Termination benefits
-
160
Share Scheme Benefit
135
168
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
29
7.5 Financial risk management
Fair value estimation
Fair value estimates are classified in a hierarchy based on the inputs to valuation techniques used to measure fair value.
The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that caused the transfer.
The Group has financial instruments that are classified as Level 2 within the fair value hierarchy. The fair value of financial
instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely
as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable,
the instrument is included within Level 2. Under Level 2 the Group holds forward foreign exchange contracts. The fair value
of these forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the
resulting value discounted back to present value. Refer to note 7.5.4.
The Group's land and buildings within property, plant and equipment and investment property is classified as Level 3 in the
fair value hierarchy as one or more of the significant inputs into the valuation are not based on observable market data.
Refer to notes 4.2 and 4.3 for more information.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-
measured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The company designates certain
derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);
or (2) hedges of highly probable forecast transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items,
as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of
hedged items.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the profit and loss component of Statement of Comprehensive Income.
Amounts accumulated in equity are recycled in the Statement of Comprehensive Income in the periods when the hedged
item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability,
the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial
cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the Statement of Comprehensive Income. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the profit and loss
component of the Statement of Comprehensive Income.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of these derivative instruments
are recognised immediately in the Statement of Comprehensive Income.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
30
7.5.1 Financial risk factors
The Group’s activities expose it to various financial risks including, liquidity risk, credit risk, and market risk (including currency risk
and cash flow interest rate risk). The Group’s risk management strategy is to minimise adverse effects on Comprehensive Income.
Derivative financial instruments are used to hedge currency risk.
7.5.2 Liquidity Risk
Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves, and by regularly monitoring cash flow.
At balance date, the Group had $32.478 million (2022: $35.113 million) in cash reserves and accordingly, management consider
liquidity risk to be relatively low.
The table below analyses the Group’s financial liabilities and gross-settled derivatives into relevant maturity groupings based on the
remaining period from the statement of financial position to the contractual maturity date. The cash flow hedge “outflow” amounts
disclosed in the table are the contractual undiscounted cash flows liable for payment by the Group in relation to all forward foreign
exchange contracts in place at balance date. The cash flow hedge “inflow” amounts represent the corresponding inflow of foreign
currency back to the Group as a result of the gross settlement on those contracts, converted using the spot rate at balance date.
The carrying value shown is the net amount of derivative financial liabilities and assets as shown in the statement of financial
position.
Trade payables are shown at carrying value in the table. No discounting has been applied as the impact of discounting is not
significant.
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
31
7.5.3 Credit Risk
Credit risk is the risk of the failure of a debtor or counterparty to honour its contractual obligations resulting in financial loss to the
Group. The Group incurs credit risk from trade receivables and transactions with financial institutions. The Group places its cash,
short-term investments, and derivative financial instruments with high credit quality financial institutions. Retail sales are
predominantly settled in cash or by using major credit cards. 0.1% (2022: 0.1%) of sales give rise to trade receivables. This
maximum exposure to credit risk is the carrying amount of trade receivables.
Concentration of credit risk with respect to debtors is limited due to the large number of customers included in the Group’s customer
base.
The Group does not require collateral or other security to support financial instruments with credit risk.
As at 1 August 2023
Less than 3
months
3-12
monthsTotal
Car rying
value
$000's $000's $000's $000's
Trade and other payables21,992-21,99221,992
21,992-21,99221,992
Forward foreign exchange contracts
Cash flow hedges:
- outflow(28,127)(39,403)(67,530)(67,530)
- inflow28,62640,37569,00168,935
- Net4999721,4711,405
As at 1 August 2022Less than 3
months
3-12
monthsTotal
Carrying
va l u e
$000's $000's $000's $000's
Trade and other payables29,791-29,79129,791
29,791-29,79129,791
Forward foreign exchange contracts
Cash flow hedges:
- outflow(17,467)(12,575)(30,042)(30,042)
- inflow18,26212,70530,96730,941
- Net795130925899
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
32
7.5.4 Market Risk
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposure predominantly with the US dollar with the purchase
of inventory from overseas suppliers.
