Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Description
of business
Naked
Brand Group Limited (“the Group”) is a designer, distributor, wholesaler and retailer of women’s and men’s
intimates apparel globally. The Group sells its merchandise through retail and outlet stores in New Zealand and Australia, wholesale
operations in New Zealand, Australia, the United States and Europe, and through online channels. The Group operates both licenced
and owned brands, including the following:
Licenced
brands:
Heidi
Klum, Fredericks of Hollywood
Owned
brands:
Pleasure
State, Davenport, Lovable, Bendon, Fayreform, Naked, VaVoom, Evollove, Hickory
The
financial report covers Naked Brand Group Limited and its controlled entities (‘the Group’). Naked Brand Group Limited
is a for-profit Group, incorporated and domiciled in Australia.
During
the year the following significant changes occurred, of which there is further disclosure contained within this report:
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●
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On
28th January 2020, Naked Brand Group Limited agreed to sell all of its rights, title and interest in the trademarks related
to the “Naked” and “NKD” brands to Gogogo SRL for a consideration of US $0.6m (note 17)
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●
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On
31st January 2020, the licence agreement with Heidi Klum was terminated by mutual consent for a fee of US$3.5m which is to
be paid in monthly instalments up to and including 30 December 2020. The exit cost less future economic benefits has been
provided for at the year-end (note 21).
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The
financial report was authorised for issue by the Directors on May 8, 2020.
Comparatives
are consistent with prior years, unless otherwise stated.
The
amounts in the financial statements have been rounded to the nearest thousand dollars.
These
general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. Naked Brand Group Limited is a for-profit entity
for the purpose of preparing the financial statements.
The
consolidated financial statements of the Group also complies with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Naked
Brand Group Limited (The Group) acquired all the share capital of Bendon Limited as part of a corporate reorganization on 19 June
2018. Following the reorganization, Naked Brand Group Limited completed a merger with Naked Brand Group Inc. which for accounting
purposes was treated as an acquisition such that Naked Brand Group Limited is deemed the accounting acquirer of the Naked Brand
Group Inc. The reorganization of the ownership of Bendon Limited results in the financial statements of the consolidated Naked
Brand Group Limited being a continuation of the Bendon Limited financial statements. The consolidated financial report of Naked
Brand Limited represents a full year of Bendon Limited’s financial results plus Naked Brand Group Inc. from the date of
acquisition being 19 June 2018 to 31 January 2019. The 31 January 2018 comparative period represents Bendon Limited and its controlled
entities only.
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(a)
|
Historical cost convention
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The
financial statements are based on historical costs, except for the measurement at fair value of selected financial assets and
financial liabilities.
2
|
Summary
of Significant Accounting Policies
|
The
financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the ordinary course of business.
For
the financial year ended 31 January 2020 the Group experienced a loss after income tax from continuing operations of NZ$54.305
million and operating cash outflows of NZ$19.894 million. It also is in a net current liability position of NZ$22.210 million
and a net liability position of NZ$6.284million.
The
losses in the year ended 31 January 2020 were impacted by the inventory product mix held which resulted in reduced revenue from
wholesale customers along with reduced turnover in both outlet and retail stores in NZ and Australia. The group has been working
with its suppliers to pay outstanding creditor positions and focus on returning stock inflow to required levels. In periods when
the stock level and product mix held were more appropriate for consumer demand the business realized strong sales results.
During
the year the Group maintained its loan facility with BNZ, it did, however, breach its Bank debt loan covenants during the financial
year, although the Group was compliant at 31 January 2020. At 31 January 2020 the Group was in the process of extending their
facilities. On 12 March 2020, the Group entered into a Deed of Amendment with the Bank of New Zealand to extend its loan facility
of NZD$16,700,000 (31 January 2019: NZD$20,000,000) until March 2022. The amended agreement stipulates the repayment dates to
reduce the facility to March 2022 and compliance with additional covenants.
The
business raised NZ$34.093 million of funds in the form of issued capital and convertible notes during the financial year to assist
with the operating cash outflows. In addition, the business used this to repay part of the bank debt from NZ$20 million to NZ$17.9
million, reduce balances with overdue trade creditors, rebuild higher margin inventory, fund operating losses and restructure
the business. The business also issued share equity to a number of suppliers in order to reduce debt balances.
The
funds raised and cash flow generated during the financial year ended 31 January 2020 have not been sufficient to provide the Group
with adequate working capital, so subsequent to the end of the financial year management has continued to raise further capital
to complete a program that will fund new inventory to restock stores and supply wholesale customers, fund further losses, reduce
out of term creditors, open new stores and provide funds to reduce the Bank debt. It is expected the group will need to continue
to raise further capital to fund losses through to the start of the year ending 31 January 2022. This capital raising/recapitalisation
is continuing at the time of this report with management having set a target to raise a further US$9.0m between 1 February 2020
and 31 June 2020. At the date of this report management had raised US$3.75m and is still planning on raising the balance. The
Group must complete the fundraising to continue as a going concern.
During
the year management engaged in further restructuring of the business’s operations including reducing costs across distribution
channels, renegotiating supplier contracts, resetting customer supply commitments and updating leadership roles with the final
member of the leadership team joining the business in February 2020.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
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Summary
of Significant Accounting Policies
|
Despite
the ongoing losses, the Directors are confident that the Group will continue as a going concern. However, while the Directors
are confident of continuing as a going concern and meeting the company’s debt obligation to its Bank and creditor commitments
as they fall due, the going concern is dependent upon the Directors and Group being successful in:
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Raising
further capital of at least US$5.25 million and collecting it before June 2020 this will enable the business to fund its operations
and meet its obligations;
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Having
sufficient funds from the capital raised to reduce costs, rebuild higher margin inventory, increase revenue across the all
channels, increase gross margin percentages and contribution that leads to a reduction in the current cash outflow being incurred
each month to reach a cash flow positive position, and to reduce bank debt;
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Generating
enough sales and increasing gross margins from trading in line with forecast
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Maintain
key personnel
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Continue
to receive support from creditors to delay payment of overdue amounts until the Group has adequate cash flow to commence a
repayment arrangement or repay the debt in full
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Renegotiating
the current repayment dates of the facility to enable the business to maximise cashflow opportunities
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Due
to the impact of COVID-19 the business has temporarily closed its bricks and mortar stores although it does continue to trade
through its two online stores. To mitigate the significant impact on cashflow it is working with suppliers to get support with
delayed payments and has reached an agreement with certain key suppliers to push back payments, including royalty payments. In
addition, the business is negotiating support from landlords to provide rent abatements through the period of closure and until
sales return to required levels. Employees have agreed to work reduced hours and the business has applied for Government wage
subsidies from the New Zealand and Australian governments. At the date of this report, the Group had received $2.0m in subsidies
from the New Zealand Government. The business is also in discussion with the bank to defer loan repayments.
The
impact of COVID-19 in Asia has delayed stock flow due to temporary factory closures and the business is working with suppliers
who are now back operating to prioritise and reschedule orders. Inventory flow has resumed and we are able to fulfil online orders
from the New Zealand and US warehouses.
In
addition, the business is investigating funding packages that they may be eligible for.
As
a result, the viability of the Group is dependent on the above matters. The dependence on these matters raise substantial doubt
about its ability to continue as a going concern and therefore whether they will realise their assets and extinguish their liabilities
in the normal course of business and at the amounts stated in the financial report. However, the Directors’ believe that
the Group will be successful in the above matters and, accordingly, have prepared the report on a going concern basis.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
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(b)
|
Basis
for consolidation
|
Subsidiaries
Subsidiaries
are all entities (including structured entities) over which the group has control. The group controls an entity when the group
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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the date that control ceases.
Intercompany
transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the group.
Non-controlling
interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement
of comprehensive income, statement of changes in equity and balance sheet respectively.
When
the group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant
influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in
profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained
interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive
income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If
the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only
a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where
appropriate.
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(c)
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Business
combinations
|
Business
combinations are accounted for by applying the acquisition method which requires an acquiring entity to be identified in all cases.
The acquisition date under this method is the date that the acquiring entity obtains control over the acquired entity.
The
fair value of identifiable assets and liabilities acquired are recognised in the consolidated financial statements at the acquisition
date.
Goodwill
or a gain on bargain purchase may arise on the acquisition date, this is calculated by comparing the consideration transferred
and the amount of non-controlling interest in the acquiree with the fair value of the net identifiable assets acquired. Where
consideration is greater than the net assets acquired, the excess is recorded as goodwill. Where the net assets acquired are greater
than the consideration, the measurement basis of the net assets are reassessed before a gain from bargain purchase recognised
in profit or loss.
All
acquisition-related costs are recognised as expenses in the periods in which the costs are incurred except for costs to issue
debt or equity securities.
Any
contingent consideration which forms part of the combination is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity then it is not remeasured and the settlement is accounted for within equity. Otherwise subsequent
changes in the value of the contingent consideration liability are measured through profit or loss.
The
tax expense/(benefit) recognised in the consolidated statements of profit or loss and other comprehensive income comprises of
current income tax expense plus deferred tax expense/(benefit).
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Current
tax is the amount of income taxes payable/(recoverable) in respect of the taxable profit/(loss) for the period and is measured
at the amount expected to be paid to/(recovered from) the taxation authorities, using the tax rates and laws that have been enacted
or substantively enacted by each jurisdiction by the end of the reporting period. Current tax liabilities/(assets) are measured
at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred
tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities
to the carrying amounts in the consolidated financial statements.
Deferred
tax is not provided for the following:
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●
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The
initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction,
affects neither accounting profit nor taxable profit/(tax loss).
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●
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Taxable
temporary differences arising on the initial recognition of goodwill.
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●
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Temporary
differences related to investment in subsidiaries, associates and jointly controlled entities to the extent that the Group
is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in
the foreseeable future.
|
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by each jurisdiction
by the end of the reporting period.
Deferred
tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences and losses can be utilised.
Current
and deferred tax is recognised as income or an expense and included in profit or loss for the period except where the tax arises
from a transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive
income or equity respectively.
In
determining the amount of current and deferred income tax, the Group takes into account the impact of uncertain income tax positions
and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series
of judgements about future events. New information may become available that causes the Group to change its judgement regarding
the adequacy of existing tax liabilities; such changes to tax liabilities will impact the income tax expense in the period that
such a determination is made.
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(e)
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Revenue
and other income
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Sale
of goods
Sales
of goods through retail stores, e-commerce and wholesale channels are recognised when control of the products have been transferred
to the customer which is a point in time. For wholesale and e-commerce sales, risks and rewards are transferred when goods are
delivered to customers, and therefore reflects an estimate of shipments that have not been received at year end based on shipping
terms and historical delivery times. The Group also provides a reserve for projected merchandise returns based on prior experience.
The
Group sells gift cards to customers. The Group recognises revenue from gift cards when they are redeemed by the customers. In
addition, the Group recognises revenue on all of its unredeemed gift cards when the gift cards have expired.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
|
(e)
|
Revenue
and other income
|
(i)
Sale of goods - wholesale
The
Group sells a range of lingerie products in the wholesale market. Sales are recognised when control of the products has transferred,
being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell
the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery
occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred
to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions
have lapsed, or the group has objective evidence that all criteria for acceptance have been satisfied.
Revenue
from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. The estimates
of discount is based on the trading terms in the contracts, and revenue is only recognised to the extent that it is highly probable
that a significant reversal will not occur. A refund liability (included in trade and other payables) is recognised for expected
volume payable to customers in relation to sales made until the end of the reporting period. The Group’s obligation to provide
a refund for faulty products under the standard trading terms is recognised as a provision.
(ii)
Sale of goods - retail/e-commerce
The
group operates a chain of retail stores and e-commerce websites selling lingerie products. Revenue from the sale of goods is recognised
when a group entity sells a product to the customer.
Payment
of the transaction price is due immediately when the customer purchases the product. It is the group’s policy to sell its
products to the end customer with a right of return within 30 days. Therefore, a refund liability (included in trade and other
payables) and a right to the returned goods (included in inventory if deemed saleable) are recognised for the products expected
to be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value
method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal
in the cumulative revenue recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed
at each reporting date.
Interest
revenue
Interest
is recognised using the effective interest method.
Other
income
Other
income is recognised on an accruals basis when the Group is entitled to it.
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(f)
|
Brand
management, administrative and corporate expenses
|
Corporate
expenses includes head office costs such as human resources, finance team and rental costs. Administrative expenses includes depreciation
and amortisation, as well as professional accounting fees. Brand management expenses includes other costs incurred in selling
products, including advertising, design and retail store occupancy and payroll.
Borrowing
costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment
of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All
other borrowing costs are recognised as an expense in the period in which they are incurred.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Inventories
are measured at the lower of cost and net realisable value. Cost of inventory is determined using the weighted average costs basis
and is net of any rebates and discounts received. Net realisable value represents the estimated selling price for inventories
less costs necessary to make the sale. Net realisable value is estimated using the most reliable evidence available at the reporting
date and inventory is written down through an obsolescence provision if necessary.
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(i)
|
Property,
plant and equipment
|
Plant
and equipment
Plant
and equipment are measured using the cost model.
Under
the cost model the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase
price and other directly attributable costs associated with locating the asset to the installation site, where applicable.
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(i)
|
Property,
plant and equipment
|
Depreciation
Property,
plant and equipment, is depreciated on a straight-line basis over the assets useful life to the Group, commencing when the asset
is ready for use.
The
estimated useful lives used for each class of depreciable asset are shown below:
Fixed asset class
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Useful life
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Leasehold improvements
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1 - 10 years
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Plant, furniture, fittings and motor vehicles
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3 - 7 years
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At
the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any
revisions are accounted for prospectively as a change in accounting estimate.
The
Group has adopted IFRS 16 from 1 February 2019. The standard replaces IAS 17 ‘Leases’ and IFRIC 4 ‘Determining
whether an Arrangement Contains a Lease’ and for lessees eliminates the classifications of operating leases and finance
leases. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included
in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17.
However, EBITDA (Earnings Before Interest, Tax, Depletion, Depreciation and Amortisation) results improve as the operating expense
is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows,
the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed
in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Right-of-use
assets
A
right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement
date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories,
an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use
assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
Lease
liabilities
A
lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate
are expensed in the period in which they are incurred.
Lease
liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is
a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term;
certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down
|
(k)
|
Financial
instruments
|
Financial
instruments are recognised initially using trade date accounting, i.e. on the date that the Group becomes party to the contractual
provisions of the instrument.
On
initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured
at fair value through profit or loss where transaction costs are expensed as incurred).
Financial
Assets
(i)
Classification
From
1 February 2018, the group classifies its financial assets in the following measurement categories:
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●
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those
to be measured subsequently at fair value (either through OCI or through profit or loss), and
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●
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those
to be measured at amortised cost.
|
The
classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
For
assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments
that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through other comprehensive income (FVOCI).
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
|
(k)
|
Financial
instruments
|
The
group reclassifies debt investments when and only when its business model for managing those assets changes.
(ii)
Recognition and derecognition
Regular
way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell
the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the group has transferred substantially all the risks and rewards of ownership.
(iii)
Measurement
At
initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial
assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment
of principal and interest.
Debt
instruments
Subsequent
measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics
of the asset. There are three measurement categories into which the group classifies its debt instruments:
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●
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Amortised
cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using
the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate
line item in the statement of profit or loss.
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●
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FVOCI:
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and
losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from
these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and
losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement
of profit or loss.
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●
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FVPL:
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the
period in which it arises.
|
Equity
instruments
The
group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair
value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit
or loss as other income when the group’s right to receive payments is established.
Changes
in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from
other changes in fair value.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
|
(k)
|
Financial
instruments
|
(iv)
Impairment
From
1 February 2018, the group assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase
in credit risk.
For
trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
(v)
Subsequent measurement
If
there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount
of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future
cash flows discounted at the financial assets original effective interest rate.
Subsequent
recoveries of amounts previously written off are credited against other expenses in profit or loss.
