Release of FY23 Annual Report
ANNUAL REPORT 2023
RESILIENCE
THROUGH
ADAPTATION
1
JOURNEY
OUR COMMITMENT
TO A NATURAL
FIBRE FUTURE
IS RESOLUTE
WE'VE CREATED A MORE FLEXIBLE AND
DYNAMIC BUSINESS, EXPANDED OUR PRESENCE
IN KEY RETAILERS AND INTRODUCED A NEW
HYBRID SUPPLY MODEL. WE HAVE THE SCALE
AND RESOURCES TO ENTER NEW GLOBAL
MARKETS. THE OUTLOOK FOR BREMWORTH
IS BRIGHTER THAN EVER.
CEO’s Review2
Cyclone Gabrielle4
FY23 Progress6
Sustainability (People, Planet and Prosperity)8
Technology18
Brand Review (Metrics, Collaboration and Partnership)20
Board of Directors26
Chairman’s Review28
Key Milestones32
FY24 Key Priorities34
Trend Statement36
Consolidated Financial Statements40
Governance and Other Disclosures108
On behalf of the Board and management of Bremworth Ltd,
we are pleased to present the Annual Report for the
year ended 30 June 2023.
George Adams
Chairman
Greg Smith
Chief Executive Officer
2 October 2023
CONTENTS
3
CEO'S REVIEW
"WE CONTINUE TO SEE ENERGY
BEHIND WOOL AND CONSUMERS
MAKING THE CHOICE TOWARDS
MORE NATURAL PRODUCTS
IN THEIR HOME."
The first half of FY23 marked the first six-month
period of post-pandemic trading. With an
unimpeded focus on implementing our strategic
transformation plan, carpet revenue grew by 2%
on HY22.
Two new products and investment in samples
helped us expand our in-store brand presence
within 70 existing retail locations in Australia
and NZ.
The second half however manifested as an
extreme test of our ability to adapt to disruption.
Cyclone Gabrielle had a devastating impact on our
Napier facility, which had flow-on effects on our
Whanganui and Auckland sites. Within weeks we
had begun the implementation of an alternative
supply contract, while also looking offshore for
additional suppliers of carpet yarns, thanks to
the incredible efforts of our team. Once we are
assured these overseas suppliers meet our quality,
environmental and safety standards, the hybrid
supply model will offer a lower fixed cost base and
remove prior capacity constraints - by providing a
more diversified or shock-resistant supply chain
from which we can accelerate our growth.
The cyclone’s impact, a softening economy and
reduction in miscellaneous revenue are reflected
in our financial results; contributing to a 6% fall
in total revenue. NPAT rose 379% - on receipt of
$35.5m of insurance progress payments.
Carpet revenue was down 3% on FY22, but revenue
of our rug business was up 45% on FY22 which
represents a significant growth opportunity.
Revenue from our wool-buying division, Elco Direct,
was down 5% as global wool prices softened;
however, we continue to grow our farmer network
and the business remains profitable.
Our investment in marketing, sustainability and
technology has laid a strong foundation for the
transition from transformation to growth, with
the strong focus on digital and product evolution
continuing over the coming year.
2
"WHILE CYCLONE GABRIELLE HAS BEEN THE
MOST CHALLENGING EVENT WE HAVE FACED
TO DATE, WE ARE EMERGING AS A MORE
RESILIENT ORGANISATION."
GREG SMITH - CEO
Greg Smith
Chief Executive Officer
2 October 2023
5
4
CYCLONE GABRIELLE
STRENGTH
THROUGH
ADVERSITY
In February 2023, Bremworth’s Napier based
spinning plant was taken offline by flooding
resulting from Cyclone Gabrielle. This plant was
a key part of Bremworth’s operations and supply
chain, providing yarn to the Auckland carpet plant
and dyed fibre to the Whanganui yarn plant.
Within days of the cyclone, Bremworth had
specialist employees travelling offshore to confirm
and source alternative supplies of yarn, with a key
objective to determine the best offshore partners
for specific yarn types, while also considering
quality and sustainability standards, lead times
and capacity.
Since this initial trip, these employees have
made further trips (accompanied by other key
employees) to ensure all suppliers are aligned with
Bremworth’s standards.
At the same time, another team of specialist
dyehouse employees from the Napier plant began
travelling weekly to and from Christchurch to
operate a third-party dyehouse facility to ensure
that there is continued supply of dyed fibre for the
Whanganui plant.
Bremworth salutes these people and their
families for their loyalty, commitment and
perseverance, while also acknowledging the
ones at home who continued to support the
business through these challenging times –
including those who were integral to the site
cleanup and plant stabilisation efforts at the
Napier plant.
Bremworth also notes that the majority of the
Napier-based employees who recently opted
for voluntary redundancy have gone on to
find employment - further highlighting the
resilience of our people and their strength
through adversity.
While still offline, the Napier plant features
prominently in deliberations around what the
potential hybrid supply chain model could look
like going forward.
7
FY23 PROGRESS
PRIORITY THREE
MAKE WINNING PRODUCTS
This year we introduced two products and refreshed some colours, while also creating a new
offering for our rug programme. Six exciting new products that were being developed for launch in
the second half of FY23 had to be redeveloped as a consequence of the impact of Cyclone Gabrielle
on the Napier plant, with these new products now being trialled at our Whanganui plant and with
our new offshore yarn suppliers.
NEW CHARMEUSE COLOURS
Two new, on-trend shades, Clay and Woodland
expanded our popular Charmeuse range.
A luxurious underfoot experience,
Charmeuse recreates the sensuous
appeal of crushed velvet.
MACKENZIE RUG
These subtly textured rugs pay homage to the
rich, rugged wonders of the South Island’s
Mackenzie Country; from the iconic Lindis Pass
to the glacial blue waters of the three lakes and
iconic Mackenzie Basin.
KENSHO
Inspired by Japanese zen gardens and made
with 100% NZ wool, Kensho is a meticulously
woven, elegant loop pile with a calming palette
of heathered neutrals.
-
_
WAINAMU
A love note to the dunes surrounding Lake
Wainamu and the Te Henga region in West
Auckland’s Waitakere Ranges, Wainamu is an
expertly crafted berber loop pile designed for
easy care living.
-
6
LAST YEAR WE SET
THREE KEY PRIORITIES
THIS IS HOW WE HAVE PERFORMED
PRIORITY ONE
GROW REVENUE
We have increased our brand presence.
We have expanded our distribution network.
We invested a higher proportion of our stock holding into Australia, with the intention to support
sales growth in that market.
Despite the above, carpet revenue dropped by 3% as a result of cyclone-related disruptions and
a softening economy, however our rug revenue has increased by 45%.
PRIORITY TWO
IMPROVE EFFICIENCY SAFELY
DIGITAL TWIN
The Digital Twin is now in use by core technical specialists across the business as part of the Data
Management and Analytics System (DMAS) platform, enabling production simulation and analysis
of resource utilisation. Insights from the Digital Twin have been used to improve the efficiency of
the Whanganui plant.
VIRTUAL TOUR
We are developing a virtual tour of our Auckland factory experimenting with technology to integrate
production operator training, health and safety education and other supplementary instructional videos
for an immersive learning experience platform.
IGNITION
The Ignition Production and Quality System provides real time data visibility, enabling better operational
decisions and historical trend analysis. The system saw its first year of full use at the Whanganui plant,
with positive engagement from our operators.
Following Cyclone Gabrielle, the Ignition system was adapted to support the increased production
requirements at the Whanganui plant with the Napier plant offline.
9
8
SUSTAINABILITY
SUSTAINABILITY
MATTERS
Sustainability, which embraces people, planet
and prosperity, is our key driver at Bremworth.
From the way we work, to how we think, take
care of our people and manage our supply
chain, sustainability is inextricably woven into
our business. It is an ever-evolving mission
for us, which is why we’ve collaborated with
Government, research partners and industry
thought leaders to help support
our sustainability evolution.
This support is integral to our sustainability
program and our focus on improving
our product circularity and reducing our
environmental impact across all stages
of the product life cycle.
With each new initiative we’re getting
one step closer to achieving our
sustainability aspirations.
Proudly partnering with ....
11
10
SUSTAINABILITY
OUR SUSTAINABILITY
ASPIRATIONS
Our view of sustainability is that it is about taking
care of our people, our environment and our
economy following the 3Ps model (People, Planet,
Prosperity). We consider that there are many ways
in which a vision of becoming more sustainable
could manifest in our products, supply
chain, manufacturing and overall business as
demonstrated in our sustainability aspirations.
We continue to make solid progress towards
our aspirations.
PEOPLE
Safety &
Wellbeing
•
We support our team to be their best selves and take a proactive approach
to risk management.
•
Our critical risk framework and controls are key enablers and challenge us to design
out risk where possible.
•
To enable our people to thrive, we design a holistic approach to the safety and
wellbeing of our people.
Diversity,
Inclusion
& Capability
•
Diversity in our workforce is what makes Bremworth special.
•
We are committed to diverse perspectives as well as collaborative and transformational
leadership in line with a high-performance culture.
•
We foster an environment of exploration, adaptation and growth.
PLANET
Circularity
•
We are committed to a circular economy and to product longevity by design,
with materials kept in use and waste and pollution minimised.
•
Designing for the future requires us to consider the whole of product life cycle
including use and end of life. We will innovate to reduce environmental impacts.
Climate
Change
•
We commit to reducing our greenhouse gas emissions in line with scientific
consensus to restrict global warming.
•
We will communicate the impact of our products on the climate to consumers
so that they can make informed choices.
PROSPERITY
Consumer
Wellbeing
•
We make beautifully designed, high performing interior products which aspire to add
to consumer health and wellbeing. Wool and other natural fibres have multiple inherent
benefits including indoor air quality, sound, moisture control and fire safety.
•
We work closely with our customers and suppliers to ensure our products and services
incorporate beautiful design, meet performance requirements and provide sustainable
and safe options for our consumers.
Communities
•
We support the New Zealand wool industry and wool-growing community to positively
steward the land. At the sites of our operations, we aspire to be an active member
of a thriving local community by creating meaningful employment opportunities.
•
We increase shareholder value by building our reputation as a leading employer,
while continuing to reinvest in the future growth of Bremworth and our people.
•
We will introduce long-term contracts to enable our wool growers and Bremworth
to improve supply, quality and margins – in the process creating a sustainable future.
13
DIVERSITY, INCLUSION AND CAPABILITY
Leadership Programme: Te Ara Rangatira
“Te Ara Rangatira” – to rise up and awaken to a
high standing.
The key purpose of this two year-long
leadership programme is to support leaders
and teams with the tools and knowledge
necessary to create and nurture a high
performance culture.
The programme was driven by the recognition
that people want to be part of a culture within
an organisation that makes them feel valued,
that supports diversity, rewards hard work and
recognises talent. Nurturing company culture
helps to deliver the KPIs the company is targeting,
with greater levels of consistency. The programme
allows us to create a more engaging environment
within our teams, encouraging higher levels
of productivity.
Developed to help us grow and transform our
leaders, the Te Ara Rangatira leadership course has
been integral to helping us navigate the impact of
Cyclone Gabrielle – our overarching goal is to have
all managers complete the course. Our first wave
of leaders are well established in the programme,
with our second wave underway and the third
wave to commence in 2024.
SAFETY AND WELLBEING
Responding to change and uncertainty
In response to the changes brought about
by Cyclone Gabrielle and during the
time immediately following, Bremworth
strengthened their focus on people’s
wellbeing further.
Re-connecting people was a key priority
achieved through a combination of initiatives
including off-site coffee mornings and local
volunteering activities. All employees were
provided with financial stability throughout the
duration of the clean-up and stabilisation of the
Napier plant. Workshops on mental wellbeing
and building resilience as well as on-site
counselling, provided our people with
comfort and the tools needed to navigate
a very challenging time.
As part of continued learning across the
business, Bremworth implemented an intensive
psychology-based safety awareness course for
our Whanganui and Auckland teams, as well as
through our mental wellbeing by design forums.
Managing Critical Risk
Bremworth continues to focus on reducing critical
risk through the implementation of a machine
guarding plan; with a 50% reduction in critical
machine guarding risks at our Auckland plant
and a 25% reduction at our Whanganui plant.
With the successful roll out of a machine risk
assessment app, our teams are better equipped
to provide machine risk awareness training,
document changes to machinery, monitor
and review the effectiveness of controls and
have access to up-to-date, real time machine
safety data.
We have continued to build our safety capability
with our leadership team to ensure clarity around
due diligence obligations.
12
PEOPLE
"THE PEOPLE HERE ARE LIKE A SECOND FAMILY – SOME
I'VE BEEN WORKING WITH FOR OVER 10 YEARS."
PEAPEA T PEAPEA - BEAMING OPERATOR
NURTURING
GREAT TEAMS
15
14
PLANET
GIVING
CIRCULARITY
A GREEN LIGHT
"OUR GOAL IS TO REDUCE OUR ENVIRONMENTAL
FOOTPRINT AND ACHIEVE A CIRCULAR PRODUCT."
GREG SMITH - CEO
CIRCULARITY
Working towards compostability
CLIMATE CHANGE
Multi-year decarbonisation programme
Compostability is about preserving the integrity
of the raw materials so that they can be kept in
use at the end of the product lifecycle. This is
the first step towards circularity and the reason
we are working towards compostability as a
stepping stone. Some of these first steps
towards our goal to reduce our environmental
footprint and achieve a circular product for our
consumers include:
• experimenting with alternative primary
and secondary backing options for
our products.
• transitioning towards lower impact dyes
which are better for people and the planet.
• continuing to explore end of life alternatives
for used carpet and rugs, with the goal
to minimise waste and as part of keeping
these materials in use.
Our commitment to the Energy Transition
Accelerator (ETA) programme run by Energy
Efficiency and Conservation Authority (EECA)
has continued with the successful delivery
of the Radio Frequency Dryer project at
Whanganui spinning plant in April 2023. The
project was co-funded by EECA’s Technology
Demonstration Fund and replaced the natural
gas fired dryer.
As part of our decarbonisation pathway, we
had commenced the transition from natural gas
process heat to electric heat pump technology
at the Napier plant. The feasibility study
and measurement systems were completed.
However, due to the significant impact of
Cyclone Gabrielle on the plant, this project
is on hold.
We have completed our carbon inventory and
had this independently verified by third party
provider Toitu
-
for our baseline year FY18, as well
as financial years FY22 and FY23. The baseline
year of FY18 was selected as it was prior to the
transformation and not affected by COVID and
other disruptions.
17
COMMUNITIES AND CONSUMER WELLBEING
Bremworth recognises the role of farm
standards, animal welfare, regenerative
agriculture, and the value that long-term
wool grower contracts provide to farming
communities.
All Bremworth wool continues to be sourced
from New Zealand farms as we work through
the adaptation to the hybrid supply chain
model. Bremworth continues to pursue
appropriate certification of its wool supply to
ensure traceability and transparency in the
supply chain with a couple of new certifications
added during the 2023 financial year. Achieving
credible certification that demonstrates ethical
and sustainable practices remains a focus to
give consumers confidence in Bremworth’s
sustainability commitment and clarity on the
composition and components that go into
making a Bremworth carpet or rug.
Commitment to the New Zealand farming
community through sourcing 100% New
Zealand wool is a core part of Bremworth’s
identity. Providing security to the farming
community through long-term wool grower
contracts and making wool accessible through
Bremworth’s “wool in schools” programme
are two of the ways that Bremworth is
demonstrating this commitment.
Following Cyclone Gabrielle, Bremworth
strengthened its commitment to modern
slavery - further developing this programme and
the level of assessment at various stages of the
supply chain and by including modern slavery
in the selection process of new partners in the
hybrid supply chain model. Bremworth’s view
is that this programme goes further than the
social impacts of modern slavery and considers
safety, environmental and quality standards to
ensure that Bremworth’s expectations are met
along the supply chain.
Bremworth will continue to pursue
transparency and work with partners through
our supply chain as an integrated and holistic
approach to sustainability.
16
PROSPERITY
SETTING THE
STANDARD
"WE WILL CONTINUE TO PURSUE TRANSPARENCY
THROUGH OUR SUPPLY CHAIN AS AN INTEGRATED
AND HOLISTIC APPROACH TO SUSTAINABILITY."
DR KIRSTINE HULSE - GM PEOPLE,
H&S & SUSTAINABILITY
19
18
TECHNOLOGY
INVESTING IN
TECHNOLOGY
NEW ERP SYSTEM
In 2020, Bremworth commenced the
implementation of a new enterprise resource
planning system which supports our sustainability
transformation. This system, when fully realised,
will seamlessly integrate all information systems
of the business into a unified, cloud-based
platform. The final stage of this project is the
implementation of the new system into our
Auckland production plant in FY24.
CYBER SECURITY
Safeguarding digital assets in an era wrought
with cyber threats is paramount. To address
this, we engaged experts to undertake a
comprehensive audit in order to uncover
potential vulnerabilities. All recommendations
following this audit have been implemented, with
a deep penetration hack test done afterward.
The test confirmed all gaps and vulnerabilities
had been successfully sealed.
Bremworth is dedicated to ensuring we continue
to have a high degree of security around our data
and systems.
DMAS PROJECT
DMAS (Data Management and Analytics System)
integrates data from underlying information and
production systems operating within the business
in one analytical platform. This system allows
deeper understanding of our operations and
continues to be developed to meet business needs.
21
NEW ZEALAND'S MOST TRUSTED BRAND
FOR 10 CONSECUTIVE YEARS
Reader’s Digest approached approximately 1700 New Zealand consumers to ask their opinions on what
brands of products and services are important to them. Respondents also had to explain why they chose
the brand they did for the Most Trusted Brand in each category.
Responses about Bremworth included:
"SOFT, COMFORTABLE CARPET. MAKES A HOUSE FEEL
LIKE A HOME."
30-39 year old female, Auckland
"LOVE THEIR CARPETS AND THEIR RECENT COMMITMENT
TO REMOVING SYNTHETICS FROM THEIR RANGE."
50-59 year old male, Otago
20 14-2023
C
a
r
p
e
t
s
C
a
r
p
e
t
s
38%
UNPROMPTED
BRAND AWARENESS
34%
BRAND
PREFERENCE
RESULTS FROM OUR 2023
SURVEY INCLUDE:
Our annual brand health research conducted by TRA surveyed New Zealanders
aged 35+ who are either in the market for flooring, or have purchased recently.
20
KEY BRAND METRICS
RESULTS THAT
DELIVER
BREMWORTH CONTINUES TO LEAD THE CARPET
CATEGORY FOR BRAND AWARENESS, CONSIDERATION
AND BRAND PREFERENCE
23
"THE WHOLE SYMBOLISM OF WOOL IS THAT
INVISIBLE THREAD THAT CONNECTS US. IT
CONNECTS EVERYBODY."
LISSY AND RUDI
22
BRAND COLLABORATION
CRAFTING
CONNECTIONS
WHARENUI HARIKOA
Crafted by Lissy and Rudi, Wharenui Harikoa is
an art piece that presents luminous, fluorescent
crochet and uniquely carved pou, with an
intention to transcend barriers and connect
people from different backgrounds.
The whare has been on show at Wellington’s
Dowse Museum, and will be complete by
December 2023 and feature at Waikato Museum.
Bremworth’s luxurious pitch-black carpet
provides an immersive contrast to showcase
this unique piece.
WHARENUI HARIKOA -
AN IMMERSIVE EXPERIENCE
CROCHET EXTRAORDINAIRES
Lissy and Rudi Robinson-Cole are crochet
extraordinaires. Exploring Matauranga Maori
through the colourful art of crochet, the talented
duo weave stories of their ancestors, whanau and
friends into their mahi.
Their respective journeys with wool started from
a young age; with Lissy watching her Dad work
exclusively with natural fibres in the fashion
industry, and Rudi watching his aunties shear,
dye and crochet wool as a young child.
--
-
25
Rachel Nolan and Patrick Kennedy
24
BRAND PARTNERSHIP
MORE THAN
JUST A FLOOR
Kennedy Nolan is a leading Melbourne
architecture and design practice. We spoke with
Founding Director Rachel Nolan about flooring
trends, sustainability and why they chose to
collaborate with Bremworth for their office.
Bremworth: Tell us about your office and why you
selected Galet Sage?
Rachel: Our Fitzroy office was designed by Carter
Couch in the late 1980s. We had admired the
building for years, so we feel lucky to call it our
studio home. We decided our ground floor should
be predominantly unprogrammed space, so we
left it free, affording us the luxury to host.
We use the space for gatherings both intimate
and rowdy, so when we were looking to refresh
the space we couldn’t go past Bremworth –
because it was all about the floor!
We came across Bremworth’s Galet range
when designing a hotel in Melbourne and were
immediately drawn to the quality, bold colours
and plush texture. The rawness of our studio’s
concrete walls required a soft companion and
Galet in colour Sage was perfect.
The product contributes so much to our space,
because it is so much more than just a floor.
KENNEDY NOLAN ARCHITECTS
Katherine Turner
Independent Director
Katherine Turner is an
independent director and
is the newest member of
the Board, joining in
February 2022. She was
appointed Chair of the
Board’s Audit Committee
at the same time and is
a member of the Board’s
Remuneration Committee.
Katherine is a highly
regarded and respected
leader and qualified
Chartered Accountant.
She has a depth of
financial, commercial
and sustainability expertise
across manufacturing and
primary sectors and a
wealth of experience taking
New Zealand products to
the world.
John Rae
Independent Director
John is an independent
director and joined the
Board in July 2015. Since
then, he has at various
times been Deputy Chair
of the Board and also
Chair of both the Audit and
Remuneration committees.
John has degrees in both
law and commerce and had
a successful international
career as a CEO in the
finance sector, before
evolving into becoming
an experienced chair and
director across a range of
industries over the past 30
years. His specialisation is
in governance of entities
facing challenging situations
and transformations, and
shareholder transition
and succession.
27
Paul Izzard
Independent Director
Paul Izzard is an independent
Director and joined the
Bremworth Board in
November 2020. Paul is
founder and director of
Izzard Design, a leading
interior design business in
New Zealand. Over almost
20 years, he has completed
more than 300 projects in
residential and commercial
design. Paul’s industry
knowledge and networks,
as well as his business
leadership experience,
are considered valuable
attributes as Bremworth
transforms to being a
global leader in designing
and creating desirable,
sustainable, safe and
high performing natural
interior solutions.
BOARD OF DIRECTORS
CHAMPIONS
FOR CHANGE
26
STRATEGIC GOVERNANCE IS ACHIEVED THROUGH A
STRONG, STABLE BOARD. OUR GROWTH STRATEGY
IS CLEAR, WITH ROBUST FUNDING TO
EXECUTE OUR GOALS.
Dianne Williams
Independent Director
Dianne Williams is an
independent Director
and joined the Bremworth
Board in July 2015. She
was appointed Chair of
the Board’s Remuneration
Committee in July 2020
and is a member of the
Board’s Audit and Nomination
Committees. Dianne’s early
career was in marketing in
the FMCG sector, driving
market dominance for some
of New Zealand’s favourite
brands including Cadbury
and Sealord before taking
up senior executive roles
with companies demanding
strong sales and
marketing programmes.
Grant Biel
Director Emeritus
Our inaugural Director
Emeritus Grant Biel
is a pivotal player in
Bremworth’s history. With
employment at Bremworth
dating back to 1964, his
passion for mechanical
engineering was established
early. Co-founding Cavalier
Carpets alongside Tony
Timpson, Grant and Tony
would go on to acquire
the original Bremworth
business, creating the
dream team in the carpet
sector. The deep expertise
and heritage created
by Grant and Tony are
invaluable to the history and
future of Bremworth.
George Adams
Independent Chairman
George Adams is an
independent Director
and was appointed to the
Board in June 2018. He was
appointed Chair of the Board
in July 2020, having served
as Deputy Chair of the Board
since April 2019. George
was also appointed Chair
of the Board’s Nomination
Committee in July 2020 and
is a member of the Board’s
Audit and Remuneration
Committees. George brings
outstanding commercial
and governance experience
from more than 30 years
of international business
experience in the fast-
moving consumer goods
and telecommunications
industries, as well as a strong
background in occupational
health and safety.
29
"WE HAVE A SIGNIFICANT OPPORTUNITY
TO REIMAGINE OUR FUTURE IN A GLOBAL
SUPPLY CHAIN ENVIRONMENT USING
NEW ZEALAND WOOL."
28
FY23
CHAIRMAN'S
REVIEW
GEORGE ADAMS
CHAIRMAN'S REVIEW
related disruption, and increased investment in
retail samples and technology. Carpet revenue
fell as a result of cyclone-related disruptions
and a decline in consumer confidence, but our
customised rug revenue continues to accelerate
albeit from a low base.
Given the quantum of insurance proceeds
likely to be received and the options that
are available to the Company, the Board has
committed to a thorough strategic review, which
will include how the proceeds will be utilised
and damage reinstated.
No dividend has been declared for FY23, with the
eventual return to dividends remaining a goal of
the Board.
FY23 was a year of rapid adaptation
for Bremworth.
While Cyclone Gabrielle left our Napier yarn
operations offline, it presented us with an
opportunity to take a different view of our
supply chain and to potentially set ourselves
up for unconstrained access to new export
markets through the new hybrid supply chain
model that is being developed, while also
considering new growth strategies.
Bremworth’s net profit after tax has increased
379% to $10.7m for FY23 on receipt of
$35.5m in insurance payouts to date, while
normalised earnings (EBITDA) fell 104%
driven by an economic slowdown, cyclone-
A STRONG RESULT IN FY23
31
OUR TEAM
Navigating the unparalleled challenges of this
year would not have been possible without the
dedication of our entire workforce.
In particular, our gratitude goes to Greg Smith
and the senior team for the work in repositioning
the business, our Napier staff who have
worked tirelessly in the factory clean up, those
who continue to travel overseas to seek out
alternative supplies of yarn and dyed fibre and
those who commute to Christchurch to oversee
the outsourced wool dyeing process.
