SEC Filing | Cenntro Inc

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

Amendment No. 1

(Mark One)

[ ]	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2019

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

[ ]	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ____________

Commission File Number 001-38544

NAKED BRAND GROUP LIMITED

(Exact name of registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Australia

(Jurisdiction of incorporation or organization)

c/o Bendon Limited

Building 7C, Huntley Street

Alexandria

NSW 2015, Australia

+61 2 9384 2400

(Address of principal executive offices)

Justin Davis-Rice, Executive Chairman

c/o Bendon Limited

Building 7B, Huntley Street

Alexandria

NSW 2015, Australia

+61 2 9384 2400

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Ordinary Shares		The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: At June 12, 2019, 59,487,636 ordinary shares were issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [X]
			Emerging growth company [X]

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP [ ]

International Financial Reporting Standards as issued
by the International Accounting Standards Board

[X]

Other [ ]

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 [ ] Item 18 [ ]

If this report is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

NAKED BRAND GROUP LIMITED

TABLE OF CONTENTS

EXPLANATORY NOTE	1

INTRODUCTION	2

TRADEMARKS AND SERVICE MARKS	2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2

NON-IFRS FINANCIAL MEASURES	4

PART I	5

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	5

PART III	33

ITEM 17. FINANCIAL STATEMENTS	33

ITEM 18. FINANCIAL STATEMENTS	33

ITEM 19. EXHIBITS	33

EXPLANATORY NOTE

On October 10, 2019, following the approval of our audit committee, we engaged BDO Audit Pty Ltd (“BDO”) as the principal accountant to audit the Company’s financial statements, which engagement was approved by our shareholders at our annual general meeting held on December 16, 2019. BDO has re-audited our financial statements for the fiscal years ended January 31, 2019 and 2018 and for the seven months ended January 31, 2017.

This Form 20-F/A is being filed by us as Amendment No. 1 to our annual report on Form 20-F for the fiscal year ended January 31, 2019, as filed with the Securities and Exchange Commission on June 14, 2019 (the “Original Form 20-F”), solely for the purpose of:

	●	amending and restating Items 17 and 18 to include our consolidated financial statements as re-audited by BDO. The only changes to our consolidated financial statements were to update Note 2(a) thereto (“Going Concern”) and Note 36 (“Events occurring after the reporting date”) to reflect events that occurred after June 20, 2019, the date the consolidated financial statements were initially issued; and

	●	amending and restating Item 5 to reflect the changes to Note 2(a) and Note 36 to our consolidated financial statements.

Other than as stated above, this Form 20-F/A does not amend, update or restate the information in any other item of the Form 20-F as originally filed on June 14, 2019 or reflect any events that have occurred after the original filing of the Form 20-F on June 14, 2019. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 20-F/A also contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

On December 20, 2019, we completed a reverse stock split of our ordinary shares, pursuant to which every 100 ordinary shares outstanding as of the effective time of the reverse stock split were combined into one ordinary share. All share and per share information in this MD&A is presented on a pre-reverse split basis.

INTRODUCTION

Unless otherwise indicated, all references in this Form 20-F/A to “we,” “our,” “us,” the “Company,” “Naked” or similar terms refer to Naked Brand Group Limited and its consolidated subsidiaries. We publish our consolidated financial statements in New Zealand dollars. In this Form 20-F/A, unless otherwise specified, all monetary amounts are in New Zealand dollars, and all references to “$,” “NZD$,” and “dollars” mean New Zealand dollars, unless otherwise indicated.

This Form 20-F/A contains our audited consolidated financial statements and related notes for the years ended January 31, 2019 and 2018, the seven month period ended January 31, 2017 and the year ended June 30, 2016 (“Audited Consolidated Financial Statements”). Our Audited Annual Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

On June 19, 2018, we consummated the transactions contemplated by that certain Agreement and Plan of Reorganization, dated as of May 25, 2017 and amended on July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018 (the “Merger Agreement”), by and among our company, Naked Brand Group Inc., a Nevada corporation (“Naked (NV)”), Bendon Limited, a New Zealand limited company (“Bendon Limited”), Naked Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of ours (“Merger Sub”) and Bendon Investments Ltd., a New Zealand company and at the time the owner of a majority of the outstanding shares of Bendon Limited (the “Principal Shareholder”).

Pursuant to the Merger Agreement, (i) we undertook a reorganization (the “Reorganization”) pursuant to which all of the shareholders of Bendon Limited exchanged all of the outstanding ordinary shares of Bendon Limited (the “Bendon Ordinary Shares”) for our ordinary shares (“Naked Ordinary Shares”), and (ii) immediately thereafter, the parties effectuated a merger of Merger Sub and Naked (NV), with Naked (NV) surviving as a wholly owned subsidiary of ours and the Naked (NV) stockholders receiving Naked Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (NV) (the “Merger” and together with the Reorganization, the “Transactions”).