The Board has established a Treasury Risk Policy to manage the foreign exchange risk. The policy is reviewed on a regular basis,
and management report monthly to the Board to confirm policy is adhered to. All committed foreign currency requirements are fully
hedged, and approximately 50% (2022: 50%) of anticipated foreign currency requirements are hedged on a rolling twelve month
basis.
The Group uses forward exchange contracts with major retail banks only to hedge its foreign exchange risk arising from future
purchases.
Forward exchange contracts – cash flow hedges
These contracts are used for hedging committed or highly probable forecast purchases of inventory. The contracts are timed to
mature during the month the inventory is shipped and the liability settled. The cash flows are expected to occur at various dates
within one year from balance date.
When forward exchange contracts have been designated and tested as an effective hedge the portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is recognised directly in equity. These gains or losses will be released
in the profit and loss in the Statement of Comprehensive Income at various dates over the following year as the hedged risk
crystallises.
At balance date the Group had entered into forward exchange contracts to sell the equivalent of NZ$67.530 million (2022:
NZ$30.042 million), primarily in US Dollars. At balance date these contracts are represented by net assets of $1.405 million (2022:
assets of $0.899 million). When foreign exchange contracts are not designated and tested as an effective hedge, the gain or loss
on the foreign exchange contract is recognised in the profit and loss in the Statement of Comprehensive Income.
At balance date there are no such contracts in place (2022: $Nil).
Interest rate risk
The Group has no interest bearing liabilities. Exposure to interest rate risk arises only from the impact on income from operating
cash flows as a result of interest bearing assets, such as cash deposits.
Sensitivity analysis
Based on historical movements and volatilities and management’s knowledge and experience, management believes that the
following movements are ‘reasonably possible’ over a 12 month period:
x Proportional foreign exchange movement of -10% (depreciation of NZD) and +10% (appreciation of NZD) against the
USD, from the year end rate of $0.6192 (2022: $0.6297).
x Proportional foreign exchange movement of -10% (depreciation of NZD) and +10% (appreciation of NZD) against the
AUD, from the year end rate of $0.9279 (2022: $0.9012).
x A parallel shift of +2% / -2% in the market interest rates from the year end deposit rate of 5.5% (2022: 2.5%).
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
33
If these movements were to occur, the post-tax impact on profit and loss and equity for each category of financial investment:
The parent is not exposed to any interest rate or foreign exchange risk.
7.5.5 Capital risk management
The Group’s objectives when managing capital are to maximise the value of shareholder equity and ensure that the Group continues
to safeguard its ability to continue as a going concern. Group capital consists of share capital, reserves and retained earnings. In
order to meet these objectives, the Group may adjust the amount of dividend payment made to shareholders. The Group has no
specific banking or other arrangements which require that the Group maintain specific equity levels.
As at 1 August 2023
ProfitEquityProfitEquityProfitEquityProfitEquity
$000's $000's $000's $000's $000's $000's $000's $000's $000's
FINANCIAL ASSETS
Loans and receivables
Cash and cash equivalents
32,478(650)(650)6506502,1802,180(1,784)(1,784)
Accounts receivable
318--------
Advances to Employees
160--------
Derivatives used for Hedging
Derivatives designated as cash
flow hedges (forward foreign
exchange contracts)
1,405-----5,520-(4,516)
FINANCIAL LIABILITIES
Liabilities at amortised cost
Trade and other payables
21,992----(1,062)(1,062)869869
TOTAL INCREASE/DECREASE(6 50)(6 50)6506 501,1 186,63 8(9 15 )(5,4 31)
As at 1 August 2022
-2% +2%-10% +10%
ProfitEquityProfitEquityProfitEquityProfitEquity
$000's $000's $000's $000's $000's $000's $000's $000's $000's
FINANCIAL ASSETS
Loans and receivables
Cash and cash equivalents35,113(702)(702)7027022,7102,710(2,218)(2,218)
Accounts receivable466--------
Advances to Employees242--------
Derivatives used for Hedging
Derivatives designated as cash
flow hedges (forward foreign
exchange contracts)899-----2,477-(2,027)
FINANCIAL LIABILITIES
Liabilities at amortised cost
Trade and other payables 29,791----(1,560)(1,560)1,2761,276
TOTAL INCREASE/DECREASE
(702)(702)7027021,1503,627(942)(2,969)
Carrying
amount
Interest rateForeign exchange rate
-2% +2%-10% +10%
Foreign exchange rateInteres t rate
Carrying
amount
HALLENSTEIN GLASSON HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 1 AUGUST 2023
34
7.6
Events subsequent to balance date
Subsequent to year end, the Board has resolved to pay a final dividend of 24.0 cents per share (partially imputed at 75%) (2022:
24.0 cents not imputed). The dividend will be paid on 15
th
December 2023 to all shareholders on the Company’s register as at
5:00pm, 8
th
December 2023.