We also wish all our Hawke’s Bay colleagues
who have opted to accept voluntary redundancy
while the plant’s future remains undetermined
the very best in their future endeavours.
POSITIVE OUTLOOK
The full benefits of the potential global hybrid
supply chain and the leveraging of new offshore
relations to explore a new strategic direction in
export will form a part of the Board-led strategic
review, with the Directors particularly excited
about the prospects.
While still in its initial stages of development,
the new hybrid supply model could enable us
to draw on both domestic and international
suppliers to help us produce New Zealand
wool carpets and rugs. This could also remove
the constraints which have prevented us from
entering much larger markets and mark a new
chapter in Bremworth’s growth journey.
The Board remains committed to the
achievement of Bremworth’s strategic goals
and generating value for shareholders. We are
grateful for the ongoing support of our investors,
customers, employees and suppliers.
George Adams
Chairman of the Board
2 October 2023
30
INSURANCE
At this stage, it is not possible to provide a
definitive position on our insurance claim.
But I can tell you that the team is working
diligently through the process to get the
maximum value for the business. This remains a
highly complex issue and although much work
has been done, more work remains. In summary,
we are insured for up to $116.1m for plant and
equipment, $3.8m for stocks and a further
$49.4m for buildings - giving a total of $169.3m
for the Napier site.
We also have 18 months of business interruption
cover which commenced at the time of Cyclone
Gabrielle in February 2023.
As it stands, the key area of difference between
us and our insurers is the approach to, and cost
of, plant reinstatement and the value of insurance
should we decide not to fully reinstate.
While the Board would prefer a prompt
resolution, we remain committed to the right
outcome rather than a fast outcome.
STRATEGIC REVIEW
Bremworth’s upward share price movements
following the release of the preliminary FY23
results do not necessarily reflect the full value of
the business. The shares are neither covered by
analysts nor well traded, leaving its value subject
to the vagaries of small trades. The Directors
note that the Bremworth shares continue
to trade at less than their net tangible asset
backing per share.
While the quantum of further insurance payouts
is still being worked through, the Directors have
commenced a Board-led strategic review to
explore the range of opportunities that maybe
available to the business.
September 2021
NATURALLY
PREMIUM
We rationalised our
product offer and shifted
our focus to Bremworth
branded collections that
deliver higher margins.
April 2021
INVESTING IN
OUR FUTURE
A $4.9M sustainability-based
research programme was
announced, co-funded by
MPI’s Sustainable Food and
Fibres Futures Fund. The
programme aims to develop
high-value wool products
using green chemistry,
which are lighter on
the planet.
April 2023
NEW DRYING
TECHNOLOGY
The implementation of a
new radio frequency dryer
to replace a natural gas
fired dryer to dry felted yarn
during production will save
an estimated 197 tonnes of
CO2e annually.
May 2021
SAYING GOODBYE
TO PLASTIC
We produced our last ever
synthetic carpet, bringing
an end to the 2,500 tonnes
of synthetic fibre we were
importing annually.
April 2023
TRUSTED
BRAND
For the tenth year in a
row, we were honoured to
be named New Zealand’s
Most Trusted Carpet
Brand, a testament to
the trust and loyalty of
our valued customers.
KEY MILESTONES
November 2020
TRANSFORMING
OUR BRAND
We rebranded from Cavalier
Bremworth to Bremworth,
unveiling a new brand identity
and our new purpose-led
positioning.
December 2020
FUNDING TO
GO GOOD
Funding for the execution of
our strategic transformation
was confirmed, with the
successful sale and leaseback
of our Auckland property.
January – March 2022
ESTABLISHING A
DECARBONISATION
PATHWAY
We embarked on our
decarbonisation initiatives,
aiming to reduce
carbon
emissions by up to 25%.
May 2022
COMPOSTABLE
RUGS
Our prototype compostable
rugs, developed under
our sustainability-based
research programme, were
showcased, bringing us
closer to a future with fully
compostable products.
February 2023
CYCLONE
GABRIELLE
Cyclone Gabrielle caused
Bremworth’s Napier facility
to go offline. The company
is in the process of adopting
a hybrid supply chain
model, which will involve
utilising both local and
offshore suppliers.
July 2020
FINDING OUR
PURPOSE
Our journey began with
the goal of delivering
natural, sustainable,
and beautiful interior
products that contribute
to creating happy
and healthy homes.
OUR JOURNEY TO GOOD
32
33
FY24 KEY PRIORITIES
FY24
CREATING A NEW
PATHWAY TO
GROWTH
FUTURE FOCUS FROM
GREG SMITH, CEO
HYBRID SUPPLY CHAIN
Bremworth’s proposed new hybrid supply chain
model will allow us to incorporate New Zealand
wool which has been dyed overseas into the
yarn and tufting production processes in our
Whanganui and Papatoetoe facilities.
Once refined and optimised, the offshore
supply will reduce our fixed cost base and
improve our utilisation of existing assets. The
addition of an on-demand yarn supply which
can be scaled efficiently offers us a significant
competitive advantage as we expand. As a
result, Bremworth will then have the potential
to explore much larger commercial contracts
and re-enter the global market and new
geographies around the world.
DIGITAL
The continued implementation of new
technology platforms is an ongoing priority
for Bremworth. There is a recognition that all
business units benefit from having access to
reliable, real time data. The use of modern
systems is designed to better inform our
decision making and, improve business
profitability and sustainability.
We are also directing more focus towards our
fast growing direct to consumer eCommerce
business. Increasing our presence in this market
segment ensures we meet the consumer where
they are starting their journey.
PRODUCTIVITY
The manufacturing business is a key asset of the
business. The implementation of new systems
and processes will improve quality, cost and
profitability at all levels within the operations.
"OUR INVESTMENT IN BRAND AND
TECHNOLOGY AND THE DEVELOPING
DYNAMIC NEW SUPPLY MODEL HAS
CREATED A FERTILE FOUNDATION
FOR GLOBAL GROWTH."
GREG SMITH - CEO
34
35
3637
TREND
STATEMENT
3839
TREND STATEMENT
SIX YEAR PERFORMANCE GRAPHS
TREND STATEMENT
Normalised is a non-GAAP measure of financial performance and therefore falls within the Financial Markets Authority’s guidance note on “Disclosing
non-GAAP financial information”. Normalised results are not audited and exclude items that are not expected to occur on a regular basis either by
virtue of quantum or nature. Full commentary on the disclosure of non-GAAP financial information and a reconciliation from the non-GAAP financial
information to the most directly comparable GAAP financial information, including that for the previous period, can be found on pages 137 to 139.
Unaudited
2023
$000
2022
$000
2021
$000
2020
$000
2019
$000
2018
$000
Operating revenue$89,689 $95,485 $111,577 $117,981 $135,234 $148,120
EBITDA (normalised) (200) 4,918 3,385 2,300 7,0 76 9,998
EBIT (normalised) (2,039) 3,475 1,708 (2,162) 3,597 6,437
Profit/(Loss) before income tax
(normalised)
(2,582) 2,605 652 (4,697) 2,451 5,058
Profit/(Loss) after income tax
(normalised)
(2,845) 1,735 376 (3,457) 1,879 3,974
Abnormal costs (after tax) 13,581 505 1,353 (17,994) (18,659) 107
Profit/(Loss) after tax
attributable to shareholders
of the Company (GAAP) 10,736 2,240 1,729 (21,451) (16,780) 4,081
Financial Position
Shareholders’ equity 50,223 3 7,7 7 1 35,592 33,637 54,989 72,222
Loans and borrowings - - - 15,800 20,500 31,500
Fixed assets 10,234 14,306 12,094 22,725 30,164 35,142
Right-of-use assets 8,616 9,280 9,968 430 - -
Goodwill and other intangibles - - - - - 2,362
Cash and bank 39,319 14,874 22,508 1,276 2,724 2,111
Return on average shareholders'
equity (normalised)(6.5%)4.7% 1.1% ( 7. 8 %)3.0% 5.7%
Basic earnings per ordinary share
(normalised) – cents (4.08) 2.51 0.55 (5.03) 2.74 5.79
Diluted earnings per ordinary share
(normalised) – cents (3.99) 2.46 0.54 (5.03) 2.74 5.79
Net tangible asset backing
per ordinary share
$0.59 $0.40 $0.36 $0.47 $0.72 $0.94
Unaudited
0
5
10
15
20
25
30
35
24
24
28
31
28
19
FY18FY19FY20FY21FY22
Percentage
FY23
0
10
20
30
40
50
41
32
NILNILNIL
43
FY18FY19FY20FY21FY22
Percentage
FY23
-5
-4
-3
-2
-1
0
1
2
3
3.0
1.9
0.5
2.2
(3.1)
(4.9)
FY18FY19FY20FY21FY22
Percentage
FY23
0
10
20
30
40
50
37
32
39
43
38
38
FY18FY19FY20FY21FY22
Days
FY23
0
50
100
150
200
154
170
91
151
119
123
FY18FY19FY20FY21FY22
Days
FY23
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2.11
2.87
2.57
2.50
3.20
1.41
FY18FY19FY20FY21FY22FY23
4041
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
4243
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS' RESPONSIBILITY STATEMENT
42
CONTENTS
43 Directors’ Responsibility Statement
44 Independent Auditor’s Report
51 Consolidated Statement of Profit or Loss
52 Consolidated Statement of Comprehensive Income
53 Consolidated Statement of Changes in Equity
55 Consolidated Statement of Financial Position
56 Consolidated Statement of Cash Flows
58 Notes to the Consolidated Financial Statements
58 1. Company information
58 2. General information relating to preparation of consolidated financial statements
62 3. Cyclone Gabrielle
67 4. Financial performance
67 4a. Segment performance
69 4b. Earnings per share
70 4c. Revenue from contracts with customers
71 4d. Other income and gains
71 4e. Administration expenses
71 4f. Personnel expenses
72 4g. Government grants
73 4h. Finance costs
73 4i. Income tax
76 5. Capital and funding
76 5a. Capital management
76 5b. Share capital, dividends and reserves
78 5c. Banking facilities, and loans and borrowings
79 6. Assets employed
79 6a. Property, plant and equipment
82 6b. Capital commitments
82 7. Working capital
82 7a. Cash and bank
83 7b. Trade receivables, other receivables and prepayments
83 7c. Inventories
84 7d. Trade payables and accruals
84 7e. Employee entitlements
85 8. Risks and financial instruments
96 9. Others
96 9a. Leases
98 9b. Share-based payment
101 9c. Provisions
102 9d. Employee benefits
103 9e. Contingent liabilities
103 9f. Related parties
106 9g. Group entities
106 9h. Events after balance date
106 9i. Climate-related disclosures
107 9j. Standards, interpretations and amendments to standards
DIRECTORS' RESPONSIBILITIES
The Directors are responsible for the preparation of the
consolidated financial statements of Bremworth Limited and
subsidiaries (“the Group”). The Directors discharge this
responsibility by ensuring that the consolidated financial
statements comply with Generally Accepted Accounting
Practice and fairly present the financial position of the Group
as at balance date and of its operations and cash flows for the
year ended on that date.
ACCOUNTING POLICIES
The Directors consider that the accounting policies used in
the preparation of the consolidated financial statements are
appropriate, consistently applied, and supported by
reasonable estimates and judgements. All relevant financial
reporting and accounting standards have also been followed.
ACCOUNTING RECORDS
The Directors believe that proper accounting records, which
enable, with reasonable accuracy, the determination of the
financial position of the Group and facilitate the compliance
of the consolidated financial statements with the Financial
Markets Conduct Act 2013, have been kept.
SAFEGUARDING OF ASSETS AND INTERNAL CONTROLS
The Directors consider that they have taken adequate steps to
safeguard the assets of the Group and to prevent and detect
fraud and other irregularities. Internal control procedures are
also considered to be sufficient to provide a reasonable
assurance as to the integrity and reliability of the consolidated
financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
The Directors present, on pages 51 to 107, the consolidated
financial statements for the year ended 30 June 2023.
These audited consolidated financial statements were
authorised for issue by the Directors on 21 September 2023
and, as required by section 461(1)(b) of the Financial Markets
Conduct Act 2013, are dated and signed as at that date.
For and on behalf of Bremworth Limited
T H G Adams
Chairman of the Board of Directors
K M Turner
Chairman of the Audit Committee
4445
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
To the shareholders of Bremworth Limited
OUR OPINION
In our opinion, the accompanying consolidated financial statements of Bremworth Limited (the Company), including its
subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as at 30 June 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 consolidated financial statements comprise:
—the consolidated statement of financial position as at 30 June 2023;
—the consolidated statement of profit or loss for the year then ended;
—the consolidated statement of comprehensive income for the year then ended;
—the consolidated statement of changes in equity for the year then ended;
—the consolidated statement of cash flows for the year then ended; and
—the notes to the consolidated financial statements, 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 consolidated 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 area of strategic options analysis. 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 and relationships have 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
consolidated financial statements of the current year. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Impact of Cyclone Gabrielle
As disclosed in notes 2f and 3 to 3e in the consolidated
financial statements, in February 2023 Cyclone Gabrielle
brought severe flooding to the Napier yarn spinning plant,
causing significant damage to the building, plant, equipment
and inventory.
Several accounting implications have arisen as a result and
the Group, aided by their independent accounting
specialists, have had to exercise considerable professional
judgement in determining the most appropriate treatment.
Significant judgments and estimates applied have been
disclosed in notes 3 to 3d. These involve determining
impairment of assets, assessing whether receipt of the
insurance claim is virtually certain, and determination of the
claim amount recorded as income.
The consolidated financial statements reflect:
—Insurance income of $35.5 million, which relates to
progress payments received to date,
—Impairment of the Napier plant and buildings of
$5.2 million
—Impairment of damaged and contaminated inventory
of $2.5 million
—Disclosure of a contingent asset, noting that it is
impracticable to estimate an amount because of the
extent of estimation uncertainty.
To audit the impact of Cyclone Gabrielle, with the
involvement of our technical accounting specialists, we
reviewed management’s assessment of and conclusions on
the accounting implications. In considering the recognition
of insurance income and disclosure of the contingent asset,
our procedures included:
—Reviewing management’s accounting analysis, which
incorporates the independent technical accounting
advice they received;
—Reviewing the relevant insurance policies to gain an
understanding of the policies in place for material
damage and business interruption relevant to
this event;
—Reviewing reports from management’s experts,
providing an estimated range of remediation costs
for the plant and buildings;
—Noting that these reports and estimates are currently
being reviewed by the insurers’ own experts;
—Considering the available reports of the insurers’ loss
adjusters and other relevant correspondence with
insurers;
—Reviewing legal advice obtained by management in
relation to the event and claim;
—Agreeing progress payments to supporting
documents and the bank statement;
—Assessing the resulting accounting treatment against
the relevant accounting standards, considering any
counterfactual information or scenarios;
—Considering the classification of insurance income
and cyclone related expenses in the consolidated
statement of profit or loss and consolidated
statement of cash flows; and
—Considering the adequacy of the related financial
statement disclosures, including the contingent
asset disclosed.
4647
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Management’s independent experts have estimated
buildings, plant and equipment remediation costs of
between $112.7 million and $162.0 million. These estimates
are currently being reviewed by the insurers’ own experts,
and could be challenged. Accordingly, management has
recognised insurance income only to the extent of the
progress payments received.
We have therefore identified the impact of Cyclone
Gabrielle as a key audit matter, due to the range and
magnitude of its implications on the Group’s consolidated
financial statements, the judgements involved in estimating
the related amounts, and determining the adequacy of the
associated disclosures.
To assess the amounts recorded for impairment of assets,
our procedures included:
—Gaining an understanding of management’s process
for determining impairment of the Napier buildings,
plant and equipment, as well as write off of the
inventory;
—Obtaining management’s experts’ damage
assessment reports and understanding the extent of
damage to the buildings, plant, equipment and
inventory;
—Agreeing the amounts impaired to the values in the
fixed asset register;
—Reviewing management’s analysis of damaged and
contaminated inventory, inspecting the results of the
Group’s physical inventory count, and comparing it
with the inventory records;
—Verifying, on a sample basis, the accuracy of the unit
cost used for calculating the inventory write-off; and
—With the assistance of our property experts,
reviewing management’s impairment assessment for
the Napier site land.
In addition, our procedures included:
—Assessing the professional competence,
independence and objectivity of management’s
technical accounting specialist;
—Testing, on a sample basis, the expenses incurred
relevant to this event; and
—Assessing the creditworthiness of the insurers.
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Valuation of inventory
The carrying value of the Group’s inventory at 30 June 2023
was $21.4 million (30 June 2022 $27.3 million) net of
inventory provisions of $1.4 million (30 June 2022
$1.4 million).
The cost of inventory reflects raw materials and
manufacturing costs, including an allocation of production
overheads based on normal operating capacity.
The Group has recorded inventory provisions, which
represent a deduction from the cost of inventory, for
obsolete, aged and discontinued inventory and carpet
oddments to reflect management’s best estimate of their net
realisable value.
Determining these provisions involves significant judgement
considering a range of factors such as inventory
rationalisation plans, consumer demand and trends,
available distribution channels and historical sales and
margins data.
Valuation of inventory is a key audit matter due to the
significance of the inventory balance, the complexity of
inventory costing, and the judgements involved in estimating
the inventory provisions.
Note 7c of the consolidated financial statements describes
the accounting policy on inventories and the judgements and
estimates applied by management to determine the
inventory provision.
To audit the cost of inventory, our procedures included:
—Gaining an understanding of the inventory costing
process and controls;
—Testing the accuracy of the application of inventory
costing by reperforming the calculation;
—Verifying inputs, on a sample basis, of the finished
goods, work in progress, and yarn inventory cost by
agreeing them to supporting documents;
—Testing the cost of raw material inventory, on a
sample basis, to supplier invoices; and
—Evaluating the nature and appropriateness of factory
overheads capitalised into inventory, based on
normal operating capacity, and testing the
mathematical accuracy of the overhead allocation
calculation.
To audit the inventory provisions, our procedures included:
—Gaining an understanding of, and assessing, the
Group’s inventory provisioning process and related
controls, taking into consideration key attributes
used such as piece sizes, grade quality, discontinued
products and recent sale prices;
—Reviewing management’s analysis of Cyclone
Gabrielle damaged and contaminated inventory;
—Observing management’s stocktake process by
attending selected locations to confirm the existence
and condition of the inventory;
—Assessing the accuracy of management’s estimate of
provisioning by comparing actual utilisation of the
provision with the corresponding prior year
provisions; and
—Testing the net realisable value of finished goods, on
a sample basis, by comparing the carrying value with
recent sales prices and margins.
4849
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
OUR AUDIT APPROACH
Overview
Overall group materiality: $672,000, which represents 0.75% of total revenue.
We chose total revenues as the benchmark because, in our view, it is a key financial statement
metric used in assessing the performance of the Group and it is a generally accepted
benchmark.
We selected transactions and balances to audit based on the Group’s materiality. By using this
approach, we audited all the material classes of transactions and balances in the consolidated
financial statements of the Group.
As reported above, we have two key audit matters, being:
—Impact of Cyclone Gabrielle
—Valuation of inventory
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated
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.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance
about whether the consolidated 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 consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group
materiality for the consolidated 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 consolidated 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 consolidated
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 consolidated financial statements and our auditor’s report thereon). The other information we
obtained prior to the date of this auditor’s report comprised the Directors’ Responsibility Statement, Trend Statement and Disclosure
of Non-GAAP Financial Information. The remaining other information is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
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 CONSOLIDATED FINANCIAL STATEMENTS
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated 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 CONSOLIDATED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the External
Reporting Board’s website at:
hhttps://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
5051
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2023
Note
Audited
2023
$000
Audited
2022
$000
Revenue from contracts with customers4c 89,689 95,485
Cost of sales(64,967) (65,785)
Gross profit24,722 29,700
Other income and gains
4d 540 688
Distribution expenses (16,183) (16,286)
Administration expenses
4e (11,118) (10,627)
Cyclone Gabrielle related insurance income
3a 35,500 –
Cyclone Gabrielle related expenses
3d(14,275) –
Cyclone Gabrielle related asset write offs
3d ( 7,6 4 4) –
11,542 3,475
Finance costs
4h (1,045) (1,029)
Finance income 502 159
Profit before income tax10,999 2,605
Income tax expense
4i (263) (365)
Profit after tax for the year$10,736$2,240
Basic earnings per share (cents)
4b15.393.24
Diluted earnings per share (cents)
4b15.043.17
This Consolidated Statement of Profit or Loss is to be read in conjunction with the notes on pages 58 to 107.
CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT (CONT'D)
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 Philippa (Pip) Cameron.
For and on behalf of:
Chartered Accountants Auckland
21 September 2023
5253
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Note
Audited
2023
$000
Audited
2022
$000
Profit after tax for the year10,736 2,240
Other comprehensive income that may be reclassified subsequently to
profit or loss
Effective portion of changes in fair value of cash flow hedges (net of
income tax) 1,088 (576)
Net change in fair value of cash flow hedges transferred to profit or loss
(net of income tax) 426 (55)
Total other comprehensive income 1,514 (631)
Total comprehensive income for the year$12,250$1,609
This Consolidated Statement of Comprehensive Income is to be read in conjunction with the notes on pages 58 to 107.
AuditedNote
Share
Capital
$000
Cash Flow
Hedging
Reserve
$000
Foreign
Currency
Translation
Reserve
$000
Share-based
Payment
Reserve
$000
Retained
Earnings
$000
Total Equity
$000
Total equity at 1 July 2022 22,054 (576) (1,420) 413 17,300 3 7,7 7 1
Total comprehensive income for the year
Profit after tax – – – – 10,73610,736
Other comprehensive income that may be
reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges (net of
income tax) – 1,514 – – – 1,514
Total comprehensive income for the year – 1,514 – – 10,73612,250
Transaction with owners in their capacity
as owners
Share-based payments - value of employee services
9b – – – 202 – 202
Issue of shares pursuant to the Bremworth
Equity Plan
5b, 9b – – – – – –
Total transaction with owners for the year – – – 202 – 202
Total equity at 30 June 2023$22,054 $938 ($1,420)$615 $28,036$50,223
This Consolidated Statement of Changes in Equity is to be read in conjunction with the notes on pages 58 to 107.
5455
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023 (CONT'D)
AuditedNote
Share
Capital
$000
Cash Flow
Hedging
Reserve
$000
Foreign
Currency
Translation
Reserve
$000
Share-based
Payment
Reserve
$000
Retained
Earnings
$000
Total Equity
$000
Total equity at 1 July 2021 21,846 55 (1,420) 51 15,060 35,592
Total comprehensive income for the year
Profit after tax – – – – 2,240 2,240
Other comprehensive income that may be
reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges (net
of income tax) – (631) – – – (631)
Total comprehensive income for the year – (631) – – 2,240 1,609
Transaction with owners in their capacity
as owners
Share-based payments - value of employee
services
9b – – – 362 – 362
Issue of shares pursuant to the Bremworth
Equity Plan
5b, 9b 208 – – – – 208
Total transaction with owners for the year 208 – – 362 – 570
Total equity at 30 June 2022$22,054 ($576)($1,420)$413 $ 1 7, 3 0 0 $ 3 7,7 7 1
This Consolidated Statement of Changes in Equity is to be read in conjunction with the notes on pages 58 to 107.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Note
Audited
2023
$000
Audited
2022
$000
ASSETS
Property, plant and equipment - owned
6a 10,234 14,306
Property, plant and equipment - right-of-use
9a 8,616 9,280
Deferred tax asset
4i 576 532
Total non-current assets 19,426 24,118
Cash and bank
7a 39,319 14,874
Trade receivables, other receivables and prepayments
7b 9,957 12,201
Inventories
7c21,122 2 7, 2 6 3
Advances to employees
9b 170 160
Derivative financial instruments
8 1,017 8
Income tax receivable 125 278
Total current assets71,710 54,784
Total assets$91,136$78,902
EQUITY
Share capital
5b 22,054 22,054
Cash flow hedging reserve
5b 938 (576)
Foreign currency translation reserve
5b (1,420) (1,420)
Share-based payment reserve
5b, 9b 615 413
Retained earnings28,036 1 7, 3 0 0
Total equity50,223 3 7,7 7 1
LIABILITIES
Lease liabilities
9a 16,742 1 7, 8 2 0
Employee benefits
9d 666 720
Provisions
9c 819 711
Total non-current liabilities 18,227 19,251
Trade payables and accruals
7d 14,948 12,210
Customer deposits
4c 192 203
Employee benefits
9d 38 53
Employee entitlements
7e 4,877 5,376
Lease liabilities
9a 1,296 1,938
Provisions
9c 816 988
Derivative financial instruments
8 16 694
Deferred income
4g 503 418
Total current liabilities 22,686 21,880
Total liabilities 40,913 41,131
Total equity and liabilities$91,136$78,902
This Consolidated Statement of Financial Position is to be read in conjunction with the notes on pages 58 to 107.
5657
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023 (CONT'D)
Note
Audited
2023
$000
Audited
2022
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 91,200 96,808
Cash paid to suppliers and employees(88,548) (101,010)
2,652 (4,202)
Government grants received 582 640
COVID-19-related subsidies received
4g – 1,776
Other receipts 5 5
GST refunded 1,191 107
Interest paid - loans and borrowings (166) (39)
Interest component of lease payments
9a (879) (990)
Interest received 503 172
Income tax paid (154) (386)
Cyclone Gabrielle related expenses
3e(10,803) –
Net cash flow from operating activities ( 7,0 6 9) (2,917)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment 44 105
Acquisition of plant and equipment
6a (1,956) (2,898)
Short term deposits (3,500) 8,000
Advances to employees pursuant to the Bremworth Equity Plan
9b (10) (160)
Cyclone Gabrielle related insurance income
3a 35,500 –
Net cash flow from investing activities 30,078 5,047
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares pursuant to the Bremworth Equity Plan
9b0208
Principal component of lease payments
9a (2,051) (2,041)
Net cash flow from financing activities (2,051) (1,833)
Net increase in cash and cash equivalents20,958 297
Cash and cash equivalents at beginning of the year 10,874 10,508
Effect of exchange rate changes on cash (13) 69
Cash and cash equivalents at end of the year$31,819 $10,874
This Consolidated Statement of Cash Flows is to be read in conjunction with the notes on pages 58 to 107.
