Baby Bunting : Half Yearly Report and Accounts

For personal use only

Appendix 4D

(Rule 4.2A.3)

Baby Bunting Group Limited

ABN 58 128 533 693

For the year ended:	26 weeks ended 26 December 2021
Previous corresponding period:	26 weeks ended 27 December 2020

Results for announcement to the market

	26 weeks	26 weeks
	ended	ended
	26 Dec 2021	27 Dec 2020
	$'000	$'000	Mvmt	up/(down)
Statutory Financial Results		(Restated)1	$'000	%
Revenue from ordinary activities	239,066	217,320	21,746	10.0%
Net profit from ordinary activities after tax	8,147	7,262	885	12.2%
(attributable to members)
Net profit attributable to members	8,147	7,262	885	12.2%

1. Refer to Note 2(c) for detailed information on restatement of comparatives in the Financial Statement for the period ended 26 December 2021.

	26 weeks	26 weeks
	ended	ended
	26 Dec 2021	27 Dec 2020
	$'000	$'000	Mvmt	up/(down)
Pro Forma Financial Results		(Restated)1	$'000	%
Revenue from ordinary activities	239,066	217,320	21,746	10.0%
Net profit from ordinary activities after tax	12,545	10,781	1,764	16.4%
(attributable to members)
Net profit attributable to members	12,545	10,781	1,764	16.4%

1. Refer to Note 2(c) for detailed information on restatement of comparatives in the Financial Statement for the period ended 26 December 2021.

Pro forma financial results have been calculated to exclude certain items contained in the following table that reconciles the statutory results to pro forma financial results for the period ended 26 December 2021 and provides further detail on pro forma adjustments. This has been done to more clearly represent the consolidated entity's underlying earnings (noting that this financial information has not been reviewed in accordance with Australian Auditing Standards).

26 weeks ended 26 December 2021
$'000	Sales	NPAT
Statutory results	239,066	8,147
Employee equity incentive expenses1,2	-	4,736
Transformation project expenses3,4	-	2,749
Tax impact from pro forma adjustments	-	(3,087)
Pro forma results	239,066	12,545

1. Expense reflects the cost amortisation of performance rights (LTI) on issue in the current reporting period.
2. The Company issued 135,051 shares under its General Employee Share Plan in the current reporting period with no monetary consideration payable by participating eligible employees who each received approximately $1,000 worth of shares ($0.760 million).
3. The Company is currently undertaking a process of assessment and when necessary, replacement of its core information technology systems. During the half, the Company incurred ($2.017 million) non-capital costs associated with the implementation of a Loyalty system, People systems and digital technology assets.
4. Other transformation project expenses ($0.732 million) include external consultant costs associated with project management costs to deliver the transformation projects.

Baby Bunting Half-year report (December 2021) Appendix 4Di

For personal use only

Appendix 4D

(Rule 4.2A.3)

(cont.)

The following table reconciles the statutory results to pro forma financial results for the period ended 27 December

2020 (noting that this financial information has not been reviewed in accordance with Australian Auditing Standards):

26 weeks ended 27 December 2020
$'000
Restated1	Sales	NPAT
Statutory results	217,320	7,262
Employee equity incentive expenses2,3,4	-	3,666
Transformation project expenses5,6	-	3,008
Other income7	-	(2,400)
Other expenses8	-	1,091
Tax impact from pro forma adjustments	-	(1,846)
Pro forma results	217,320	10,781

1. Refer to Note 2(c) for detailed information on restatement of comparatives in the Financial Statement for the period ended 26 December 2021.
2. Expense reflects the cost amortisation of performance rights (LTI) on issue in the reporting period.
3. The Company issued 165,221 shares under its General Employee Share Plan in the reporting period with no monetary consideration payable by participating eligible employees who each received approximately $1,000 worth of shares ($0.795 million).
4. The Company made a $2.774 million cash incentive payment to participating executives in connection with EPS performance rights (assessed over the period FY16 to FY20) granted by the Company in October 2015 as part of the Company's Long Term Incentive Plan. This plan involved the issue of shares, however due to a timing difference between the $3.215 million impairment of certain digital assets in June 2020 and the receipt of a $2.400 million settlement payment from the vendor of those assets (refer Note (7) below - Other Income), the original performance rights lapsed. If not for this timing difference, the compound annual growth rate of the Company's EPS measured over the FY16 to FY20 performance period would have been 16.2% which would have resulted in 25.5% of the EPS performance rights vesting. The Board had regard to the significant earnings per share growth achieved since the Company's IPO, as well as the direct connection between the impairment of the digital assets and the settlement payment recovered by the Company shortly after the end of the performance period. On this basis, the Board determined to provide a benefit to participating executives calculated by reference to the EPS performance rights that would have vested if the recovery were received during FY20. A share price of $4.09 was used to calculate the cash payments (based on 678,438 rights that would have otherwise vested). The share price was determined by reference to a VWAP of the Company's shares in the period 1 July to 30 September 2020.
5. The Company was undertaking a process of assessment and when necessary, replacement of its core information technology systems. In 1H FY21, the Company incurred ($1.888 million) non-capital costs associated with the implementation of a merchandise demand planning and replenishment system, order fulfilment systems, Loyalty system, People systems and assessment of digital technology assets.
6. Other transformation project expenses ($1.120 million) include external consultant costs associated with the setup of the new National Distribution Centre ($0.172 million) and project management costs ($0.524 million) to deliver the transformation projects.
7. The Company received a cash payment ($2.400 million) from the vendor of certain digital commerce technology assets that were impaired in FY20 following settlement of a dispute relating to those assets.
8. In 1H FY21, the Company responded to an interception of insects found in packaging of goods in an imported shipping container. Working closely with the Federal Department of Agriculture, Water and the Environment, the Company implemented a number of actions in accordance with Departmental requirements, including the treatment of all store rooms where the affected stock was held and the Distribution Centre and fumigation of some inventory. This resulted in some short term increases to supply chain costs and one-off costs of treatment and fumigation costs and customer remediation costs. These issues have now been resolved. Around 50% of costs associated with this incident were recovered through its insurance policies in 2H FY21.

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Dividends

	Amount per security	Franked
	(cps)	amount
Dividends paid
Final 2021 dividend per share (paid 10 September 2021)	8.3	100%
Dividends determined
Interim 2022 dividend per share	6.6	100%
Record date for determining entitlements to the dividend	25 February 2022
Date dividend is payable	11 March 2022
The Company does not currently offer a dividend reinvestment plan.
Commentary on results for the period

For further explanation of the statutory figures above refer to the accompanying Financial Report for the half-year ended 26 December 2021, which includes the Directors' Report. The Half Year Results Presentation released in conjunction with this Results Announcement provides further analysis of the results.

Net tangible assets per ordinary share

	26 December	27 December
	2021	2020
	$	$
Net tangible assets per ordinary share		Restated1
Net tangible assets per ordinary share	0.46	0.37

1. Refer to Note 2(c) for detailed information on restatement of comparatives in the Financial Statement for the period ended 26 December 2021.

Details of entities over which control has been gained or lost

Baby Bunting NZ Limited (100%) - 8 September 2021.

Other information

Independent Review by Auditor

This report is based on the condensed consolidated financial statements which have been reviewed by Ernst & Young.

Baby Bunting Half-year report (December 2021) Appendix 4Diii

For personal use only

iv

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FINANCIAL REPORT

FOR THE HALF-YEAR ENDED 26 DECEMBER 2021

Baby Bunting

Group Limited

ABN 58 128 533 693