7.7 Standards, amendments and interpretations to existing standards
Regulatory reporting requirements in relation to climate related disclosures were published on 15 December 2022 within the
Aotearoa New Zealand Climate Standards. These standards are not mandatory for the 1 August 2023 reporting period and have
not been early adopted by the Group. The Group is currently in the process of evaluating the impact of the climate reporting
requirements and will commence reporting for the financial year ended 1 August 2024.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
Independent auditor’s report
To the shareholders of Hallenstein Glasson Holdings Limited
Our opinion
In our opinion, the accompanying financial statements of Hallenstein Glasson Holdings Limited (the
Company), including its subsidiaries (the Group), present fairly, in all material respects, the financial
position of the Group as at 1 August 2023, its financial performance and its cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
What we have audited
The Group's financial statements comprise:
●the statement of financial position as at 1 August 2023;
●the statement of comprehensive income for the year then ended;
●the statement of changes in equity for the year then ended;
●the statement of cashflows for the year then ended; and
●the notes to the accounts, which include significant accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of tax compliance and tax advisory
services. 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. The provision of these other
services has not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
PwC 36
Description of the key audit matter How our audit addressed the key audit matter
Inventory valuation
As at 1 August 2023, the Group held
$31.0 million of finished goods, net of
inventory adjustments of $0.3 million.
Given the size of the inventory balance,
and the estimates and judgements
described below, the valuation of
inventory required significant audit
attention and is a key audit matter.
As disclosed in Note 3.2, inventories are
held at the lower of cost and net realisable
value (NRV). At year end, the valuation of
inventory is reviewed by management and
its cost is reduced where inventory is
forecast to be sold below cost.
The inventory adjustment is determined
based on various factors including
historical data, current trends, inventory
ageing and product information from
buyers. Determining the appropriate level
of provisioning involves judgement and
the application of assumptions including
management's estimation of future selling
prices.
Our audit procedures included:
●for a sample of inventory items, testing inventory
costing to supporting documentation;
●testing the accuracy of the ageing report used by
management to calculate inventory provisions by
agreeing a sample of aged inventory items t
o
s
upporting documentation;
●for a sample of inventory items, testing the net
realisable value of inventory items to selli
ng
pr
ices;
●performing analytical procedures on select
ed
inventory provisions to assess their
reasonableness and that they appropriately met
our expectations;
●enquiries of management and considered th
e
r
esults of our testing above to determine whether
any specific write downs were required; and
●reviewing the appropriateness of disclosures in
the financial statements.
Our audit approach
Overview
Overall group materiality: $2.27 million, which represents approximately
5% of Group profit before tax.
We chose Group profit before tax as the benchmark because, in our view,
it is the benchmark against which the performance of the Group is most
commonly measured by users, and is a generally accepted benchmark.
Our Group audit scoping focussed on the major operating subsidiaries
which were selected based on their contribution to the Group’s revenue or
profit before tax. We performed substantive analytical procedures over the
other subsidiaries.
As reported above, we have one key audit matter being inventory
valuation.
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other
matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
PwC 37
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and in aggregate, on the financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the financial statements and our
auditor's report thereon. The Annual report is expected to be made available to us after the date of this
auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the Directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a
whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
PwC 38
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Indumin
Senaratne (Indy Sena).