Financial
liabilities
Financial
liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial
liabilities depending on the purpose for which the liability was acquired. Although the Group uses derivative financial instruments
in economic hedges of currency and interest rate risk, it does not hedge account for these transactions.
The
Group’s financial liabilities include borrowings, trade and other payables (including finance lease liabilities), which
are measured at amortised cost using the effective interest rate method.
All
of the Group’s derivative financial instruments that are not designated as hedging instruments are accounted for at fair
value through profit or loss.
|
(l)
|
Impairment
of non-financial assets
|
At
the end of each reporting period the Group determines whether there is an evidence of an impairment indicator for non-financial
assets.
Where
an indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for
use, the recoverable amount of the asset is estimated.
Where
assets do not operate independently of other assets, the recoverable amount of the relevant cash-generating unit (CGU) is estimated.
The
recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use
is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.
Where
the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.
Reversal
indicators are considered in subsequent periods for all assets which have suffered an impairment loss, except for goodwill.
|
(m)
|
Cash
and cash equivalents
|
For
the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and
bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Trade
receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment.
|
(o)
|
Trade
and other payables
|
These
amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
Goodwill
Goodwill
is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
|
i)
|
the
consideration transferred;
|
|
|
|
|
ii)
|
any
non-controlling interest; and
|
|
|
|
|
iii)
|
the
acquisition date fair value of any previously held equity interest;
|
over
the acquisition date fair value of net identifiable assets acquired in a business combination.
Patents
and licences
Separately
acquired patents and licences are shown at historical cost. Licenses and customer contracts acquired in a business combination
are recognised at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less
accumulated amortisation and impairment losses. Licence fees have an estimated useful life of 5 – 50 years.
Software
Software
has a finite life and is carried at cost less any accumulated amortisation and impairment losses. It has an estimated useful life
of between one and three years.
Brands
Brand
assets relate to brands owned by the Group that have arisen on historical acquisitions. These assets were initially measured at
fair value.
Brands
are considered as to whether they have a finite or indefinite useful life at their acquisition and are amortized if considered
to have a finite life. Brands are considered to have indefinite lives in circumstances when there is no foreseeable limit to the
period over which the asset is expected to generate net cash flows for the entity they are not amortised. Brands with indefinite
useful lives have been in existence for many years, are well established and show no signs of deteriorating. These indefinite
life brands are assessed for impairment annually or more frequently if impairment indicators are noted.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Amortisation
Amortisation
is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill
and indefinite life brands, from the date that they are available for use.
Amortisation
methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Goodwill
and indefinite life brands are not amortised but are tested for impairment annually or more frequently if impairment indicators
exist. Goodwill is allocated to the Group’s cash generating units or groups of cash generating units, which represent the
lowest level at which goodwill is monitored but where such level is not larger than an operating segment. Gains and losses on
the disposal of an entity include the carrying amount of goodwill related to the entity sold.
|
(i)
|
Short-term
obligations
|
Liabilities
for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognised in respect of employees’
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as current employee benefit obligations in the balance sheet.
|
(ii)
|
Other
long-term employee benefit obligations
|
The
liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service. They are therefore measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods
of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate
bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result
of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The
obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Provisions
are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that
an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions
are measured at the present value of management’s best estimate of the outflow required to settle the obligation at the
end of the reporting period. The discount rate used is a pre-tax rate that reflects current market assessments of the time value
of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken
to finance costs in the consolidated statements of profit or loss and other comprehensive income.
Provisions
recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period.
|
(i)
|
Lease
incentive provision
|
Lease
contributions include payment for improvements initially funded by the landlord. The improvement asset is capitalised and a provision
for the amount of landlord contribution is recognised. The provision is released on a monthly basis over the term of the lease
of the property.
|
(ii)
|
Onerous
contract provision
|
The
Group provides for future losses on long-term contracts where it is considered probable that the contract costs are likely to
exceed revenues in future years. A provision is required for the present value of future losses. Estimating these future losses
involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation
over time.
|
(iii)
|
Make
good provision
|
The
Group is required to restore the lease premises of various retail stores to their original condition at the end of the respective
lease terms. Provisions for make good obligations are recognised when the group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount
can be reliably estimated. A provision is recognised for the present value of the estimated expenditure required to remove any
leasehold improvements. These costs have been capitalised as part of the cost of leasehold improvements and are amortised over
the lease term.
|
(s)
|
Earnings/(loss)
per share
|
(i)
Basic earnings/(loss) per share
Basic
earnings/(loss) per share is calculated by dividing:
|
●
|
the
profit/(loss) attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares
|
|
|
|
|
●
|
by
the weighted average number of ordinary shares outstanding during the financial year.
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
|
(s)
|
Earnings/(loss)
per share
|
(ii)
Diluted earnings/(loss) per share
Diluted
earnings/(loss) per share adjusts the figures used in the determination of basic earnings per share to take into account:
|
●
|
the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
|
|
|
|
|
●
|
the
weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive
potential ordinary shares.
|
For
periods in which the Group has reported net losses, diluted net loss per share attributable to common shareholders is the same
as basic net loss per share attributable to common stockholders, since their impact would be anti-dilutive to the calculation
of net loss per share.
Borrowings
are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over
the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all
of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period
of the facility to which it relates.
Borrowings
are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference
between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance
costs.
Where
the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or
part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference
between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings
are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.
On
issuance of the convertible notes, an assessment is made to determine whether the convertible notes contain an equity instrument
or whether the whole instrument should be classified as a financial liability.
When
it is determined that the whole instrument is a financial liability and no equity instrument is identified (for example for foreign-currency-denominated
convertibles notes), the conversion option is separated from the host debt and classified as a derivative liability. The carrying
value of the host contract (a contract denominated in a foreign currency) at initial recognition is determined as the difference
between the consideration received and the fair value of the embedded derivative. The host contract is subsequently measured at
amortised cost using the effective interest rate method. The embedded derivative is subsequently measured at fair value at the
end of each reporting period through the profit and loss. The convertible note and the derivative are presented as a single number
on the balance sheet within interest-bearing loans and borrowings.
When
it is determined that the instrument contains an equity component based on the terms of the contract, on issuance of the
convertible notes, the fair value of the liability component is determined using a market rate for an equivalent
non-convertible bond. This amount is classified as a financial liability measured at amortised cost (net of transaction
costs) until it is extinguished on
conversion or redemption. The remainder of the proceeds is allocated to the conversion option that is recognised and included
in equity. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option
is not re-measured in subsequent years.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Ordinary
shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
|
(w)
|
Foreign
currency transactions and balances
|
Each
of the entities within the Group prepare their financial statements based on the currency of the primary economic environment
in which the entity operates (functional currency). The consolidated financial statements are presented in New Zealand dollars
which is the parent entity’s functional and presentation currency.
Transaction
and balances
Foreign
currency transactions are recorded at the spot rate on the date of the transaction.
At
the end of the reporting period:
|
●
|
Foreign
currency monetary items are translated using the closing foreign currency rate;
|
|
|
|
|
●
|
Non-monetary
items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and
|
|
|
|
|
●
|
Non-monetary
items that are measured at fair value are translated using the rate at the date when fair value was determined.
|
Exchange
differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which
they were translated on initial recognition or in prior reporting periods are recognised through profit or loss, except where
they relate to an item of other comprehensive income or whether they are deferred in equity as qualifying hedges.
Group
companies
The
financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
|
●
|
assets
and liabilities are translated at period-end exchange rates prevailing at that reporting date;
|
|
|
|
|
●
|
income
and expenses are translated at average exchange rates for the period where the average rate approximates the rate at the date
of the transaction; and
|
|
|
|
|
●
|
retained
earnings are translated at the exchange rates prevailing at the date of the transaction.
|
Exchange
differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation
reserve in the consolidated balance sheets. These differences are recognised in the consolidated statements of profit or loss
and other comprehensive income in the period in which the operation is disposed.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
2
|
Summary
of Significant Accounting Policies
|
Operating
segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The executive
directors are the chief operating decision maker, responsible for allocating resources and assessing performance of the operating
segments.
3
|
Changes
in accounting policies
|
|
(a)
|
IFRIC
23 - Uncertainty over Income Tax Treatments
|
IFRIC
23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is
uncertainty over income tax treatments. The Interpretation requires:
|
●
|
The
Group to contemplate whether uncertain tax treatments should be considered separately, or together as a group, based on which
approach provides better predictions of the resolution;
|
|
●
|
The
Group to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and
|
|
●
|
if
it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely
amount or expected value, depending on whichever method better predicts the resolution of the uncertainty.
|
The
Group has adopted IFRIC 23 as at February 1, 2019. The adoption has not resulted in any material impacts to the financial report.
This
note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting
policies that have been applied from 1 February 2019, where they are different to those applied in prior periods. As permitted
under IFRS 16 paragraph 6, the Company has elected not to recognise leases that are less than 1 year in length or are for a low
value asset (<$5k) on the balance sheet. The Company has applied a single discount rate to the assets with similar characteristics
and used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
The
Group has adopted IFRS 16 from 1 February 2019. The standard replaces IAS 17 ‘Leases’ and IFRIC 4 ‘Determining
whether an Arrangement Contains a Lease’ and for lessees eliminates the classifications of operating leases and finance
leases. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included
in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17.
However, EBITDA (Earnings Before Interest, Tax, Depletion, Depreciation and Amortisation) results improve as the operating expense
is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows,
the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed
in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Right-of-use assets
A
right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement
date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories,
an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
3
|
Changes
in accounting policies (continued)
|
|
(b)
|
IFRS
16 – Leases (continued)
|
Right-of-use
assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
Lease
liabilities
A
lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate
are expensed in the period in which they are incurred.
Lease
liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is
a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term;
certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
Impact
of the adoption of IFRS 16 on the financial position as at 1 February 2019:
IFRS
16 was adopted without restating comparative information using the modified retrospective approach. The reclassifications and
the adjustments arising from IFRS 16 are therefore not reflected in the restated statement of financial position as at 31 January
2019 but are recognised in the statement of financial position on 1 February 2019.
|
|
1 February 2019
|
|
|
|
$’000
|
|
Right-of-use assets
|
|
|
26,158
|
|
Lease contribution provision
|
|
|
1,102
|
|
Lease liabilities
|
|
|
(27,899
|
)
|
Net reduction in retained earnings
|
|
|
639
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
4
|
Critical
Accounting Estimates and Judgments
|
The
directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current
and future events affecting transactions and balances.
These
estimates and judgements are based on the best information available at the time of preparing the financial statements, however
as additional information is known then the actual results may differ from the estimates.
The
significant estimates and judgements made have been described below.
Key
estimates - inventory
Each
item on inventory is reviewed on an annual basis to determine whether it is being carried at higher than its net realisable value.
During the period, management have written down inventory based on best estimate of the net realisable value, although until the
time that inventory is sold this is an estimate.
Key
estimates - fair value of financial instruments
The
Group has certain financial assets and liabilities which are measured at fair value. Where fair value has not been able to be
determined based on quoted price, a valuation model has been used. The inputs to these models are observable, where possible,
however these techniques involve significant estimates and therefore fair value of the instruments could be affected by changes
in these assumptions and inputs.
Key
estimates - impairment of brands
In
accordance with IAS 36 Impairment of Assets, the Group is required to estimate the recoverable amount of indefinite-lived brand
assets at each reporting period.
Impairment
testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported
by their value in use or fair value less cost to sell.
In
calculating the fair value less costs to sell, certain assumptions are required to be made in respect of highly uncertain matters
including management’s expectations of:
|
-
|
growth
in brand revenues
|
|
-
|
market
royalty rate
|
|
-
|
the
selection of discount rates to reflect the risks involved, and
|
|
-
|
long-term
growth rates
|
Changing
the assumptions selected by management, in particular the growth rate, discount rate and market royalty rate assumption used,
could significantly affect the Group’s impairment evaluation and hence results.
The
Group’s review includes the key assumptions related to sensitivity in the model. Further details are provided in note 17
to the consolidated financial statements.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
4
|
Critical
Accounting Estimates and Judgments
|
Key
estimates - impairment of goodwill
In
accordance with IAS 36 Impairment of Assets, the Group is required to estimate the recoverable amount of goodwill at each reporting
period.
Impairment
testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported
by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted
at an appropriate rate and using a terminal value to incorporate expectations of growth thereafter.
In
calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain
matters including management’s expectations of:
|
-
|
growth
in EBITDA future cash flows;
|
|
-
|
timing
and quantum of future capital expenditure;
|
|
-
|
long-term
growth rates; and
|
|
-
|
the
selection of discount rates to reflect the risks involved.
|
Changing
the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the cash flow projections,
could significantly affect the Group’s impairment evaluation and hence results.
The
Group’s review includes the key assumptions related to sensitivity in the cash flow projections. Further details are provided
in note17 to the consolidated financial statements.
Key
judgments - taxes
Deferred
tax assets
Determining
income tax provisions and the recognition of deferred tax assets including carried forward income tax involves judgment on the
tax treatment of certain transactions. Deferred tax is recognised on tax losses not yet used and on temporary differences where
it is probable that there will be taxable revenue against which these can be offset. Management has made judgments as to the probability
of future taxable income being generated against which tax losses will be available for offset based on budgets, current and future
expected economic conditions.
Key
judgments – determining the lease term of contracts with renewal options
The
Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised within the next 12 months. As per the Company policy, the options are not
exercised when the lease terms are beyond 12 months as of the assessment date. When the Group has the option to lease the assets
for additional terms, it applies judgement in evaluating whether it is reasonably certain to exercise the option to renew, considering
all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group
reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its
ability to exercise (or not to exercise) the option to renew.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
5
|
Revenue
and Other Income
|
Revenue
from continuing operations
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
Gross revenue
|
|
|
93,302
|
|
|
|
120,278
|
|
|
|
145,452
|
|
Rebates
|
|
|
(3,237
|
)
|
|
|
(8,358
|
)
|
|
|
(14,064
|
)
|
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,388
|
|
Sale of goods by channel
|
|
|
|
|
|
|
|
|
|
|
|
|
- Retail
|
|
|
42,576
|
|
|
|
50,443
|
|
|
|
53,150
|
|
- Wholesale
|
|
|
15,553
|
|
|
|
29,394
|
|
|
|
45,901
|
|
- Online
|
|
|
31,936
|
|
|
|
32,083
|
|
|
|
32,234
|
|
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,285
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
103
|
|
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,388
|
|
Sales of goods by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
- New Zealand
|
|
|
33,786
|
|
|
|
40,703
|
|
|
|
46,665
|
|
- Australia
|
|
|
24,365
|
|
|
|
32,065
|
|
|
|
38,208
|
|
- United States
|
|
|
30,863
|
|
|
|
34,156
|
|
|
|
32,323
|
|
- Europe
|
|
|
1,051
|
|
|
|
4,996
|
|
|
|
14,192
|
|
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,388
|
|
Disaggregation
of revenue
The
Group derives its revenue from the transfer of goods at a point in time. The table above provides a breakdown of revenue by major
business line. The categories above depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected
by economic data. As disclosed in Note 11, the Group has seven operating segments.
