Ann: Change to Reporting Segments, page-2

This change to reporting segments is something that I truly appreciate as an BRG investor.

This makes it very easy to compare the performance of the 2 business units which on the surface look very similar, but in reality, have a completely different set of characteristics.

As the announcement reveals, the Global Product Segment (GPS) is the true engine growth of the company, while the Distribution Segment (DS), is more like the legacy business (the old Breville).

In FY2016:


Revenue: GPS produced $427.2m (74.1% of total) and DS produced $149.4m (25.9% of total).
EBITDA: GPS produced $74.01m (88.8% of total) and DS produced $9.3m (11.2% of total).
EBIT: GPS produced $65.1m (88.4% of total) and DS produced $8.6m (11.6% of total).

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Within GPS, North America is by far the biggest contributor of revenue, followed by ANZ. One thing stood out, which is the contribution made by Rest of World, which is very quickly catching up to ANZ.

Considering that BRG management has stated publicly that their focus in the next couple of years is to redirect any kind of cost savings achieved to 1) R&D and 2) Sales/Marketing, the future for BRG should be quite encouraging.

An early result of this further effort into R&D is the Breville-designed top of the range Nespresso machine, the Creatista Plus. This little machine combines the convenience of your typical Nespresso machine with a steam wand. This allows people to create cafe quality latte in the convenience of their home.

This kind of aspirational products will assist Breville in building its image of quality in the minds of consumers. This segment of the market is more insulated against the ravages of price war that is happening all the time in the lower end of the market.

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The other announcement yesterday was about the purchase of BRG shares by the new director. This kind of no-nonsense policy of building directors' shareholding in the company, should be more prevalent in the ASX.