RECONCILIATION OF PROFIT WITH NET CASH FLOW FROM OPERATING ACTIVITIES
Note
Audited
2023
$000
Audited
2022
$000
Profit after tax for the year10,736 2,240
Add/(Deduct) non-cash items:
Depreciation - owned assets
6a 845 683
Depreciation - right-of-use assets
9a 994 954
Impairment of buildings and plant and equipment
3d 5,170 –
Share-based payments - value of employee services
9b 202 362
Deferred tax (44) 200
Net gain on sale of plant and equipment (30) (102)
Net (gain)/loss on foreign currency balance 13 (69)
Add/(Deduct) Cyclone Gabrielle related cash items:
Cyclone Gabrielle related insurance income
3a (35,500) –
Changes in working capital items:
Trade receivables, other receivables and prepayments 2,243 321
Inventories6,141 (7,228)
Income tax receivable 153 (221)
Trade payables and accruals 2,739 (856)
Customer deposits (11) 203
Employee benefits and entitlements (568) 34
Provisions(64) 365
Deferred income 85 67
Derivative financial instruments (173) 130
Net cash flow from operating activities($ 7,0 6 9)($2,917)
This Consolidated Statement of Cash Flows is to be read in conjunction with the notes on pages 58 to 107.
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58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1. COMPANY INFORMATION
Bremworth Limited (“Bremworth” or “the Company”) is a limited liability company that is domiciled and incorporated in
New Zealand.
The consolidated financial statements presented are for Bremworth and its subsidiaries (“the Group”) as at, and for the year
ended, 30 June 2023.
The Company is registered under the Companies Act 1993 and is an FMC reporting entity for the purposes of the Financial
Reporting Act 2013 and the Financial Markets Conduct Act 2013. The consolidated financial statements have been prepared
in accordance with these Acts.
The principal activities of the Group comprise wool acquisition, and carpet and rug manufacturing and sales.
All Group subsidiaries are wholly-owned.
2. GENERAL INFORMATION RELATING TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
2a. STATEMENT OF COMPLIANCE
The consolidated financial statements comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other applicable New Zealand accounting standards and authoritative notices as appropriate for Tier 1 For-Profit
entities. The consolidated financial statements also comply with International Financial Reporting Standards (IFRS).
2b. BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (NZ GAAP) as appropriate for Tier 1 For-Profit entities.
They have been prepared on the historical cost basis, except for derivative financial instruments which are measured at fair
value as disclosed at note 8 (Risks and financial instruments) to the consolidated financial statements.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in New Zealand dollars, which is Bremworth Limited’s functional and presentation currency. Unless otherwise
indicated, all financial information presented in New Zealand dollars has been rounded to the nearest thousand.
The Consolidated Statements of Profit or Loss, Comprehensive Income, Changes in Equity and Cash Flows are stated
exclusive of GST. All items in the Consolidated Statement of Financial Position are stated exclusive of GST, except for trade
receivables and trade payables, which include GST invoiced.
2c. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS AND SIGNIFICANT ACCOUNTING POLICIES
The preparation of the consolidated financial statements in conformity with NZ IFRS requires the directors to make
estimates, judgements and assumptions that affect the application of accounting policies and reported amounts of assets,
liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future
periods affected.
2. GENERAL INFORMATION RELATING TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
2c. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS AND SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Information about estimates and judgements that have a significant effect on the amounts recognised in the consolidated
financial statements are disclosed in the following notes:
Note 3 – impact of Cyclone Gabrielle
Note 4i – measurement and recoverability of tax losses
Note 6a – recoverability of property, plant and equipment
Note 7c – inventory provisioning
Note 9a – determination of lease term
Note 9c – measurement of provisions
Note 9d – measurement of employee benefits
Significant accounting policies and critical estimates, judgements and assumptions are also disclosed in the relevant notes to
the consolidated financial statements and identified using the following coloured boxes:
Accounting policiesEstimates, judgements and assumptions
2d. BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2023
and the results of all subsidiaries for the year then ended. Subsidiaries are all entities over which the Company has control.
The Company controls an entity when the Company 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.
Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements. Unrealised losses are also eliminated unless the underlying intra-group
transaction provides evidence that the asset transferred is impaired.
2e. CHANGES IN ACCOUNTING POLICIES
There were no changes in accounting policies during the year ended 30 June 2023.
2f. IMPACT OF CYCLONE GABRIELLE
Background
On 14 February 2023, the Napier yarn spinning plant suffered widespread flooding as Cyclone Gabrielle which struck
New Zealand from 13 to 15 February 2023 brought severe winds and rain and extensive flooding to parts of the North Island
- including Hawke’s Bay where the Napier yarn spinning plant is situated.
The Napier plant was inundated and sustained significant damage to buildings and plant and equipment as well as loss
of inventor y.
The Napier plant is a key plant within the Group’s woollen carpet operation, supplying woollen spun yarn to the Auckland
carpet plant for conversion into carpet and dyed fibre to the Whanganui yarn spinning plant for processing into felted yarns
for carpet manufacturing.
The plant has not operated since 14 February 2023. Although significant progress has been made at the plant - with clean-up
virtually completed and buildings and plant and equipment stabilised to prevent further deterioration - it is expected to be
offline for a yet to be determined, but significant, period of time pending a decision on appropriate next steps.
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2. GENERAL INFORMATION RELATING TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
2f. IMPACT OF CYCLONE GABRIELLE (CONT’D)
Insurances
The Group has comprehensive insurances, with the following table summarising the type and scope of cover relating to the
damage and losses arising from Cyclone Gabrielle:
Type of coverScope of cover
Sums insured
$000’s
Material damageBuildings49,400
Plant and equipment116,100
Inventory stored at the Napier plant2,700
Inventory stored elsewhere1,100
$169,300
Business interruptionGross profit (including payroll, fixed costs and increased cost of working to avoid loss of turnover)91,500
Additional costs10,000
Claims preparation costs500
$102,000
The insurers have acknowledged the cyclone event and confirmed that the Group’s material damage policy will respond in
relation to damage to buildings and plant and equipment as well as loss of inventory and the business interruption policy will
respond in relation to the impact of reduction in turnover and costs incurred as a result of consequent disruptions to
the business.
The business interruption policy provides for an indemnity period of 18 months from the date of loss and will therefore extend
over the period through to 13 August 2024. As a consequence, claims under the business interruption policy are expected to
occur in FY24 and into FY25.
While the insurance claims process is progressing well, it is expected to take a number of months to complete. The Group
has already received, prior to balance date, $35.5 million of progress payments from its insurers. These payments were made
on the condition that if the final adjusted loss (as agreed between the parties or as determined by any applicable dispute
resolution process) is less than the amount of the progress payments and all other payments under the policies, then the
overpaid amount will be promptly refunded.
The Group has engaged two independent consulting engineering firms to perform detailed assessments of damage to
buildings and plant and equipment, with these assessments placing the P50 estimated cost of remediation at $130.6 million
(being the estimate of cost such that there is a 50% probability of the remediation being completed within that
cost estimate).
The estimated remediation range put forward by the Group’s independent external experts of between $112.7 million (at P10)
and $162.0 million (at P90) is currently being reviewed by the loss adjusters and their experts. The loss adjusters and their
experts have issued an interim report questioning whether alternative methods of remediation are possible or ought to be
considered, and while they have provided progress updates on the work done, the full results of their review are yet to
be received.
There is, to date, no agreement between the loss adjusters and the Group around the extent of damage to the Napier yarn
spinning plant and the nature and estimated cost of, as well as time required for, the remediation works. However, the loss
adjusters have acknowledged that significant damage has occurred to the Napier plant and that the claim would
be significant.
2. GENERAL INFORMATION RELATING TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
2f. IMPACT OF CYCLONE GABRIELLE (CONT’D)
Risk mitigation and business continuity plans
With the Napier yarn spinning plant offline and in order to secure the Group’s ongoing access to yarns and dyed fibre,
management has activated risk mitigation and business continuity plans which included alternative supply arrangements
as follows:
—procuring woollen yarns from an independent New Zealand yarn spinner for some of its woollen carpet ranges;
—use of an independent third-party dyeing facility to supply the Whanganui yarn spinning plant with dyed fibre; and
—procuring New Zealand wool yarns, and dyed New Zealand wool fibre, from overseas suppliers.
Following the reconfiguration of its plant and equipment, the Whanganui plant is now able to not only produce felted yarns
but also woollen spun yarns – putting the woollen carpet operation in a strong position to continue to supply key product
ranges to its distribution partners.
Trials of New Zealand wool yarns, and dyed New Zealand wool fibre, from offshore have proved to be successful, with
commercial-sized batches on order and expected to be received for processing into carpet from September 2023 onwards.
This new hybrid supply chain model is complementary to the existing woollen carpet operation and will insulate the Group
from future events that could potentially disrupt operations while also strengthening the business.
Board-led strategic review
A decision around the remediation works at the Napier plant is yet to be made, pending completion of the loss adjusters’
review of remediation costs and the outcome of a Board-led strategic review that the Directors have commenced.
This review, which involves external consultants, recognises that the receipt of insurance proceeds presents options for the
Group, with the strategic review designed to assist the Board in identifying the options around the application of
those proceeds.
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2. GENERAL INFORMATION RELATING TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
2f. IMPACT OF CYCLONE GABRIELLE (CONT’D)
Dealing with impact of Cyclone Gabrielle in the financial statements
The following table summarises the impact of Cyclone Gabrielle on the Group and how these have been dealt with in the
financial statements:
Impact of Cyclone GabrielleFinancial statements line item$000’sNotes
Insurance proceeds have been recognised as incomeCyclone Gabrielle related
insurance income
$35,500
3a
Further insurance proceeds are recognised as income and as a
receivable where receipt is virtually certain and amount is able to be
reliably estimated
Not applicable$0
3b
Insurance proceeds as contingent assetsNot applicable$0
3c
Site clean-up and asset stabilisation costs incurred have been
recognised as expenses
Cyclone Gabrielle
related expenses
($14,275)
3d
Ongoing costs (including payroll) as a result of the cyclone, increased
costs of working and other additional costs to avoid loss of revenue as
well as professional fees (including claims preparation costs) incurred
have also been recognised as expenses
Damaged or destroyed buildings and plant and equipment have been
derecognised to the extent appropriate
Cyclone Gabrielle related
asset write offs
($5,170)
3d, 6a
Damaged or destroyed inventory has been written off to the
extent appropriate
Cyclone Gabrielle related
asset write offs
($2,474)
3d, 7c
The accounting for the impact of Cyclone Gabrielle is discussed in detail in note 3 (Cyclone Gabrielle) to the consolidated
financial statements.
3. CYCLONE GABRIELLE
Accounting policies
Insurance proceeds are recognised as income and as a receivable when receipt is virtually certain and to the extent
that the amount can be reliably estimated.
In the event that insurance proceeds cannot be recognised as income and as a receivable because receipt is not
virtually certain and/or the amount cannot be reliably estimated, they are disclosed as contingent assets.
Estimates, judgements and assumptions
As a result of the Cyclone Gabrielle flooding event, a number of significant estimates and judgements have been
necessary to determine the accounting treatment in these financial statements.
These estimates and judgements include the following:
—recognition of insurance income (note 3a)
—estimation of further insurance proceeds as income (note 3b)
—assessment of and disclosure of contingent assets (note 3c)
—assessment of impairment of inventory, buildings, land and plant and equipment (note 3d)
Details of the estimates and judgements made are further discussed below where relevant.
3. CYCLONE GABRIELLE (CONT'D)
3a. CYCLONE GABRIELLE RELATED INSURANCE INCOME
2023
$000
2022
$000
Insurance recovery - progress payments$35,500 $0
Cyclone Gabrielle related insurance income consists of:
Insurance recovery progress payments ($35.5 million)
Prior to 30 June 2023, the Group received two initial progress payments from the insurers – the first of $20.0 million in April
2023, followed by $15.5 million in June 2023 - with the insurers treating these as non-specific to either material damage or
business interruption.
The Group has concluded that there is virtual certainty as at balance date with respect to the progress payments of $35.5
million and has recognised that as income in the Consolidated Statement of Profit or Loss.
The initial progress payments were made on the condition that if the final adjusted loss (as agreed between the parties or as
determined by any applicable dispute resolution process) is less than the amount of the progress payments and all other
payments under the policies, then the overpaid amount will be promptly refunded.
The Group expects that the initial progress payments of $35.5 million received will not be required to be refunded, based on
the following:
—the substantially greater estimated costs of remediation as determined by the Group’s independent external experts as
discussed at note 2f (Impact of Cyclone Gabrielle) to the consolidated financial statements;
—the acknowledgement from the insurers’ loss adjusters that the Group has already incurred significant costs associated
with the clean-up and stabilisation of the Napier site, as well as the other costs that have been incurred (including
employee costs) which are also covered by the Group’s insurance policies;
—recognition by the loss adjusters that significant damage has occurred to the Napier plant and that the claim is a
significant claim.
3b. ESTIMATION OF FURTHER INSURANCE PROCEEDS AS INCOME
The Group’s expectation is that the ultimate amount received will be larger than the $35.5 million progress payments to date
for the following reasons:
—the substantially greater estimated costs of remediation under the material damage policy as discussed in note 2f
(Impact of Cyclone Gabrielle) to the consolidated financial statements and note 3a above;
—the loss adjusters having acknowledged the cyclone as an insured event and the indemnity owed to the Group under
the policies;
—the insignificant counterparty credit risks.
However, the amount cannot currently be estimated sufficiently reliably for the following reasons:
—the estimated remediation range put forward by the Group’s independent external experts of between $112.7 million
and $162.0 million and the consequent wide range of possible outcomes;
—the relatively early stage of the insurance claims process, with the estimate currently being reviewed by the loss
adjusters and their experts;
—the estimate being highly sensitive to the actual extent of damage to buildings and plant and equipment and whether
key underlying assets can be repaired or alternatively must be replaced;
—the damage assessment and estimated cost of, as well as time required for, remediation works being particularly
sensitive to availability of machine parts and specialist labour, with actual results potentially differing significantly
from estimates.
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3. CYCLONE GABRIELLE (CONT'D)
3b. ESTIMATION OF FURTHER INSURANCE PROCEEDS AS INCOME (CONT’D)
There is also uncertainty around the quantum of the indemnity cash settlement the Group would be entitled to if chooses to
not reinstate the Napier plant.
As a consequence, further insurance proceeds have not been recognised as income and as a receivable in the
financial statements.
3c. CONTINGENT ASSETS
While the Group has a contingent asset at balance date - being the probable receipt of further insurance proceeds under the
material damage policy as identified in note 3b - the Group has not provided an estimate of the contingent asset because it
has determined, based on the estimation uncertainties discussed at note 3b, that it is not practicable to do so.
These estimates and judgements will continue to be reviewed as new information becomes available. Because the insurance
claims process is expected to take a number of months to complete and will involve a number of parties - including the loss
adjusters and their experts as well as the Group and its own experts - it is possible that the actual financial impacts will differ
from those included in these financial statements and that these differences may be material.
As claims under the business interruption policy are expected to be made in future, a contingent asset does not yet exist in
relation to the business interruption policy at balance date.
3d. CYCLONE GABRIELLE RELATED ASSET WRITE OFFS AND EXPENSES
Note
2023
$000
2022
$000
Write off of buildings6a 3,608 –
Write off of plant and equipment, other assets and assets under
construction
6a 1,562 –
Write off of inventory
7c 2,474 –
Other recoverable expenses14,015 –
Non-recoverable expenses 260 –
$21,919$0
Cyclone Gabrielle related asset write offs and expenses consist of:
Write off of buildings ($3.6 million) and plant and equipment, other assets and assets under construction ($1.6 million)
Accounting standards treat the physical damage of an asset to be an indicator of impairment. Therefore, if there has been
physical damage to an asset as a result of a natural disaster, like Cyclone Gabrielle, an impairment test is required with
careful consideration given to assessing the asset’s recoverable amount.
Following impairment assessment of damaged buildings and plant and equipment, the Group has determined that the
carrying values of buildings and plant and equipment at the Napier plant are required to be derecognised on the basis that
there are no longer any future economic benefits that could be derived from their use in their current state or from
their disposal.
As a result, the carrying values of these assets have been written off to the Consolidated Statement of Profit or Loss.
The Group does not consider the carrying value of the Napier land of $811,000 to be impaired, with the carrying amount of
that land supported by its standalone fair value, after having regard to the land categorisation attributed to the land by the
Hawke’s Bay City Council following Cyclone Gabrielle and the current market value of industrial land in Hawke’s Bay after
allowing for estimated building demolition costs.
Refer also to note 6a (Property, plant and equipment) to the consolidated financial statements for further information.
3. CYCLONE GABRIELLE (CONT'D)
3d. CYCLONE GABRIELLE RELATED ASSET WRITE OFFS AND EXPENSES (CONT’D)
Write off of inventory ($2.5 million)
Accounting standards require inventory to be measured at the lower of cost and net realisable value.
Where the cost of inventory may not be recoverable because the inventory is damaged as a consequence of an event like
Cyclone Gabrielle, the Group is required to estimate its recoverable amount and recognise an impairment if this estimate is
less than the carrying amount.
Based on the analysis and estimates prepared by management, the Group has determined that the carrying value of inventory
at the Napier plant was required to be written off – either because they have been damaged or destroyed as a consequence
of having been immersed in, or exposed to, contaminated flood water or otherwise contaminated by virtue of their proximity
to flood water and could not therefore be used for further processing into finished carpet.
Refer also to note 7c (Inventories) to the consolidated financial statements for further information.
Other recoverable costs ($14.0 million)
The Group has incurred costs relating to site clean-up and asset stabilisation, with $3.5 million accrued at balance date.
Of the total of $14.0 million, $5.4 million related to wages and salaries (largely of the Napier-based employees) and
$1.2 million to ongoing fixed costs at the Napier plant, as well as $6.4 million towards site clean-up and asset stabilisation and
$1.0 million of miscellaneous spends (including professional fees and claims preparation costs and the other costs associated
with the activation of the risk mitigation and business continuity plans).
These costs are recoverable from the proceeds of insurance.
Non-recoverable costs ($0.3 million)
These are expenses incurred by the Group in relation to the cyclone where there will be no recovery from the insurers and
include the $250,000 deductible under the material damage policy as well as other expenses that are above the sub-limits
provided for in the policy (for example, employees’ personal effects).
3e. PROGRESS PAYMENTS RECEIVED AND CASH PAID
Prior to 30 June 2023, the Group received two initial progress payments from the insurers – the first of $20.0 million in April
2023, followed by $15.5 million in June 2023 - with the insurers treating these as non-specific to either material damage or
business interruption. As a consequence, the Group has treated the $35.5 million as cash inflow relating to
investing activities.
At balance date, $10.8 million has been spent, with $5.4 million relating to wages and salaries (largely of the Napier-based
employees) and $1.2 million relating to ongoing fixed costs at the Napier plant, as well as $3.1 million towards site clean-up
and asset stabilisation and $1.1 million of miscellaneous spends (including professional fees and claims preparation costs and
the other costs associated with the activation of the risk mitigation and business continuity plans).
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3. CYCLONE GABRIELLE (CONT'D)
3f. GOING CONCERN
The Group prepares its consolidated financial statements on a going concern basis and expects to be able to realise its assets
and meet its financial obligations in the normal course of business.
Cash and bank at balance date of $39.3 million (2022: $14.9 million) is at a level significantly higher than forecasted as a
result of insurance progress payments received.
Net working capital (being current assets (excluding cash and bank) less current liabilities) employed by the Group as at
balance date of $9.7 million (2022: $18.0 million) is well down on the previous year, with the Group continuing to focus on
working capital utilisation and efficiency.
To assess the ongoing liquidity of the Group and its ability to meet its other financial commitments as they fall due in the
normal course of business as a consequence of Cyclone Gabrielle, management has prepared forecasts of the Group’s
financial performance, while also assessing cash flows and financial position, as part of its management and monitoring of
the Group’s operations through to 30 June 2025.
In preparing these forecasts, management considered and, where required made assumptions, in relation to:
—the costs associated with voluntary redundancies for Napier-based employees, and holiday pay paid out, subsequent
to balance date as further discussed at note 9h (Events after balance date) to the consolidated financial statements;
—the additional costs, and time it could take, to switch to alternative sources of supply of yarns and dyed fibre and be
able to maintain inventory at, or otherwise return inventory to, levels required to meet current demand;
—the ongoing costs relating to the business and the other actions that have been taken to reduce discretionary spending
during the period of interruption to the business; and
—the further insurance recoveries that are expected to insulate the Group from the impact of Cyclone Gabrielle.
The Board expects that existing cash and bank of $39.3 million is easily sufficient to enable the Group’s continued operation.
Despite the disruptions from Cyclone Gabrielle, the Group continues to trade and to actively engage with its distribution
partners - with the focus on ensuring we can continue to supply key product ranges and to support them.
The Board is committed to the future of the existing woollen carpet business, with the new hybrid supply chain model post
Cyclone Gabrielle going to be not only complementary to the existing operation but also insulate the Group from future
events that could potentially disrupt operations.
That commitment to the future of the business is further demonstrated by its decision to undertake a Board-led
strategic review.
This review, which involves external consultants, recognises that the receipt of insurance proceeds presents options for the
Group, with the strategic review designed to assist the Board in identifying the options around the application of those
proceeds while also looking to address the Group’s current supply chain and manufacturing cost base.
4. FINANCIAL PERFORMANCE
This section deals with the financial performance of the Group and addresses, among other things, the financial performance
of the Group’s reportable segments and the key areas that impact on the Group’s profitability, including operating revenue,
other income, gains/losses on sale of property, plant and equipment, expenses and taxation.
4a. SEGMENT PERFORMANCE
Reportable segments
The Group’s reportable and operating segments are:
—Carpet, with this segment involved in the manufacturing and sales of carpet and rugs in New Zealand, Australia and
rest of the world; and
—Wool, with this segment involved in the acquisition of wool for the carpet segment and for sales to external customers
in New Zealand.
An operating segment is a component of the Group:
—that engages in business activities from which it may earn revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Group’s other components;
—whose operating results are regularly reviewed by the Group’s chief operating decision maker - in this case, the Chief
Executive Officer - to make decisions about the resources to be allocated to the segment and to assess its
performance; and
—for which discrete financial information is available.
The Chief Executive Officer uses total revenue, segment result before depreciation, restructuring and impairment and
segment result after depreciation but before restructuring and impairment to assess the performance of the operating
segments. Total assets and total liabilities are also reviewed for the operating segments.
Inter-segment transactions
Inter-segmental sales during the year and intercompany profits on stocks at balance date are eliminated on consolidation.
Geographical areas
In presenting information on the basis of geographical areas, revenue is based on the geographical location of customers and
non-current assets are based on the geographical location of those assets.
2023
$000
2022
$000
Revenue
New Zealand 50,637 54,595
Australia 3 7,0 2 7 3 7,7 9 7
Canada 1,231 1,460
USA 761 1,331
Rest of the world 33 302
$89,689 $95,485
As at
30 Jun 2023
$000
As at
30 Jun 2022
$000
Non-current assets
New Zealand 18,329 23,040
Australia 1,097 1,078
$19,426 $24,118
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4. FINANCIAL PERFORMANCE (CONT'D)
4a. SEGMENT PERFORMANCE (CONT’D)
Major customers
None of the Group’s external customers contributed revenues in excess of 10% of the Group’s total revenues.
Carpet and rugs sales
and manufacturingWool acquisitionTo tal
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
External revenue 71,502 76,307 18,187 19,178 89,689 95,485
Inter-segment revenue – – 1,634 2,401 1,634 2,401
To t al r eve nu e 71,502 76,307 19,821 21,579 91,323 9 7, 8 8 6
Elimination of inter-segment revenue (1,634) (2,401)
Consolidated revenue$89,689 $95,485
Segment result before depreciation and insurances(52) 4,880 766 949 714 5,829
Depreciation - owned assets (674) (515) (171) (168) (845) (683)
Depreciation - right-of-use assets (862) (822) (132) (132) (994) (954)
Depreciation - recycled through inventory – 194 – – – 194
Segment result before insurances(1,588) 3,737 463 649 (1,125) 4,386
Cyclone Gabrielle related insurance income 35,500 – – – 35,500 –
Cyclone Gabrielle related expenses(14,275) – – – (14,275) –
Cyclone Gabrielle related asset write offs ( 7,6 4 4) – – – ( 7,6 4 4) –
Segment result after insurances11,993 3,737 463 649 12,456 4,386
Elimination of inter-segment profits 14 52
Unallocated corporate costs (928) (963)
Results from operating activities11,542 3,475
Finance costs (1,045) (1,029)
Finance income 502 159
Profit before income tax10,999 2,605
Income tax expense (263) (365)
Profit after tax for the year$10,736$2,240
4. FINANCIAL PERFORMANCE (CONT'D)
4a. SEGMENT PERFORMANCE (CONT’D)
Carpet and rugs sales
and manufacturingWool acquisitionTo tal
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Reportable segment assets46,846 59,122 4,971 4,906 51,817 64,028
Unallocated assets - Cash and bank 39,319 14,874
Total assets$91,136$78,902
Capital expenditure 1,956 2,621 – 277 $1,956 $2,898
Reportable segment liabilities 21,290 20,229 1,585 1,144 22,875 21,373
Unallocated liabilities - Lease liabilities 18,038 19,758
Total liabilities$40,913 $41,131
4b. EARNINGS PER SHARE
Basic earnings per share (Basic EPS)
20232022
Profit after tax attributable to shareholders of the Company ($000)10,736 2,240
Weighted average number of ordinary shares outstanding 69,771,837 69,081,838
Basic EPS (cents)15.39 3.24
Diluted earnings per share (Diluted EPS)
20232022
Profit after tax attributable to shareholders of the Company ($000)10,736 2,240
Weighted average number of ordinary shares outstanding and potential ordinary shares 71,364,576 70,659,533
Diluted EPS (cents)15.04 3.17
In calculating the diluted earnings per share, the Company has taken into account the maximum number of shares that could
be issued under the Company’s LTI Schemes and the Bremworth Option Scheme as further discussed at note 9b (Share-
based payment) to the consolidated financial statements.