Other
income relates to non-recurring advisory, management and design services provided to other third-party intimates apparel brand
owners.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
The
loss for the period was derived after charging/(crediting):
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
|
|
|
|
|
|
|
|
|
|
Staff costs (see note 9)
|
|
|
28,009
|
|
|
|
31,380
|
|
|
|
34,158
|
|
Depreciation of property, plant and equipment
|
|
|
1,338
|
|
|
|
2,151
|
|
|
|
2,724
|
|
Depreciation of right-of-use assets
|
|
|
8,676
|
|
|
|
-
|
|
|
|
-
|
|
Amortisation of acquired intangibles
|
|
|
589
|
|
|
|
231
|
|
|
|
306
|
|
Impairment of tangible assets (see note 15)
|
|
|
491
|
|
|
|
281
|
|
|
|
|
|
Impairment of intangible assets (see note 17)
|
|
|
8,413
|
|
|
|
7,892
|
|
|
|
1,914
|
|
Loss on disposal of property, plant and equipment
|
|
|
322
|
|
|
|
232
|
|
|
|
362
|
|
Transaction expenses
|
|
|
9,597
|
|
|
|
9,267
|
|
|
|
3,322
|
|
Operating lease rentals
|
|
|
|
|
|
|
|
|
|
|
|
|
- land and buildings
|
|
|
-
|
|
|
|
9,236
|
|
|
|
10,021
|
|
- other
|
|
|
-
|
|
|
|
524
|
|
|
|
786
|
|
Gain on sale of intangible assets
|
|
|
(906
|
)
|
|
|
-
|
|
|
|
-
|
|
Contract termination
|
|
|
4,696
|
|
|
|
-
|
|
|
|
-
|
|
Auditor’s remuneration (note
37)
|
|
|
679
|
|
|
|
1,050
|
|
|
|
513
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31
January 2019
NZ$000’s
|
|
|
For the Year Ended 31
January 2018
NZ$000’s
|
|
- Interest expense on external borrowings
|
|
|
1,608
|
|
|
|
2,338
|
|
|
|
5,431
|
|
- Interest expense on convertible loan notes
|
|
|
1,425
|
|
|
|
-
|
|
|
|
-
|
|
- Interest expense on leases
|
|
|
1,674
|
|
|
|
-
|
|
|
|
-
|
|
- Interest (income)/expense on shareholder loans*
|
|
|
(165
|
)
|
|
|
1,062
|
|
|
|
2,807
|
|
- Amortisation of loan set up costs
|
|
|
671
|
|
|
|
641
|
|
|
|
553
|
|
|
|
|
5,213
|
|
|
|
4,041
|
|
|
|
8,791
|
|
*
During the year, the shareholder loan payable was derecognised resulting in a reversal of interest expense.
8
|
Other
foreign currency (gains)/losses
|
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31
January 2019
NZ$000’s
|
|
|
For the Year Ended 31
January 2018
NZ$000’s
|
|
- Fair value (gain)/loss on foreign exchange contracts
|
|
|
(729
|
)
|
|
|
1,065
|
|
|
|
(502
|
)
|
- Net foreign exchange loss/(gain)
|
|
|
114
|
|
|
|
(3,027
|
)
|
|
|
(255
|
)
|
|
|
|
(615
|
)
|
|
|
(1,963
|
)
|
|
|
(757
|
)
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31
January 2019
NZ$000’s
|
|
|
For the Year Ended 31
January 2018
NZ$000’s
|
|
Employee benefits expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Salaries and wages
|
|
|
26,920
|
|
|
|
30,872
|
|
|
|
33,613
|
|
- Defined contribution expenses
|
|
|
1,089
|
|
|
|
508
|
|
|
|
545
|
|
|
|
|
28,009
|
|
|
|
31,380
|
|
|
|
34,158
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
10
|
Income
Tax Expense/(benefit)
|
(a)
The major components of tax expense/(benefit) comprise:
|
|
For the Year
Ended 31
January 2020
NZ$000’s
|
|
|
For the Year
Ended 31
January 2019
NZ$000’s
|
|
|
For the Year
Ended 31
January 2018
NZ$000’s
|
|
Current tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax on profits for the period
|
|
|
28
|
|
|
|
(667
|
)
|
|
|
537
|
|
Adjustments for current tax of prior periods
|
|
|
53
|
|
|
|
(607
|
)
|
|
|
(477
|
)
|
Total current tax expense/(benefit)
|
|
|
81
|
|
|
|
(1,274
|
)
|
|
|
60
|
|
Deferred tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in deferred tax assets (note 29)
|
|
|
701
|
|
|
|
-
|
|
|
|
-
|
|
Income tax expense/(benefit) for continuing operations
|
|
|
782
|
|
|
|
(1,274
|
)
|
|
|
60
|
|
(b)
Reconciliation of income tax to accounting profit:
Loss before income tax
|
|
|
(53,523
|
)
|
|
|
(50,494
|
)
|
|
|
(37,533
|
)
|
Tax at New Zealand tax rate of 28%
|
|
|
(14,986
|
)
|
|
|
(14,138
|
)
|
|
|
(10,509
|
)
|
Tax effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
- permanent differences (including impairment expense)
|
|
|
5,108
|
|
|
|
753
|
|
|
|
(105
|
)
|
- adjustments in respect of current income tax of previous years
|
|
|
32
|
|
|
|
(522
|
)
|
|
|
(449
|
)
|
- effects of different tax rates of subsidiaries operating in other jurisdictions
|
|
|
(301
|
)
|
|
|
493
|
|
|
|
(30
|
)
|
- deferred tax assets relating to the current year not brought to account
|
|
|
10,163
|
|
|
|
12,077
|
|
|
|
11,150
|
|
- deferred tax assets relating to prior periods no longer recognised (note 29)
|
|
|
701
|
|
|
|
-
|
|
|
|
-
|
|
- other
|
|
|
65
|
|
|
|
63
|
|
|
|
3
|
|
Income tax expense/(benefit)
|
|
|
782
|
|
|
|
(1,274
|
)
|
|
|
60
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
10
|
Income
Tax Expense/(benefit)
|
(c)
Tax losses not recognised
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
Unused tax losses for which no deferred tax asset has been recognised
|
|
|
166,882
|
|
|
|
130,587
|
|
|
|
87,455
|
|
Potential tax benefit at 28%
|
|
|
46,727
|
|
|
|
36,564
|
|
|
|
24,487
|
|
The
Group has assessed future forecast profits and concluded that not enough criteria have been satisfied to recognise any deferred
tax assets at the period ended 31 January 2020. Unused tax losses do not have an expiry date. During the period, the Group de-recognised
all deferred tax assets on timing differences carried forward from prior years, amounting to $701,000 after accounting for exchange
rate differences.
(d)
Temporary differences not recognised
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
Temporary differences for which no deferred tax asset has been recognised
|
|
|
9,825
|
|
|
|
14,504
|
|
|
|
14,661
|
|
Potential tax benefit at 28%
|
|
|
2,751
|
|
|
|
4,061
|
|
|
|
4,105
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Segment
information
Identification
of reportable operating segments
The
consolidated entities’ Director examined the group’s performance from both sales channel and geographical perspective and identified
seven reportable segments being Australia Retail, New Zealand Retail, Australia wholesale, New Zealand wholesale, US Wholesale,
EU Wholesale and e-commerce.
Australia
retail
This
segment covers retail and outlet stores located in Australia.
New
Zealand retail
This
segment covers retail and outlet stores located in New Zealand.
Australia
wholesale
This
segment covers the wholesale of intimates apparel to customers based in Australia.
New
Zealand wholesale
This
segment covers the wholesale of intimates apparel to customers based in New Zealand.
US
wholesale
This
segment covers the wholesale of intimates apparel to customers based in the United States of America.
Europe
wholesale
This
segment covers the wholesale of intimates apparel to customers based in Europe.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Identification
of reportable operating segments
E-commerce
This
segment covers the group’s online retail activities. E-commerce revenue for the periods ended 31 January 2020, 31 January 2019
and 31 January 2018 include revenue from a US brand called Fredericks of Hollywood for which Bendon Limited currently has a licence
agreement.
These
operating segments are based on the internal reports that are reviewed and used by the Chief Executive Officer (who is identified
as the Chief Operating Decision Maker (‘CODM’)) in assessing performance and in determining the allocation of resources.
The
CODM reviews underlying EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted
for internal reporting to the CODM are consistent with those adopted in the financial statements.
EBITDA
is a financial measure which is not prescribed by IFRS and represents the profit adjusted for specific non-cash and significant
items. The directors consider EBITDA to reflect the core earnings of the consolidated entity.
The
information reported to the CODM is on a monthly basis.
Other
Costs and Business Activities
Certain
costs are not allocated to our reporting segment results, such as costs associated with the following:
-
Corporate overheads, which is responsible for centralized functions such as information technology, facilities, legal, finance,
human resources, business development, and procurement. These costs also include compensation costs and other miscellaneous operating
expenses not charged to our operating segments, as well as interest and tax income and expense.
These
costs are included with in “unallocated” segment in our segment performance.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Other
assets and liabilities
Assets
and liabilities are managed on a Group basis, not by segment. CODM does not regularly review any asset or liability information
by segment and its preparation is impracticable. Accordingly, we do not report asset and liability information by segment.
Reconciliation
of segment revenue to consolidated statements of profit or loss and other comprehensive income:
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
Total segment revenue
|
|
|
104,153
|
|
|
|
136,842
|
|
|
|
156,311
|
|
Intersegment eliminations
|
|
|
(14,088
|
)
|
|
|
(24,922
|
)
|
|
|
(24,923
|
)
|
Other revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total revenue
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,388
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Reconciliation
of segment EBITDA to the consolidated statements of profit or loss and other comprehensive income:
The
Board meets on a monthly basis to assess the performance of each segment, net operating profit does not include non-operating
revenue and expenses such as dividends, fair value gains and losses.
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
Segment EBITDA
|
|
|
(16,167
|
)
|
|
|
(25,602
|
)
|
|
|
(24,053
|
)
|
Any other reconciling items
|
|
|
(37,356
|
)
|
|
|
(24,892
|
)
|
|
|
(13,480
|
)
|
Income tax (expense)/benefit
|
|
|
(782
|
)
|
|
|
1,274
|
|
|
|
(60
|
)
|
Total net loss after tax
|
|
|
(54,305
|
)
|
|
|
(49,220
|
)
|
|
|
(37,593
|
)
|
Any
other reconciling items includes brand transition, finance expenses, impairment expense, depreciation and amortisation, fair value
gain/loss on foreign exchange contracts, and unrealised foreign exchange gain/loss that cannot be allocated to segments.
|
(b)
|
Geographical
information
|
In
presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers
whereas segment assets are based on the location of the assets.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
(b)
|
Geographical
information
|
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
|
For the Year Ended 31 January 2018
NZ$000’s
|
|
New Zealand
|
|
|
33,786
|
|
|
|
40,703
|
|
|
|
46,665
|
|
Australia
|
|
|
24,365
|
|
|
|
32,065
|
|
|
|
38,208
|
|
United States
|
|
|
30,863
|
|
|
|
34,156
|
|
|
|
32,323
|
|
Europe
|
|
|
1,051
|
|
|
|
4,996
|
|
|
|
14,192
|
|
|
|
|
90,065
|
|
|
|
111,920
|
|
|
|
131,388
|
|
The
revenues resulting from the Naked business combination in the prior year are included in the United States segment shown above.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
NZ
Retail
NZ$000’s
|
|
|
AU
Retail
NZ$000’s
|
|
|
NZ
Wholesale
NZ$000’s
|
|
|
AU
Wholesale
NZ$000’s
|
|
|
US
Wholesale
NZ$000’s
|
|
|
EU
Wholesale
NZ$000’s
|
|
|
e-commerce
NZ$000’s
|
|
|
Unallocated
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
For
the year ended 31 January 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from external customers
|
|
|
28,302
|
|
|
|
14,274
|
|
|
|
3,482
|
|
|
|
7,066
|
|
|
|
3,955
|
|
|
|
1,051
|
|
|
|
31,935
|
|
|
|
-
|
|
|
|
90,065
|
|
|
|
|
28,302
|
|
|
|
14,274
|
|
|
|
3,482
|
|
|
|
7,066
|
|
|
|
3,955
|
|
|
|
1,051
|
|
|
|
31,935
|
|
|
|
-
|
|
|
|
90,065
|
|
Cost
of sales
|
|
|
(12,997
|
)
|
|
|
(6,585
|
)
|
|
|
(3,455
|
)
|
|
|
(4,837
|
)
|
|
|
(2,265
|
)
|
|
|
(785
|
)
|
|
|
(20,916
|
)
|
|
|
(4,407
|
)
|
|
|
(56,247
|
)
|
Gross
margin
|
|
|
15,305
|
|
|
|
7,689
|
|
|
|
27
|
|
|
|
2,229
|
|
|
|
1,689
|
|
|
|
266
|
|
|
|
11,020
|
|
|
|
(4,407
|
)
|
|
|
33,818
|
|
Other
segment expenses*
|
|
|
(10,491
|
)
|
|
|
(8,293
|
)
|
|
|
(473
|
)
|
|
|
(2,149
|
)
|
|
|
(523
|
)
|
|
|
33
|
|
|
|
(13,659
|
)
|
|
|
-
|
|
|
|
(35,555
|
)
|
Unallocated
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,234
|
)
|
|
|
(1,234
|
)
|
Corporate
expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,772
|
)
|
|
|
(12,772
|
)
|
Other
foreign exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(424
|
)
|
|
|
(424
|
)
|
EBITDA
|
|
|
4,814
|
|
|
|
(604
|
)
|
|
|
(446
|
)
|
|
|
80
|
|
|
|
1,166
|
|
|
|
299
|
|
|
|
(2,639
|
)
|
|
|
(18,837
|
)
|
|
|
(16,167
|
)
|
Brand
transition, restructure and transaction expenses**
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,687
|
)
|
|
|
(13,687
|
)
|
Finance
expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,213
|
)
|
|
|
(5,213
|
)
|
Interest
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
|
|
12
|
|
Impairment
expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,904
|
)
|
|
|
(8,904
|
)
|
Depreciation
and amortisation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,603
|
)
|
|
|
(10,603
|
)
|
Fair
value gain on foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
729
|
|
|
|
729
|
|
Unrealised
foreign exchange gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
310
|
|
|
|
310
|
|
Fair
value gain/(loss) on Convertible Notes derivative
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income/(loss)
before income tax expense
|
|
|
4,814
|
|
|
|
(604
|
)
|
|
|
(446
|
)
|
|
|
80
|
|
|
|
1,166
|
|
|
|
299
|
|
|
|
(2,639
|
)
|
|
|
(56,193
|
)
|
|
|
(53,523
|
)
|
Income
tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(782
|
)
|
|
|
(782
|
)
|
Income/(loss)
after income tax expense
|
|
|
4,814
|
|
|
|
(604
|
)
|
|
|
(446
|
)
|
|
|
80
|
|
|
|
1,166
|
|
|
|
299
|
|
|
|
(2,639
|
)
|
|
|
(56,975
|
)
|
|
|
(54,305
|
)
|
*
Other segment expenses relate to brand management expenses and some corporate expenses.