F
or and on behalf of:
C
hartered Accountants Auckland
29 September 2023
---
Distribution Notice
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer Hallenstein Glasson Holdings Limited
Financial product name/description Ordinary Shares
NZX ticker code HLG
ISIN (If unknown, check on NZX
website)
NZHLGE 0001S4
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 8/12/2023
Ex-Date (one business day before the
Record Date)
7/12/2023
Payment date (and allotment date for
DRP)
15/12/2023
Total monies associated with the
distribution
1
$14,315,775 based on the number of units on issue at
the date of the form
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.31000000
Gross taxable amount
3
$0.31000000
Total cash distribution
4
$0.24000000
Excluded amount (applicable to listed
PIEs)
$0.00000000
Supplementary distribution amount $0.03176474
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Partial imputation
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
If fully or partially imputed, please
state imputation rate as % applied
6
22.58%
Imputation tax credits per financial
product
$0.07000000
Resident Withholding Tax per
financial product
$0.03230000
Section 4: Distribution re-investment plan1 (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
Date strike price to be announced (if
not available at this time)
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Stuart Duncan
Contact person for this
announcement
Stuart Duncan
Contact phone number +64 21 528 184
Contact email address stuartd@glassons.com
Date of release through MAP
29/09/2023
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
---
29 September 2023
HALLENSTEIN GLASSON HOLDINGS LIMITED
RESULTS FOR FULL YEAR ENDED 1 AUGUST 2023
The Company advises that Group sales for the 12 months to 1 August 2023 were $409.71 million which
were +16.7% up on the prior year ($351.21 million).
The audited net profit after tax for the
12 months was $31.98 million, an increase of +24.9% on the prior
corresponding period ($25.61 million).
All brands’ sales performance were well ahead of the prior corresponding period. This can be in part
attributed to the adverse impact in the prior year of the numerous lockdowns in both New Zealand
and
Australia, with stores closed and 5,432 trading days lost in the first half of the 2022 financial year.
However, sales continued to trade above the prior year, although at a lesser amount, throughout the
second half, which was pleasing given the economic environment and the cost‐of‐living crisis experienced
during this time.
Gross margin held steady during the year at 57.3% compared to 57.6% in the prior year. The exchange
rate remained challenging throughout the year, notably down on the prior corresponding period.
Despite this, gross margin was able to be maintained due to the focus placed on negotiating
better prices
with suppliers, an improvement in freight costs throughout the year as availability improved and costs
gradually returning to pre‐COVID levels.
During the financial year there was a continued focus on reducing operating costs wherever possible
given the high inflationary environment locally and globally. Inventory levels were managed well
to
preserve liquidity and ended the year lower than the prior corresponding period. This gives the Group
the flexibility needed to adjust to the trading environment as it continues to evolve.
The balance sheet remains in a strong position with improved working capital compared to the prior
corresponding period and
a healthy cash reserve.
During the financial year the Group implemented intercompany charges to reflect brand value provided
by New Zealand for the benefit of Australia, procurement services provided by New Zealand to Australia,
and management services provided by one related entity to another. These charges have impacted the
profit before
income tax of the segments reported and are therefore not directly comparable to the prior
corresponding period segment results. These charges have been implemented based on professional
advice and are consistent with comparable industry benchmarks.
Glassons
Australia
Sales in Australia were $191.23 million which was an increase of +21.8% on the prior corresponding
period. Net profit after tax was $17.11 million, a decrease of ‐10.5% on the prior corresponding period
($19.11 million). As noted above, the current year profit has been impacted by intercompany charges
implemented
during the year.
During the year, a new store was opened in Macarthur Square, Sydney. Several stores were extended and
refurbished during the year including the Pacific Fair, Carindale, and Indooroopilly stores in Queensland;
the Chapel Street, Melbourne Central, Frankston and Eastlands stores in Victoria; and the Birkenhead
store in
New South Wales. Further refurbishments and new store openings are planned in the next six
months, including a second store in Adelaide in Rundle Mall due to open in December 2023. Additional
office and warehouse space was taken adjacent to the current Fulfilment Centre in Sydney to ensure
adequate space was
in place to support the expected future growth of the Australian operations.