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4. FINANCIAL PERFORMANCE (CONT'D)
4c. REVENUE FROM CONTRACTS WITH CUSTOMERS
2023
$000
2022
$000
Sales of goods
Carpet 70,234 72,296
Rugs 1,122 773
Wool 18,187 19,178
Carpet yarn – 598
Others 146 2,130
89,689 94,975
Provision of installation services – 510
To t al r eve nu e$89,689 $95,485
Credit terms for carpet and rug sales within New Zealand and Australia are generally no later than 30 days after the month in
which invoices are raised and, in the case of wool sold in New Zealand, within 14 days of invoice date or on despatch
whichever is the earlier. Credit terms for sales of carpet overseas are generally 60 to 90 days from date of invoice and for
sales of carpet yarn overseas 120 days from date of invoice.
Rugs sold direct are for cash, with payment at the time orders are placed. All amounts received are accounted for as
customer deposits in the first instance, with $192,000 of customers deposits booked as at balance date (2022: $203,000).
Accounting policies
Sale of goods
Revenue is recognised when or as performance obligations are satisfied by transferring control of the products sold to
the customer at the transaction price specified in the contract. Control transfers to the customers for carpet, rug and
carpet yarn sales on delivery of the goods to the customer. For wool sales, control passes on payment, prior to
delivery. The transaction price includes all amounts which the Group expects to be entitled to, net of goods and
services tax and other indirect taxes, expected rebates and discounts.
Apart from warranties, there are no contractual rights of return and there are therefore no provisions for returns. In
specific circumstances, the Group may choose to accept returns, in which case the returns are recognised at
that time.
Provision of installation services
Revenue from installation services rendered is recognised in profit or loss in proportion to the stage of completion of
the transaction at the reporting date as the customer receives and uses the benefit simultaneous to installation. The
stage of completion of installation services rendered is determined by having regard to the quantity in lineal metres of
carpet installed at balance date relative to the total quantity in lineal metres of carpet required for each contract.
4. FINANCIAL PERFORMANCE (CONT'D)
4d. OTHER INCOME AND GAINS
Note
2023
$000
2022
$000
Rentals received 4 4
Dividends received 1 1
Government grants recognised
4g 505 581
Net gain on sale of plant and equipment 30 102
Total other income and gains$540 $688
4e. ADMINISTRATION EXPENSES
The following items of expenditure are included in administration expenses:
2023
$000
2022
$000
Donations$1 $2
Total fees paid and payable to auditors
Audit fees and expenses paid and payable for audit of consolidated financial statements 564 515
Non-audit fees paid and payable for strategic options analysis 15 –
Total fees paid and payable$579 $515
Strategic options analysis relates to a report detailing those options that may be available to the Group and the Board in
relation to Cyclone Gabrielle insurance recoveries. This report did not contain any recommendations or decisions, and the
services were cleared by the Chair of the Audit Committee as having no impact on auditor independence.
4f. PERSONNEL EXPENSES
Note
2023
$000
2022
$000
Directors’ fees8g 387 372
Wages, salaries, bonuses and holiday pay 31,663 33,218
Other employee related costs 1,372 1,494
Restructuring costs– 121
Employee benefits 1,033 1,130
Increase/(Decrease) in liability for retiring allowances and long service leave (15) 392
Total personnel expenses$34,440 $36,727
Personnel costs are included in cost of sales, distribution expenses and administration expenses in the Consolidated
Statement of Profit or Loss (except where these costs relate to the restructuring of the Group’s operations in which case they
are classified as restructuring costs).
Employee benefits include those benefits provided to employees as part of their employee arrangements with the Group and
cover the provision of motor vehicles, income protection insurances, life insurances and medical insurances and associated
fringe benefits taxes. Employee benefits also include the costs of providing on-site staff amenities.
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4. FINANCIAL PERFORMANCE (CONT'D)
4g. GOVERNMENT GRANTS
COVID-19 subsidies
2023
$000
2022
$000
Balance at 1 July brought forward in inventory 109 –
Subsidies received during the year 89 1,776
Amount recognised in the Consolidated Statement of Profit or Loss (198) (1,667)
Balance at 30 June carried forward in inventory$0 $109
The Group applied for and received $89,000 pursuant to residual COVID-19 subsidy schemes from the New Zealand
Government (2022: Applied for and received $1,676,000 pursuant to various COVID-19 subsidy schemes from the New
Zealand Government and $100,000 from the New South Wales Government).
$198,000 of these subsidies were recognised in cost of sales in the Consolidated Statement of Profit or Loss during the
financial year (2022: $1,308,000, $257,000 and $102,000 recognised in cost of sales, distribution expenses and
administration expenses respectively).
International Growth Fund and Sustainable Food and Fibre Futures Fund
Grants totalling $121,000 (2022: $242,000) from the Government’s International Growth Fund (IG Fund) and $384,000 (2022:
$339,000) from the Sustainable Food and Fibre Futures Fund (SFFF Fund) are included in other income in the Consolidated
Statement of Profit or Loss, with the IG Fund covering pre-approved activities over the period from May 2019 to January
2023 and the SFFF Fund over the period from December 2020 through to June 2024.
There are no unfulfilled conditions or other contingencies attaching to the grants recognised in other income during the year.
Government grants that have been deferred, either because they relate to future costs to be incurred or assets, totalled
$503,000 at balance date (2022: $418,000).
Others
The Group did not benefit directly from any other forms of government assistance.
Notes 4d (Other income and gains) and 4g (Government grants) to the consolidated financial statements provide further
information on how the Group accounts for government grants.
Accounting policies
Grants from the government are recognised at their fair value where there is a reasonable assurance that the Group
will comply with all attached conditions and the grants will be received.
Government grants relating to costs that have been incurred are credited to profit or loss while grants relating to
future costs are included in current liabilities as deferred income and recognised in profit or loss over the period
necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as
deferred income and they are credited to profit or loss on a straight-line basis over the expected lives of the
related assets.
4. FINANCIAL PERFORMANCE (CONT'D)
4h. FINANCE COSTS
2023
$000
2022
$000
Interest component of lease payments (879) (990)
Facility fees - Bank guarantees (166) (39)
Finance costs($1,045)($1,029)
Accounting policies
Finance costs include interest expense on loans and borrowings, interest component of lease payments and facility
fees for the Bank’s guarantee of the Group’s commitments. All interest expense are recognised in the Consolidated
Statement of Profit or Loss using the effective interest method.
4i. INCOME TAX
2023
$000
2022
$000
Income tax expense in the Consolidated Statement of Profit or Loss
Current tax expense
Current year 175 66
Adjustment for prior years 132 99
307 165
Deferred tax expense/(benefit)
Origination and reversal of temporary differences (44) 695
Adjustment for prior years – 10
Unrecognised deferred tax liabilities – (505)
(44) 200
Income tax expense$263 $365
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4. FINANCIAL PERFORMANCE (CONT'D)
4i. INCOME TAX (CONT’D)
2023
$000
2022
$000
Reconciliation of effective tax rate
Profit after tax for the year10,736 2,240
Income tax expense 263 365
Profit excluding income tax$10,999$2,605
Income tax using the Company’s domestic tax rate of 28% (2022: 28%)3,080 729
Non-deductible expenses (13) 15
Effect of tax rate difference in foreign jurisdiction 10 17
Adjustment for prior years 132 109
Unrecognised deferred tax liabilities 723 (505)
Tax loss re-recognised(3,669)–
Income tax expense$263 $365
2023
$000
2022
$000
Imputation credits
Imputation credits available to shareholders of the Company$9,223 $9,223
Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
AssetsLiabilitiesNet
2023
$000
2022
$000
2023
$000
2022
$000
2023
$000
2022
$000
Property, plant and equipment 240 302 – – 240 302
Employee benefits 105 101 – – 105 101
Lease liabilities 1 21 – – 1 21
Provisions 230 108 – – 230 108
Net tax assets/(liabilities)$576 $532 $0 $0 $576 $532
Deferred tax assets at balance date relate to the Group’s Australian carpet sales operations where it is expected that there
will be taxable profits in future periods to allow for the utilisation of the deferred tax assets.
Deferred tax assets relating to the Group’s New Zealand operations were written off in FY20. Deferred tax assets not
recognised in respect of temporary differences and tax loss carry-forwards totalled $13,690,000 at balance date (2022:
$16,601,000), with the change relating to the re-recognition of unrecognised tax loss.
While the Board has confidence in the prospects of the business as discussed at note 3f (Going concern) to the consolidated
financial statements, it has taken the same approach with respect to the recognition of deferred tax assets as it has with the
reversal of the FY20 impairment of assets as discussed at note 6a (Property, plant and equipment) to the consolidated
financial statements and has concluded that the execution of the Group’s strategy to focus on wool carpets, while
progressing to plan, is still in its early stages and therefore does not warrant the re-recognition of deferred tax assets.
4. FINANCIAL PERFORMANCE (CONT'D)
4i. INCOME TAX (CONT’D)
Deferred tax assets have also not been recognised in respect of temporary differences and tax loss carry-forwards totalling
$24,150,000 (2022: $24,150,000) relating to an Australian subsidiary that currently does not have trading activity on the basis
that it is also not probable that future taxable profit will be available against which the Group can use the benefits therefrom,
taking the total deferred tax assets unrecognised to $37,840,000 (2022: $40,751,000).
Notwithstanding the derecognition of deferred tax assets for accounting purposes, these deferred tax assets remain
available to the Group for income tax purposes.
Movement in temporary differences during the year:
Balance
30 June 2022
$000
Recognised in
Consolidated Statement
of Profit or Loss
$000
Balance
30 June 2023
$000
Property, plant and equipment 302 (62) 240
Employee benefits 101 4 105
Lease liabilities 21 (20) 1
Provisions 108 122 230
To t al$532 $44 $576
Balance
30 June 2021
$000
Recognised in
Consolidated Statement
of Profit or Loss
$000
Balance
30 June 2022
$000
Property, plant and equipment 378 (76) 302
Employee benefits 156 (55) 101
Lease liabilities 80 (59) 21
Provisions 118 (10) 108
To t al$732 ($200)$532
Accounting policies
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to
the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in
other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes and is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date.
Estimates, judgements and assumptions
Deferred tax assets are recognised for unused tax losses and deductible temporary differences to the extent that it is
probable that future taxable profits will be available against which they can be used. Future taxable profits are
determined based on business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each
balance date and adjusted to the extent that it is no longer probable that sufficient taxable profits will be available in
the future to utilise the deferred tax asset.
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5. CAPITAL AND FUNDING
This section looks at the Group’s two key sources of funding, how it manages its funding and other related matters.
5a. CAPITAL MANAGEMENT
The Group’s capital includes share capital, reserves and retained earnings.
The Group’s capital management policy is aimed at maintaining a strong capital base so as to maintain investor, creditor and
market confidence in the Group and to enable it to continue to fund the ongoing needs of the business and to sustain its
future development.
The impact of the level of capital on shareholders’ return is also recognised, as is the return to shareholders in the form of
dividends paid and growth in share price, and the Group works to maintain a balance between the higher returns that might
be possible with greater gearing and the advantages and security afforded by a sound capital base.
The Group is not subject to any externally imposed capital requirements.
The allocation of capital between the Group’s specific business segment operations and activities is, to a large extent, driven
by the opportunities that exist within each of these segments and the optimisation of the return achieved on the capital
allocated. The process of allocating capital to specific business segment operations and activities is determined by the
Chief Executive Officer in consultation with the Board and is therefore undertaken independently of those responsible for
the operation.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board.
There have been no material changes in the Group’s management of capital during the year.
Consistent with best practice, the Group monitors capital on the basis of the leverage ratio. Leverage ratio is calculated as
net debt divided by total capital employed. Net debt is determined as total loans and borrowings (including both non-current
and current as shown in the Consolidated Statement of Financial Position) plus bank overdraft less cash and bank. Total
capital employed is calculated as equity as shown in the Consolidated Statement of Financial Position plus net debt financing
assets in operation.
5b. SHARE CAPITAL, DIVIDENDS AND RESERVES
Share capital
2023
$000
2022
$000
Shares on issue
Balance at 1 July 69,179,098 68,679,098
Issued during the year 890,328 500,000
balance as at 30 June 70,069,426 69,179,098
The Company does not have a limited amount of authorised capital.
The Company issued, in accordance with the terms of the Bremworth 2022 Long-Term Incentive Scheme, 890,328 fully
paid-up ordinary shares on 31 October 2022 to Bremworth Share Scheme Limited (Trustee), with these shares to be held by
the Trustee on behalf of the participating employees until the relevant vesting date (2022: 500,000 fully paid up ordinary
shares on 10 September 2021 to the Chief Executive Officer pursuant to the Bremworth Equity Plan), with more information to
be found in note 9b (Share-based payment) to the consolidated financial statements.
All issued shares are fully paid up and have no par value.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and one vote per share at
meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
5. CAPITAL AND FUNDING (CONT'D)
5b. SHARE CAPITAL, DIVIDENDS AND RESERVES (CONT’D)
Dividends
No dividends were paid during the year (2022: Nil).
The Board has not declared a final dividend in respect of the current year ended 30 June 2023 (2022: Nil).
Cash flow hedging reserve
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operational, financing and investing activities. In accordance with its treasury policy, the Group does not hold or issue
derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are
accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately.
Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement
to fair value is recognised immediately in profit or loss.
Where derivatives qualify for hedge accounting, changes in the fair value of the derivative hedging instrument designated as
a cash flow hedge are recognised in other comprehensive income to the extent that the hedge is effective. To the extent that
the hedge is ineffective, changes in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then
hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive
income remains there until the forecast transaction occurs at which time the gain or loss is transferred to profit or loss. When
the hedge item is a non-financial asset, the amount recognised in the cash flow hedging reserve is transferred to the carrying
amount of the asset when it is recognised. In other cases, the amount recognised in the cash flow hedging reserve is
transferred to profit or loss in the same year that the hedged item affects profit or loss.
The cash flow hedging reserve represents the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions that have not yet occurred.
Foreign currency translation reserve
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are
translated to New Zealand dollars at exchange rates at the reporting date. The income and expenses of foreign operations
are translated to New Zealand dollars at exchange rates at the dates of the transactions.
The foreign currency translation reserve comprises all exchange rate differences arising from the translation of the financial
statements of foreign operations and the translation of liabilities designated as hedges against the Company’s net investment
in a foreign operation.
There is no movement in the foreign currency translation reserve balance for the year ended 30 June 2023 (2022: Nil) as the
reserve relates to dormant foreign entities of the Group.
Share-based payment reserve
The share-based payment reserve is used to recognise the grant date assessed fair value of the performance rights issued to
executive employees under the Company’s long-term incentive scheme as further discussed at note 9b (Share-based
payment) to the consolidated financial statements.
The assessed fair value of the performance rights at grant date are recognised as an expense in profit or loss over the period
from grant date to condition date, adjusted to reflect only those rights where the service condition will be met, with
corresponding entries to the share-based payment reserve.
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5. CAPITAL AND FUNDING (CONT'D)
5c. BANKING FACILITIES AND LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group’s banking facilities. For more information about the
Group’s exposure to interest rate risks, see note 8 (Risks and financial instruments) to the consolidated financial statements.
The Group’s banking facilities (including Bank guarantees to third parties relating to lease and other commitments of the
Group) are provided by Bank of New Zealand and National Australia Bank Limited (together, “the Bank”).
The Group has no funding facilities at balance date (2022: Nil).
The Group fully repaid its Bank loans and borrowings, while also putting itself in a surplus cash position, during FY21 with the
cash coming from the Group’s sell-down of non-wool inventory as it exited the non-wool carpet market and from the sale and
leaseback of the Auckland property.
Following the full repayment of the Group’s Bank loans and borrowings in December 2020, the Bank and the Company
agreed to the withdrawal of all committed credit lines while continuing to retain transactional banking facilities, foreign
exchange transaction facilities and a guarantee facility.
The Group continues to maintain ongoing relationships with the Bank, with the view that committed credit lines could be
reinstated in the future to fund working capital requirements as the Group progresses through its transformation journey. As
a consequence, the Group has retained the security arrangements that were previously put in place to secure obligations for
the payment and repayment of moneys due, owing or payable by the Group to the Bank.
These security arrangements include the granting in favour of Bank of New Zealand, as security agent for the Bank, a
first-ranking composite general security deed and cross guarantee securing all obligations of the Group to the Bank by
certain companies in the Group. The property-owning companies in the Group have also continued to grant in favour of Bank
of New Zealand first-ranking mortgages in respect of land and buildings as security for all obligations of the Group to the
Bank, including obligations for the payment and repayment of moneys due, owing or payable by the Group to the Bank (see
note 6a (Property, plant and equipment) to the consolidated financial statements).
The Group had no other borrowings at balance date (2022: Nil).
6. ASSETS EMPLOYED
This section covers non-current assets, being property, plant and equipment and other assets that the Group employs in the
production and sale of carpet and rugs, and the acquisition and sale of wool fibre, to generate revenues and profits.
6a. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
$000
Plant and
equipment
$000
Other assets
$000
Under
construction
$000
To tal
$000
COST
Balance at 1 July 2022 10,970 65,663 12,784 669 90,086
Additions 8 41 84 1,823 1,956
Disposals (9) (3,992) (598) – (4,599)
Tr a n s f e r s – 697 298 (995) –
Cyclone Gabrielle related derecognition (4,409) (27,067) (337) (653) (32,466)
Balance at 30 June 2023$6,560 $35,342 $12,231 $844 $54,977
Balance at 1 July 2021 10,427 64,793 11,448 1,322 87,990
Additions 543 83 379 1,893 2,898
Disposals – (528) (274) – (802)
Tr a n s f e r s – 1,315 1,231 (2,546) –
Balance at 30 June 2022$10,970 $65,663 $12,784 $669 $90,086
DEPRECIATION AND IMPAIRMENT LOSSES
Balance at 1 July 2022 1,672 63,518 10,545 45 75,780
Depreciation for the year 129 279 437 – 845
Disposals – (3,948) (638) – (4,586)
Tr a n s f e r s – 45 – (45) –
Cyclone Gabrielle related derecognition (801) (26,210) (285) – (27,296)
Balance at 30 June 2023$1,000 $33,684 $10,059 $0 $44,743
Balance at 1 July 2021 1,544 63,848 10,459 45 75,896
Depreciation for the year 128 232 323 – 683
Disposals – (562) (237) – (799)
Balance at 30 June 2022$1,672 $63,518 $10,545 45 $75,780
CARRYING AMOUNTS
At 30 June 2023$5,560 $1,658 $2,172 844 $10,234
At 30 June 2022$9,298 $2,145 $2,239 $624 $14,306
At 1 July 2021$8,883 $945 $989 $1,277 $12,094
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6. ASSETS EMPLOYED (CONT'D)
6a. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Other assets
Other assets comprise fixtures and fittings (including leasehold improvements and display stands), computer equipment,
motor vehicles and office equipment.
Impairment
The Group’s market capitalisation at balance date was below the carrying value of net assets. Even though market
capitalisation excludes any control premium and may not reflect the value of 100% of the Group’s net assets, it is still
considered to be an indicator of impairment. As a consequence, the Group conducted a review of all of its assets, including
fixed assets and right-of-use assets, to assess whether there was any impairment at balance date.
Apart from Cyclone Gabrielle related impairments (refer to note 3 (Cyclone Gabrielle) to the consolidated financial
statements), the Group has concluded that no other impairment of assets was required at balance date (2022: Nil).
The Group has also concluded that no reversal of the previous impairment of assets should be made following an assessment
that the execution of the Group’s strategy to focus on wool carpets which, while progressing to plan, is in its early stages.
Security
At balance date, the Group’s property, plant and equipment were subject to various registered charges in favour of the
Group’s bankers as security for the Group’s banking facilities and arrangements (see note 5c (Banking facilities and loans and
borrowings) to the consolidated financial statements).
Accounting policies
Recognition and measurement
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a
working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on
which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised
as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Under construction
Items being constructed for future use are held as part of property, plant and equipment under construction. The
carrying amounts of these represent the costs incurred at balance date and will be transferred to the appropriate
classification of property, plant and equipment on completion. Initial cost includes the purchase consideration and
those costs directly attributable in bringing the asset to the location and condition necessary for its intended use.
These costs include site preparation costs, installation costs, borrowing costs, unrecovered operating costs incurred
during planned commissioning and the costs of obtaining consents.
Costs cease to be capitalised when all the activities necessary to bring the asset to its location and condition for its
intended use are complete.
6. ASSETS EMPLOYED (CONT'D)
6a. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Accounting policies (cont’d)
Depreciation
Depreciation is recognised in the Consolidated Statement of Profit or Loss over the estimated useful lives of each part
of an item of property, plant and equipment. Land is not depreciated.
The principal rates used for the current and comparative periods are as follows:
— buildings 1.0 - 2.5% straight line
— building fitouts 5.0 - 20.0% straight line
— plant and equipment 6.7 – 20.0% straight line
— other assets
– display stands 10.0% straight line
– computer equipment 20.0 – 25.0% straight line
– office equipment 10.0 – 20.0% straight line
– cars 20.0% diminishing value
– trucks and utilities 10.0% straight line
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
Impairment
The carrying amount of property, plant and equipment and other assets is tested for impairment whenever there are
indicators of impairment.
An impairment loss is recognised if the carrying amount of the cash-generating unit (being the smallest identifiable
asset group that generates cash flows that are largely independent from other assets and groups) to which the
property, plant and equipment and other assets is allocated exceeds its recoverable amount.
The recoverable amount of a cash-generating unit is the greater of its value in use and its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the cash-
generating unit.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of
any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of
units) on a pro rata basis.
Estimates, judgements and assumptions
NZ IAS 36 Impairment of Assets requires the Group to assess, at the end of each reporting period, whether there is any
indication that an asset may be impaired. If any such indication exists, the Group shall estimate the recoverable
amount of the asset. The recoverable amount of an asset is the higher of its fair value less costs of disposal and its
value in use. The Group is required to recognise an impairment loss to the extent to which the carrying amount of an
asset exceeds its recoverable amount.
For the purpose of assessing impairment, assets are grouped in the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash
generating unit or CGU), which as at 30 June 2023 were identified as being the Carpets and Wool Acquisition CGUs.
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6. ASSETS EMPLOYED (CONT'D)
6b. CAPITAL COMMITMENTS
Capital expenditure contracted for, but not recognised as liabilities, at balance date is set out below.
2023
$000
2022
$000
Property, plant and equipment$72 $208
The remediation works that may be required at the Napier yarn spinning plant are yet to be decided and no capital
commitments relating to remediation have therefore been entered into at balance date.
7. WORKING CAPITAL
This section reviews the level of working capital the Group generates and utilises in its normal day-to-day operating activities.
The Group’s working capital includes current assets (cash and bank, trade receivables, other receivables and prepayments
and inventories) and current liabilities (trade payables and accruals and employee entitlements).
7a. CASH AND BANK
Cash and bank at balance date comprise the following:
2023
$000
2022
$000
Cash and cash equivalents 31,819 10,874
Short term deposits 7, 5 0 0 4,000
$39,319 $14,874
Accounting policies
Cash is cash on hand and demand deposits and includes bank overdrafts used for cash management purposes where
formal arrangements for set off has been agreed with the Bank. Under these set off arrangements, the Group is able to
set off overdrawn balances up to a maximum of $1,000,000 against credit balances in selected accounts as long as
the net balance of all these accounts (including overdrawn accounts) as a whole remain in credit. At balance date,
there were no overdrawn amounts subject to set off (2022: $130,000). Cash equivalents are highly liquid investments
that are readily convertible to known amounts of cash (that is, there is insignificant risk of changes in value) with
maturity no more than three months from balance date.
7. WORKING CAPITAL (CONT'D)
7b. TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAYMENTS
2023
$000
2022
$000
Trade receivables due from external customers 9,306 11,145
Other receivables 8 39
Prepayments 643 1,017
$9,957 $12,201
The Group’s approach and policy with respect to, and quantitative disclosure of, credit risk are discussed at note 8 (Risks and
financial instruments) to the consolidated financial statements.
Impairment losses on trade receivables and other receivables are assessed collectively and on a portfolio basis based on the
number of days overdue using the expected loss model, taking into account the historical loss experienced in portfolios with
a similar number of days overdue as well as current conditions and forecast of future economic conditions.
Accounting policies
Trade receivables and other receivables are recognised initially at transaction price and subsequently at amortised
cost less impairment losses.
7c. INVENTORIES
Inventories, net of provision, are summarised in the table below:
2023
$000
2022
$000
Raw materials and consumables4,790 6,984
Work in progress1,039 1,024
Finished goods15,293 19,255
$21,122$ 2 7, 2 6 3
Carrying amount of inventories subject to retention of title clauses$760 $3,378
Inventory provision at 1 July 1,353 1,976
Change in provision during the year 55 (623)
Inventory provision at 30 June$1,408 $1,353
The approach to inventory provisioning in 2023 is substantially consistent with 2022.
Write downs or write offs of inventory during the year totalled $3,775,000 (2022: $935,000). The 2023 write offs include
$2,474,000 of inventory that was written off because of damage as a consequence of Cyclone Gabrielle, with the Group
determining that the inventory had been damaged or destroyed as a consequence of having been immersed in, or exposed
to, contaminated flood water or otherwise contaminated by virtue of their proximity to flood water and could not therefore
be used for further processing into finished carpet. Refer to note 3 (Cyclone Gabrielle) to the consolidated financial
statements) for further information.