**
Brand transition, restructure and transaction expenses are shown net of proceeds from the sale of Naked brand and trademarks.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
NZ Retail
NZ$000’s
|
|
|
AU Retail
NZ$000’s
|
|
|
NZ Wholesale
NZ$000’s
|
|
|
AU Wholesale
NZ$000’s
|
|
|
US Wholesale
NZ$000’s
|
|
|
EU Wholesale
NZ$000’s
|
|
|
e-commerce
NZ$000’s
|
|
|
Unallocated
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
For the year ended 31 January 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers
|
|
|
31,801
|
|
|
|
18,547
|
|
|
|
7,154
|
|
|
|
11,491
|
|
|
|
5,798
|
|
|
|
4,996
|
|
|
|
32,133
|
|
|
|
-
|
|
|
|
111,920
|
|
|
|
|
31,801
|
|
|
|
18,547
|
|
|
|
7,154
|
|
|
|
11,491
|
|
|
|
5,798
|
|
|
|
4,996
|
|
|
|
32,133
|
|
|
|
-
|
|
|
|
111,920
|
|
Cost of sales
|
|
|
(15,424
|
)
|
|
|
(9,192
|
)
|
|
|
(6,372
|
)
|
|
|
(8,498
|
)
|
|
|
(5,222
|
)
|
|
|
(4,490
|
)
|
|
|
(21,248
|
)
|
|
|
(4,034
|
)
|
|
|
(74,480
|
)
|
Gross margin
|
|
|
16,377
|
|
|
|
9,355
|
|
|
|
782
|
|
|
|
2,993
|
|
|
|
576
|
|
|
|
506
|
|
|
|
10,885
|
|
|
|
(4,034
|
)
|
|
|
37,440
|
|
Other segment expenses*
|
|
|
(13,537
|
)
|
|
|
(11,003
|
)
|
|
|
(912
|
)
|
|
|
(4,495
|
)
|
|
|
(2,724
|
)
|
|
|
(1,536
|
)
|
|
|
(11,247
|
)
|
|
|
-
|
|
|
|
(45,454
|
)
|
Unallocated expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,050
|
)
|
|
|
(1,050
|
)
|
Corporate expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,947
|
)
|
|
|
(17,947
|
)
|
Other foreign exchange gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,409
|
|
|
|
1,409
|
|
EBITDA
|
|
|
2,840
|
|
|
|
(1,648
|
)
|
|
|
(130
|
)
|
|
|
(1,502
|
)
|
|
|
(2,148
|
)
|
|
|
(1,030
|
)
|
|
|
(362
|
)
|
|
|
(21,622
|
)
|
|
|
(25,602
|
)
|
Brand transition, restructure and transaction expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,075
|
)
|
|
|
(10,075
|
)
|
Finance expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,041
|
)
|
|
|
(4,041
|
)
|
Impairment expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,173
|
)
|
|
|
(8,173
|
)
|
Depreciation and amortisation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,382
|
)
|
|
|
(2,382
|
)
|
Fair value loss on foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,704
|
)
|
|
|
(1,704
|
)
|
Unrealised foreign exchange gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,258
|
|
|
|
2,258
|
|
Fair value loss on Convertible Notes derivative
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(775
|
)
|
|
|
(775
|
)
|
Income/(loss) before income tax expense
|
|
|
2,840
|
|
|
|
(1,648
|
)
|
|
|
(130
|
)
|
|
|
(1,502
|
)
|
|
|
(2,148
|
)
|
|
|
(1,030
|
)
|
|
|
(362
|
)
|
|
|
(46,514
|
)
|
|
|
(50,494
|
)
|
Income tax benefit
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,274
|
|
|
|
1,274
|
|
Income/(loss) after income tax expense
|
|
|
2,840
|
|
|
|
(1,648
|
)
|
|
|
(130
|
)
|
|
|
(1,502
|
)
|
|
|
(2,148
|
)
|
|
|
(1,030
|
)
|
|
|
(362
|
)
|
|
|
(45,240
|
)
|
|
|
(49,220
|
)
|
*
Other segment expenses relate to brand management expenses and some corporate expenses.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
For the year ended 31 January 2018
|
|
NZ Retail
NZ$000’s
|
|
|
AU Retail
NZ$000’s
|
|
|
NZ Wholesale
NZ$000’s
|
|
|
AU Wholesale
NZ$000’s
|
|
|
US Wholesale
NZ$000’s
|
|
|
EU Wholesale
NZ$000’s
|
|
|
e-commerce
NZ$000’s
|
|
|
Unallocated
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Revenue from external customers
|
|
|
34,269
|
|
|
|
18,236
|
|
|
|
10,453
|
|
|
|
15,512
|
|
|
|
6,390
|
|
|
|
14,192
|
|
|
|
32,234
|
|
|
|
-
|
|
|
|
131,286
|
|
Service income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102
|
|
|
|
102
|
|
|
|
|
34,269
|
|
|
|
18,236
|
|
|
|
10,453
|
|
|
|
15,512
|
|
|
|
6,390
|
|
|
|
14,192
|
|
|
|
32,234
|
|
|
|
102
|
|
|
|
131,388
|
|
Cost of sales
|
|
|
(16,488
|
)
|
|
|
(9,457
|
)
|
|
|
(8,213
|
)
|
|
|
(12,545
|
)
|
|
|
(6,438
|
)
|
|
|
(10,221
|
)
|
|
|
(20,974
|
)
|
|
|
(3,123
|
)
|
|
|
(87,459
|
)
|
Gross margin
|
|
|
17,781
|
|
|
|
8,779
|
|
|
|
2,240
|
|
|
|
2,967
|
|
|
|
(48
|
)
|
|
|
3,971
|
|
|
|
11,260
|
|
|
|
(3,021
|
)
|
|
|
43,929
|
|
Other segment expenses*
|
|
|
(13,451
|
)
|
|
|
(11,329
|
)
|
|
|
(1,068
|
)
|
|
|
(3,781
|
)
|
|
|
(3,301
|
)
|
|
|
(2,904
|
)
|
|
|
(11,520
|
)
|
|
|
-
|
|
|
|
(47,354
|
)
|
Unallocated expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,101
|
)
|
|
|
(1,101
|
)
|
Corporate expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,150
|
)
|
|
|
(19,150
|
)
|
Other foreign exchange loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(377
|
)
|
|
|
(377
|
)
|
EBITDA
|
|
|
4,330
|
|
|
|
(2,550
|
)
|
|
|
1,172
|
|
|
|
(814
|
)
|
|
|
(3,349
|
)
|
|
|
1,067
|
|
|
|
(260
|
)
|
|
|
(23,649
|
)
|
|
|
(24,053
|
)
|
Brand transition, restructure and transaction expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,272
|
)
|
|
|
(3,272
|
)
|
Finance expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,791
|
)
|
|
|
(8,791
|
)
|
Impairment expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,914
|
)
|
|
|
(1,914
|
)
|
Depreciation and amortisation expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,030
|
)
|
|
|
(3,030
|
)
|
Fair value loss on foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(502
|
)
|
|
|
(502
|
)
|
Unrealised foreign exchange gain
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,636
|
|
|
|
1,636
|
|
Fair value gain on Convertible Note derivative
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,393
|
|
|
|
2,393
|
|
Income/(loss) before income tax expense
|
|
|
4,330
|
|
|
|
(2,550
|
)
|
|
|
1,172
|
|
|
|
(814
|
)
|
|
|
(3,349
|
)
|
|
|
1,067
|
|
|
|
(260
|
)
|
|
|
(37,129
|
)
|
|
|
(37,533
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(60
|
)
|
|
|
(60
|
)
|
Income/(loss) after income tax expense
|
|
|
4,330
|
|
|
|
(2,550
|
)
|
|
|
1,172
|
|
|
|
(814
|
)
|
|
|
(3,349
|
)
|
|
|
1,067
|
|
|
|
(260
|
)
|
|
|
(37,189
|
)
|
|
|
(37,593
|
)
|
*
Other segment expenses relate to brand management expenses and some corporate expenses.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
12
|
Cash
and Cash Equivalents
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Cash on hand
|
|
|
44
|
|
|
|
47
|
|
Cash at bank
|
|
|
3,747
|
|
|
|
1,915
|
|
|
|
|
3,791
|
|
|
|
1,962
|
|
13
|
Trade
and Other Receivables
|
|
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
CURRENT
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
|
|
2,358
|
|
|
|
7,789
|
|
Provision for impairment
|
|
(a)
|
|
|
(22
|
)
|
|
|
(609
|
)
|
|
|
|
|
|
2,336
|
|
|
|
7,180
|
|
Prepayments
|
|
|
|
|
2,959
|
|
|
|
2,280
|
|
Other receivables
|
|
|
|
|
762
|
|
|
|
183
|
|
Total current trade and other receivables
|
|
|
|
|
6,057
|
|
|
|
9,650
|
|
Due
to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
13
|
Trade
and Other Receivables
|
|
(a)
|
Impairment
of receivables
|
The
Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the
lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at 31 January 2020
is determined as follows, the expected credit losses incorporate forward looking information.
31 January 2020
|
|
0 - 30 days
|
|
|
31 - 60 days
|
|
|
60 - 90 days
|
|
|
> 90 days overdue
|
|
|
Total
|
|
Expected loss rate (%)
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
|
|
|
|
Gross carrying amount ($)
|
|
|
2,039
|
|
|
|
247
|
|
|
|
50
|
|
|
|
22
|
|
|
|
2,358
|
|
ECL provision
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22
|
|
|
|
22
|
|
Reconciliation
of changes in the provision for impairment of receivables is as follows:
|
|
For the Year Ended 31 January 2020
NZ$000’s
|
|
|
For the Year Ended 31 January 2019
NZ$000’s
|
|
Balance at beginning of the period (calculated in accordance with IAS 139)
|
|
|
(609
|
)
|
|
|
(326
|
)
|
Opening impairment allowance calculated under IFRS 9
|
|
|
(609
|
)
|
|
|
(326
|
)
|
Movement through provision
|
|
|
(4
|
)
|
|
|
(1,037
|
)
|
Unused amounts reversed
|
|
|
616
|
|
|
|
772
|
|
Foreign exchange movement
|
|
|
(25
|
)
|
|
|
(18
|
)
|
Balance at end of the period
|
|
|
(22
|
)
|
|
|
(609
|
)
|
The
Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss (ECL). The ECL on
trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis
of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions
of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions
at the reporting date.
The
Group has recognised a loss allowance of 100% against identifiable receivables at risk in excess of 90 days because historical
experience has indicated that these receivables are generally not recoverable.
There
has been no change in the estimation techniques or significant assumptions made during the current reporting period.
The
Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy
proceedings, whichever occurs first.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
13
|
Trade
and Other Receivables
|
The
ageing analysis of receivables is as follows:
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
0-30 days
|
|
|
2,039
|
|
|
|
5,577
|
|
31-60 days
|
|
|
247
|
|
|
|
852
|
|
61-90 days (past due not impaired)
|
|
|
50
|
|
|
|
101
|
|
91+ days (past due not impaired)
|
|
|
-
|
|
|
|
3,295
|
|
91+ days (considered impaired)
|
|
|
22
|
|
|
|
(2,036
|
)
|
|
|
|
2,358
|
|
|
|
7,789
|
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Finished goods
|
|
|
24,035
|
|
|
|
21,564
|
|
Provision for impairment
|
|
|
(495
|
)
|
|
|
(444
|
)
|
|
|
|
23,539
|
|
|
|
21,120
|
|
Write
downs of inventories to net realisable value during the period were NZ$51k (2019: NZ$106k).
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
15
|
Property,
plant and equipment
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
|
|
|
|
|
|
|
Leasehold Improvements
|
|
|
|
|
|
|
|
|
At cost
|
|
|
11,456
|
|
|
|
12,035
|
|
Accumulated depreciation and impairment
|
|
|
(9,690
|
)
|
|
|
(8,771
|
)
|
|
|
|
1,766
|
|
|
|
3,264
|
|
Plant, furniture, fittings and motor vehicles
|
|
|
|
|
|
|
|
|
At cost
|
|
|
24,850
|
|
|
|
25,666
|
|
Accumulated depreciation
|
|
|
(23,579
|
)
|
|
|
(25,167
|
)
|
|
|
|
1,271
|
|
|
|
499
|
|
|
|
|
|
|
|
|
|
|
Total property, plant and equipment
|
|
|
3,037
|
|
|
|
3,763
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
15
|
Property,
plant and equipment
|
|
|
(a)
|
Movements in carrying amounts of property, plant and equipment
|
Movement
in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial
period:
|
|
Leasehold improvements
NZ$000’s
|
|
|
Plant, furniture, fittings and motor vehicles
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Year ended 31 January 2020
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of year
|
|
|
3,264
|
|
|
|
499
|
|
|
|
3,763
|
|
Additions
|
|
|
191
|
|
|
|
1,103
|
|
|
|
1,294
|
|
Disposals
|
|
|
(28
|
)
|
|
|
(324
|
)
|
|
|
(352
|
)
|
Depreciation expense
|
|
|
(461
|
)
|
|
|
(877
|
)
|
|
|
(1,338
|
)
|
Reclassification
|
|
|
(1,070
|
)
|
|
|
1,120
|
|
|
|
50
|
|
Impairment loss
|
|
|
(213
|
)
|
|
|
(278
|
)
|
|
|
(491
|
)
|
Adjustment to make good asset
|
|
|
14
|
|
|
|
-
|
|
|
|
14
|
|
Foreign exchange movements
|
|
|
69
|
|
|
|
28
|
|
|
|
97
|
|
Balance at the end of the year
|
|
|
1,766
|
|
|
|
1,271
|
|
|
|
3,037
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 January 2019
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of year
|
|
|
2,728
|
|
|
|
2,013
|
|
|
|
4,741
|
|
Additions
|
|
|
1,501
|
|
|
|
1,084
|
|
|
|
2,585
|
|
Disposals
|
|
|
(105
|
)
|
|
|
(2,736
|
)
|
|
|
(2,841
|
)
|
Depreciation expense
|
|
|
(982
|
)
|
|
|
(1,170
|
)
|
|
|
(2,152
|
)
|
Impairment loss
|
|
|
-
|
|
|
|
(239
|
)
|
|
|
(239
|
)
|
Foreign exchange movements
|
|
|
122
|
|
|
|
1,547
|
|
|
|
1,669
|
|
Balance at the end of the year
|
|
|
3,264
|
|
|
|
499
|
|
|
|
3,763
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
The
Group leases warehouse, retail and office facilities. The leases typically run for a period of 5 years with an option to
renew the lease after that date. Lease payments are renegotiated every resigning period to reflect market rentals. Some leases
provide for additional rent payments that are based on changes in local price indices. For certain leases, the Group is restricted
from entering into any sub-leasing arrangements. The Group also leases information technology and other point of sale equipment.
Information
about leases for which the Group is a lessee is presented below:
Right-of-use
assets
Right-of-use
assets related to leased properties that do not meet the definition of investment property are presented as property, plant and
equipment (see note 15).
|
|
Land & Buildings
|
|
|
Plant, furniture, fittings and motor vehicles
|
|
|
Total
|
|
|
|
NZ $000’s
|
|
|
NZ $000’s
|
|
|
NZ $000’s
|
|
Balance as at 1 February
|
|
|
25,616
|
|
|
|
542
|
|
|
|
26,158
|
|
Additions to right-of-use-assets
|
|
|
6,255
|
|
|
|
72
|
|
|
|
6,327
|
|
Depreciation charge for the year
|
|
|
(8,479
|
)
|
|
|
(197
|
)
|
|
|
(8,676
|
)
|
Balance at 31 January 2020
|
|
|
23,392
|
|
|
|
417
|
|
|
|
23,809
|
|
Amounts
recognised in profit or loss
|
|
2020
|
|
|
|
NZ $000’s
|
|
|
|
|
|
|
Interest expense on lease liabilities
|
|
|
1,674
|
|
Extension
options
Some
property leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract
period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The
extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date
whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise
the options if there is a significant event or significant changes in circumstances within its control.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Goodwill
|
|
|
|
|
|
|
Cost
|
|
|
6,091
|
|
|
|
5,607
|
|
Accumulated impairment
|
|
|
(6,091
|
)
|
|
|
(3,287
|
)
|
|
|
|
-
|
|
|
|
2,320
|
|
Patents and licences
|
|
|
|
|
|
|
|
|
Cost
|
|
|
25,151
|
|
|
|
25,993
|
|
Accumulated amortisation and impairment
|
|
|
(3,489
|
)
|
|
|
(918
|
)
|
|
|
|
21,662
|
|
|
|
25,075
|
|
Brands
|
|
|
|
|
|
|
|
|
Cost
|
|
|
12,032
|
|
|
|
14,769
|
|
Accumulated amortisation and impairment
|
|
|
(5,401
|
)
|
|
|
(4,563
|
)
|
|
|
|
6,631
|
|
|
|
10,205
|
|
Software
|
|
|
|
|
|
|
|
|
Cost
|
|
|
15,548
|
|
|
|
15,718
|
|
Accumulated amortisation and impairment
|
|
|
(15,548
|
)
|
|
|
(15,455
|
)
|
|
|
|
-
|
|
|
|
263
|
|
Total Intangible assets
|
|
|
28,293
|
|
|
|
37,864
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
17
|
Intangible
Assets (continued)
|
|
(a)
|
Movements in carrying amounts of intangible assets
|
|
|
Goodwill
NZ$000’s
|
|
|
Patents and licences
NZ$000’s
|
|
|
Brands
NZ$000’s
|
|
|
Software
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Year ended 31 January 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
2,320
|
|
|
|
25,075
|
|
|
|
10,205
|
|
|
|
263
|
|
|
|
37,864
|
|
Adjustments*
|
|
|
-
|
|
|
|
(2,310
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,310
|
)
|
Amortisation
|
|
|
-
|
|
|
|
(589
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(589
|
)
|
Impairment (note 6)
|
|
|
(2,480
|
)
|
|
|
(2,037
|
)
|
|
|
(3,694
|
)
|
|
|
(202
|
)
|
|
|
(8,413
|
)
|
Reclassification
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|
(50
|
)
|
Foreign exchange movements
|
|
|
160
|
|
|
|
1,523
|
|
|
|
120
|
|
|
|
(11
|
)
|
|
|
1,792
|
|
Closing value at 31 January 2020
|
|
|
-
|
|
|
|
21,662
|
|
|
|
6,631
|
|
|
|
-
|
|
|
|
28,293
|
|
* During the year, a financial liability relating to a shareholder
loan on the balance sheet of Frederick’s of Hollywood (FOH) on the acquisition of FOH Online Corp Inc. was derecognised as
the stock purchase agreement stipulated the transaction was debt free. This has resulted in a reduction to the carrying value of
the acquired intangible asset with a write back to the profit and loss account for the accrued and capitalised interest.
