Billabong International
LimitedABN 17 084 923 946
PageAppendix 4D 2
Directors' report 3
Auditor's independence declaration 7
Consolidated income statement 8
Consolidated statement of comprehensive income 8
Consolidated balance sheet 9
Consolidated statement of changes in equity 10
Consolidated cash flow statement 11
Notes to the financial statements 12
Directors' declaration 20
Independent auditor's review report to the members of Billabong
International Limited 21
INTERIM FINANCIAL REPORT 31 DECEMBER 2016This interim financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 30 June 2016 and any public announcements made by Billabong International Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
Billabong International Limited is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
1 Billabong Place, Burleigh Heads Qld 4220 For queries in relation to reporting please call
+61 7 5589 9899 or email: secretary@billabong.com.au
Corporate website: www.billabongbiz.com
Appendix 4DFor the half-year ended 31 December 2016
Extracts from this report for announcement to the market.
Half-year Half-year 2016 $'0002015
$'000
Change
$'000 %
Total revenue from ordinary activities 511,027 565,440 (54,413) (9.6%) Loss from ordinary activities after tax attributable to members (16,050) (1,587) (14,463) n/a Net loss for the period attributable to members (16,050) (1,587) (14,463) n/a
Dividends Amount per Security Franked amount per securityInterim dividend 0.0 cents 0.0 cents
Previous corresponding period interim dividend 0.0 cents 0.0 cents The Board has not declared an interim ordinary dividend for the half-year ended 31 December 2016.
The Dividend Reinvestment Plan (DRP) remains suspended.
NTA backing Half-year 2016$0.34
Half-year
2015
Net tangible asset backing per ordinary share
$0.54
Explanation of ResultsPlease refer to the Operating and Financial Review within the Directors' Report for an explanation of the results.
Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Billabong International Limited (the Company) and the entities it controlled at the end of, or during, the half-year ended 31 December 2016.
DirectorsThe following persons were Directors of the Company during the whole of the half-year and up to the date of this report: Ian Pollard
Neil Fiske Gordon Merchant Howard Mowlem Jason Mozingo
Kim Anderson was appointed as Director on 9 December 2016 and continues in office at the date of this report. Sally Pitkin was a Director from the beginning of the financial period until her resignation on 15 August 2016.
Amar Doshi was an Alternate Director to Jason Mozingo from the beginning of the financial period until his resignation on 4 August 2016.
Operating and Financial Review Group overviewSignificant changes in the state of affairs
The statement below should be read in conjunction with note 33 (events occurring after the balance sheet date) of the annual report for the year ended 30 June 2016 and any public announcements made by the Company during the financial half-year.
Other than matters dealt with in this report there were no significant changes in the state of affairs of the Group during the financial half- year.
Group financial performance
The Group results for the period and the prior corresponding period (pcp) include certain significant items. Refer to note 3 of the half-year financial statements for detailed disclosure in relation to these items.
In order to provide users with additional information regarding the continuing operations excluding the aforementioned significant items and to help understand the impact of these events on the results of the Group, the segment results are presented in two separate tables.
Table A presents the segment results on a basis including all significant items. See Table A: Segment results as reported - including significant items.
Table B presents the results excluding significant items. See Table B: Adjusted segment results.
On 29 June 2016, the Group announced the sale of Sector 9. The results of Sector 9 did not meet the conditions under AASB 5 to be disclosed as a discontinued operation and are therefore included in the pcp in both tables below. The disposal of Sector 9 primarily impacts the year on year comparison of revenue and expenses, particularly in the Americas, and has been highlighted in some of the accompanying commentary included in this report.
Table A: Segment results as reported - including significant items Segment revenues Segment EBITDAI*Half-year | Half-year | Half-year | Half-year |
2016 | 2015 | 2016 | 2015 |
$'000 | $'000 | $'000 | $'000 |
231,339 | 243,904 | 19,181 | 29,525 |
192,093 | 219,926 | (5,375) | (3,693) |
84,887 | 98,045 | 3,439 | 7,575 |
1,586 | 1,833 | 1,586 | 1,833 |
509,905 | 563,708 | 18,831 | 35,240 |
(14,578) (16,416) | (16,320) | ||
(16,818) | |||
(12,163) | 2,102 | ||
(3,887) | (3,689) | ||
(16,050) | (1,587) |
Asia Pacific Americas Europe
Third party royalties Segment revenues / EBITDAI*
Less: Depreciation and amortisation Net interest expense
(Loss)/profit before income tax expense Income tax expense
Loss attributable to members of Billabong International Limited
* Segment earnings before interest, taxes, depreciation, amortisation and impairment (EBITDAI) excludes inter-company royalties and sourcing fees and includes an allocation of global overhead costs (which include corporate overhead, international advertising and promotion costs, central sourcing costs and foreign exchange movements).