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7. WORKING CAPITAL (CONT'D)
7c. INVENTORIES (CONT’D)
Accounting policies
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in
first-out principle, and includes expenditure incurred in acquiring the inventories and bringing them to their existing
location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs of completion and selling expenses.
Estimates, judgements and assumptions
Inventory provisions are recognised for oddments and obsolete, aged and discontinued inventories to arrive at their
likely net realisable value.
Estimates and judgement are applied in identifying and categorising - to the extent applicable - obsolete, aged and
discontinued inventory and determining the level of provisioning that is required – with a range of factors including
inventory rationalisation plans, consumer demand and trends, available distribution channels and historical sales and
margin data considered.
7d. TRADE PAYABLES AND ACCRUALS
2023
$000
2022
$000
Trade payables 10,111 10,766
Accruals 4,837 1,444
$14,948 $12,210
Accounting policies
Trade payables are unsecured - except to the extent to which they have retention of titles clauses within their supply
arrangements with the Group - and are usually paid within the agreed payment terms.
The carrying amounts of trade payables are considered to be the same as their fair values, due to their short-term
nature.
7e. EMPLOYEE ENTITLEMENTS
2023
$000
2022
$000
Leave obligations 4,562 4,351
Bonus entitlement– 732
Wages accruals 315 293
$4,877 $5,376
Leave obligations cover the Group’s liabilities in relation to employees’ accrued and entitled annual leave as well as their
unconditional entitlement to long service leave where they have completed the required period of service.
7. WORKING CAPITAL (CONT'D)
7e. EMPLOYEE ENTITLEMENTS (CONT’D)
Accounting policies
Employee entitlements relating to wages and salaries as well as annual leave and other employment-related payments
that are expected to be settled wholly within 12 months after the end of the annual reporting period in which the
employees render the related service are recognised in respect of employees’ services up to the end of the reporting
period as liabilities and are measured at the amounts expected to be paid when the liabilities are settled.
The entire amount of employee entitlements is presented as current as the Group does not have an unconditional right
to defer settlement for any of these obligations.
8. RISKS AND FINANCIAL INSTRUMENTS
This section identifies the risks faced by the Group, explains the impact of these risks on its financial position, performance
and cash flows, outlines the Group’s approach to financial risk management and highlights the financial instruments used to
manage risks.
MANAGEMENT COMMENTARY
Exposure to credit, liquidity, foreign currency and interest rate risks arises in the normal course of the Group’s businesses.
The Group enters into derivative financial instruments in the ordinary course of business to manage foreign currency and
interest rate risks in accordance with the treasury policy approved by the Board. A financial risk management committee,
composed of senior management and operating under the Board-approved treasury policy, ensures that procedures for
derivative instrument utilisation, control and valuation, risk analysis, counterparty credit approval, and ongoing monitoring
and reporting are adhered to.
The Group manages commodity price risks through negotiated supply contracts and forward physical contracts. However,
because these contracts are, generally, in respect of raw material and utility purchases for own use, they are not accounted
for as financial instruments.
Credit risk
Management has a credit policy in place under which each new customer is individually analysed for credit worthiness and
assigned a purchase limit before the standard payment and delivery terms and conditions are offered. Because of the Group’s
customer base, there is no need for the Group to rely on external ratings. In most cases, bankers’ references, trade credit
insurance approvals and/or credit references from other suppliers are considered adequate. Purchase limits are reviewed on
a regular basis.
In order to determine which customers are classified as having payment difficulties, the Group applies a mix of duration and
frequency of default. The Group does not generally require collateral in respect of trade and other receivables.
The Group’s exposure to credit risk is mainly influenced by its customer base. As such, it is concentrated to the default risk of
its industry. However, geographically, there is no credit risk concentration, with the Group’s customers spread throughout
New Zealand, Australia and other overseas markets. Credit risk exposure with respect to trade receivables is limited by
stringent credit controls, by the utilisation of irrevocable letters of credit and trade credit insurances wherever required, and
by the large number of customers within the Group’s customer base.
The amount and timing of collection of trade receivables and estimate of expected credit losses under NZ IFRS 9 Financial
Instruments have been considered and included in the consolidated financial statements.
The Group does not invest in securities, but accepts that surplus cash and cash equivalents may arise from time to time
during the course of its management of cash. In these instances, it requires these surplus cash and cash equivalents to be
deposited on call and only with counterparties approved by the Board as having the required credit ratings.
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8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
MANAGEMENT COMMENTARY (CONT’D)
Foreign currency forward exchange contracts and interest rate swaps have been entered into with counterparties approved
by the Board as having the required credit ratings. The Group’s exposure to credit risk from these financial instruments is
limited because it does not expect the non-performances of the obligations contained therein due to the high credit ratings
of the financial institutions concerned. The Group does not require any collateral or security to support these financial
instruments.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements
on an ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its obligations
arising from its financial liabilities and has credit lines in place to cover potential shortfalls.
The funds generated enabled the Group to not only repay all of the Group’s bank debt outstanding as at that date but also
put it into a significant cash surplus position at balance date to enable it to fund its transformation and provide it with
sufficient liquidity to settle its ongoing financial obligations for at least 12 months after the date of issuing these consolidated
financial statements.
As discussed at note 5c (Banking facilities and loans and borrowings) to the consolidated financial statements, the Group
continues to maintain, among other things, transactional banking facilities with its Bank and will look to raise for discussions
with the Bank the reinstatement of committed credit lines to cover working capital requirements as the Group progresses
through its transformation journey.
The Group’s contractual cash flows and liquidity risk profile are set out in detail on page 89.
Foreign currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in
which sales, purchases, receivables and payables are denominated. All entities in the Group have New Zealand dollars ($) as
their functional currency.
The Group enters into foreign currency contracts within policy parameters to manage the risk associated with forecast sales
and purchases. The Group’s policy allows management to hedge up to 12 months forecast sales and purchases without prior
approval of the Board having first been obtained.
The Group does not engage in speculative transactions or hold derivative financial instruments for trading purposes and
requires that exposures to foreign currency risks, and details of all outstanding derivative instruments, are reported to and
reviewed by the Board on a monthly basis.
The Group applies a hedge ratio of 1:1. The method used to assess hedge effectiveness is Critical Match Terms whereby the
hedging instrument and the hedged item are matched to the key terms. In the hedge relationship, the main cause of
ineffectiveness includes a change in the critical terms, for example, the timing of the transaction.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on
the currency, amount and timing of the respective cash flows. The Group assesses whether the derivative designated in each
hedging relationship is expected to be, and has been, effective in offsetting changes in cash flows of the hedged item using
the critical matched terms method.
8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
MANAGEMENT COMMENTARY (CONT’D)
Interest rate risk
Prior to the repayment of bank debt in December 2020, interest rate swaps were entered into to hedge a proportion of the
Group’s exposure to interest rate fluctuations by ensuring that there was an appropriate mix, after having regard to the
circumstances prevailing at the time, of fixed and floating rate exposure within the Group’s total loans and borrowings.
Interest rate risks are continually monitored having regard to the circumstances at any given time.
The Group’s policy allows management to hedge up to between 25% and 75% of the Group’s core loans and borrowings
without the prior approval of the Board having first been obtained.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on
the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group assesses
whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows
of the hedged item using the critical matched terms method.
QUANTITATIVE DISCLOSURES
Credit risk
The carrying amount of financial assets represents the Group’s maximum credit exposure.
The Group has not renegotiated the terms of any financial assets which would result in the carrying amount no longer being
past due or avoid a possible past due status.
The Group’s maximum exposure to credit risk for trade and other receivables by geographic regions is as follows:
2023
$000
2022
$000
New Zealand 5,556 5,797
Australia 3,173 4,677
Other regions 585 710
Trade and other receivables$9,314 $11,184
The status of trade and other receivables at the reporting date is as follows:
Current
0 – 30 days
past due
31 – 120 days
past due
More than 120
days past dueTotal
2023
Expected loss rate0%0%0%8%
Gross carrying amount – trade and other receivables 7, 2 6 0 1,480 368 225 9,333
Loss allowance – – – (19) (19)
2022
Expected loss rate0%0%0%7%
Gross carrying amount – trade and other receivables 9,885 930 291 84 11,190
Loss allowance – – – (6) (6)
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8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
QUANTITATIVE DISCLOSURES (CONT’D)
In summary, trade and other receivables are determined to be impaired as follows:
2023
$000
2022
$000
Trade and other receivables - gross 9,333 11,190
Individual impairment provisions (19) (6)
Trade and other receivables - net$9,314 $11,184
Individually impaired trade receivables relate to a small number of customers where the amounts involved are immaterial. In
the case of insolvency, the Group generally writes off the receivable in full unless there is clear evidence that a receipt,
whether directly or by way of a claim under the Group’s trade credit insurance policy, is highly probable.
The Group adopts the expected loss model in assessing its trade and other receivables for impairment. In doing so, it
determines impairment on a forward-looking basis, taking into account not only past events and current conditions, but also
forecast of future economic conditions. Bad debts are written off when they are considered to have become uncollectable.
The details of movements in the impairment provision are as follows:
2023
$000
2022
$000
Balance at 1 July (6) (13)
Impaired trade receivables written off 6 7
Changes in impairment provision (19)–
Balance at 30 June($19)($6)
Changes in the impairment provision are included in distribution expenses in the Consolidated Statement of Profit or Loss.
8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
QUANTITATIVE DISCLOSURES (CONT’D)
Liquidity risk
The following table sets out the contractual undiscounted cash flows for all material financial liabilities (including projected
interest costs).
Timing of contractual cash flows
Statement of
Consolidated
Financial
Position
$000
To tal
contractual
cash flows
$000
6 months
or less
$000
6-12
months
$000
1-2
years
$000
2-5
years
$000
Greater than
5 years
$000
2023
Trade payables 10,111 10,111 10,111 – – – –
Lease liabilities 18,038 23,181 1,074 1,017 1,964 5,763 13,363
Total non-derivative liabilities$28,149 $33,292 $11,185 $1,017 $1,964 $5,763 13,363
Forward exchange contracts
Inflow (45,575) (18,425) (15,219) (11,931) – –
Outflow 44,285 18,049 14,805 11,430 – –
(1,001) (1,290) (376) (414) (500) – –
Net derivative liabilities/(assets)($1,001)
Disclosed in Consolidated Statement of
Financial Position
Current assets (1,017)
Current liabilities 16
Net derivative liabilities/(assets)($1,001)
2022
Trade payables 10,766 10,766 10,766 – – – –
Lease liabilities 19,758 26,537 1,427 1,408 2,735 5,726 15,241
Total non-derivative liabilities$30,524 $ 3 7, 3 0 3 $12,193 $1,408 $2,735 $5,726 $15,241
Forward exchange contracts
Inflow (41,693) (13,534) (12,147) (16,012) – –
Outflow 42,240 13,914 12,251 16,075 – –
686 547 380 104 63 – –
Net derivative (assets)/liabilities$686
Disclosed in Consolidated Statement of
Financial Position
Current assets (8)
Current liabilities 694
Net derivative (assets)/liabilities$686
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8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
QUANTITATIVE DISCLOSURES (CONT’D)
Foreign currency risk
The Group’s exposure to foreign currency risk can be summarised as follows:
NZD equivalent of these foreign currencies:
AUD
$000
USD
$000
EUR
$000
Others
$000
2023
Trade receivables 3,173 76 – –
Trade payables (314) (123) (19) (32)
Net Consolidated Statement of Financial Position exposure before hedging activity 2,859 (47) (19) (32)
Estimated forecast sales for which hedging is in place 42,716 – – –
Net cash flow exposure before hedging activity 45,575 (47) (19) (32)
Forward exchange contracts
Notional amounts (45,575) – – –
Net unhedged exposure($0)($47)($19)($32)
2022
Trade receivables 4,715 300 – –
Trade payables (1,596) (1,001) (94) (13)
Net Consolidated Statement of Financial Position exposure before hedging activity 3,119 (701) (94) (13)
Estimated forecast sales for which hedging is in place 38,574 – – –
Net cash flow exposure before hedging activity 41,693 (701) (94) (13)
Forward exchange contracts
Notional amounts (41,693) – – –
Net unhedged exposure$0 ($701)($94)($13)
8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
QUANTITATIVE DISCLOSURES (CONT’D)
Interest rate risk – re-pricing analysis
At balance date, the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
To tal
$000
6 months or less
$000
6-12 months
$000
1-2 years
$000
2-5 years
$000
Greater than 5 years
$000
2023
Financial assets and liabilities
Cash and bank 39,319 39,319 – – – –
2022
Financial assets and liabilities
Cash and bank 14,874 14,874 – – – –
Sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on the Group’s
earnings. Over the longer-term, however, changes in foreign exchange and interest rates will have an impact on profit.
For foreign exchange contracts that continue to meet the hedge accounting criteria at the balance sheet date to hedge
foreign exchange exposures, it is estimated that a general change in the value of the New Zealand dollar against other foreign
currencies as set out below would have no impact on the Group’s profit or loss before income tax for the years ended
30 June 2023 and 2022. The impact on equity, net of tax, for these foreign exchange contracts, is disclosed in the
table below:
StrengthenWeakenStrengthenWeaken
P&LEquity, net of tax
$000$000$000$000
30 June 2023
NZD/AUD (+/- 5%) – – 1,437 (1,588)
30 June 2022
NZD/AUD (+/- 5%) – – 1,318 (1,457)
There were no foreign exchange contracts that do not meet the hedge accounting criteria at the balance sheet date.
The impact of a change in interest rates by one percentage point on the Group’s profit or loss and OCI is set out as follows:
Increase
1% point
Decrease
(1% point)
Increase
1% point
Decrease
(1% point)
P&LEquity, net of tax
$000$000$000$000
Interest rate impact - Net FY23$382 ($382) – –
Interest rate impact - Net FY22$142 ($142) – –
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8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
HEDGING
Forecast transactions
The Group classifies the forward exchange contracts taken out to hedge forecast transactions as cash flow hedges.
The following relates to items designated as hedging instruments:
Notional amount
Carrying amount
Line item in
Consolidated
Statement
of Financial
Position
Changes in
the value of
the hedging
instrument
recognised in
OCI during the
year
Hedge
ineffectiveness
recognised in
profit or loss
Balance
in CFHR
Average rate
of hedgingAssetsLiabilities
$000$000$000$000$000$000
2023
Foreign currency risk
Forward exchange
contracts – sales and
receivables
1, 2
AUD40,680 1,017 (16)Derivative
financial
instruments
- assets and
liabilities
(426)– 938 0.8926
1
62% of notional amount expiring within 12 months of balance date and 38% expiring between 12 and 24 months of balance date
2
Hedge ratio 1:1
Notional amount
Carrying amount
Line item in
Consolidated
Statement
of Financial
Position
Changes in
the value of
the hedging
instrument
recognised in
OCI during the
year
Hedge
ineffectiveness
recognised in
profit or loss
Balance
in CFHR
Average rate
of hedgingAssetsLiabilities
$000$000$000$000$000$000
2022
Foreign currency risk
Forward exchange
contracts – sales and
receivables
1, 2
AUD38,100 8 (694)Derivative
financial
instruments
- assets and
liabilities
52 – (576)0.9138
1
100% of notional amount expiring within 12 months of balance date
2
Hedge ratio 1:1
8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
CLASSIFICATION AND FAIR VALUES
The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy.
Hedging
instruments
$000
Amortised cost
$000
Total carrying
amount
$000
Fair value hierarchy
Level 2
$000
2023
Assets
Derivative financial instruments 1,017 – 1,017 1,017
Cash and bank – 39,319 39,319
Trade and other receivables – 9,314 9,314
Advances to employees – 170 170
Total assets$1,017 $48,803 $49,820
Liabilities
Lease liabilities – 16,742 16,742
Employee benefits – 666 666
Total non-current liabilities – 1 7, 4 0 8 1 7, 4 0 8
Derivative financial instruments 16 – 16 16
Trade payables and accruals – 14,948 14,948
Customer deposits – 192 192
Employee benefits and entitlements – 4,915 4,915
Lease liabilities – 1,296 1,296
Total current liabilities 16 21,351 21,367
Total liabilities$16 $38,759 $38,775
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8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
CLASSIFICATION AND FAIR VALUES (CONT’D)
Hedging
instruments
$000
Amortised cost
$000
Total carrying
amount
$000
Fair value hierarchy
Level 2
$000
2022
Assets
Derivative financial instruments 8 – 8 8
Cash and bank – 14,874 14,874
Trade and other receivables – 11,184 11,184
Advances to employees – 160 160
Total assets$8 $26,218 $26,226
Liabilities
Lease liabilities – 1 7, 8 2 0 1 7, 8 2 0
Employee benefits – 720 720
Total non-current liabilities – 18,540 18,540
Derivative financial instruments 694 – 694 694
Trade payables and accruals – 12,210 12,210
Customer deposits – 203 203
Employee benefits and entitlements – 5,429 5,429
Lease liabilities – 1,938 1,938
Total current liabilities 694 19,780 20,474
Total liabilities$694 $38,320 $39,014
There were no financial assets or liabilities with fair values classified as Level 1 or Level 3 in the fair value hierarchy.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of
ownership of the financial assets are transferred. Financial liabilities are derecognised if the Group’s obligations specified in
the contract expire or are discharged or cancelled.
Derivatives, being forward exchange contracts, have been measured at fair value using relevant valuation techniques which
include net present value and discounted cash flow models and comparison with similar instruments for which observable
market prices exist. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates,
credit spreads and other information used in estimating discount rates and foreign currency exchange rates.
Non-derivative financial instruments comprise trade and other receivables, cash and bank and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value, inclusive of transaction costs, and are subsequently
measured at amortised cost using the effective interest rate method less any impairment losses.
8. RISKS AND FINANCIAL INSTRUMENTS (CONT'D)
DETERMINATION OF FAIR VALUES
The fair value of an asset or a liability is measured on a recurring basis. When measuring the fair value of an asset or a liability,
the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value
hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change occurred.
MASTER NETTING OR SIMILAR AGREEMENTS
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting
agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all
transactions outstanding are aggregated into a single net amount that is payable by one party to the other. In certain
circumstances – for example, when a credit event such as a default occurs, all outstanding transactions under the agreement
are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.
The ISDA agreements do not meet the criteria for offsetting in the Consolidated Statement of Financial Position. This is
because the Group does not have any currently legally enforceable right to offset recognised amounts, because the right to
offset is enforceable only on the occurrences of future events such as a default on the bank loans or other credit events.
The following table sets out the carrying amounts of recognised derivatives that are subject to master netting agreements:
20232022
Derivative assets
$000
Derivative liabilities
$000
Derivative assets
$000
Derivative liabilities
$000
Gross amounts in the Consolidated Statement
of Financial Position 1,017 (16) 8 (694)
Amounts offset – – – –
Net amounts in the Consolidated Statement
of Financial Position 1,017 (16) 8 (694)
Related amounts that are not offset based on
ISDA (16) 16 (8) 8
Net amounts$1,001 $0 $0 ($686)
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9. OTHERS
This section includes the remaining information relating to the consolidated financial statements which is required to be
disclosed to comply with financial reporting standards.
9a. LEASES
This note provides information for leases where the Group is a lessee.
AMOUNTS RECOGNISED IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Right-of-use assets
2023
$000
2022
$000
Buildings 8,017 8,839
Plant and equipment 358 361
Motor vehicles 241 80
$8,616 $9,280
Lease liabilities
2023
$000
2022
$000
Non-current 16,742 1 7, 8 2 0
Current 1,296 1,938
$18,038 $19,758
Additions to right-of-use assets during the year were $331,000 (2022: $266,000).
There was no impairment of right-of-use assets during the year (2022: Nil).
There was also no reversal of prior year impairment of right-of-use assets during the year (2022: Nil).
AMOUNTS RECOGNISED IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Depreciation charge in respect of right-of-use assets
2023
$000
2022
$000
Buildings 821 823
Plant and equipment 134 110
Motor vehicles 39 21
$994 $954
Interest expense (included in finance costs)$879$990
Expense relating to short-term leases (included in cost of goods sold and administration
expenses$311$594
Expense relating to leases of low-value assets that are not disclosed above as short-term
leases (included in administrative expenses)$39$71
AMOUNTS RECOGNISED IN THE CONSOLIDATED STATEMENT OF CASH FLOWS
Total cash outflow for leases$2,930$3,031
9. OTHERS (CONT'D)
Accounting policies
The Group leases buildings, forklifts and motor vehicles, with contracts typically entered into for fixed periods ranging
from between three to four years for motor vehicles, five to six years for fork hoists and up to sixteen years for
buildings, but may have extension options as further discussed below.
Contracts may contain both lease and non-lease components. The Group has elected, for leases of motor vehicles, to
not separate lease and non-lease components and instead account for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
—fixed payments; and
—variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
—where possible, uses recent third-party financing secured by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was secured;
—uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by lessees
within the Group which does not have recent third-party financing; and
—makes adjustments, where necessary, specific to the lease taking into account country, currency and security.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market
data) which has a similar payment profile to the lease, then the group entities use that rate as a starting point to
determine the incremental borrowing rate.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
Right-of-use assets are measured at cost comprising the following:
—the amount of the initial measurement of lease liability; and
—make good costs.
Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Payments associated with short-term leases of plant and equipment and motor vehicles and all leases of low-value
assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease
term of 12 months or less without a purchase option. Low-value assets comprise IT equipment and small items of
office furniture.
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9. OTHERS (CONT'D)
EXTENSION OPTIONS
Extension options are generally incorporated into contracts for leases of buildings, with these options used to maximise
operational flexibility with respect to the management of the buildings used in the Group’s operations. Where extension
options are held, they are exercisable only by the Group and not by the respective lessor. Extension options are generally not
included in contracts for leases of plant and equipment and motor vehicles because of the Group’s ability to replace these
assets without significant cost, delay or disruption to the business.
Estimates, judgements and assumptions
In determining the lease term, management considers all facts and circumstances that create an economic incentive
to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain
to be extended, with the Group reasonably certain to extend:
—if there are significant costs to not extend; and
—if leasehold improvements are expected to have a significant remaining value.
Otherwise, the Group considers other factors including the lease durations already provided for in the contract, the
Group’s future strategic or business direction and the costs and disruptions to the business as a consequence of any
decision to not exercise an extension option.
As at balance date, potential future cash outflows of $19,803,000 (undiscounted) in respect of leases of buildings
have not been included in the determination of lease liability because it is not reasonably certain that these leases will
be extended (2022: $19,803,000).
The lease term is reassessed if an extension option is actually exercised. The assessment of reasonable certainty is
only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and
that is within the control of the lessee. The Group did not revise its assessment of reasonable certainty with respect to
extension options during the year (2022: Nil).
9b. SHARE-BASED PAYMENT
SHARE-BASED PAYMENT ARRANGEMENTS
The Company operates four share-based payment plans/schemes, with these plans/schemes designed to incentivise
selected employees by providing them with opportunities to be issued equity interests in the Company – in the process
aligning their interests with those of shareholders.
The Company has determined the performance rights, the shares and the options issued under these plans/schemes to be
equity-settled share-based payment arrangements pursuant to NZ IFRS 2 Share-based Payment, with the participants not
able to request payment in cash.
Bremworth 2020 Long-Term Incentive Scheme (2020 LTI Scheme)
The 2020 LTI Scheme provides for eligible employees to be issued performance rights which would entitle them to be
issued shares in the Company, subject to service and performance conditions being met, at the end of the stipulated
performance period.
No performance rights were issued under the 2020 LTI Scheme in the current year (2022: Nil).
The number of shares to be issued is dependent on the extent to which total shareholder return (TSR) exceeds 14% per
annum compounding over the performance period and the share price at condition date, except that the number of shares
issued to all participants will not, together with shares issued under NZX Listing Rule 4.6.1 over the previous 12 months,
exceed 3% of the total number of shares on issue at condition date.
9. OTHERS (CONT'D)
9b. SHARE-BASED PAYMENT (CONT’D)
The maximum number of shares that could have been issued in respect of all outstanding performance rights under the 2020
LTI Scheme at condition date (being 1 May 2023) was 1,071,394 (or 1.53% of the total number of shares on issue at balance
date of 70,069,426).
All performance rights issued in 2020 under the 2020 LTI Scheme lapsed during the year (2022: Nil).
Bremworth Equity Ownership Plan (Bremworth Equity Plan)
The Bremworth Equity Plan provides for eligible employees to be issued shares in the Company on terms determined by the
Board and as set out in the rules of the Bremworth Equity Plan and includes the provision of a full recourse loan by the
Company to those eligible employees to fund the amount payable for the shares issued to them.
No shares were issued under the Bremworth Equity Plan in the current year (2022: 500,000).
The total number of shares issued under the Bremworth Equity Plan as at balance date was 500,000 (2002: 500,000).
Bremworth Share Option Scheme (Bremworth Option Scheme)
The Bremworth Option Scheme provides for selected employees to be awarded options to acquire ordinary shares at a fixed
price, with the options becoming exercisable over time in accordance with a vesting schedule or on certain liquidity events as
defined in the rules of the Bremworth Option Scheme.
No options were issued under the Bremworth Option Scheme in the current period (2022: 1,000,000).
The total number of options issued under the Bremworth Option Scheme at balance date was 1,000,000 (2002: 1,000,000).
Bremworth 2022 Long-Term Incentive Scheme (2022 LTI Scheme)
The 2022 LTI Scheme was established by the Board in October 2022, with the Scheme providing for selected employees to
be awarded performance rights which would entitle them to be issued shares in the Company, subject to service and
performance conditions being met, at the end of the stipulated performance period.
In accordance with the terms of the Scheme, 890,328 fully paid-up ordinary shares were issued by the Company on 31
October 2022 to Bremworth Share Scheme Limited (Trustee), with these shares to be held by the Trustee on behalf of the
participating employees until the relevant vesting date.
