Although it's "adjusted profit" which can of course cover all manner of sins. They "adjusted" $2.3m out of 1H, and will also adjust for goodwill write down of $25.6m, so a total of $27.9m to be 'adjusted'. Reported NPAT would be c. $30.85m vs FY17 $70.7m, just a trifling 56% below last year. Smoke and mirrors. It's caused by a goodwill right down of T7 - "
an investment in a store expansion programme, no longer support the goodwill valuation associated with the original acquisition". Which must mean that the stores aren't generating expected sufficient future cashflow to cover the goodwill and yet the strategy remains to expand the physical retail presence?? Makes perfect (non)sense and is definitely worth paying the full bonus for. Of course.
https://www.nzx.com/announcements/323104
Per the 2017 Annual Report:
"The recoverable amount of the Torpedo7 CGU exceeded its carrying amountby $5.683 million. The cash flow projections in the Torpedo7 model assumes an average annual growth rate in sales of 7.6% and an increase in grossmargins from 24% to 28% over the 5 year projection period."
19 stores in the network + online were expected to generate $31.3m cash flow over 5 years, one year later zero? In which case either the cost of the move to Auckland from Hamilton sucks up all cash flow generated by the stores, or the stores are unprofitable in which case where is the asset write down for the stores also?
Smoke and mirrors.