New Zealand
Sales in New Zealand for the year were $112.45 million, an increase of +7.7% on the prior corresponding
period. Net profit after tax was $10.89 million, an increase of +167.1% on the prior corresponding period
($4.08
million). As noted above, the current year profit has been impacted by intercompany charges
implemented during the year.
Over the last year, the Botany store in Auckland and the Napier store were refurbished, and the Albany
store was relocated to a new location in the mall just after year end in
September 2023. The
Christchurch CBD store is in the process of being relocated and moved to a pop‐up location in July where
it continues to trade until the new store is ready in November 2023.
Online sales continue to be a significant contribution to sales, although this has reduced compared to the
COVID lockdown period. Digital investment is sustained to ensure that growth continues. The Glassons
App now has over 1.5 million downloads, and more functions are being added regularly to enhance the
user experience.
Glassons maintains an ability to stay at the forefront of trends due to the brands
deep understanding of
their customer base, a commitment to staying agile and responsive and a willingness to adapt. This is
supported by our commitment to quality, balanced with affordability and our focus on sustainability to
ensure that Glassons is in a good shape heading into the new financial year.
Hallenstein
Brothers
Sales for the 12‐month period were $106.03 million (including Australia), an increase of +17.9% on the
prior corresponding period. Net profit after tax was $3.89 million, an increase of +85.7% on the prior
corresponding period ($2.09 million).
During the year, the Invercargill store was relocated to the new Invercargill Central mall and was fitted
with a new concept design. The Palmerston North store was also refurbished with the new concept
design. In July 2023 the Christchurch CBD was relocated to a new location in the city center. Also
in July,
the Newmarket store in Auckland was closed. Further refurbishments are planned in the next six
months. In Australia, the Garden City store was moved into a temporary site in July and will open in a
new location in November 2023.
While sales in formal tailored products have continued
to decline, Hallenstein Brothers have successfully
adapted their range to offer a diverse range of quality, on trend and affordable products. Online sales are
still a key contributor to growth and the team have a commitment to customer satisfaction that helps the
brand appeal to their customers and their continued growth,
on both sides of the Tasman, in a
competitive market.
E‐Commerce
Online sales declined over the period by ‐23.5% against the prior corresponding period. This decline
marks the impact of the COVID disruptions experienced at the beginning of the 2022 financial year, but
also is in part due to a strong drive from customers to get back into the physical stores post COVID, which
has seen the demand for online shopping reduce compared to recent comparative periods. Online sales
now represent 18.29% of total sales for the full financial year, down from 27.88% in the prior
corresponding period.
While declining
compared to the periods impacted by COVID, online sales are 71.4% higher than the 2019
financial year (the last comparative with no COVID impact). In 2019 online sales represented 15.20% of
total sales. There is a continued focus on digital development and marketing across the Group to drive
engagement across
all channels and ensure that customers enjoy a true omni channel experience.
Dividend
The Directors have declared a final dividend of 24 cents per share (partially imputed at 75%) (24 cents per
share not imputed last year) to be paid on 15th December 2023. Together with the interim dividend of 24
cents per share that was paid on 19th April 2023, the full year dividend is 48 cents per share. The
dividend payment is able to be maintained as the Company’s balance sheet continues to remain strong,
and inventory levels well controlled. The intercompany charges implemented during the year has
resulted
in greater profitability in New Zealand and therefore improved imputation credits available for
our New Zealand shareholders.
Future Outlook
The first eight weeks of the new financial year have seen Group sales decline by ‐5.86% on the prior
corresponding period. The current economic conditions and cost‐of‐living pressures are impacting
on the
consumers spending habits across both countries and brands. This was coupled with an unseasonably
warm winter which made clearing winter products more challenging. We have been encouraged by the
reaction to the new season products as it has been released in recent weeks.
It has been pleasing to see gross margin tracking ahead of the prior year, despite the continued
strengthening of the USD exchange rate. This reflects the strong relationships we have with our suppliers
and the lower freight costs compared to the prior year. We continue to look for operational and cost
efficiencies, while remaining agile with our product offerings to ensure we are well positioned for the
upcoming peak trade period.
A further update will be provided at the Annual Meeting of Shareholders in December 2023.
Stuart Duncan
Group CEO
+64 21 528 184
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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