Vesting of these shares is dependent on TSR performance over the three-year period from 1 July 2022 to 30 June 2025
exceeding the 14% per annum compounding threshold set by the Board, with TSR calculated by reference to the volume
weighted average share price on the NZX for the last 20 trading days prior to 30 June 2025 as compared to the volume
weighted average share price on the NZX for the last 20 trading days prior to 1 July 2022 of $0.4787.
Measurement of fair value of performance rights and options granted under share-based payment arrangements
The fair value of performance rights and options granted under the various schemes have been determined using a Monte
Carlo simulation, with a detailed description of how the model is used, and the key inputs, set out in Note 8b (Share-based
payment) of the annual financial statements for the year ended 30 June 2022.
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9. OTHERS (CONT'D)
9b. SHARE-BASED PAYMENT (CONT’D)
Maximum number of shares that could be issued under current share-based payment arrangements
The following table summarises the maximum number of shares that could be issued under the Bremworth Option Scheme
and the LTI Scheme as at balance date:
20232022
Balance at 1 July 2,071,394 1,071,394
Issued during the year 890,328 1,000,000
Lapsed during the year (1,071,394)–
Balance as at 30 June 1,890,328 2,071,394
% of total number of shares on issue 2.70 2.99
Impact of share-based payment arrangements on the financial statements
The assessed fair value of the performance rights and options at grant date are recognised as an expense in profit or loss over
the period from date on which the participant started rendering service or the grant date (whichever is the earlier), adjusted
to reflect only those rights and options where the service condition will be met, with corresponding entries to the share-
based payment reserve within equity.
The following were recognised in administration expenses in the Consolidated Statement of Profit or Loss for the year ended
30 June 2023:
—$80,800, being the proportion of the fair value of the performance rights issued under the 2020 LTI Scheme relating to
the year ended 30 June 2023 (2022 $97,000);
—$78,300, being the proportion of the fair value of the options granted under the Bremworth Option Scheme relating to
the year ended 30 June 2023 (2022: $73,300 being the proportion of the fair value of the options granted for the period
from commencement of employment through to balance date);
—$43,100, being the proportion of the fair value of the options granted under the 2022 LTI Scheme for the period from
grant date through to balance date (2022: Nil);
with a corresponding credit totalling $202,000 to the share-based payment reserve within equity (2022: $170,300).
There were no issue of shares under the Bremworth Equity Plan during the year (2022: The Company issued 500,000 fully
paid up ordinary shares in September 2021, with the difference between the $0.4161 issue price per share and the $0.8000
market price per share at issue date of $192,000 recognised in administration expenses in the Consolidated Statement of
Profit or Loss with a corresponding credit to the share-based payment reserve within equity).
INTEREST-FREE FULL-RECOURSE LOAN
The Company did not provide any interest-free, full-recourse, loans under the Bremworth Equity Plan during the period
(2022: $208,050).
The accounting for interest-free, full-recourse, loans under the Bremworth Equity Plan is disclosed in Note 8b (Share-based
payment) of the annual financial statements for the year ended 30 June 2022.
9. OTHERS (CONT'D)
9c. PROVISIONS
Workplace
accidents
$000
Make good
$000
Warranties
$000
Claims
$000
To tal
$000
Balance at 1 July 2022 150 89 1,110 350 1,699
Provided during the year – – 1,145 15 1,160
Utilised during the year – – (949) (175) (1,124)
Released to profit or loss during the year (100) – – – (100)
Balance at 30 June 2023$50 $89 $1,306 $190 $1,635
Non-current – 89 729 – 819
Current 50 – 577 190 816
Balance at 30 June 2023$50 $89 $1,306 $190 $1,635
Balance at 1 July 2021 150 89 1,095 – 1,334
Provided during the year – – 699 350 1,049
Utilised during the year – – (684) – (684)
Released to profit or loss during the year – – – – –
Balance at 30 June 2022$150 $89 $1,110 $350 $1,699
Non-current – 89 622 – 711
Current 150 – 488 350 988
Balance at 30 June 2022$150 $89 $1,110 $350 $1,699
WORKPLACE ACCIDENTS
Certain companies within the Group are parties to the ACC Partnership Programme during the year. Under this programme,
these companies assume the costs normally assumed by ACC (Accident Compensation Corporation of New Zealand) for
accidents in the workplace, with the provision for claims incurred but yet to be settled. It is expected that the outflow of
economic benefit will occur within 12 months of balance date.
MAKE GOOD
Provision for make good relates to the costs expected to be incurred in relation to make good obligations under leases
entered into, with the provision utilised as the costs relating thereto are incurred or adjusted to reflect current estimates of
costs to be incurred. The amount utilised during the year relates to the amount paid.
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9. OTHERS (CONT'D)
WARRANTIES
The provision for warranties relates mainly to carpet sold during the years ended 30 June 2023 and 2022. The provision is
based on estimates made from historical warranty data associated with similar products sold by the Group.
The Group has no history of material warranty claims in respect of non-carpet products sold. As a consequence, no provision
for warranties is required in respect of these other products.
The amount of warranty costs recognised as an expense directly to the Consolidated Statement of Profit or Loss during the
year totalled $1,208,000 (2022: $1,024,000).
Warranties relating to the sale of carpet are standard warranties. The Group does not offer extended warranties that would
be subject to a separate performance obligation.
CLAIMS
The provision for claims relates to the estimated cost to settle claims received during the year ended 30 June 2023 for
products supplied by a previously-owned business unit, with these claims yet to be resolved at balance date (2022: Nil).
Accounting policies
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability.
Estimates, judgements and assumptions
Provision for warranties requires judgement to be applied by considering a range of factors including the nature and
extent of historical claims data associated with similar products sold by the Group, the terms of the warranties built
into supply contracts, consumer protection laws in key markets and the corrective actions being taken to address
quality issues at production.
9d. EMPLOYEE BENEFITS
2023
$000
2022
$000
Liability for long service leave 704 773
Total employee benefits$704 $773
Non-current 666 720
Current 38 53
Balance at 30 June$704 $773
9. OTHERS (CONT'D)
9d. EMPLOYEE BENEFITS (CONT'D)
Accounting policies
Short-term employee benefits are expensed as the related services are provided.
Long-term employee benefits relate to long service leave that is not expected to be settled within 12 months after the
end of the annual reporting period in which the employees render the service that gives rise to the benefit. The
Group’s net obligation is the amount of future benefit employees have earned in return for their service in the current
and prior years. The complexity and length of the long service leave arrangement requires the use of actuarial
assumptions, such as salary increases and inflation, in order to calculate the present value of the obligation. The
Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods adjusted for the probability of the benefits vesting
and discounted at the appropriate rate to determine its present value.
Estimates, judgements and assumptions
The Group appointed Deloitte to assist with the Group’s assessment of its liability for long service leave as at 30 June
2023, with Deloitte using a Projected Unit Credit (PUC) method to value employees’ entitlements to long service leave.
This method involves a monthly projection of the long service leave entitlement for each employee to retirement age.
The expected entitlement payment at each point over the projection period is calculated using assumptions about
likely resignation, retirement, mortality and disability for each employee. Using employee data provided by the
Company, Deloitte were able to estimate the value of the long service leave liability as at balance date.
9e. CONTINGENT LIABILITIES
The Group has granted indemnities in favour of Bank of New Zealand and National Australia Bank Limited (together, “the
Bank”) at balance date in respect of Bank guarantees relating to leases and other commitments totalling $2,068,000 (2022:
$2,248,000).
Some subsidiaries in the Group are parties to a cross guarantee in favour of the Bank securing each other’s obligations, with
the property-owning companies in the Group also granting in favour of the Bank first-ranking mortgages in respect of land
and buildings as security for all obligations if the Group to the Bank.
The Group’s indebtedness under the cross guarantee at balance date amounted to nil (2022: Nil).
The Group received claims during the year ended 30 June 2022 for products supplied by a previously-owned business unit,
with the estimated cost to settle these claims provided for at balance date. It is not possible to estimate the financial impact
of any further claims given there is insufficient history to inform the extent or the timing of any future claims.
9f. RELATED PARTIES
TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT PERSONNEL
For the purposes of this note, key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or
otherwise) of that entity.
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9. OTHERS (CONT'D)
9f. RELATED PARTIES (CONT’D)
As shareholders
One of the Directors is a shareholder in the Company. The Chief Executive Officer is also a shareholder in the Company by
virtue of the fully paid up ordinary shares issued to and held by him pursuant to the Bremworth Equity Plan with more
information found in note 9b (Share-based payment) to the consolidated financial statements.
Their shares rank pair passu with all the other ordinary shares in the capital of the Company and do not therefore confer
additional rights to dividends paid or to attend or vote at any meetings of the shareholders of the Company.
As lenders or borrowers
There were no loans to, or from, the Directors and key management personnel during the year ended 30 June 2023. An
interest-free, full-recourse, loan of $208,050 was provided to the Chief Executive Officer during the 2022 financial year
pursuant to the terms of the Bremworth Equity Plan, with the proceeds of that loan applied towards the amount payable for
the 500,000 fully paid up ordinary shares issued to the Chief Executive Officer under the Bremworth Equity Plan. More
information can be found in note 9b (Share-based payment) to the consolidated financial statements.
Directors’ remuneration and benefits
The fees paid to the Directors for services in their capacity as directors totalled $387,000 during the year ended 30 June
2023 (2022: $372,000).
No other services were provided by the Directors during the year (2022: Nil).
The scale of fees payable to the Directors was last reviewed and approved by the Board in January 2019, with the current
scale of fees applying with effect from 1 January 2019 set out below:
Directors’ feesPer annumExplanatory notes
Non-executive Chairman of the Board$128,100 Inclusive of time spent on Board committees and as Chairman of
Nomination Committee
Non-executive directors
(including Deputy Chairman of the Board)
$61,000 Inclusive of time spent on Board committees
Chairman of the Audit Committee$10,000 In recognition of additional time and responsibilities as Chairman
of Audit Committee
Chairman of the Remuneration Committee$5,000 In recognition of additional time and responsibilities as Chairman
of Remuneration Committee
G C W Biel, a long-serving Director, was paid a lump sum retiring allowance pursuant to an arrangement that was contained
in the Company’s constitution on his retirement from the Board on 25 November 2021. The amount of this retiring allowance,
which was set in November 2007, is $96,000. The Company decided at that time that retiring allowances would no longer be
offered in respect of new Directors appointed to the Board.
The Group notes that the Directors are precluded by the NZX Listing Rules from voting at general meetings of shareholders
on certain matters prescribed by the New Zealand Exchange. These matters include, in the case of the Directors who are also
shareholders, shareholders’ approval of directors’ fees.
9. OTHERS (CONT'D)
9f. RELATED PARTIES (CONT’D)
Key management personnel’s (including the Chief Executive Officer’s) remuneration and benefits
In addition to salaries and performance-based payments, the Group also provides non-cash benefits to the Chief Executive
Officer of the Company and key management personnel of the Group.
These non-cash benefits may include the provision of motor vehicles, income protection insurances, life insurances and
medical insurances. In assessing the value of the non-cash benefit provided to the Chief Executive Officer and key
management personnel, the Group has used the value of the benefit that is used for calculating fringe benefit tax plus the
fringe benefit tax that is paid or payable.
The remuneration paid and payable, and the benefits provided, to the Chief Executive Officer and key management
personnel (but excluding the Directors’ remuneration and benefits) comprised:
2023
$000
2022
$000
Salaries, bonuses and leave entitlements 2,878 3,582
Share-based payments 202 362
Employee benefits 287 254
Termination payments– 10
$3,367 $4,208
The Group has not provided the Chief Executive Officer and key management personnel with any post-employment benefits.
Pursuant to the terms of employment of the Chief Executive Officer, the Company agreed to issue the Chief Executive
Officer with 500,000 ordinary shares under the terms of the Bremworth Equity Plan (as discussed in detail at note 9b
(Share-based payment) to the consolidated financial statements), with the issue of these shares to take place at the time of
the appointment of the Chief Executive Officer.
However, because of a delay in the issue of those shares to the Chief Executive Officer and the increase in the Bremworth
share price between the time of his appointment on 23 June 2021 and the time the shares were issued to him on 10
September 2021, the Chief Executive Officer was liable for the tax on the difference between the market price of Bremworth
shares on issue date and the price those shares were issued to him at.
In keeping with the agreement that was reached with the Chief Executive Officer, the Board approved a one-off payment to
the Chief Executive Officer in September 2021 of $127,317 to keep the Chief Executive Officer neutral in respect of the tax
that he had to pay as a consequence of the delay.
That amount of $127,317 is recognised in administration expenses in the Consolidated Statement of Profit or Loss.
Other transactions
The Group deals with many entities and organisations in the normal course of business. The Group is not aware of any of the
Directors, the Chief Executive Officer or key management personnel, or their related parties, holding positions in any of
these entities or organisations that result in them having control or significant influence over the financial or operating
policies of these entities or organisations.
The Group does not transact with the Directors, the Chief Executive Officer or key management personnel, and their related
parties, other than in their capacity as directors and employees, except that they may purchase carpets and rugs from the
Group for their own domestic use. These purchases are on the same terms and conditions as those applying to all employees
of the Group and are immaterial and personal in nature.
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9. OTHERS (CONT'D)
9g. GROUP ENTITIES
OPERATING SUBSIDIARIES OF THE GROUP
Principal activity
Country of
incorporation
Interest (%)
2023
Interest (%)
2022
Bremworth Carpets and Rugs Limited
(previously Bremworth Limited)Carpet sales and manufacturingNew Zealand100100
Bremworth Pty Limited
(previously Cavalier Bremworth Pty Limited)Carpet salesAustralia100100
Cavalier Bremworth (Australia) LimitedCarpet distributionNew Zealand100100
Bremworth Spinners Limited
(previously Cavalier Spinners Limited)Carpet yarn salesNew Zealand100100
Elco Direct LimitedWool acquisitionNew Zealand100100
9h. EVENTS AFTER BALANCE DATE
Voluntary redundancies for Napier-based employees
Subsequent to balance date – and after having confirmed that the Napier yarn spinning plant would be offline for a
considerable, but yet to be determined, period of time and having established that staff at the Napier plant were looking for
more certainty around their future – the Group presented several options to employees, while also putting in place various
programmes aimed at providing career and financial advice, as well as emotional support, for all affected staff.
These options included voluntary redundancy or expressions of interest for redeployment to the Whanganui plant.
110 waged and eight salaried employees opted for voluntary redundancy. While some employees did consider redeployment
to the Whanganui plant, these did not work out for personal reasons.
The cost of voluntary redundancy is $1.4 million.
18 waged and seven salaried employees either did not take up the offer, or were not eligible, for voluntary redundancy and
will continue to be employed by the Group.
Future insurances
The Group is in the process of renewing its insurances for 2023/24, with its insurance brokers:
—working with the panel of insurers on the scope of cover that would be available to the Group from any future flooding
events (with latest advice indicating a limit of $20.0 million cover for material damage and business interruption
combined) and a deductible of $1.0 million); and
—investigating excess layer coverage for floods to the extent required.
9i. CLIMATE-RELATED DISCLOSURES
The Group has considered the impact of climate-related risks on the business and on its future financial performance,
financial position and cash flows as part of the sustainability framework that has been adopted under the Group’s
transformation strategy to becoming an all-wool and natural materials organisation.
These risks are broadly as follows:
—the exposure to carbon pricing and its impact on the cost of natural gas, with the Group’s reliance on natural gas at its
carpet manufacturing plant in Auckland and its carpet yarn spinning plants in Napier (while noting that a decision
regarding its future is yet to be made following the impact of Cyclone Gabrielle as discussed in more detail in note 2f
(Impact of Cyclone Gabrielle) to the consolidated financial statements) and Whanganui;
9. OTHERS (CONT'D)
9i. CLIMATE-RELATED DISCLOSURES (CONT’D)
—the exposure to the effects of climate change through adverse climatic conditions (for example, flooding) and, in time,
rising sea levels, with both the Napier and Whanganui sites within close proximity of the coast and significant rivers;
—climate change adaptation and managed retreat legislation on the longer-term regulatory framework.
In relation to the exposure to carbon pricing, the Group has in place two decarbonisation projects that are aimed at directly
reducing our reliance on natural gas in our manufacturing processes while also ensuring that its electricity provider is, by
design, a fully renewable generator of electricity.
The first initiative is a $2,500,000 project at the Group’s Napier carpet yarn spinning plant to reduce its reliance on natural
gas process heat through process heat optimisation and transitioning to electric heat pump technology. This project is being
38% co-funded ($958,000) under various funding programmes, including the GIDI (Government Investment in Decarbonising
Industry) Fund administered by the Energy Efficiency and Conservation Authority (EECA). This initiative has been put on hold
as a consequence of the disruption to the Napier carpet yarn spinning plant following Cyclone Gabrielle. The initial stages of
this project, including the detailed feasibility study and monitoring and targeting programme were completed prior to the
plant going offline. The project will be reassessed once the site damage assessment is able to be completed and a decision
around the future of the plant able to be made.
The second decarbonisation initiative at the Group’s Whanganui carpet yarn spinning plant, which is also being co-funded by
EECA, involves the replacement of the gas-fired dryer used in felted yarn production with an alternative radio frequency (RF)
dryer. This project had an expected cost of $440,000, with the EECA co-funding agreed at 40% ($176,000). This project was
successfully delivered in FY23, with the new RF dryer currently in use on the felting line. The project is now in the final
measuring and monitoring stage before being closed off with EECA.
The organisation has a thorough understanding of scope 1 and 2 emissions for the business as well as material scope 3
emissions. It has undertaken third party verification of its carbon inventory including a 2018 baseline and the financial years
ended June 2022 and 2023. This is a significant step towards setting science based targets for organisational
emission reduction.
In relation to the exposure to adverse climatic conditions, the Group has in place insurances to protect it against losses
arising from such events while also having established natural hazards exposure levels for the Napier site. See also note 2f
(Impact of Cyclone Gabrielle) to the consolidated financial statements for further discussions relating to the risk mitigation
and business continuity plans following Cyclone Gabrielle and the resilience of the new hybrid supply chain model.
Work is also underway to understand natural hazards at the other manufacturing sites as well as available
mitigation strategies.
Based on the Group’s assessment, there is nothing to indicate that climate-related risks have had any impact on the carrying
value of its non-financial assets as at 30 June 2023 other than those already recognised following Cyclone Gabrielle as
discussed at note 3 (Cyclone Gabrielle) to the consolidated financial statements, with the Board closely monitoring
developments in this area.
The matter of future insurances against flooding is discused at note 9h (Events after balance date) to the consolidated
financial statements.
9j. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO STANDARDS
There are no new, or pending, standards or amendments to existing standards which have, or are expected to have, a
material impact on the Group.
108109
GOVERNANCE
& OTHER
DISCLOSURES
FOR THE YEAR ENDED 30 JUNE 2023
110111
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT
GOVERNANCE & OTHER DISCLOSURES
CONTENTS
111 Corporate Governance Statement
126 Disclosures under the Companies Act 1993
130 Disclosures under the NZX Listing Rules
131 Disclosures under the Financial Markets Conduct Act 2013
132 Shareholder Information
133 Trend Statement
137 Disclosure of Non-GAAP Financial Information
140 Corporate Directory
Bremworth’s Board of Directors (“the Board”) is responsible for and committed to maintaining the highest standards of
corporate behaviour and responsibility and has adopted governance principles reflecting this.
The Board seeks to follow best practice recommendations for listed companies to the extent that is appropriate for the nature
and complexity of Bremworth’s operations.
The Board considers that the Company’s corporate governance framework materially complies with the NZX Corporate
Governance Code.
Bremworth’s Code of Ethics and other key policies and charters relating to corporate governance can be found on the
Company’s website www.bremworth.co.nz/corporate-governance
A summary of Bremworth’s governance actions and performance against each of the principles in the NZX Corporate
Governance Code and its compliance with the recommendations relating to each of these principles are set out on
pages 111 to 125.
PRINCIPLE 1 CODE OF ETHICAL BEHAVIOUR
Bremworth expects its Directors, officers, employees and contractors to act legally, ethically and with integrity in a manner
consistent with the Company’s Code of Ethics.
The Code of Ethics sets out the standard of conduct expected of Directors and employees and the Company’s approach to
stakeholders. It is supported by other policies and procedures including those that address continuous disclosures,
confidentiality of information, conflicts of interest, reporting of concerns and share trading.
Whistleblowing
Bremworth has established internal procedures to monitor compliance with, and measures for dealing with breaches of, the
Code of Ethics. Bremworth encourages employees to speak out if they have concerns. The avenues for doing so are detailed
in the Company’s Code of Ethics which supports the reporting and investigation of breaches of the Code of Ethics and
serious wrongdoing in or by Bremworth.
Conflicts of interest
The Board is conscious of its obligation to ensure that Directors and employees avoid conflicts of interest between their duty
to Bremworth and their own interests. Guidance is provided in the Company’s Constitution, Board charter and the Code
of Ethics.
The Board reviews at every meeting the interests register in which relevant transactions and matters involving the Directors
are recorded. It is expected that Directors are sensitive to actual and perceived conflicts of interest that may occur and have
constant consideration of this issue.
Bremworth does not donate to political parties.
The Directors’ interest disclosures can be found on pages 126 and 127.
YEAR ENDED 30 JUNE 2023
112113
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
PRINCIPLE 1 CODE OF ETHICAL BEHAVIOUR (CONTINUED)
Share trading policy
Bremworth has a Share Trading Policy which, along with the Financial Markets Conduct Act 2013, imposes limitations and
requirements on Directors and employees in dealing in the Company’s shares. Directors and employees who are likely to
have knowledge of, or access to, material information can only buy or sell Bremworth shares during permitted periods and
with the written consent of the Board. They must not use their position of confidential knowledge of the Company or its
business to engage in share trading for personal benefit or to provide benefit to any third party.
Trading in Bremworth shares while in possession of material information is strictly prohibited.
A regular review of the share register is conducted to ensure compliance with the Share Trading Policy.
PRINCIPLE 2 BOARD COMPOSITION AND PERFORMANCE
The Board’s role is to add long-term shareholder value, while acting in a manner that the Directors believe is in the best
interests of the Company and having regard to the interests of its employees and other stakeholders. The role and
responsibilities of the Board are detailed in the Board Charter, which is reviewed at least every two years and is available on
the Company’s website.
Delegation
The Board delegates the day-to-day management of the Company to the Chief Executive Officer (“the CEO”). The CEO in
turn delegates authority to senior management. These authorisation levels are set out in the Delegated Authority Policy.
Board composition
The Board comprises Directors who, collectively, have the balance of independence, skills, knowledge, experience and
perspectives to meet and discharge the Board’s responsibilities. Core competences and skills include health and safety,
sustainability and environment, operations and asset optimisation, financial acumen, sales, marketing and distribution, legal,
regulatory and risk, listed company governance, operating model transformation and well-developed ability for critical and
strategic analysis.
A balance of longer-serving Directors with experience in the Company and newer Directors who bring fresh perspective and
insight is desirable. The Board encourages strong individual thinking and rigorous discussion and analysis when
making decisions.
Grant Biel, a long-standing Director and co-founder of the carpet business, who retired from the Board in November 2021,
was appointed the Company’s first-ever Director Emeritus by the Board on his retirement and continues to make himself
available to the Board and to the Company.
As at 30 June 2023, the Board comprised five Directors – George Adams (Chairman), Paul Izzard, John Rae, Katherine Turner
and Dianne Williams.
The profile of the Directors can be found on pages 126 and 127.
PRINCIPLE 2 BOARD COMPOSITION AND PERFORMANCE (CONTINUED)
Directors’ skill matrix as at 30 June 2023
Director independence
The Board charter provides that the Chairman shall be an independent Director and that the majority of the Board shall be
independent Directors.
Director independence is determined in accordance with the NZX Listing Rules and with regard to the factors described in
the NZX Corporate Governance Code.
George Adams, Paul Izzard, John Rae, Katherine Turner and Dianne Williams have been determined to be independent
Directors of the Company as at 30 June 2023.
0%10%20%30%40%50%60%70%80%90%100%
Corporate governance
Environmental
International business
Interior design
Stakeholder engagement
People, and health and safety
Industry, operations, asset optimisation and IT
Sales and marketing
Financial acumen
Strategy development and execution
Extensive experience and strong working knowledge
Limited knowledge or experience and not considered an area of expertise
Solid relevant experience and working knowledge
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
114115
PRINCIPLE 2 BOARD COMPOSITION AND PERFORMANCE (CONTINUED)
Director appointment
Membership of the Board, and appointment and retirement of Directors by rotation, are determined in accordance with the
Company’s Constitution and the NZX Listing Rules.
While the appointment process is the responsibility of the whole Board, the Nomination Committee is tasked with identifying
and recommending candidates to fill director vacancies for the approval of the Board. The Committee considers such factors
as it deems appropriate, including capability, skill sets, experience, qualifications, judgement and the ability to work with
other Directors. Reference checks are carried out on all candidates and key information about candidates is provided to
shareholders to assist their decision as to whether to elect or re-elect a candidate.
Shareholders may also nominate candidates for election to the Board, with the Board asking for Director nominations prior to
the Annual Meeting of shareholders each year, in accordance with the Constitution of the Company and the NZX
Listing Rules.
New Directors are provided with an induction pack containing governance information, key policies and all relevant
information necessary to prepare them for their role. New Directors also receive presentations by the CEO and senior
management on the key issues facing Bremworth, its operations and the environment and markets in which it operates.
The Company has written agreements with all Directors establishing the terms of their appointment.
The Board is satisfied that each Director has the necessary time available to devote to the position, broadens the Board’s
expertise and has a personality that is compatible with the other Directors.
Director training, access to information and advice
Directors are encouraged to undertake appropriate training and education to ensure they remain current on how to best
perform their duties. In addition, the CEO and senior management provide regular updates on relevant industry and
company issues.
Directors have unrestricted access to Company information and briefings from the CEO and senior management. Site visits
provide the Directors with a better understanding of the business, including its major health and safety risks and how these
are managed.