|
|
Goodwill
NZ$000’s
|
|
|
Patents and licences
NZ$000’s
|
|
|
Brands
NZ$000’s
|
|
|
Software
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Year ended 31 January 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
-
|
|
|
|
201
|
|
|
|
12,463
|
|
|
|
348
|
|
|
|
13,012
|
|
Additions
|
|
|
5,798
|
|
|
|
25,076
|
|
|
|
2,726
|
|
|
|
33
|
|
|
|
33,633
|
|
Amortisation
|
|
|
-
|
|
|
|
(202
|
)
|
|
|
-
|
|
|
|
(29
|
)
|
|
|
(231
|
)
|
Impairment
|
|
|
(3,287
|
)
|
|
|
-
|
|
|
|
(4,563
|
)
|
|
|
(83
|
)
|
|
|
(7,933
|
)
|
Foreign exchange movements
|
|
|
(192
|
)
|
|
|
-
|
|
|
|
(420
|
)
|
|
|
(6
|
)
|
|
|
(618
|
)
|
Closing value at 31 January 2019
|
|
|
2,320
|
|
|
|
25,075
|
|
|
|
10,205
|
|
|
|
-
|
|
|
|
37,864
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
17
|
Intangible
Assets (continued)
|
|
(b)
|
Impairment
testing for goodwill
|
For
the purpose of impairment testing, goodwill is allocated to cash-generating units as below:
Description of the cash-generating unit (CGU)
|
|
For the Year Ended 31 January 2020
NZ $000’s
|
|
|
For the Year Ended 31 January 2019
NZ $000’s
|
|
United States
|
|
|
2,480
|
|
|
|
2,320
|
|
Impairment of goodwill
|
|
|
2,480
|
|
|
|
2,320
|
|
Impairment
assumptions
Goodwill
relates to the acquisition of Naked Inc, a business operating in the United States and was allocated to the Group’s operation
in United States which is the cash generating unit (CGU) for the purpose of impairment testing. On 30 September 2019 the Group
resolved to close its Wholesale operations in the United States which resulted in the carrying value being impaired.
The
result of the impairment assessment is that the carrying value of goodwill was fully impaired during the year.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
17
|
Intangible
Assets (continued)
|
|
(c)
|
Impairment
of patents & licences
|
Impairment
charge relating to patents & licences is a result of the impairment of the Fredericks of Hollywood (FOH) licence which was
acquired on 8 December 2018 as part of the Stock Purchase Agreement with the shareholders of FOH Online Corp Inc. The Group also
fully impaired the carrying value of patents and licence acquired as part of the Naked merger.
|
|
For the Year Ended 31 January 2020
NZ $000’s
|
|
|
For the Year Ended 31 January 2019
NZ $000’s
|
|
|
|
|
|
|
|
|
FOH licence
|
|
|
1,914
|
|
|
|
-
|
|
Naked patents & licence
|
|
|
123
|
|
|
|
-
|
|
Impairment of patents & licences
|
|
|
2,037
|
|
|
|
-
|
|
Impairment
assumptions
Management
has determined the recoverable amount of the FOH licence asset by assessing the fair value less cost of disposal (FVLCOD) of the
underlying assets. The relief from royalty method adopted to complete the valuation determines, in lieu of ownership, the cost
that would be required to obtain comparable rights to use the asset via a third-party licence arrangement. These calculations
use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the
five-year period are extrapolated using the estimated growth rates shown below. These growth rates do not exceed the long-term
average growth rates for the industry. The result of the impairment assessment is that the carrying value of the FOH licence exceeded
the fair value less costs to sell by an amount of $2.0m. As such, the FOH licence asset has been partially impaired during the
year.
Management’s
approach and the key assumptions used to determine the FVLCOD were as follows: Sales growth: 9.0%
Royalty
rate: 5.0%
Cash
flow - revenue forecast period: 5 years
Post-tax
discount rate (%): 10.5%
Long
term sales growth rate (%): 2%
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
17
|
Intangible
Assets (continued)
|
|
(d)
|
Impairment testing for indefinite-lived brand intangibles
|
Brand
intangible assets represent brands owned by the Group, that arose on historical acquisitions including Pleasure State, Davenport
and Lovable.
|
|
For the Year Ended 31 January 2020
NZ $000’s
|
|
|
For the Year Ended 31 January 2019
NZ $000’s
|
|
|
|
|
|
|
|
|
|
|
Pleasure State
|
|
|
125
|
|
|
|
2,206
|
|
Davenport and Lovable
|
|
|
1,439
|
|
|
|
1,065
|
|
Naked
|
|
|
2,130
|
|
|
|
1,292
|
|
Impairment of indefinite-lived brand intangibles
|
|
|
3,694
|
|
|
|
4,563
|
|
The
brand intangible assets of $6,631,000 (2019: $10,205,000) are tested for impairment annually.
Impairment
assumptions
Management
has determined the recoverable amount of the indefinite-lived brand assets by assessing the fair value less cost of disposal (FVLCOD)
of the underlying assets. The relief from royalty method adopted to complete the valuation determines, in lieu of ownership, the
cost that would be required to obtain comparable rights to use the asset via a third-party licence arrangement. These calculations
use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the
five-year period are extrapolated using the estimated growth rates shown below. These growth rates do not exceed the long-term
average growth rates for the industry. The result of the impairment assessment is that the carrying value has exceeded the fair
value less costs to sell by $3.7m. As such, the indefinite-lived brand assets has been partially impaired for the year ended 31
January 2020.
Management’s
approach and the key assumptions used to determine the FVLCOD were as follows:
Sales
growth: 5 to 9% (31 January 2019: 2.5%)
Royalty
rate: 5.0% (31 January 2019: 5.0%)
Cash
flow - revenue forecast period: 5 years (31 January 2019: 5 years)
Post-tax
discount rate (%) for US brands: 10.5% (31 January 2019: 10.50%)
Post-tax
discount rate (%) for NZ brands: 11.75% (31 January 2019: 11.75%)
Long
term sales growth rate (%): 2% (31 January 2019: 2%)
Impact
of possible changes in key assumptions
The
directors have made judgements and estimates to assess indefinite-lived assets for impairment. Should these judgements and estimates
not occur the resulting carrying amount may decrease.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
17
|
Intangible
Assets (continued)
|
|
(d)
|
Impairment testing for indefinite-lived brand intangibles
|
The
sensitivities that have been separately modelled are as follows:
(a)
a 2.1% increase in the post-tax discount rate
(b)
sales growth rate reduced to 0%
The
carrying amounts of the indefinite-lived brand intangible assets are sensitive to assumptions used in the impairment test calculations
including the post-tax discount rate and sales growth rate. A 2.1% increase in the post-tax discount rate would result in an additional
impairment of $1,047 thousand (31 January 2019: an increase of 2.1% would result an impairment of $951 thousand) against the carrying
amount of the indefinite-lived brand intangibles. A reduction of the sales growth rate to 0% would result in an additional impairment
of $1,749 thousand (31 January 2019: a reduction to 0% would result an impairment of $1,554 thousand) against the carrying amount
of the indefinite-lived brand intangible assets.
During
the year management determined the costs relating to a prior year ERP upgrade was greater than the recoverable amount of the software.
This has resulted in an impairment charge of $0.202m.
|
(f)
|
Sale of intangible asset
|
On
28th January 2020, Naked Brand Group Limited agreed to sell all of its rights, title and interest in the trademarks
related to the “Naked” and “NKD” brands to Gogogo SRL for a consideration of US $0.6m (NZ $0.906m). At
the date of sale, the intangible assets sold had a book value of nil as they had been fully impaired, resulting in a gain on sale
of intangible assets of US$0.6m (NZ $0.906m) which has been recognised in the profit and loss account.
18
|
Derivative
Financial Instruments
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
-
|
|
|
|
1,484
|
|
In
order to mitigate exchange rate movements and to manage the inventory costing process, the Group has previously entered into forward
currency contracts to purchase US dollars. As at 31 January 2020, there were no forward exchange contracts in place due to the
uncertainty over timing of inventory purchases and related funding constraints.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
19
|
Trade
and Other Payables
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Current:
|
|
|
|
|
|
|
Trade payables
|
|
|
10,407
|
|
|
|
23,580
|
|
Accruals
|
|
|
8,593
|
|
|
|
10,150
|
|
Employee benefit liabilities
|
|
|
3,430
|
|
|
|
1,815
|
|
|
|
|
22,430
|
|
|
|
35,545
|
|
Trade
and other payables are unsecured and are normally settled within 30 days however some the trade creditors are out of term as at
31 January 2020. Subsequent to the end of the financial period the Group is actively working to bring all of the creditors in
term. The carrying amounts are considered to be a reasonable approximation of fair value.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Amounts due in less than one year:
|
|
|
|
|
|
|
|
|
Secured liabilities:
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
17,900
|
|
|
|
20,000
|
|
Debt issuance costs in relation to bank loan
|
|
|
-
|
|
|
|
(270
|
)
|
Other loan
|
|
|
1,315
|
|
|
|
1,237
|
|
|
|
|
19,215
|
|
|
|
20,967
|
|
Amounts due after more than one year:
|
|
|
|
|
|
|
|
|
Secured liabilities:
|
|
|
|
|
|
|
|
|
Convertible loan notes
|
|
|
19,698
|
|
|
|
-
|
|
|
|
|
19,698
|
|
|
|
-
|
|
|
|
|
38,913
|
|
|
|
20,967
|
|
The
fair value of borrowings is not considered to be materially different to their carrying amounts.
|
(a)
|
Assets pledged as collateral:
|
Borrowings
are collateralized by a fixed and floating charge over the assets of the consolidated entity. The lease liabilities are effectively
secured as the rights to the leased assets, recognised in the balance sheet, revert to the lessor in the event of default.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
20
|
Borrowings (continued)
|
|
(b)
|
Bank overdrafts, bank loans and bank loan covenants
|
During
the year the Group maintained its loan facility with the BNZ with interest rate charges ranging between 5.1% and 5.53% and was
predominantly on a monthly rolling basis. The original monthly loan covenant compliance measures were replaced by an inventory
measure. Inventory ratio was to be on average 1.2 times net bank debt (bank loan less cash at bank). The Group had breached the
covenants throughout the year however was compliant in December and January. On 12 March 2020, the Group entered into a Deed of
Amendment with the Bank of New Zealand to extend its loan facility of NZD$16,700,000 (31 January 2019: NZD$20,000,000) until March
2022. The facility includes bank guarantees totalling NZD$1,345,000 and has new covenant compliance measures which are:-
1.
Actual month and cumulative sales variance to budget to be no greater than 15% adverse to budget
2.
Actual month and cumulative gross profit variance to budget to be no greater than 15% adverse to budget
3.
Inventory ratio to be a minimum of 1.35 times bank debt (up to but excluding 31 July 2020)
4.
Inventory ratio to be a minimum of 1.65 times bank debt (31 July 2020 and thereafter)
Convertible
loan notes are initially recognised as a liability as the notes have the characteristics of a liability and are not converted
into fixed, rather a variable number of shares. The Note holder can, in writing, cause the borrower to redeem any portion of the
Note up to an agreed maximum monthly amount.
During
the year, the Group completed 5 separate private placements of secured convertible notes to 2 private investors for a cash consideration
of $21.5m (US$14.0m) with discounts and fees of $1.5m (US$0.95m) with daily compounding interest rates ranging between 10-20%.
During the year the, the note holders of 4 notes elected to exchange their warrant in return for a one-time 5% increase on the
Note balance on the date of election. Total warrants exchanged for an increase in principal Note balance during the period was
$0.9m (US$0.6m). In addition to warrant exchanges, the Note holder is also entitled to a one-time 10% increase in Note value if
the Group fails to meet its financial obligations contained under the Note agreement. The total increase in principal Note balance
relating to financing penalties during the year was $0.9m ($0.6m). By the year end, the first convertible note issued in May 2019
$5.0m (US$3.3m) had been fully converted to equity while $0.6m (US$0.4m) of the note issued in December had been converted. Note
other note holders had exercised their conversion rights at balance date. The notes are secured by a second priority security
interest over all assets and is subordinated to the Bank of New Zealand bank debt. Subject to adjustment, the Note holders have
the right to convert the Note into Naked ordinary shares at an agreed price which ranged between US$0.05 (pre reverse share split)
and US$4.00 (post reverse share split). 6 months after the purchase price date, the lender has the right to cause the borrower
to redeem any portion of the Note up to a monthly maximum amount that was between US$0.4m and US$0.6m. As at 31 January 2020 that
Group had a principal amount of $19.1m (US$12.4m) and accrued interest of $0.6m (US$0.4m). The Total owing of $19.7m (US$12.8m)
is reflected on the balance sheet at the year end and interest has been charged to the Profit and Loss account. When a conversion
option is exercised the amount of conversion is taken to share capital, reducing the loan note balance.
The
other loan relates to convertible note that is no longer convertible but remains payable at a future date.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Current:
|
|
|
|
|
|
|
Lease contributions
|
|
|
-
|
|
|
|
179
|
|
Other provisions
|
|
|
5,205
|
|
|
|
-
|
|
Make good
|
|
|
639
|
|
|
|
742
|
|
|
|
|
5,844
|
|
|
|
921
|
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Non-current:
|
|
|
|
|
|
|
Lease contributions
|
|
|
-
|
|
|
|
906
|
|
Make good
|
|
|
1,796
|
|
|
|
1,466
|
|
|
|
|
1,796
|
|
|
|
2,372
|
|
|
|
Lease
contributions
NZ$000’s
|
|
|
Other
provisions
NZ$000’s
|
|
|
Make
good
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Opening balance at 1 February 2019
|
|
|
1,085
|
|
|
|
-
|
|
|
|
2,208
|
|
|
|
3,293
|
|
Impact of IFRS 16*
|
|
|
(1,102
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,102
|
)
|
Additional provisions recognised
|
|
|
-
|
|
|
|
5,205
|
|
|
|
307
|
|
|
|
5,512
|
|
Amounts used during the period
|
|
|
-
|
|
|
|
-
|
|
|
|
(64
|
)
|
|
|
(80
|
)
|
Exchange differences
|
|
|
17
|
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
1
|
|
Balance at 31 January 2020
|
|
|
-
|
|
|
|
5,205
|
|
|
|
2,435
|
|
|
|
7,640
|
|
*
There is a $17k foreign exchange difference relating to the impact of IFRS16 that is not reflected in the table in note 3
which does not materially affect the opening adjustment at date of adoption.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
21
|
Provisions (continued)
|
|
|
Lease
contributions
NZ$000’s
|
|
|
Other
provisions
NZ$000’s
|
|
|
Make
good
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Opening
balance at 1 February 2018
|
|
|
1,322
|
|
|
|
264
|
|
|
|
2,231
|
|
|
|
3,817
|
|
Additional provisions
recognised
|
|
|
337
|
|
|
|
-
|
|
|
|
717
|
|
|
|
1,054
|
|
Unused amounts reversed
|
|
|
-
|
|
|
|
-
|
|
|
|
(600
|
)
|
|
|
(600
|
)
|
Unwinding of discounts
|
|
|
-
|
|
|
|
-
|
|
|
|
(84
|
)
|
|
|
(84
|
)
|
Amounts used during
the period
|
|
|
(510
|
)
|
|
|
(264
|
)
|
|
|
-
|
|
|
|
(774
|
)
|
Exchange
differences
|
|
|
(64
|
)
|
|
|
-
|
|
|
|
(56
|
)
|
|
|
(120
|
)
|
Balance
at 31 January 2019
|
|
|
1,085
|
|
|
|
-
|
|
|
|
2,208
|
|
|
|
3,293
|
|
Other
provisions
On
31 January 2020, the Group entered into an agreement terminating the license agreement with Heidi Klum. The termination agreement
provides that we may continue selling existing Heidi Klum branded products, as well as Heidi Klum branded products manufactured
on or prior to June 30, 2020 under existing contracts. The right to continue selling such products will continue until six months
after the date of the termination agreement in the Northern Hemisphere and until 12 months after the date of the termination agreement
in the Southern Hemisphere. A termination fee to Heidi Klum in lieu of further royalties is payable in instalments through to
30 December 2020. At 31 January 2020 the termination costs of the contract are greater than the economic benefit and hence the
contract has been identified as onerous. A provision is recognised for an amount the termination costs exceed the economic benefits.