Operating and Financial Review (continued) Table B: Adjusted segment results Adjusted EBITDAI by Segment Excluding significant itemsHalf-year | Half-year |
2016 | 2015 |
$'000 | $'000 |
20,582 | 29,602 |
3,395 | (1,902) |
3,784 | 7,665 |
1,586 | 1,833 |
29,347 | 37,198 |
(14,578) | (16,320) |
(16,416) | (16,818) |
(1,647) | 4,060 |
(5,094) | (5,889) |
(6,741) | (1,829) |
Asia Pacific Americas Europe
Third party royalties Adjusted EBITDAI
Less: Depreciation and amortisation Net interest expense
Adjusted net (loss)/profit before income tax expense Adjusted income tax expense
Adjusted net loss attributable to members of Billabong International Limited
Constant currency
Due to a significant portion of the Group's operations being outside Australia, the Group is exposed to currency exchange rate translation risk i.e. the risk that the Group's offshore earnings and assets fluctuate when reported in Australian Dollars (AUD). The Group's segment information for the prior period has also been provided in the below commentary on a constant currency basis (i.e. using the current period monthly average exchange rates to convert the prior period foreign earnings) to remove the impact of foreign exchange movements from the Group's performance against the pcp. The constant currency comparatives are not compliant with Australian Accounting Standards.
Adjusted EBITDAI
Adjusted EBITDAI excludes pre-tax significant items of income and expense. Refer to note 3 of the half-year financial statements for detailed disclosure in relation to these items.
Comments on the operations and the results of those operations are set out below:
Consolidated result including significant items
Net loss after tax for the half-year ended 31 December 2016 was $16.1 million compared to a net loss after tax of $1.6 million in the pcp. The current half-year includes an income tax expense of $3.9 million compared to an income tax expense in the prior half-year of $3.7 million. Loss before income tax expense for the half-year ended 31 December 2016 was $12.2 million compared to profit before tax of $2.1 million in the pcp. The results were impacted by the abovementioned significant items in both half-years.
Group performance excluding significant items
Group sales to external customers of $508.3 million, excluding third party royalties, represents an as reported 9.5% decrease on the pcp. In constant currency terms Group revenues decreased 7.6% on the pcp. In constant currency terms, sales revenue in Asia Pacific decreased 6.7%, the Americas decreased 9.5% and Europe decreased 5.9% compared with the pcp. Adjusting for the disposal of Sector 9 comparable Group revenues in constant currency terms decreased 5.8% for the period compared with the pcp.
Consolidated gross margins were 51.6% (51.7% in the pcp).
Adjusted EBITDAI excluding significant items of $29.3 million for the period compares to $37.2 million for the pcp. This is a decrease of 21.1% (a decrease of 20.9% in constant currency terms).
Regional results excluding significant items were as follows:
In Asia Pacific
EBITDAI of $20.6 million for the period compares to $29.6 million for the pcp.
Revenue was 5.2% lower than the pcp in as reported terms (down 6.7% in constant currency terms) and adjusted EBITDAI was down $9.0 million compared to the pcp.
Asia Pacific was significantly impacted by a weak trading month of October with comparable bricks and mortar retail sales down 16.0% in Australia which had a flow on impact to wholesale repeat orders in the months of November and December.
Bricks and mortar retail sales in November and December improved compared to October. Australian comparable bricks and mortar retail sales in the month of December were up 0.9%.
For the half-year as a whole, bricks and mortar comparable store sales trading across the region was 3.7% lower compared to the pcp. In Australia, comparable bricks and mortar store sales were down 4.2% on the pcp.
Gross margin pressure reflected the lower AUD, relative to the United States Dollars (USD), during the period which increased input prices (approximately $4 million) and impacted gross margins 170 basis points compared to the pcp, together with a highly promotional retail environment. Sourcing and other margin improvements limited the overall decline in gross margins to 130 basis points.
Billabong International Ltd. published this content on 24 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 23 February 2017 22:53:09 UTC.
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