Directors and Board committees have the right, in connection with their duties and responsibilities, to seek independent
professional advice at the Company’s expense, with the approval of the Chairman.
Evaluation of Director, Board and committee performance
The Board, and the Board’s committees, critically evaluate annually their own performance and the performance of the
individual Directors. The Board, and its committees, also review annually their own processes and procedures to ensure that
they are not unduly complex and are designed to assist the Board and its committees in effectively fulfilling their roles.
PRINCIPLE 2 BOARD COMPOSITION AND PERFORMANCE (CONTINUED)
Attendance at meetings
Board meetings are usually held monthly (except for January), with other meetings held as and when required to deal with
any specific matters that may arise between scheduled meetings.
The table below sets out Director attendances at Board, Board committee and shareholder meetings for the year ended 30
June 2023.
BoardSpecial BoardAudit Committee
Nomination
Committee
Remuneration
CommitteeShareholder
To t al h e l d1194141
Attendances:
George Adams11/119/94/41/14/41/1
Paul Izzard11/118/94/41/14/41/1
John Rae11/116/94/41/14/41/1
Katherine Turner11/119/94/41/14/41/1
Dianne Williams11/118/94/41/13/41/1
Diversity and Inclusion Policy
Bremworth is committed to creating an inclusive and high performing culture to drive business engagement and success.
Bremworth aims to reflect the communities we operate in. We embrace and capitalise on innovation which starts with
listening and learning. Fundamental elements of our philosophy include:
—seeing the diversity of its work force as a key asset and contributor to improved business performance and
decision making;
—not discriminating based on age, race, gender, sexual orientation, ethnicity or any other non-performance related
differentiating factor;
—treating its people fairly and respectfully; and
—promoting diversity of thought and action, and unbiasedly rewards capability and achievement.
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
116117
PRINCIPLE 2 BOARD COMPOSITION AND PERFORMANCE (CONTINUED)
Diversity and Inclusion Policy (continued)
The Company has a Diversity and Inclusion Policy, a copy of which is published on the Company’s website. The key areas of
focus are:
—sharing and promotion of this Policy with employees;
—a capability-based approach to recruitment of people from a diverse as possible range of candidates;
—facilitation of opportunities for diversity of thought and action from all levels of the organisation; and
—promotion of diversity and inclusion through company culture programmes and celebrations that bring employees with
differing perspectives together.
Through our transformation initiatives, Bremworth has been growing its internal pipeline of talent and focusing on bringing
women into supervisory and technical roles. This includes a number of women in engineering and science and/or research-
based roles.
A number of initiatives are in place to support diversity and the Board believes the principles in the Policy were adhered to in
the 2023 financial year.
Bremworth has a diverse workforce, representing more than 15 different ethnicities. English is a second language for a
number of these staff, so Bremworth has initiatives in place to support them in the workplace, including the opportunity to
participate in numeracy and literacy programmes.
The gender composition of the Company’s Directors, officers and employees is summarised below.
30 June 202330 June 2022
MaleFemaleTo talMaleFemaleTotal
Directors3/60%2 /4 0%5/100%3/60%2 /4 0%5/100%
Officers
1
8/80%2/20%10/100%8/80%2/20%10/100%
Direct reports of officers45/61%29/39% 74/100%39/59%2 7/41%66/100%
Rest of organisation202/62%122/38%324/100%211/60%14 3/4 0%354/100%
To t al258/62%155/38%413/100%261/60%174/4 0%435/100%
1 An officer is a person, however designated, who is concerned or takes part in the management of the Company’s business but
excludes a person who does not report directly to the Board or report directly to a person who reports directly to the Board.
30 June 202330 June 2022
Age compositionNumber%Number%
Under 30 years of age65167718
30 to 50 years of age1603916538
Over 50 years of age1884519344
To t al413100435100
In 2022, two targeted development programmes were launched as part of implementing our people capability and
development pillar. These are an anthropology-based culture and leadership development programme Te Ara Rangatira, and
the technical development programme Poutama. Te Ara Rangatira was extended to include developing leaders within the
business in 2023, with 30 employees across the wider business invited to participate in the inaugural first wave and 33 in the
subsequent second wave. A further cornerstone of our capability development focusses on providing opportunities to be
part of cross-functional project teams.
PRINCIPLE 3 BOARD COMMITTEES
The Board utilises committees to enhance Board effectiveness in key areas, while retaining Board responsibility. Committees
established by the Board make recommendations to the Board on those matters falling within the scope of the relevant
committee charter. They do not act or make decisions unless specifically mandated by their charter or by prior Board
authority to do so.
The Board has three standing committees – the Audit Committee, Remuneration Committee and Nomination Committee.
Each of these has a Board approved charter (which can be found on the Company’s website), setting out the role,
responsibilities, delegations and membership requirements. The Board regularly reviews the charters of each Board
committee, their performance against those charters and membership of each committee.
The Board believes that committee charters comply with the recommendations in the NZX Corporate Governance Code.
The Board appoints the Chairman of each committee. Members are chosen for the skills, experience and other qualities that
they bring to the relevant committees.
Bremworth’s Board committees as at 30 June 2023 were:
CommitteeRoleMembers
Audit CommitteeAssists the Board in ensuring adequacy of
financial management, internal reporting
and monitoring processes, integrity of
financial reporting, statutory audit quality
and independence, internal audit and
internal controls.
Katherine Turner (Chairman)
George Adams
Paul Izzard
John Rae
Dianne Williams
Remuneration CommitteeAssists the Board in establishing and
maintaining a strong governance framework
in respect of remuneration packages for
Directors and for the CEO and senior
management.
Dianne Williams (Chairman)
George Adams
Paul Izzard
John Rae
Katherine Turner
Nomination CommitteeAssists the Board in ensuring appropriate
Board performance and composition and in
appointing directors.
George Adams (Chairman)
John Rae
Dianne Williams
Independent Takeover Committee
As the Company has a small Board, it is not envisaged that the Board would appoint an Independent Takeover Committee,
upon a takeover offer being received, unless there are Directors who are interested in the takeover offer or certain Directors
are unavailable to assist on the matter.
The Board has a Takeover Response Policy setting out the objectives of the Company’s takeover response strategy and
establishing the appropriate protocols to be followed in the event of a takeover offer for the Company, covering, among
other things:
—structure of the takeover response team and roles of key groups in the team;
—the Takeovers Code process and timetable;
—steps to be taken on receipt of a takeover notice;
—communication between the Company and the bidder; and
—potential takeover response strategies.
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
118119
PRINCIPLE 4 REPORTING AND DISCLOSURE
Continuous disclosure
The Board is responsible for the timeliness, accuracy and completeness of all Company disclosures, including its results,
financial reporting and all matters relating to its business activities that could have a material effect on the price of
Bremworth shares if they were generally available to the market.
Bremworth is committed to promoting investor confidence by providing timely, accurate, complete and equal access to
material information, both positive and negative, in accordance with the NZX Listing Rules. To achieve and maintain high
standards of disclosures, Bremworth has adopted a Continuous Disclosure Policy, which is designed to ensure compliance
with NZX continuous disclosure guidance note.
This Policy, a copy of which is published on the Company’s website, sets guidelines and outlines responsibilities to safeguard
the Company against inadvertent breaches of continuous disclosure obligations.
Financial reporting
The Directors are committed not only to preparing consolidated financial statements that comply with New Zealand
Generally Accepted Accounting Practice and fairly present the Group’s financial position as at balance date and its financial
performance and cash flows for the year ended on that date, but also to balanced, clear and objective financial reporting.
The Audit Committee assists the Board in providing oversight of the quality and integrity of external financial reporting
including the accuracy and completeness of the financial statements. In preparing the consolidated financial statements, the
Company also ensures that its financial reporting is accompanied by sufficient explanation and is expressed in a clear and
objective manner to assist investors make informed investment decisions.
All matters required to be addressed, and for which the Committee has responsibility, were addressed during the
reporting period.
The Directors believe that proper accounting records which enable, with reasonable accuracy, the determination of the
financial position of the Group and facilitate the compliance of the consolidated financial statements with the Financial
Markets Conduct Act 2013 have been kept.
The Chief Financial Officer holds the role of Company Secretary. In all secretarial matters, the Board ensures that the
Company Secretary’s reports are objective and that the Company Secretary has unfettered access to the Chairman and the
Audit Committee, without reference to the CEO.
Non-financial reporting
In addition to shareholders, Bremworth has a wide range of stakeholders and maintains open channels of communication for
all audiences, including brokers, the investing community and the New Zealand Shareholders’ Association, as well as its
employees, suppliers and customers.
Bremworth’s vision is to become a global leader in designing and creating desirable, sustainable, safe and high performing
natural interiors with its purpose to find a more sustainable way. This includes enhancing consumer wellbeing by producing
innovative products in an economically inclusive, socially just and environmentally restorative way, while also being
conscious to how its activities affect employees, contractors, communities and the environment in which it operates.
Insight into Bremworth’s assessment of its business, strategy and performance as well as the progress of its transformational
shift towards becoming a design-led wool-focused company can be found on pages 2 to 35.
PRINCIPLE 4 REPORTING AND DISCLOSURE (CONTINUED)
Non-financial reporting (continued)
A detailed framework addressing the Company’s environmental and social responsibilities was developed over the 2020
financial year, with a new Sustainability division established. The development of this division and addition of key technical
specialists continued over the 2022 financial year. The business follows the integrated People, Planet and Prosperity
framework with key pillars detailed below.
The Board is pleased to be able to share with shareholders the progress for the 2023 financial year as the Company continues
to build its programme of formal measuring and monitoring of these key areas within the context of our business.
In April 2021, the Company embarked on the $4.9 million research-based sustainability programme in partnership with the
Ministry for Primary Industries (MPI) via the Sustainable Food, Fibre and Futures Fund - with MPI contributing $1.9 million to
the programme.
This three-year programme is grounded on the sustainability principles of People, Planet and Prosperity and focuses on three
main work streams:
—developing a more sustainable and compostable carpet;
—increasing process efficiency through Industry 4.0 principles and technology; and
—leveraging technology to further develop technical capability and future pipeline of talent.
The Company also committed to two decarbonisation projects during the 2022 financial year, with the first a $2.5 million
project at the Napier carpet yarn spinning plant to reduce its reliance on natural gas process heat through process heat
optimisation and transitioning to electric high temperature heat pump technology. This project is being 38% co-funded under
various funding programmes, including the GIDI (Government Investment in Decarbonising Industry) Fund administered by
the Energy Efficiency and Conservation Authority (EECA). This initiative has been put on hold as a consequence of the
disruption to the Napier carpet yarn spinning plant following Cyclone Gabrielle. The initial stages of this project, including
the detailed feasibility study and monitoring and targeting programme were completed prior to the plant going offline. The
project will be reassessed once the site damage assessment is able to be completed and a decision around the future of the
plant able to be made.
The second decarbonisation initiative at the Whanganui carpet yarn spinning plant, which is also being co-funded by EECA
via the Technology Demonstration Fund, involves the replacement of the gas-fired dryer used in felted yarn production with
an alternative radio frequency (RF) dryer. This project was successfully delivered in the 2023 financial year, with the new RF
dryer currently in use on the felting line. The project is now in the final measuring and monitoring stage before being closed
off with EECA.
PLANET
PEOPLE
PROSPERITY
C
O
N
S
U
M
E
R
W
E
L
L
B
E
I
N
G
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
120121
PRINCIPLE 5 REMUNERATION
The Board has a clear policy for setting remuneration of Directors and senior management at levels that are fair and
reasonable to attract, reward and retain the skills, knowledge and experience required to enhance the Company’s
performance.
The Remuneration Committee assists the Board in discharging its responsibilities in relation to setting and reviewing of
Directors’ remuneration and senior management objective setting, performance review and remuneration.
External advice is sought as required to ensure remuneration is benchmarked to the market for Directors and senior
management positions.
Directors’ remuneration
Shareholders resolved at the October 2018 Annual Meeting that the total remuneration to be paid to the non-executive
Directors be fixed at a sum not exceeding $450,000 per annum, such sum to be divided amongst them in such proportions
and in such manner as they may determine.
The remuneration payable to the Directors was last reviewed and approved by the Board on 18 January 2019, with the current
scale of Directors’ remuneration applying from 1 January 2019 set out on page 104 (note 9f (Related parties) to the
consolidated financial statements).
The total remuneration paid to the Directors for the year ended 30 June 2023 was $387,100, with the details paid to each
Director set out on page 128.
Remuneration strategy
Bremworth’s remuneration strategy is:
—aligned with its recruitment and leadership development philosophies and its approaches to performance management
to ensure the attraction, development and retention of talented individuals; and
—underpinned by a pay-for-performance philosophy and utilises annual performance incentives to provide opportunities
for individuals to achieve market competitive remuneration levels and in the case of superior performance, total
remuneration above market.
CEO and executive remuneration
The CEO and executive remuneration packages are made up of three key components – being fixed remuneration
(in the form of fixed base salary plus fringe benefits), variable short-term performance incentives and long-term
performance incentives.
Fixed remuneration
Bremworth’s philosophy with respect to fixed remuneration is to ensure that all employees are fairly and equitably
remunerated relative to similar businesses and positions within the New Zealand market.
Fixed remuneration levels are reviewed annually for market competitiveness and alignment with strategic priorities and
performance outcomes and to ensure:
—our employees are strongly motivated to deliver shareholder value;
—the Company is able to attract and retain high-performing employees who will ensure the achievement of business
objectives; and
—the provision of benefits and allowances that contribute to the health and well-being of our employees.
PRINCIPLE 5 REMUNERATION (CONTINUED)
Short-term performance incentives
Short-term performance incentives are at-risk payments that are designed to motivate and reward performance during a
financial year, with targets set by the Board having regard to strategic priorities and desired performance outcomes from
time to time.
Short-term performance incentives include both Company targets and individual targets, with minimum thresholds in place
for both of these. Eligibility to short-term performance incentives is conditional on these thresholds being achieved in the
first instance, with pay outs dependent on the extent to which actual performance exceeds the targets determined by
the Board.
The Company targets for the 2022 financial year and the 2023 financial year include both revenue and profitability, with each
of these given equal weightings.
Individual targets (and the clear measures underlying these targets to determine achievement or non-achievement in any one
year) are set having regard to the roles and responsibilities held by the CEO and each member of the senior leadership team
and as agreed with the Board (in the case of the CEO) and with the CEO (in the case of the senior leadership team) at the
start of the relevant financial year.
Short-term incentives entitlements for on-target performance and over-performance are set out in the table below:
Entitlement for on-target performanceMaximum entitlement for over- performance
CEO40% of base salary60% of base salary
Member of the senior leadership team20% of base salary30% of base salary
Long-term performance incentives
Bremworth’s long-term performance incentives are designed to align the interests of the CEO and members of the
Bremworth senior leadership team with those of shareholders, and to incentivise them to enhance long-term shareholder
value, through share-based payment arrangements.
These long-term incentives include:
—the issue of performance rights in December 2020 to selected senior executive employees (including the CEO at the
time) under the 2020 Long-Term Incentive Scheme;
—the issue of shares and options in September 2021 and April 2022 respectively to the incoming CEO pursuant to the
Bremworth Equity Ownership Plan and the Bremworth Share Option Scheme respectively; and
—the issue of performance rights in October 2022 to selected senior executive employees under the 2022 Long-Term
Incentive Scheme.
More information on these long-term incentives can be found on pages 98 to 100 (note 9b (Share-based payment) to the
consolidated financial statements).
The 2022 Long-Term Incentive Scheme provides for the allocation of shares, annually, to such selected members of the
senior leadership team (“the Participants”) as the Board shall determine as part of the Participants’ total remuneration
package, with:
—the market value of the shares to be allocated to the Participants equal to 20% of base salary of the Participants; and
—these shares to vest at the end of the three-year performance period subject to the fulfilment of the performance
conditions set down by the Board.
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
122123
PRINCIPLE 5 REMUNERATION (CONTINUED)
CEO’s remuneration
The remuneration of the CEO is set independently, and without any involvement of the CEO, on an arm’s length commercial
basis as recommended by the Remuneration Committee and approved by the Board.
The CEO’s remuneration comprises a fixed base salary, a variable short-term incentive that is payable annually subject to
attainment of targets, awards under the Bremworth Equity Ownership Plan (Bremworth Equity Plan) and the Bremworth
Share Option Scheme (Bremworth Option Scheme) and other benefits (including fringe benefits and holiday
pay entitlements).
The targets under the short-term incentive plan include growth in revenue and/or profitability as well as the delivery of
strategy, health and safety, leadership and culture outcomes as agreed with the CEO at the commencement of the period,
with 40% of fixed base salary payable for on-target performance under the plan.
The Company issued two tranches of options under the Bremworth Option Scheme to the CEO during the year ended 30
June 2022, with 480,000 options on 10 September 2021 and a further 520,000 options on 8 April 2022.
The Company also issued 500,000 fully paid up ordinary shares pursuant to the terms of the Bremworth Equity Plan to the
CEO on 10 September 2021, with the consideration for the shares of $208,050 funded by way of an interest-free, full-
recourse, loan provided by the Company to the CEO.
The remuneration of the CEO can be analysed as follows:
Fixed base salary
received
2
Short term incentive
receivable
2,3
Share-based
payments
4
Other
benefits received
or receivable
5
Total remuneration
Year ended 30 June 2023$566,500Nil$78,326$31,338$676,164
Year ended 30 June 2022
1
$530,020$130,332265,232$201,748$ 1 ,1 2 7, 3 3 2
1 Commencement date of employment 26 July 2021
2 Inclusive of 3.0% Employer KiwiSaver
3 40% of fixed base salary payable for on-target performance, with nothing payable for 2023 (2022: 24.59%)
4 Fair value of options issued under the Bremworth Option Scheme (2022: Fair value of options issued under the Bremworth Option Scheme
of $73,282 and difference between issue price and market price of shares issued under the Bremworth Equity Plan of $191,950)
5 Inclusive of fringe benefits and holiday pay entitlement, with 2022 also inclusive of a one-off payment of $127,317 as further discussed below
Pursuant to the terms of employment of the CEO, the Company agreed to issue the CEO with 500,000 ordinary shares under
the terms of the Bremworth Equity Plan (as discussed in detail at note 9b (Share-based payment) to the consolidated financial
statements), with the issue of these shares to take place at the time of the appointment of the CEO on 23 June 2021.
However, because of a delay in the issue of those shares to the CEO and the increase in the Bremworth share price between
the time of his appointment on 23 June 2021 and the time the shares were issued to him on 10 September 2021, the CEO was
liable for the tax on the difference between the market price of Bremworth shares on issue date and the price those shares
were issued to him at.
In keeping with the agreement that was reached with the CEO, the Board approved a one-off payment to the CEO in
September 2021 of $127,317 to keep the CEO neutral in respect of the tax that he had to pay as a consequence of the delay.
PRINCIPLE 6 RISK MANAGEMENT
Bremworth is committed to the effective management of risk, which is fundamental to the Company’s growth and
profitability targets and outcomes.
The Company maintains a risk management framework for the identification, assessment, monitoring and management of
risk and has in place, among other policies, a Health and Safety Policy, a Treasury Management Policy and a Delegated
Authority Policy to manage specific risks.
The Board is responsible for overseeing and approving the Company’s risk management framework and risk tolerance levels
as well as ensuring that an effective assurance system is in place.
The material financial risks facing the business and the management of these risks are discussed at pages 85 to 95 (note 8
(Risks and financial instruments) to the consolidated financial statements) with management reporting on these financial risks
to the Board at every scheduled Board meeting.
Health and safety
The Board has a Health and Safety Policy, a copy of which is published on the Company’s website.
The Policy provides the context, direction and framework within which all other health and safety materials are developed.
It is the foundation for managing health and safety risks whilst applying a learning and people-centric lens to our operations
and risk management. We take a proactive approach to risk management. Our critical risk framework and controls are key
enablers and challenge us to design out risk where possible. To enable our people to thrive, we designed a holistic approach
to their safety and wellbeing so that we support our team to be their best selves. Our critical risks are shown below.
Areas with limited access and
potential to contain a toxic or
oxygen-deficient atmosphere.
Fixed plant used in making carpet
and yarn.
Tools or equipment falling
from height.
Powered mobile equipment
including moving vehicles, forklifts
and elevated work platforms.
Person falling from one level
to another.
Loads suspended above ground
such as hoists and slings.
Electricity, fuel, pressure
and hydraulics.
Substances known or suspected to
cause harm to health.
Environmental conditions
and natural disasters.
The Board adopts a risk-based approach to health and safety risk management, focusing on strengthening critical risk
management, while continuing to develop organisational capability and accountability for making health and safety an
integrated part of our business. Health and safety is a standing agenda item at Board meetings and Directors complete site
visits which include a health and safety focus.
While the Board does not have a Health and Safety Committee, there is a Health and Safety forum which the Board
Chairman, as the Board’s representative, and the CEO are part of, along with employees across the whole business. The
quarterly Health and Safety forum involves employees from different backgrounds, experience, roles and levels of the
organisation. The diversity of thought, demographics and perspectives brought by this group is a valuable contribution and
helps shape the overall Health and Safety programme while also demonstrating our Diversity and Inclusion Policy in action.
There is an ongoing emphasis to learn from high-risk potential events and to proactively manage risks to prevent
reoccurrence. A key initiative to support this is the implementation of a “Learning Teams” approach to investigations with a
focus on meaningful conversations.
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
124125
PRINCIPLE 6 RISK MANAGEMENT (CONTINUED)
Health and safety (continued)
The Health and Safety programme concentrates on clearly identifying critical risks and strengthening control effectiveness for
these key critical risks. Key areas of the programme include improving machinery safety, implementation of electric forklifts and
reducing hazardous substance risk. Initiatives are executed within a cycle of continuous improvement and with the input and
support of our site Health and Safety committees and the Health and Safety forum. Underpinning this is a focus to protect and
grow our talent, maintain strong safety leadership and create psychologically safe workplaces for our people to thrive.
PRINCIPLE 7 AUDITORS
External audit
The Board is responsible for ensuring the quality and independence of the statutory audit process and has adopted an
External Audit Independence Policy, a copy of which is published on the Company’s website.
The Audit Committee is charged with considering, and making recommendations to the Board regarding, any issues relating
to the independence, performance, appointment or termination of the external auditor.
The Committee reviews the quality and cost of the statutory audit undertaken by the Company’s external auditor and
provides a formal channel of communication between the Board, senior management and external auditor. The Committee
also assesses the external auditor’s independence on an annual basis.
The external auditor is prohibited from undertaking any work that impairs, or is seen to impair, independence and objectivity
with respect to the statutory audit.
During the 2023 financial year, the auditor conducted a strategic options analysis detailing those options that may be
available to the Group and the Board in relation to Cyclone Gabrielle insurance recoveries. This report did not contain any
recommendations or decisions, and the services were cleared by the Chair of the Audit Committee as having no impact on
auditor independence.
Bremworth’s external auditor attends the Annual Meeting and is available to answer questions relating to the conduct of the
statutory audit and the preparation and content of the auditor’s report.
The fees paid to the external auditor for audit work for the years ended 30 June 2022 and 2023 are set out on page 71 (note
4e (Administration expenses) to the consolidated financial statements).
All non-audit work carried out by the external auditor are required to be approved by the Board pursuant to the External
Audit Independence Policy as having no effect on the independence or objectivity of the external auditor in relation to its
statutory audit work.
In determining whether a non-audit related service impinges on the independence or objectivity of the external auditor,
consideration is given to, among other things, the people doing the work, the nature of the work done and whether it involves
any calculations of balances in the financial statements or for financial reporting.
Internal audit
Bremworth operates an independent internal audit programme that provides objective assurance of the effectiveness of the
internal control framework.
Internal audit assists the Board and the Audit Committee to accomplish their objectives by bringing a disciplined approach to
evaluating and improving the effectiveness of risk management, internal controls and governance processes.
Internal audit adopts a risk-based assurance approach that is approved by the Board and has the autonomy to report
significant issues directly to the Audit Committee or, if considered necessary, the Chairman of the Board.
PRINCIPLE 8 SHAREHOLDER RIGHTS AND RELATIONS
Bremworth respects the rights of shareholders, is focused on fostering constructive relationships with shareholders that
encourage them to engage with the Company and values dialogue with institutional and private investors.
Bremworth is also committed to giving all shareholders comprehensive, timely and equal access to information about its
activities and keeps shareholders informed through:
—continuous disclosures to NZX;
—half year and annual reports, including accompanying shareholder presentations;
—the Annual Meeting and any other meetings of shareholders called to obtain approval for Board actions as appropriate;
and
—the Company’s website www.bremworth.co.nz/investor-centre where investors and interested stakeholders can
access financial and operational information and key corporate governance information about the Company.
The Board encourages shareholders to opt to receive communications from the Company electronically, thereby ensuring
that they get access to communications efficiently and in a timely manner.
Shareholder meetings
The Board encourages full participation of shareholders at shareholder meetings to ensure a high level of Director and
management accountability and shareholder identification with Bremworth’s strategies and goals.
Shareholders are able to ask questions of and express their views to the Board, management and the external auditor at
Annual Meetings of shareholders. The Board adopts the one share, one vote principle, conducting voting at shareholder
meetings by poll. Shareholders are also able to cast postal votes or vote by proxy ahead of meetings without having to
physically attend those meetings.
Bremworth aims to make its notice of Annual Meeting and any other meetings of shareholders available on its website at
least 20 working days prior to the meeting.