Make
good
In
accordance with certain lease agreements, the Group must refurbish and restore the lease premises to a condition agreed with the
landlord at the end of the lease term or as prescribed. The provision has been calculated using a pre-tax discount rate of 2%
(2019: 2%), and other market assumptions and re-assessed annually.
During
the 2020 financial year an additional $307,000 (2019: $717,000) was recognised in relation to new retail leases in New Zealand
and Australia.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
The
Group has adopted IFRS 16 from 1 February 2019. The standard replaces IAS 17 ‘Leases’ and for lessees eliminates the
classifications of operating leases and finance leases. Straight-line operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included
in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when
compared to lease expenses under IAS 17. However, EBITDA (Earnings Before Interest, Tax, Depletion, Depreciation and Amortisation)
results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the
lease payments are separately disclosed in financing activities.
On
transition to IFRS 16 on 1 February 2019, the Group recognised a right-of-use assets of $26,158,000, a reduction to lease contribution
provisions of $1,102,000 and a lease liability of $27,899,000 and a reduction to retained earnings of $639,000. The prior period
has not been restated, the adjustment to opening retained earnings of $639,000 at 1 February 2019 is reflected in the Consolidated
Statement of Changes in Equity. When measuring the lease liabilities, the Group discounted these lease payments using its incremental
borrowing rate at the date of initial application of IFRS 16. The rate applied was 6.0%.
|
|
FY
31 Jan 2020
Applying
IFRS 16
$’000
|
|
|
FY
31 Jan 2020
Applying
IAS 17
$’000
|
|
|
Movement
$’000
|
|
Consolidated
Statement of Profit or Loss (loss before tax)
|
|
|
(53,523
|
)
|
|
|
(52,974
|
)
|
|
|
549
|
|
Total
expense
|
|
|
143,588
|
|
|
|
143,039
|
|
|
|
549
|
|
Finance
expenses
|
|
|
5,213
|
|
|
|
3,539
|
|
|
|
1,674
|
|
Depreciation
|
|
|
10,014
|
|
|
|
1,338
|
|
|
|
8,676
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
FY
31 Jan 2020
Applying
IFRS 16
$’000
|
|
|
FY
31 Jan 2020
Applying
IAS 17
$’000
|
|
|
Movement
$’000
|
|
Consolidated Statement
of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
Right-of-use
assets
|
|
|
23,809
|
|
|
|
-
|
|
|
|
23,809
|
|
Lease liabilities,
current
|
|
|
(8,112
|
)
|
|
|
-
|
|
|
|
(8,112
|
)
|
Lease liabilities,
non-current
|
|
|
(17,719
|
)
|
|
|
-
|
|
|
|
(17,719
|
)
|
Other liabilities
|
|
|
834
|
|
|
|
-
|
|
|
|
834
|
|
Accumulated losses*
|
|
|
(1,188
|
)
|
|
|
-
|
|
|
|
(1,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement
of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
operating activities
|
|
|
(19,894
|
)
|
|
|
(28,021
|
)
|
|
|
8,127
|
|
Cash flows used in
financing activities
|
|
|
22,098
|
|
|
|
30,225
|
|
|
|
(8,127
|
)
|
*Includes
$639k opening adjustment loss at the date of adoption.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
The
following elections for IFRS 16 were taken on transition date:
|
●
|
the
Group did not reassess whether existing contracts are, or contain, a lease and applied IFRS 16 only to existing contracts that
were previously identified as lease under IAS 17;
|
|
●
|
the
Group applied a single discount rate to a portfolio of leases with reasonably similar characteristics; and
|
|
●
|
leases
with a remaining term of less than 12 months from the transition date and low value lease are expensed on a straight-line basis
to the Consolidated Profit or Loss account.
|
Undiscounted
contractual maturity of lease liabilities
|
|
31
January 2020
NZ$000’s
|
|
Amounts payable:
|
|
|
|
|
Within
one year
|
|
|
9,409
|
|
2 to 5 years inclusive
|
|
|
19,311
|
|
After
5 years
|
|
|
177
|
|
|
|
|
28,897
|
|
Less
future finance charges
|
|
|
(3,066
|
)
|
Lease
liabilities
|
|
|
25,831
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
4,697,204
(2019: 296,409) Ordinary shares
|
|
|
170,193
|
|
|
|
134,183
|
|
|
|
For
the Year
Ended
31 January 2020
NZ$000’s
|
|
|
For
the Year
Ended
31 January 2019
NZ$000’s
|
|
At the
beginning of the reporting period
|
|
|
134,183
|
|
|
|
68,727
|
|
Issuance of new
shares
|
|
|
|
|
|
|
|
|
- Cash collected
|
|
|
12,586
|
|
|
|
23,248
|
|
- Settle shareholder
loan
|
|
|
-
|
|
|
|
12,242
|
|
- Shares issued in
lieu of consultancy fee
|
|
|
-
|
|
|
|
692
|
|
- Shares issued in
lieu of inventory payment
|
|
|
15,
525
|
|
|
|
4,047
|
|
- Shares issued in
lieu of related party loan
|
|
|
1,546
|
|
|
|
-
|
|
Convertible note conversion
|
|
|
5,979
|
|
|
|
4,159
|
|
Warrants issued
|
|
|
374
|
|
|
|
-
|
|
Business combination
with Naked Brand Group Inc.
|
|
|
-
|
|
|
|
14,196
|
|
Asset
acquisition of FOH Online Inc.
|
|
|
-
|
|
|
|
6,872
|
|
At
the end of the reporting period
|
|
|
170,193
|
|
|
|
134,183
|
|
The
holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Group. On a show of
hands at meetings of the Group, each holder of ordinary shares has one vote in person or by proxy, and upon a poll each share
is entitled to one vote.
On
20 December 2019 the company executed a 1-100 reverse share split reducing the number of shares. The reverse split has also been
reflected in the prior year number of shares.
The
Group does not have authorised capital or par value in respect of its shares.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
The
key objectives of the Group when managing capital is to safeguard its ability to continue as a going concern and maintain optimal
benefits to stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available
to the entity. The Group defines capital as its equity and net debt.
There
has been no change to capital risk management policies during the year.
Management
are constantly adjusting the capital structure to take advantage of favourable costs of capital or high return on assets. As the
market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders
or sell assets to reduce debt. The Group is not subject to any externally imposed capital requirements.
The
gearing ratio for the years ended 31 January 2020 and 31 January 2019 are as follows:
|
|
Note
|
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
Total borrowings
|
|
|
20
|
|
|
|
38,913
|
|
|
|
20,967
|
|
Less
Cash and cash equivalents
|
|
|
12
|
|
|
|
(3,791
|
)
|
|
|
(1,962
|
)
|
Net debt
|
|
|
|
|
|
|
35,122
|
|
|
|
19,005
|
|
Equity
|
|
|
|
|
|
|
(6,284
|
)
|
|
|
10,519
|
|
Total
capital
|
|
|
|
|
|
|
28,838
|
|
|
|
29,524
|
|
Gearing ratio
|
|
|
|
|
|
|
122
|
%
|
|
|
64
|
%
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
(c)
Warrants
The
following warrants were outstanding as at 31 January 2020 (31 January 2019: 49,000*).
Average
Exercise Price (USD)
|
|
Issue
Date
|
|
|
Expiry
Date
|
|
|
No.
of warrants
|
|
|
|
|
Mar-19
|
|
|
|
Mar-23
|
|
|
|
14,000
|
|
|
|
|
Mar-19
|
|
|
|
Mar-24
|
|
|
|
3,921
|
|
$0.01 - $0.50
|
|
|
Apr-19
|
|
|
|
Apr-22
|
|
|
|
500
|
|
|
|
|
May-19
|
|
|
|
May-21
|
|
|
|
10,000
|
|
|
|
|
Jul-19
|
|
|
|
May-25
|
|
|
|
170,100
|
|
|
|
|
Aug-19
|
|
|
|
Feb-25
|
|
|
|
285,714
|
|
|
|
|
Aug-19
|
|
|
|
Aug-24
|
|
|
|
22,857
|
|
$0.50
- $1.00
|
|
|
Mar-19
|
|
|
|
Mar-21
|
|
|
|
42,280
|
|
$1.50 - $2.00
|
|
|
Nov-17
|
|
|
|
Nov-21
|
|
|
|
2,000
|
|
|
|
|
Oct-18
|
|
|
|
Oct-21
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec-17
|
|
|
|
Dec-20
|
|
|
|
10,660
|
|
|
|
|
Apr-18
|
|
|
|
Apr-20
|
|
|
|
5,140
|
|
$2.01 - $4.00
|
|
|
May-18
|
|
|
|
Mar-20
|
|
|
|
2,030
|
|
|
|
|
Jun-18
|
|
|
|
Jun-20
|
|
|
|
3,430
|
|
|
|
|
Jun-18
|
|
|
|
Jun-23
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar-19
|
|
|
|
Jun-20
|
|
|
|
6,670
|
|
$4.01+
|
|
|
May-18
|
|
|
|
May-21
|
|
|
|
2,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
number of outstanding warrants as at 31 January 2020
|
|
|
|
|
|
|
|
|
|
|
610,122
|
|
*
On 20 December 2019 the company executed a 1-100 reverse share split reducing the number of warrants. The reverse split has also
been reflected in the prior year number of warrants outstanding.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
Foreign
currency translation reserve
|
|
|
|
|
|
|
|
|
Opening
balance
|
|
|
(2,013
|
)
|
|
|
(2,006
|
)
|
Transfers
in
|
|
|
2,131
|
|
|
|
(7
|
)
|
Balance
at the end of the year
|
|
|
118
|
|
|
|
(2,013
|
)
|
Foreign
currency translation reserve
Exchange
differences arising on translation of the foreign controlled entity are recognised in other comprehensive income - foreign currency
translation reserve. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
25
|
Loss
per Share
|
|
|
|
(a)
Basic and diluted loss per share
|
|
|
For
the Year
Ended
31 January 2020
NZ$
|
|
|
For
the Year
Ended
31 January 2019
NZ$
|
|
From
continuing operations attributable to the ordinary equity holders of the Group
|
|
|
(34.74
|
)
|
|
|
(200.77
|
)
|
Total
basic and diluted loss per share attributable to the ordinary equity holders of the Group
|
|
|
(34.74
|
)
|
|
|
(200.77
|
)
|
(b)
Reconciliation of loss used in calculating loss per share
|
|
|
|
For
the Year
Ended
31 January 2020
NZ$000’s
|
|
|
For
the Year
Ended
31 January 2019
NZ$000’s
|
|
Basic
and diluted loss per share
|
|
|
|
|
|
|
|
|
Loss
attributable to the ordinary equity holders of the Group used in calculating basic earnings per share:
|
|
|
(54,305
|
)
|
|
|
(49,220
|
)
|
(c)
Weighted average number of shares used as the denominator
|
|
|
31
January 2020
Number
|
|
|
31
January 2019
Number*
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares used as the denominator in calculating basic and diluted loss per share
|
|
|
1,563,056
|
|
|
|
243,790
|
|
*
On 20 December 2019 the company executed a 1-100 reverse share split reducing the number of shares. The reverse split has also
been reflected in the prior year number of shares.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
(d)
Information concerning the classification of securities
|
Convertible
Notes
At
31 January 2020, the Group had 4 convertible notes outstanding with a principal of $19.1m and accrued interest of $0.6m. Please
refer to note 20(c).
|
|
Year
Ended 31 January 2020
NZ$000’s
|
|
|
Year
Ended 31 January 2019
NZ$000’s
|
|
Accumulated
losses at the beginning of the financial year
|
|
|
(121,651
|
)
|
|
|
(72,431
|
)
|
Impact of IFRS 16
|
|
|
(639
|
)
|
|
|
-
|
|
Loss
for the year
|
|
|
(54,305
|
)
|
|
|
(49,220
|
)
|
Accumulated
losses at end of the financial year
|
|
|
(176,595
|
)
|
|
|
(121,651
|
)
|
27
|
Other
Financial Commitments
|
|
|
|
(a)
Operating leases
|
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
Minimum lease payments
under non-cancellable operating leases:
|
|
|
|
|
|
|
|
|
- not later
than one year
|
|
|
-
|
|
|
|
8,533
|
|
- between one year
and five years
|
|
|
-
|
|
|
|
18,039
|
|
-
later than five years
|
|
|
-
|
|
|
|
1,485
|
|
|
|
|
-
|
|
|
|
28,057
|
|
IFRS
16 Leases standard came into effect on 1 January 2019. IFRS 16 requires that all leases and the related rights and obligations
should be recognised on the lessee’s balance sheet, unless the lease is less than one year in length or is for a low-value
asset. Leases that do not meet these criteria are expensed on a straight-line basis. See note 3 for more details on IFRS 16 and
note 22 for details of undiscounted contractual maturity of lease liabilities.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
27
|
Other Financial Commitments
|
(b) Contracted
Commitments
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
Licence contract
|
|
|
|
|
|
|
|
|
- not later
than one year
|
|
|
5,392
|
|
|
|
4,286
|
|
-
between one year and five years
|
|
|
-
|
|
|
|
8,696
|
|
|
|
|
5,392
|
|
|
|
12,982
|
|
On
31 January 2020 the Group, through mutual consent, terminated the licence agreement with Heidi Klum and Heidi Klum Company LLC
of a fee of US$3.5m as is shown above.
(c)
Lessor Commitments
At
31 January 2020, had no outstanding commitments due to the adoption of IFRS 16 “Leases”:
|
|
31
January 2020
NZ$000’s
|
|
|
31
January 2019
NZ$000’s
|
|
- no later
than 1 year
|
|
|
-
|
|
|
|
441
|
|
- between 1 year and
5 years
|
|
|
-
|
|
|
|
493
|
|
-
greater than 5 years
|
|
|
-
|
|
|
|
-
|
|
Total
minimum lease payments
|
|
|
-
|
|
|
|
934
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
The
Group is exposed to a variety of financial risks through its use of financial instruments.
The
Group’s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial
markets.
The
most significant financial risks to which the Group is exposed to are described below:
Specific
risks
●
|
Liquidity
risk
|
●
|
Credit
risk
|
●
|
Market
risk - currency risk, interest rate risk and price risk
|
Financial
instruments used
The
principal categories of financial instruments used by the Group are:
|
●
|
Trade
receivables
|
|
●
|
Cash
at bank
|
|
●
|
Bank
overdraft
|
|
●
|
Trade
and other payables
|
|
●
|
Floating
rate bank loans
|
|
●
|
Forward
currency contracts
|
|
●
|
Shareholders
loan
|
Objectives,
policies and processes
The
Board of Directors have overall responsibility for the establishment of the Group’s financial risk management framework.
This includes the development of policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk
and the use of derivatives.
Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The
day-to-day risk management is carried out by the Group’s finance function under policies and objectives which have been
approved by the Board of Directors.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
Objectives,
policies and processes
Mitigation
strategies for specific risks faced are described below:
Liquidity
risk
Liquidity
risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The
Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities as and when they
fall due.
The
Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities
as well as cash-outflows due in day-to-day business.
The
timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates
and does not reflect management’s expectations that banking facilities will be rolled forward. The amounts disclosed in
the table are the undiscounted contracted cash flows and therefore the balances in the table may not equal the balances in the
consolidated balance sheets due to the effect of discounting.
Due
to the recent developments of COVID-19, the company has been further tasked to preserve cash due to the recent lockdown procedures
that have occurred in the company’s main markets meaning retail stores are closed and the company is heavily reliant on
its e-commerce segment. In addition, the company has applied for government subsidies where appropriate to help alleviate the
impact of reduced cash inflow from store closures. At the date of this report, the Group had received $2.0m in subsidies from
the New Zealand Government.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
The Group’s liabilities have contractual maturities which are summarised below:
|
|
Non-derivatives
Borrowings
NZ$000’s
|
|
|
Non-derivatives
Trade payables
NZ$000’s
|
|
|
Non-derivatives
Total
NZ$000’s
|
|
|
Derivatives
Gross future cash settlement on forward currency contracts - inflow
NZ$000’s
|
|
|
Derivatives
Gross future cash settlement on forward currency contracts - (outflow)
NZ$000’s
|
|
|
Derivatives
Total
NZ$000’s
|
|
Not later than 1 month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 January 2020
|
|
|
2,052
|
|
|
|
10,407
|
|
|
|
12,459
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
|
1,329
|
|
|
|
23,580
|
|
|
|
24,908
|
|
|
|
18,325
|
|
|
|
(19,212
|
)
|
|
|
(887
|
)
|
1 to 3 months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 January 2020
|
|
|
18,044
|
|
|
|
-
|
|
|
|
18,044
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
|
184
|
|
|
|
-
|
|
|
|
184
|
|
|
|
9,610
|
|
|
|
(10,061
|
)
|
|
|
(451
|
)
|
3 months to 1 year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 January 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
|
20,184
|
|
|
|
-
|
|
|
|
20,184
|
|
|
|
4,976
|
|
|
|
(5,121
|
)
|
|
|
(145
|
)
|
1
to 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 January 2020
|
|
|
28,764
|
|
|
|
-
|
|
|
|
28,764
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 January 2020
|
|
|
48,860
|
|
|
|
10,407
|
|
|
|
59,267
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
|
21,697
|
|
|
|
23,580
|
|
|
|
45,277
|
|
|
|
32,912
|
|
|
|
(34,395
|
)
|
|
|
(1,483
|
)
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
Credit
risk
Credit
risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.
Credit
risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions,
as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.
The
Group operates out of 61 stores across Australasia while having offices in New Zealand and the US which all have committed leasing
obligations. COVID-19 has caused the Group to negotiate payments terms across its supplier ledger until such time that normal
trading resumes.
Trade
receivables and contract assets
Trade
receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation
is performed on the financial condition of accounts receivable.
The
Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss
from defaults. The utilisation of credit limits by customers is regularly monitored by line management. Customers who subsequently
fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established.
Management
considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit
quality, including those that are past due.
The
Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties.
The
credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable
banks with high quality external credit ratings.
On
a geographical basis, the Group has significant credit risk exposures in New Zealand and Australia, given the substantial operations
in those regions.
The
credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings
if available or historical information about counterparty default rate.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
|
31 January 2018
NZ$000’s
|
|
Trade receivables
Counterparty without external credit ratings
|
|
|
|
|
|
|
|
|
|
|
|
|
New customer less than 6 months
|
|
|
-
|
|
|
|
42
|
|
|
|
12
|
|
Existing customers (more than 6 months with default in past)
|
|
|
2,358
|
|
|
|
7,747
|
|
|
|
9,970
|
|
Total
|
|
|
2,358
|
|
|
|
7,789
|
|
|
|
9,982
|
|
Cash at bank
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
|
31 January 2018
NZ$000’s
|
|
Credit ratings
|
|
|
|
|
|
|
|
|
|
|
|
|
AA-
|
|
|
3,747
|
|
|
|
1,915
|
|
|
|
10,591
|
|
A+
|
|
|
-
|
|
|
|
-
|
|
|
|
94
|
|
Total
|
|
|
3,747
|
|
|
|
1,915
|
|
|
|
10,685
|
|
The
Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties.
On
a geographical basis, the Group has significant credit risk exposures in New Zealand and Australia, United States and United Kingdom
given the substantial operations in those regions.
Market
risk
Market
risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices.
A
significant amount of inventory is purchased in US dollars with sales primarily being generated in Australian and New Zealand
dollars. COVID-19 will put additional uncertainty as exchange rates become more volatile.
(i)
Foreign exchange risk
Exposure
to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement
in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the functional currency
of the Group.
Exposures
to currency exchange rates arise from the Group’s overseas sales and purchases, which are primarily denominated in currencies
other than the functional currency, in particular USD.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
Foreign
currency denominated financial assets and liabilities, translated into New Zealand Dollars at the closing rate, are as follows:
31 January 2020
|
|
AUD
NZ$000’s
|
|
|
USD
NZ$000’s
|
|
|
GBP
NZ$000’s
|
|
|
EUR
NZ$000’s
|
|
|
HKD
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Nominal amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
-
|
|
|
|
19
|
|
|
|
20
|
|
|
|
441
|
|
|
|
-
|
|
|
|
480
|
|
Trade payables
|
|
|
12
|
|
|
|
4,068
|
|
|
|
85
|
|
|
|
1
|
|
|
|
2
|
|
|
|
4,168
|
|
Cash and cash equivalents
|
|
|
1,500
|
|
|
|
747
|
|
|
|
85
|
|
|
|
5
|
|
|
|
4
|
|
|
|
2,341
|
|
31 January 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
51
|
|
|
|
42
|
|
|
|
-
|
|
|
|
285
|
|
|
|
-
|
|
|
|
378
|
|
Trade payables
|
|
|
1
|
|
|
|
9,035
|
|
|
|
8
|
|
|
|
61
|
|
|
|
7
|
|
|
|
9,112
|
|
Cash and cash equivalents
|
|
|
623
|
|
|
|
149
|
|
|
|
38
|
|
|
|
8
|
|
|
|
11
|
|
|
|
829
|
|
31 January 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
328
|
|
|
|
199
|
|
|
|
-
|
|
|
|
1,376
|
|
|
|
-
|
|
|
|
1,903
|
|
Trade payables
|
|
|
781
|
|
|
|
11,209
|
|
|
|
74
|
|
|
|
29
|
|
|
|
53
|
|
|
|
12,146
|
|
Cash and cash equivalents
|
|
|
1,660
|
|
|
|
7,190
|
|
|
|
77
|
|
|
|
92
|
|
|
|
165
|
|
|
|
9,184
|
|
The
table on the next page illustrates the sensitivity of the net result for the year and equity in regards to the Group’s financial
assets and financial liabilities and the US dollar - New Zealand Dollar, Australian Dollar - New Zealand Dollar, GB Pound - New
Zealand Dollar, Euro - New Zealand Dollar, and Hong Kong Dollar - New Zealand Dollar exchange rates. There have been no changes
in the assumptions calculating this sensitivity from prior years.
It
assumes a 10% change of the New Zealand Dollar / Australian Dollar exchange rate for the year ended 31 January 2020 (31 January
2019: 10%, 31 January 2018: 10%). A 10% change is considered for the New Zealand Dollar / US Dollar exchange rate (31 January
2019: 10%, 31 January 2018: 10%). A 10% change is considered for the New Zealand Dollar / GB Pound exchange rate (31 January 2019:
10%, 31 January 2018: 10%). A 10% change is considered for the New Zealand Dollar / Euro exchange rate (31 January 2019: 10%,
31 January 2018: 10%). All of these percentages have been determined based on the average market volatility in exchange rates
in the previous 12 months.
The
year-end rates are 0.9655 AUD, 0.6491 USD, 0.4954 GBP, 0.5883 EUR and 5.0424 HKD.
The
sensitivity analysis is based on the foreign currency financial instruments held at the reporting date.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
If
the New Zealand Dollar had strengthened and weakened against the Australian Dollar, US Dollar, GB Pound, Euro and HK Dollar by
10% (31 January 2019: 10%, 31 January 2018: 10%) and 10% (31 January 2019: 10%, 31 January 2018: 10%) respectively then this would
have had the following impact:
|
|
NZ$000’s
|
|
|
|
+10%
|
|
|
-10%
|
|
USD
|
|
|
|
|
|
|
|
|
Net results/Equity (31 January 2020)
|
|
|
(594
|
)
|
|
|
594
|
|
Net results/Equity (31 January 2019)
|
|
|
(954
|
)
|
|
|
954
|
|
Net results/Equity (31 January 2018)
|
|
|
(1,509
|
)
|
|
|
1,509
|
|
AUD
|
|
|
|
|
|
|
|
|
Net results/Equity (31 January 2020)
|
|
|
(1
|
)
|
|
|
1
|
|
Net results/Equity (31 January 2019)
|
|
|
(5
|
)
|
|
|
5
|
|
Net results/Equity (31 January 2018)
|
|
|
(805
|
)
|
|
|
805
|
|
GBP
|
|
|
|
|
|
|
|
|
Net results/Equity (31 January 2020)
|
|
|
(16
|
)
|
|
|
16
|
|
Net results/Equity (31 January 2019)
|
|
|
(1
|
)
|
|
|
1
|
|
Net results/Equity (31 January 2018)
|
|
|
(175
|
)
|
|
|
175
|
|
EUR
|
|
|
|
|
|
|
|
|
Net results/Equity (31 January 2020)
|
|
|
(42
|
)
|
|
|
42
|
|
Net results/Equity (31 January 2019)
|
|
|
(32
|
)
|
|
|
32
|
|
Net results/Equity (31 January 2018)
|
|
|
(136
|
)
|
|
|
136
|
|
HKD
|
|
|
|
|
|
|
|
|
Net results/Equity (31 January 2020)
|
|
|
(-)
|
|
|
|
-
|
|
Net results/Equity (31 January 2019)
|
|
|
(1
|
)
|
|
|
1
|
|
Net results/Equity (31 January 2018)
|
|
|
(14
|
)
|
|
|
14
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
Exposures
to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above
is considered to be representative of the Group’s exposure to foreign currency risk.
Forward
exchange contracts
The
Group has no open forward exchange contracts at the end of the reporting period.
The
following table summarises the notional amount of the Group’s commitments in relation to forward exchange contracts.
|
|
Notional Amounts
|
|
|
Average Exchange Rate
|
|
|
|
31 January
2020
NZ$000’s
|
|
|
31 January
2019
NZ$000’s
|
|
|
31 January
2018
NZ$000’s
|
|
|
31 January
2020
$
|
|
|
31 January
2019
$
|
|
|
31 January
2018
$
|
|
Buy USD / sell NZD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 6 months
|
|
|
-
|
|
|
|
34,395
|
|
|
|
48,149
|
|
|
|
-
|
|
|
|
0.6620
|
|
|
|
0.7061
|
|
Buy AUD / sell NZD
|
|
|
|
|
|
|
Settlement
|
|
NZ$000’s
|
|
|
NZ$000’s
|
|
|
NZ$000’s
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Less than 6 months
|
|
|
-
|
|
|
|
-
|
|
|
|
2,247
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.8900
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
28
|
Financial
Risk Management
|
(ii)
Interest rate risk
The
Group is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose
the Group to fair value interest rate risk.
The
Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are
therefore usually at fixed rates. At the reporting date, the Group is exposed to changes in market interest rates through its
bank borrowings, which are subject to variable interest rates.
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Floating rate instruments
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
|
-
|
|
|
|
-
|
|
Working capital financing bank facility
|
|
|
-
|
|
|
|
-
|
|
Convertible notes
|
|
|
-
|
|
|
|
-
|
|
Borrowings
|
|
|
17,900
|
|
|
|
20,000
|
|
|
|
|
17,900
|
|
|
|
20,000
|
|
The
following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in interest
rates of +1.00%/-1.00% (2019: +1.00%/-1.00%, 2018: +1.00%/-1.00%), with effect from the beginning of the year. These changes are
considered to be reasonably possible based on observation of current market conditions and economist reports.
The
calculations are based on the financial instruments held at each reporting date. All other variables are held constant.
|
|
NZ$000’s
|
|
|
|
1.00%
|
|
|
-1.00%
|
|
|
|
NZ$000’s
|
|
|
NZ$000’s
|
|
Net results/Equity (31 January 2020)
|
|
|
179
|
|
|
|
(179
|
)
|
Net results/Equity (31 January 2019)
|
|
|
200
|
|
|
|
(200
|
)
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
29
|
Tax
assets and liabilities
|
|
|
Opening
Balance
NZ$000’s
|
|
|
Charged
to Income*
NZ$000’s
|
|
|
Charged
directly to Equity
NZ$000’s
|
|
|
Changes
in Tax Rate
NZ$000’s
|
|
|
Exchange
Differences
NZ$000’s
|
|
|
Closing
Balance
NZ$000’s
|
|
Deferred tax assets/(liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried forward tax losses
|
|
|
1,322
|
|
|
|
(692
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
630
|
|
Intangible assets
|
|
|
(630
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(630
|
)
|
Balance at 31 January 2020
|
|
|
692
|
|
|
|
(692
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Carried forward tax losses
|
|
|
630
|
|
|
|
692
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,322
|
|
Intangible assets
|
|
|
(630
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(630
|
)
|
Balance at 31 January 2019
|
|
|
-
|
|
|
|
692
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
692
|
|
*
There is a foreign currency impact of $9k which is not reflected in the table above. The total amount charged to the profit and
loss account is $701k (note 10).
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
No
final dividend will be paid in respect of the year ended 31 January 2020 (31 January 2019: nil, 31 January 2018: nil).
Franking
account
|
|
31 January 2020
NZ$000’s
|
|
|
31 January 2019
NZ$000’s
|
|
Australian franking credits available for subsequent financial years at a tax rate of 30%
|
|
|
3,995
|
|
|
|
3,995
|
|
New Zealand imputation credits available for subsequent financial years at a tax rate of 28%
|
|
|
236
|
|
|
|
236
|
|
The
above amounts are based on the dividend franking account at period-end adjusted for:
|
(a)
|
Franking
credits that will arise from the payment of the current tax liabilities;
|
|
(b)
|
Franking
debits that will arise from the payment of dividends recognised as a liability at the period end;
|
|
(c)
|
Franking
credits that will arise from the receipt of dividends recognised as receivables at the end of the period.
|
31
|
Key
Management Personnel Remuneration
|
Key
management personnel remuneration included within employee expenses for the period is shown below:
|
|
For the Year
Ended
31 January 2020
NZ$000’s
|
|
|
For the Year
Ended
31 January 2019
NZ$000’s
|
|
|
For the Year
Ended
31 January 2018
NZ$000’s
|
|
Short-term employee benefits
|
|
|
3,182
|
|
|
|
2,056
|
|
|
|
1,743
|
|
|
|
|
3,182
|
|
|
|
2,056
|
|
|
|
1,743
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
32
|
Interests
in Subsidiaries
|
Composition
of the Group
|
|
Principal place of business / Country of Incorporation
|
|
Percentage Owned (%)*
31 January
2020
|
|
|
Percentage Owned (%)*
31 January
2019
|
|
|
Percentage Owned (%)*
31 January
2018
|
|
Subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
Bendon Retail Limited
|
|
New Zealand
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon Holdings Limited
|
|
New Zealand
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon Holdings Pty Limited
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon Pty Limited
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon Intimates Pty Limited
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
PS Holdings No. 1 Pty Limited
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Pleasure State Pty Limited
|
|
Australia
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Pleasure State (HK) Limited
|
|
Hong Kong
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon UK Limited
|
|
United Kingdom
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon USA Inc
|
|
United States of America
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Bendon Limited**
|
|
New Zealand
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
Naked Brand Inc.
|
|
United States of America
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
FOH Online Corp Inc.
|
|
United States of America
|
|
|
100
|
|
|
|
100
|
|
|
|
-
|
|
*The
percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.