VARIANCES TO NZX CORPORATE GOVERNANCE CODE
NZX Corporate Governance Code
Principle
NZX Corporate Governance Code
RecommendationKey differenceBoard’s position
2. Board Composition
and Performance
2.5: The Board should set
measurable objectives for
achieving diversity
The Board has not set
measurable objectives under the
Diversity and Inclusion Policy for
achieving diversity
The Board considers diversity
outcomes can be achieved
without measurable objectives,
with the increase in the number
of women in middle management
over the 2022 financial year
demonstrating this approach
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE GOVERNANCE STATEMENT (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
126127
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE COMPANIES ACT 1993 (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE COMPANIES ACT 1993
DIRECTORS
The Directors of the Company as at 30 June 2023 were:
George Adams
Paul Izzard
John Rae
Katherine Turner
Dianne Williams
INTERESTS REGISTER
The Companies Act 1993 requires the Company to maintain an interests register in which are recorded the particulars of
certain transactions and matters (eg. use of company information, remuneration, indemnity and insurance and share dealing)
involving the Directors. It further requires particulars of the entries in the interests register for the year to be disclosed in the
annual report.
Use of company information
No notices were received from the Directors regarding the use of company information that would not otherwise have been
available to them, except in their capacity as directors, during the year.
Remuneration
The scale of remuneration payable to the Directors with effect from 1 January 2019 was approved by the Board of Directors
on 18 January 2019 and is set out on page 104 (note 9f (Related parties) to the consolidated financial statements).
Indemnity and insurance
The Board of Directors authorised, during the year, the renewal of the Company’s directors’ and officers’ liability insurance
policies covering the risks arising out of the acts or omissions of the Directors and employees of the Company and its
subsidiaries to the extent normally covered by such policies.
The total cost of these policies for the year ended 30 August 2023 was $131,634 which was considered fair to the Company.
Share dealing
No notices were received from the Directors in relation to share dealing during the year.
Directors’ relevant interests in shares in the Company as at 30 June 2023 were:
Dianne Williams
Beneficial5,000
Other-
INTERESTS REGISTER (CONTINUED)
Specific disclosures of interest
No specific disclosures of interest were received during the year.
General disclosures of interest
General disclosures of interest that were current as at 30 June 2023 were:
George AdamsApollo Foods Limited
Mars Manufacturing Limited
The Apple Press Limited
Apollo Brands Limited
Arborgen Holdings Limited
Insightful Mobility Limited
Mix Global Holdings Limited
Essano Limited
Mix IP Limited
Netlogix Group Holdings Limited
New Zealand Frost Fans Limited
Business Leaders Health and Safety Forum
Worksafe Partners Advisory Group
Executive Chairman and shareholder
Director
Director
Director
Director and shareholder
Chairman and shareholder
Chairman
Director
Director
Chairman
Chairman and shareholder
Chairman
Member
Paul IzzardPaul Izzard Design Limited
Windswept Trust
Director and shareholder
Tr u s te e
John RaeAbodo Limited
Corson Grain Limited
Crown Regional Holdings Limited
F J Hawkes & Co. Limited
Gobble Limited
Jaffa Holdings Limited
Kingyo Foods Limited
Midlands Fund Management Limited
Thos Corson Holdings Limited
Wet Gisborne Limited
Te Rahui Herenga Waka Whakatane GP
New Zealand Government Waste Minimisation Fund
JR Family Trust
Chairman
Director
Chairman
Director and shareholder
Director and shareholder as nominee
Director and shareholder
Director and shareholder as nominee
Director
Chairman
Chairman
Chairman
Panel Member
Tr u s te e
Katherine TurnerCompac International Limited
Compac Sorting Equipment Limited
Compac Technologies Limited
LENZ Equipment Limited
Taste Technologies Limited
Taste Technologies Installations Limited
Tastemark Limited
Cresta Properties Limited
Garden to Table
Director
Director
Director
Director
Director
Director
Director
Director and shareholder
Tr u s te e
Dianne WilliamsCoromandel Pure Honey 2020 Limited
Darden Limited
Darden Holdings Limited
Stepchange Consulting Limited
West Auckland Trust Services Limited
Director and shareholder
Director and shareholder
Director and shareholder
Director and shareholder
Director
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
128129
DIRECTORS' REMUNERATION
The total remuneration and value of other benefits earned by each of the Directors of the Company for the year ended
30 June 2023 were:
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Other
benefitsTotal
George Adams$128,100----$128,100
Paul Izzard$61,000----$61,000
John Rae$61,000----$61,000
Katherine Turner$61,000$10,000---$71,000
Dianne Williams$61,000-$5,000--$66,000
To t al$372,100$10,000$5,000--$387,100
EMPLOYEES' REMUNERATION
The number of employees of the Company and its subsidiaries whose remuneration and value of other benefits for the year
ended 30 June 2023 fall into the various brackets specified by the Companies Act 1993 is as follows:
Remuneration and value
of other benefits ($)
Number of employees
– 2023
Number of employees
– 2022
100,000 – 109,999
110,000 – 119,999
120,000 – 129,999
130,000 – 139,999
140,000 – 149,999
150,000 – 159,999
160,000 – 169,999
170,000 – 179,999
190,000 – 199,999
220,000 – 229,999
230,000 – 239,999
240,000 – 249,999
260,000 – 269,999
270,000 – 279,999
280,000 – 289,999
290,000 – 299,999
310,000 – 319,999
320,000 – 329,999
410,000 – 419,999
430,000 – 439,999
490,000 – 499,999
500,000 – 509,999
670,000 – 679,999
1,120,000 – 1,129,999
17
7
10
6
8
1
2
3
3
2
2
1
-
1
1
-
1
-
1
1
-
-
1
-
19
9
7
8
5
3
3
2
3
-
3
2
2
-
-
1
1
1
-
-
1
1
-
1
Total number of employees6872
DONATIONS
Refer to page 71 (note 4e (Administration expenses) to the consolidated financial statements).
AUDIT FEES
Refer to page 71 (note 4e (Administration expenses) to the consolidated financial statements).
SUBSIDIARY COMPANY DIRECTORS
The following persons respectively held office as directors of subsidiary companies as at the end of the year:
Subsidiaries Directors
Bremworth Carpets and Rugs Limited (formerly Bremworth Limited)
Bremworth Spinners Limited (formerly Cavalier Spinners Limited)
Elco Direct Limited
Cavalier Bremworth Limited (formerly Elcotex Limited)
Cavalier Bremworth (Australia) Limited
Cavalier Bremworth (North America) Limited
Cavalier Spinners Limited (formerly Heron Distributors Limited)
Knightsbridge Carpets Limited
EnCasa Carpets Limited
Norman Ellison Carpets Limited
Bremworth Share Scheme Limited (formerly NEC Limited)
Carpet Distributors Limited
Horizon Yarns Limited
Cavalier Commercial Limited
Radford Yarn Technologies Limited
E Lichtenstein and Company Limited
Elcopac Limited
Elcowool Limited
e-Wool Limited
Microbial Technologies Limited
Northern Prospecting Limited
Greg Smith
Bremworth Pty. Limited (formerly Cavalier Bremworth Pty. Limited)
Cavalier Holdings (Australia) Pty. Limited
Cavalier Bremworth Pty. Limited (formerly Kimberley Carpets Pty. Limited)
Norman Ellison Carpets Pty. Limited
Cavalier Commercial Pty. Limited
Greg Smith
Michael Ingham
No subsidiary company directors received, in their capacity as such, directors’ fees or other benefits from the subsidiaries.
There were no entries in the interests register in respect of any of the subsidiary company directors. The remuneration and
value of other benefits of these directors is disclosed under employees’ remuneration on page 128.
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE COMPANIES ACT 1993 (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE COMPANIES ACT 1993 (CONT'D)
YEAR ENDED 30 JUNE 2023YEAR ENDED 30 JUNE 2023
130131
ANALYSIS OF SHAREHOLDINGS
Number of shareholders%Shares held%
Size of shareholdings
Up to 1991033.598,4270.01
200 – 4991214.2240,9600.06
500 – 9992157. 4 9149,9440.21
1,000 – 1,9994951 7. 2 5678,9250.97
2,000 – 4,99971624.952,192,3403.13
5,000 – 9,99946516.203,061,3434.37
10,000 – 49,99961121.2911,974,0551 7.0 9
50,000 – 99,999732.544,834,9756.90
Over 99,999712.474 7,1 2 8 , 4 5 76 7. 2 6
2,870100.0070,069,426100.00
Location of shareholders
New Zealand2,75796.0669,059,55998.56
Overseas
Australia702.44504,3760.72
Others431.50505,4910.72
2,870100.0070,069,426100.00
Shares held%
Top 20 shareholders
Rural Aviation (1963) Limited8 , 5 6 7,6 4 212.23
Brian Edward Woolf3,800,0005.42
Custodial Services Limited (Account 4)3,565,8745.09
FNZ Custodians Limited3,124,8394.46
Brigit Kirsten Timpson2,402,6803.43
Matthew Charles Timpson and Rennie Cox Trustees No 8 Limited (Matthew Timpson Family Account)2,402,6803.43
Suzanne Rachel Timpson and Fairlie Ann Milne (Suzanne Timpson No 1 Family Account)2,402,6793.43
New Zealand Depository Nominee Limited (Account 1 Cash Account)2,003,0772.86
Gregory John Muir1,225,0001.75
Fergus David Elliott Brown1,000,0001.43
F B Trustee Limited (Fergus Brown Family Account)1,000,0001.43
BNP Paribas Nominees (NZ) Limited944,5281.35
Ian David McIlraith940,0001.34
Bremworth Share Scheme Limited890,3281.27
Masfen Securities Limited787,5001.12
Maarten Arnold Janssen74 7, 5 1 61.07
Percy Keith McFadzean715,0001.02
Forsyth Barr Custodians Limited (1-Custody)685,1510.98
Graham James Munro and Zita Lillian Munro588,0000.84
Graeme Paul Spry540,4390.77
38,332,93354.72
SUBSTANTIAL HOLDINGS
The substantial product holders in the Company in respect of whom notices have been received were:
Remuneration and value
of other benefits ($)
Number of ordinary shares (being the only
class of listed voting securities) where
relevant interest exists
G C W Biel8 , 4 6 7,6 4 2
Rural Aviation (1963) Limited8 , 4 6 7,6 4 2
Brian Edward Woolf3,600,000
The total number of ordinary shares, being the only class of listed voting securities in the Company, as at 30 June 2023
was 70,069,426.
The definition of the term “relevant interest” in the Financial Markets Conduct Act 2013 is extremely wide, and more than one
relevant interest can exist in the same voting securities.
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE NZX LISTING RULES
AS AT 31 AUGUST 2023
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURES UNDER THE FINANCIAL MARKETS CONDUCT ACT 2013
AS AT 30 JUNE 2023
132133
GOVERNANCE AND OTHER DISCLOSURES
SHAREHOLDER INFORMATION
ANNUAL MEETING OF SHAREHOLDERS
Time and date 2 p.m., Monday, 27 November 2023
Venue Home Ideas Auckland Conference Room
165 The Strand
Parnell
Auckland
CORPORATE CALENDAR
27 November 2023 2023 Annual Meeting of shareholders
31 December 2023 End of 2024 half year
Mid-February 2024 Announcement of 2024 half year result and release of 2024 half year report
30 June 2024 End of 2024 financial year
Late August 2024 Announcement of 2024 annual result
September 2024 Period for director nominations
End of September 2024 Release of 2024 Annual Report
GOVERNANCE AND OTHER DISCLOSURES
TREND STATEMENT
2023
$000
2022
$000
2021
$000
2020
$000
2019
$000
2018
$000
2017
$000
Financial Performance
Operating revenue$89,689 $95,485 $111,577 $117,981 $135,234 $148,120 $156,120
EBITDA (normalised) (200) 4,918 3,385 2,300 7,0 76 9,998 2,572
Depreciation - owned assets (845) (683) (379) (2,418) (3,479) (3,561) (3,251)
Depreciation - right-of-use assets (994) (954) (534) (1,779) – – –
Depreciation - recycled through inventory – 194 (764) (265) – – –
EBIT (normalised)(2,039) 3,475 1,708 (2,162) 3,597 6,437 (679)
Finance costs (1,045) (1,029) (1,124) (2,535) (1,790) (2,798) (2,936)
Finance income 502 159 68 – – – –
Share of profit after tax of equity-accounted
investees (normalised) – – – – 644 1,419 797
Profit/(Loss) before income tax (normalised)(2,582) 2,605 652 (4,697) 2,451 5,058 (2,818)
Income tax (expense)/benefit (263) (870) (276) 1,240 (572) (1,084) 962
Profit/(Loss) after tax (normalised)(2,845) 1,735 376 (3,457) 1,879 3,974 (1,856)
Abnormal gains/(losses) (after tax)13,581 505 1,353 (17,994) (18,659) 107 (268)
Profit/(Loss) after tax attributable to
shareholders of the Company (GAAP)10,736 2,240 1,729 (21,451) (16,780) 4,081 (2,124)
Ordinary dividends paid – – – – – – –
Profit/(Loss) after dividends$10,736$2,240 $1,729 ($21,451)($16,780)$4,081 ($2,124)
Financial Position
Shareholders’ equity50,223 3 7,7 7 1 35,592 33,637 54,989 72,222 6 7, 8 9 0
Loans and borrowings - term portion – – – – 20,500 27,500 35,000
Term liabilities 18,227 19,251 20,978 3,511 1,618 2,029 3,728
Loans and borrowings – current portion – – – 15,800 – 4,000 6,500
Current liabilities 22,686 21,880 21,453 1 7,0 3 3 22,227 2 7, 2 5 3 25,739
Shareholders’ equity and total liabilities$91,136$78,902 $78,023 $69,981 $99,334 $133,004 $138,857
Property, plant and equipment 10,234 14,306 12,094 22,725 30,164 35,142 3 7,1 2 3
Right-of-use assets 8,616 9,280 9,968 430 – – –
Investment in equity-accounted investees – – – – – 24,544 23,490
Goodwill and other intangibles – – – – – 2,362 2,362
Deferred tax asset 576 532 732 600 5,456 4,971 5,532
Non-current assets 19,426 24,118 22,794 23,755 35,620 6 7,0 1 9 68,507
Cash and bank 39,319 14,874 22,508 1,276 2,724 2,111 1,255
Current assets32,391 39,910 32,721 44,950 60,990 63,874 69,095
Total assets$91,136$78,902 $78,023 $69,981 $99,334 $133,004 $138,857
134135
GOVERNANCE AND OTHER DISCLOSURES
TREND STATEMENT (CONT'D)
2023
$000
2022
$000
2021
$000
2020
$000
2019
$000
2018
$000
2017
$000
Abnormal items (after tax)
Cyclone Gabrielle related income 35,500 – – – – – –
Cyclone Gabrielle related expenses(14,275) – – – – – –
Impairment of assets ( 7,6 4 4) – – (5,095) (4,413) – –
Impairment of right-of-use assets – – – (2,094) – – –
Impairment of intangible assets – – – – (2,362) – –
Impending change in legislation relating to
tax depreciation on buildings – – – 2,940 – – –
Derecognition of deferred tax assets – – – (12,891) – – –
Restructuring costs – – (1,271) (854) – 136 (4,542)
Reversal of impairment of fixed assets – – – – – 99 1,083
Gain on sale of property – – 2,624 – – – –
Scour merger costs – – – – – (128) (738)
Gain on merger and dilution of equity-
accounted investee – – – – – – 3,929
Loss on sale of interest in, and property held
by, equity-accounted investees – – – – (11,884) – –
Reversal of normalised tax expense – 505 – – – – –
To t al$13,581$505 $1,353 ($17,994)($18,659)$107 ($268)
GOVERNANCE AND OTHER DISCLOSURES
TREND STATEMENT (CONT'D)
2023202220212020201920182017
Financial Ratios and Summary
Use of Funds and Return on Investment
Return on average shareholders’ equity
(normalised) - %(6.5%)4.7% 1.1% ( 7. 8 %)3.0% 5.7% (2.7%)
Basic earnings per ordinary share (normalised)
- cents(4.08) 2.51 0.55 (5.03) 2.74 5.79 (2.70)
Diluted earnings per ordinary share (normalised)
- cents(3.99) 2.46 0.54 (5.03) 2.74 5.79 (2.70)
Financial Structure
Net tangible asset backing per ordinary share - $$0.59 $0.40 $0.36 $0.47 $0.72 $0.94 $0.87
Equity ratio - %55.1%4 7. 9 %45.6%48.1%55.4%54.3%48.9%
Return to Shareholders
Dividends paid per ordinary share – – – – – – –
Share Price
30 June$0.400 $0.465 $0.490 $0.220 $0.320 $0.620 $0.350
52 week high$0.640 $0.850 $0.490 $0.380 $0.680 $0.630 $0.950
52 week low$0.295 $0.445 $0.205 $0.160 $0.310 $0.270 $0.330
Market Capitalisation ($000)
30 June$28,028 $32,168 $33,653 $15,109 $21,977 $42,581 $24,038
Capital Expenditure and Depreciation ($000)
Capital expenditure$1,956 $2,898 $2,481 $2,119 $4,705 $1,622 $2,123
Depreciation - owned assets$845 $683 $379 $2,418 $3,479 $3,561 $3,251
Depreciation - right-of-use assets$994 $954 $534 $1,779 $0 $0 $0
136137
GOVERNANCE AND OTHER DISCLOSURES
TREND STATEMENT (CONT'D)
GLOSSARY OF FINANCIAL TERMS
EBITDA Earnings before interest, tax, depreciation and amortisation
EBIT Earnings before interest and tax
EBITDA (normalised) Earnings before abnormal costs, interest, tax, depreciation and amortisation
EBIT (normalised) Earnings before abnormal costs, interest and tax
Net assets Total assets less total liabilities
USE OF FUNDS AND RETURN ON INVESTMENT
Return on average shareholders’
equity (normalised)
Profit/(Loss) after tax (normalised)
Average shareholders’ equity
Basic earnings per ordinary share
(normalised)
Profit/(Loss) after tax (normalised)
Weighted average number of ordinary shares on issue during the year
Diluted earnings per ordinary share
(normalised)
Profit/(Loss) after tax (normalised)
Weighted average number of ordinary shares on issue during the year
(including the maximum number of shares that could be issued under the
Company’s LTI Scheme and the Bremworth Option Scheme)
FINANCIAL STRUCTURE
Net tangible asset backing
per ordinary share
Net assets less goodwill and intangible assets
Number of ordinary shares on issue at balance date
Equity ratioShareholders’ equity
Shareholders’ equity and total liabilities
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION
The Directors acknowledge that the Annual Report, including the Trend Statement from pages 133 to 136, contains financial
information that is non-GAAP (Generally Accepted Accounting Practice) and therefore falls within the Financial Markets
Authority’s guidance note on “Disclosing non-GAAP financial information” issued in July 2017.
The Trend Statement has been prepared using the audited GAAP-compliant financial statements of the Group.
The Directors believe that the non-GAAP financial information contained within the Trend Statement (more particularly, the
non-GAAP measures of financial performance such as “EBITDA (normalised)”, “EBIT (normalised)”, “Profit before income tax
(normalised)” and “Profit after tax (normalised)” as well as the various other financial ratios that are based on normalised results
– for example, earnings per share) provide useful information to investors regarding the performance of the Group because the
calculations exclude restructuring costs and other gains/losses (for example, gain/loss on sale of property and investments) that
are not expected to occur on a regular basis either by virtue of quantum or nature.
In arriving at this view, the Directors have also taken cognisance of the regular requests by users of the consolidated financial
statements, including analysts and shareholders, regarding the nature and quantum of abnormal items within the GAAP-
compliant results and the way analysts distinguish between GAAP and non-GAAP measures of profit.
The disclosure of the non-GAAP financial information is also consistent with how the financial information for the Group is
reported internally, and reviewed by the Chief Executive Officer as its chief operating decision maker, and provides what the
Directors and management believe gives a more meaningful insight into the underlying financial performance of the Group and a
better understanding of how the Group is tracking after taking into account items of an abnormal nature, including items that are
unlikely to recur or otherwise unusual in nature.
Non-GAAP financial information does not have standardised meaning prescribed by GAAP and therefore may not be
comparable to similar financial information prescribed by other entities.
In collating the Trend Statement, the Directors have taken into account all of the requirements within the guidance note. More
specifically, these include:
—outlining why non-GAAP financial information is useful to investors and how it is used internally by management;
—identifying the source of non-GAAP financial information;
—ensuring that:
–non-GAAP financial information is not presented with undue and greater prominence, emphasis or authority than
the most directly comparable GAAP financial information;
–presentation of non-GAAP financial information does not in any way confuse or obscure presentation of GAAP
financial information;
–a reconciliation from the non-GAAP financial information to the most directly comparable GAAP financial
information, including that for the previous period, can be easily accessed (see below);
–a consistent approach is adopted from period to period with respect to the presentation of non-GAAP financial
information, including that for comparative periods;
–where there is any change in approach from the previous period, the nature of the change is explained and the
reasons and financial impact provided;
–non-GAAP financial information is unbiased; and
—taking care when describing, or referring to, items as ‘one-off’ or ‘non-recurring’.
138139
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION (CONT'D)
GOVERNANCE AND OTHER DISCLOSURES
DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION (CONT'D)
RECONCILIATION OF GAAP-COMPLIANT TO NON-GAAP-COMPLIANT MEASURES OF PROFIT AFTER TAX
Year ended 30 June 2023Year ended 30 June 2022
GAAP
$000
Adjustments
$000
Normalised
$000
GAAP
$000
Adjustments
$000
Normalised
$000
Revenue$89,689 – $89,689$95,485 – $95,485
EBITDA13,381(13,581)(200) 4,918 – 4,918
Depreciation - owned assets (845) – (845) (683) – (683)
Depreciation - right-of-use assets (994) – (994) (954) – (954)
Depreciation - recycled through inventory – – – 194 – 194
EBIT11,542(13,581)(2,039) 3,475 – 3,475
Finance costs (1,045) – (1,045) (1,029) – (1,029)
Finance income 502 – 502 159 – 159
Profit before tax10,999(13,581)(2,582) 2,605 – 2,605
Tax expense (263) – (263) (365) (505) (870)
Profit after tax$10,736(13,581)(2,845)$2,240 (505) 1,735
Abnormal gains after tax13,58113,581 505 505
Profit after tax (GAAP)$0 $10,736$0 $2,240
Analysis of abnormal items
Year ended 30 June 2023Year ended 30 June 2022
Profit
before tax
$000
Ta x
effect
$000
Profit
after tax
$000
Profit
before tax
$000
Ta x
effect
$000
Profit
after tax
$000
Cyclone Gabrielle related income 35,500 – 35,500 – – –
Cyclone Gabrielle related asset write offs
and expenses(21,919) – (21,919) – – –
Reversal of normalised tax expense – – – – 505 505
To t al$13,581$0 $13,581$0 $505 $505
Calculation of basic and diluted earnings per share
under GAAP and non-GAAP measures of profit after tax
Year ended 30 June 2023
GAAP-compliant
reported profit
after tax
Reverse abnormal
items (net of tax)
where applicable
Non-GAAP-compliant
normalised profit
after tax
Profit attributable to shareholders ($000)$10,736($13,581)($2,845)
Weighted average number of ordinary shares (basic) 69,771,837 69,771,837
Earnings per share (basic) (cents)15.39(4.08)
Weighted average number of ordinary shares (diluted) 71,364,576 71,364,576
Earnings per share (diluted) (cents)15.04(3.99)
Year ended 30 June 2022
Profit attributable to shareholders ($000)$2,240 ($505)$1,735
Weighted average number of ordinary shares (basic) 69,081,838 69,081,838
Earnings per share (basic) (cents) 3.24 2.51
Weighted average number of ordinary shares (diluted) 70,659,533 70,659,533
Earnings per share (diluted) (cents) 3.17 2.46
140141
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE DIRECTORY
GOVERNANCE AND OTHER DISCLOSURES
CORPORATE DIRECTORY
BOARD OF DIRECTORS
George Adams DipFSA(Hons), FCA, CFInstD
Independent
Chairman of the Board of Directors
Chairman of Nomination Committee
Member of Audit and Remuneration Committees
Paul Izzard BA (Hons) Interior Design
Independent
Member of Audit and Remuneration Committees
John Rae B.Com., LLB, CMInstD
Independent
Member of Audit, Remuneration and Nomination Committees
Katherine Turner B.Com., CA, CMInstD
Independent
Chairman of Audit Committee
Member of Remuneration Committee
Dianne Williams B.Com., MBA, CMInstD
Independent
Chairman of Remuneration Committee
Member of Audit and Nomination Committees
DIRECTOR EMERITUS
Grant Biel B.E. (Mech.)
CHIEF EXECUTIVE OFFICER
Greg Smith
CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY
Victor Tan CA, FCIS
FOUNDING SHAREHOLDER
The late Anthony Charles Timpson ONZM
REGISTERED OFFICE
7 Grayson Avenue, Auckland 2104,
P O Box 97040, Auckland 2241.
Telephone: 0800 808 303, Facsimile: 64-9-279 4756, Website: bremworth.co.nz
SHARE REGISTRAR
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Auckland 0622,
Private Bag 92119, Auckland 1142.
Telephone: 64-9-488 8700, Facsimile: 64-9-488 8787, Investor Enquiries: 64-9-488 8777.
AUDITOR
PwC
LEGAL ADVISORS
Russell McVeagh
BANKERS
Bank of New Zealand
National Australia Bank Limited
CORPORATE
General Manager Health and Safety,
People and Sustainability
Kirstine Hulse
Group Information Technology ManagerTrevor Jones
CARPET OPERATION
General Manager Sales New Zealand
and Australia
Dean Chandler
General Manager Logistics, Procurement
and International Operations
Garth Clarke
General Manager Global Marketing,
Product and Digital Business
Rochelle Flint
General Manager Tufting Plant Jason Howearth
General Manager Yarn PlantsAndrew Karl
WOOL OPERATION
General Manager Wool ProcurementShane Eades
WEBSITES
Corporate bremworth.co.nz/investor-centre
Carpet Operation bremworth.co.nz
bremworth.com.au
Wool Operation elcodirect.co.nz
Share Registrar computershare.com/nz
Bremworth Ltd
7 Grayson Avenue, Auckland 2104, PO Box 97040, Auckland 2241
Telephone: 64-9-277-6000 www.bremworth.co.nz
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.