**
Bendon Limited was the parent entity in the period ended 31 January 2018.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
33
|
Fair
Value Measurement
|
The
Group measures the following assets and liabilities at fair value on a recurring basis:
|
●
|
Financial
assets - derivative financial instruments
|
|
●
|
Financial
liabilities - derivative financial instruments
|
Fair
value hierarchy
IFRS
13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a level in the fair
value hierarchy as follows:
|
Level
1
|
Unadjusted
quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
|
|
|
|
|
Level
2
|
Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
|
|
|
|
Level
3
|
Unobservable
inputs for the asset or liability.
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
33
|
Fair
Value Measurement
|
The
table below shows the assigned level for each asset and liability held at fair value by the Group:
31 January 2020
|
|
|
Level 1
NZ$000’s
|
|
|
|
Level 2
NZ$000’s
|
|
|
|
Level 3
NZ$000’s
|
|
|
|
Total
NZ$000’s
|
|
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Derivative on Convertible Notes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
31 January 2019
|
|
Level 1
NZ$000’s
|
|
|
Level 2
NZ$000’s
|
|
|
Level 3
NZ$000’s
|
|
|
Total
NZ$000’s
|
|
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
-
|
|
|
|
1,484
|
|
|
|
-
|
|
|
|
1,484
|
|
Derivative on Convertible Notes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
There
were no transfers between levels during the financial periods.
The
carrying amount of trade and other receivables and trade and other payables are assumed to approximate their fair values due to
their short-term nature. Bank loans approximate fair value of the carrying amount on the basis of the variable nature of the interest
rates associated with the loans.
Valuation
techniques for fair value measurements categorised within level 2
The
fair value of derivative financial instruments is determined using valuation techniques which maximise the use of observable market
data where it is available and relies as little as possible on entity specific estimates.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
33
|
Fair
Value Measurement
|
Valuation
techniques for fair value measurements categorised within level 3
The
fair value of the derivative on convertible notes has been determined using a Black-Scholes model. Measurement inputs include
share price on measurement date, expected term of the instrument, risk free rate, expected volatility and expected dividend rate.
The Group used valuations specialists to perform these valuations.
Fair
value measurements using significant unobservable movements (level 3)
The
following table presents the changes in level 3 instruments for the year ended 31 January 2019.
|
|
Convertible
note liability
NZ$000’s
|
|
Balance at 31 January 2018
|
|
|
1,110
|
|
Conversion
|
|
|
(1,110
|
)
|
Balance at 31 January 2019
|
|
|
-
|
|
For
the year ended 31 January 2020, there were no derivatives on convertible notes.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
Contingent
Liabilities
The
Group has entered into a number of trade guarantee arrangements in the normal course of business totalling $0.7m (2019: $1.2m)
In
the prior year, a shareholder lodged a court Action against the Group claiming they did not receive the correct number of shares
in the Group on completion of the merger between Naked Inc. and Bendon Limited to form Naked Brand Group Limited in the prior
year. The Group has sought to have this claim dismissed by the Court on the basis that the Group had no contract with the shareholder
and that the shareholder did not have a possessory right over a certain number of shares in the Group. No provision has been made
for this in these financial statements.
On
March 24, 2020, Timothy Connell filed a complaint against Naked Brand Group Limited, a subsidiary of ours, and Mr. Davis-Rice,
alleging, among other things, that certain shares issued to him in satisfaction of a debt were not registered for resale as promised.
Mr. Connell seeks rescission of the transaction. Our management intends to defend the action vigorously. Nothing has been provided
as management believe this debt has been settled.
|
(a)
|
Loans
(to)/from related parties
|
|
|
Opening
balance
NZ$000s
|
|
|
Closing
balance
NZ$000s
|
|
Loans to related parties
|
|
|
|
|
|
|
|
|
Cullen Investments Limited - 31 January 2020
|
|
|
-
|
|
|
|
-
|
|
Cullen Investments Limited - 31 January 2019
|
|
|
11,536
|
|
|
|
-
|
|
Whitespace Atelier Limited - 31 January 2020
|
|
|
282
|
|
|
|
-
|
|
Whitespace Atelier Limited - 31 January 2019
|
|
|
273
|
|
|
|
282
|
|
FOH Online Inc. - 31 January 2020
|
|
|
-
|
|
|
|
-
|
|
FOH Online Inc. - 31 January 2019
|
|
|
3,518
|
|
|
|
-
|
|
Loans from related parties
|
|
|
|
|
|
|
|
|
SBL Holdings - 31 January 2020
|
|
|
(1449
|
)
|
|
|
-
|
|
SBL Holdings - 31 January 2019
|
|
|
-
|
|
|
|
(1,449
|
)
|
Naked Inc. - 31 January 2020
|
|
|
-
|
|
|
|
-
|
|
Naked Inc. - 31 January 2019
|
|
|
(1,369
|
)
|
|
|
-
|
|
EJ Watson – 31 January 2020
|
|
|
(2,289
|
)
|
|
|
-
|
|
EJ Watson – 31 January 2019
|
|
|
-
|
|
|
|
(2,289
|
)
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
(a)
|
Loans
(to)/from related parties
|
Whitespace
Atelier Limited (“Whitespace”) is no longer regarded as a related party. Transactions in the prior year amounted to
$12.7m and at 31 January 2019, the Group had made prepayments totalling $281,714.
Subsequent
to the merger with Naked Brand Group Inc. on 19th June 2018, Naked Brand Group Inc. became part of the Group as at 31 January
2019. The balances between the subsidiaries are eliminated in the Group Balance Sheet.
Subsequent
to the acquisition of FOH Online Inc. on 8 December 2018, FOH Online Inc. became part of the Group as at 31 January 2019. The
balances between the subsidiaries are eliminated in the Group Balance Sheet.
During
the year, a financial liability relating to a shareholder loan created on the acquisition of FOH Online Corp Inc. was derecognised
as the current acquisition accounting results in a debt free balance with the shareholder. This adjustment is reflected in the
31 January 2020 accounts in a reduction to the carrying value of the acquired intangible asset with a write back to the profit
and loss account for the accrued and capitalised interest. This has resulted in a reduction to the carrying value of the acquired
intangible asset with a write back to the profit and loss account for accrued and capitalised interest. Further information can
be found in note 17.
During
the period, the loan payable to SBL Holdings Limited was extinguished through the issuance of shares in the Company.
During
the period, The Group received tax services from Rothsay Chartered Accountants, an accountancy firm, in which a director of the
company held a senior position. The Group received services to the value of $32,503.
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
(a)
|
Reconciliation
of result for the year to cashflows from operating activities
|
Reconciliation
of net income to net cash provided by operating activities:
|
|
Year Ended
31 January 2020
NZ$000’s
|
|
|
Year Ended
31 January 2019
NZ$000’s
|
|
|
Year Ended
31 January 2018
NZ$000’s
|
|
Loss for the year
|
|
|
(54,305
|
)
|
|
|
(49,220
|
)
|
|
|
(37,593
|
)
|
Cash flows excluded from profit attributable to operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
- interest paid on borrowings
|
|
|
2,868
|
|
|
|
3,400
|
|
|
|
8,792
|
|
- gain on sale of intangible assets
|
|
|
(906
|
)
|
|
|
-
|
|
|
|
-
|
|
Non-cash flows in profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
- depreciation and amortisation expense
|
|
|
10,603
|
|
|
|
2,382
|
|
|
|
3,030
|
|
- impairment expense
|
|
|
8,904
|
|
|
|
8,173
|
|
|
|
1,914
|
|
- shares issued in lieu of inventory payment
|
|
|
5,942
|
|
|
|
-
|
|
|
|
-
|
|
- warrants issued
|
|
|
371
|
|
|
|
-
|
|
|
|
-
|
|
- fair value gain/(loss) on convertible notes derivative
|
|
|
-
|
|
|
|
775
|
|
|
|
(2,393
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
- (increase)/decrease in trade and other receivables
|
|
|
2,901
|
|
|
|
14,267
|
|
|
|
14,925
|
|
- (increase)/decrease in current tax receivables
|
|
|
368
|
|
|
|
(355
|
)
|
|
|
52
|
|
- (increase)/decrease in inventories
|
|
|
(1,912
|
)
|
|
|
13,350
|
|
|
|
6,638
|
|
- (increase)/decrease in deferred tax asset/(liability)
|
|
|
711
|
|
|
|
(692
|
)
|
|
|
-
|
|
- (increase)/decrease in related party receivables
|
|
|
282
|
|
|
|
6,531
|
|
|
|
(906
|
)
|
- increase/(decrease) in trade and other payables
|
|
|
402
|
|
|
|
(5,681
|
)
|
|
|
6,956
|
|
- increase/(decrease) in income taxes payable
|
|
|
(140
|
)
|
|
|
226
|
|
|
|
152
|
|
- increase/(decrease) in provisions
|
|
|
5,534
|
|
|
|
(522
|
)
|
|
|
39
|
|
- increase/(decrease) in foreign currency derivative liability
|
|
|
(1,484
|
)
|
|
|
(1,712
|
)
|
|
|
(5,104
|
)
|
- net exchange differences
|
|
|
(33
|
)
|
|
|
(355
|
)
|
|
|
(618
|
)
|
Cashflows from operations
|
|
|
(19,894
|
)
|
|
|
(9,434
|
)
|
|
|
(4,116
|
)
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
|
(b)
|
Non-cash
investing and financing activities
|
Investing
and financing transactions that do not require the use of cash or cash equivalents (i.e. non-cash) are excluded from the statement
of cash flows. Such transactions are disclosed below that provides all the relevant information about the non-cash investing and
financing activities specific to the Group:
|
|
Year Ended 31 January 2020
NZ$000’s
|
|
|
Year Ended 31 January 2019
NZ$000’s
|
|
|
Year Ended 31 January 2018
NZ$000’s
|
|
Shares issued in lieu of inventory payment
|
|
|
15,525
|
|
|
|
-
|
|
|
|
-
|
|
Warrants issued
|
|
|
371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
15,896
|
|
|
|
-
|
|
|
|
-
|
|
37
|
Auditor’s
Remuneration
|
|
|
Year Ended 31 January 2020
NZ$000’s
|
|
|
Year Ended 31 January 2019
NZ$000’s
|
|
|
Year Ended 31 January 2018
NZ$000’s
|
|
Pricewaterhouse Coopers Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
- Audit fees
|
|
|
-
|
|
|
|
477
|
|
|
|
485
|
|
- Taxation fees
|
|
|
-
|
|
|
|
33
|
|
|
|
-
|
|
- Other
|
|
|
10
|
|
|
|
403
|
|
|
|
-
|
|
Total remuneration to Pricewaterhouse Coopers Australia
|
|
|
10
|
|
|
|
913
|
|
|
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network firms of Pricewaterhouse Coopers Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
- Taxation services
|
|
|
-
|
|
|
|
137
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BDO Audit Pty Ltd Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
- Audit fees
|
|
|
403
|
|
|
|
-
|
|
|
|
-
|
|
- Other
|
|
|
266
|
|
|
|
-
|
|
|
|
-
|
|
Total remuneration to BDO Audit Pty Ltd Australia
|
|
|
669
|
|
|
|
-
|
|
|
|
-
|
|
Naked
Brand Group Limited
ACN
619 054 938
Notes
to the Consolidated Financial Statements
For
the Periods Ended 31 January 2020, 31 January 2019 and 31 January 2018
38
|
Events
occurring after the reporting date
|
On
February 5, 2020, the Company received an instruction to issue 384,221 shares under the Convertible Promissory Note dated December
19, 2019 at a conversion price of US$0.5856 for a total of US$225,000.
On
12 February 2020, the Company completed a private placement of a convertible promissory note and a warrant to purchase ordinary
shares, for a purchase price of US$3m, with a principal balance before discount and expenses of US$3.17m. The holder exercised
the right to exchange the warrant for a 5% increase in the balance of the Note, and as result the warrant was cancelled, and the
balance of the Note was increased by US$0.2m. The note accrues daily interest at 20% p.a, and matures on February 11, 2022. The
Company has the right to prepay the Note, subject to a 25% premium. The Note is subordinated to the Company’s existing senior
secured credit facility with the Bank of New Zealand. From August 12, 2020 the holder has the right to convert the outstanding
balance of the note into the Company’s ordinary shares at a conversion price of US$4.00 per share.
On
12 March 2020, the Group entered into a Deed of Amendment with the Bank of New Zealand to extend its loan facility of NZD$16,700,000
(31 January 2019: NZD$20,000,000) until March 2022. The facility includes guarantees and financial instruments totalling NZD$1,345,000.
In
March 2020, the World Health Organisation declared the outbreak coronavirus (“COVID-19”) as a pandemic, which continues
to spread throughout New Zealand, Australia and the United States. As a result, we have closed New Zealand retail and outlet locations
on 23 March 2020 and Australian retail and outlet locations on 28 March 2020. Online channels continue to operate however we have
seen a reduction in consumer spending. The closure of retail and outlet locations and reduction in sales within online channels
has resulted in a negative impact to the Group’s revenue. Whilst the situation is expected to be temporary, we note it is
rapidly developing and not yet practicable to estimate the extend of the impact this may have on the Group. Therefore, while we
expect this to negatively impact the business, results of operations, and financial position the Group has, negotiated payment
terms with key suppliers, reviewed staffing requirements and applied for government subsidies to help alleviate some of the cash
constraints and preserve its cash position and help preserve its financial flexibility. Refer to Note 2 (a) for further details.
On
April 15, 2020, Naked Brand Group Limited (the “Company”)
entered into a Securities Purchase Agreement (the “SPA”) for a private placement to St. George Investments LLC (the
“Holder”) of a Convertible Promissory Note (the “Note”) and a Warrant to Purchase Ordinary Shares (the
“Warrant”), for a purchase price of $1.5 with a principal balance before discount and expense of US$1.6m
Of
the total purchase price, the Holder is paying US$0.75m in cash and is paying the remaining US$0.75m through the delivery of a
promissory note (the “Investor Note”). The funding of the cash portion of the purchase price is expected to occur
on or about April 16, 2020. The Investor Note was issued as of April 15, 2020, does not accrue interest, and matures on April
30, 2020. The holder exercised the right to exchange the warrant for a 5% increase in the balance of the Note. The note accrues
daily interest at 20% p.a, and matures on April 14, 2022. The Company has the right to prepay the Note, subject to a 25% premium.
The Note is subordinated to the Company’s existing senior secured credit facility with the Bank of New Zealand. From October
14, 2020 the holder has the right to convert the outstanding balance of the note into the Company’s ordinary shares at a
conversion price of US$4.00 per share.
On
April 13, 2020, the Company received an instruction to issue 411,929 shares under the Convertible Promissory Note dated October
4, 2019 at a conversion price of US$0.30345 for a total of US$125,000.
On
April 24, 2020, the Company received an instruction to issue 414,872 shares under the Convertible Promissory Note dated October
4, 2019 at a conversion price of US$0.31335 for a total of US$130,000.
On
April 28, 2020, the Company received an instruction to issue 415,031 shares under the Convertible Promissory Note dated October
4, 2019 at a conversion price of US$0.31335 for a total of US$130,050.
On
April 30, 2020, the Company received an instruction to issue 590,394 shares under the Convertible Promissory Note dated October
4, 2019 at a conversion price of US$0.31335 for a total of US$185,000.
On
April 30, 2020, the Company received US$0.75m relating to the promissory note, “Investor Note”, mentioned above.
On May 5, 2020, the Company
received an instruction to issue 255,306 shares under
the Convertible Promissory Note dated October 4, 2019 at a conversion price of US$0.31335 for a total of US$80,000.