As a result of the Transactions, Bendon Limited and Naked (NV) became our wholly owned subsidiaries and the shareholders of Bendon Limited and the stockholders of Naked (NV) became shareholders of ours.

TRADEMARKS AND SERVICE MARKS

This Form 20-F/A contains references to a number of trademarks which are our registered trademarks or trademarks for which we have pending applications or common law rights. Our major trademarks include, among others, the “Naked” trademark, the Heidi Klum trademarks, Frederick’s of Hollywood trademarks and other related trademarks.

Solely for convenience, the trademarks, service marks and trade names referred to in this Form 20-F/A are listed without the ^®, (sm) and I symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 20-F/A contains forward-looking statements. Forward-looking statements include all statements that are not historical facts. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. They appear in a number of places throughout this Form 20-F/A and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. Forward-looking statements contained in this Form 20-F/A include, among other things, statements relating to:

●

expectations regarding industry trends and the size and growth rates of addressable markets;

	●	our business plan and our growth strategies, including plans for expansion to new markets and new products; and

	●	expectations for seasonal trends.

These statements are not assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Although we base the forward-looking statements contained in this Form 20-F/A on assumptions that we believe are reasonable, we caution you that actual results and developments (including our results of operations, financial condition and liquidity, and the development of the industry in which we operate) may differ materially from those made in or suggested by the forward-looking statements contained in this Form 20-F/A. In addition, even if results and developments are consistent with the forward-looking statements contained in this Form 20-F/A, those results and developments may not be indicative of results or developments in subsequent periods. Certain assumptions made in preparing the forward-looking statements contained in this Form 20-F/A include:

	●	our ability to implement our growth strategies;

	●	our ability to maintain good business relationships with our suppliers, wholesalers and distributors;

	●	our ability to keep pace with changing consumer preferences;

	●	our ability to protect our intellectual property; and

	●	the absence of material adverse changes in our industry or the global economy.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in Item 3.D of the Original Form 20-F, “Risk Factors,” which include, but are not limited to, the following risks:

	●	we may be unable to raise any necessary capital;

	●	we may be unable to maintain the strength of our brand or to expand our brand to new products and geographies;

	●	we may be unable to protect or preserve our brand image and proprietary rights;

	●	we may not be able to satisfy changing consumer preferences;

	●	an economic downturn may affect discretionary consumer spending;

	●	we may not be able to compete in our markets effectively;

	●	we may not be able to manage our growth effectively;

	●	poor performance during our peak season may affect our operating results for the full year;

	●	our indebtedness may adversely affect our financial condition;

	●	our ability to maintain relationships with our select number of suppliers;

	●	our ability to manage our product distribution through our retail partners and international distributors;

	●	the success of our marketing programs;

	●	the risk our business is interrupted because of a disruption at our headquarters; and

	●	fluctuations in raw materials costs or currency exchange rates.

Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. As a result, any, or all of our forward-looking statements in this Annual Report may turn out to be inaccurate. We have included important factors in the cautionary statements included in this Annual Report, particularly in Item 3.D of this the Original Form 20-F, “Risk Factors,” that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not rely on our forward-looking statements. Moreover, we operate in a highly competitive and rapidly changing environment in which new risks often emerge. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

You should read this Form 20-F/A, together with the Original Form 20-F, and the documents that we reference herein and therein and have filed as exhibits hereto and thereto, completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained herein are made as of the date of this Form 20-F/A, and we do not assume any obligation to update any forward-looking statements except as required by applicable law.

NON-IFRS FINANCIAL MEASURES

This document includes “non-IFRS financial measures,” that is, financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. Specifically, we make use of the non-IFRS measures “EBITDA.”

EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and impairment. Our management uses EBITDA as a measure of our operating results and considers it to be a meaningful supplement to net income as a performance measurement, primarily because we incur significant depreciation and depletion and the exclusion of impairment losses in EBITDA eliminates the non-cash impact.

EBITDA is used by investors and analysts for the purpose of valuing an issuer. The intent of EBITDA is to provide additional useful information to investors and the measure does not have any standardized meaning under IFRS. Accordingly, this measure should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate EBITDA differently. For a reconciliation of net income from continuing operations to EBITDA, please see Item 5 of this Annual Report, “Operating and Financial Review and Prospects – Results of Operations.”

PART I

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis (this “MD&A”) for Bendon Limited provides information concerning our financial condition and results of operations for the year ended January 31, 2019, 2018 and 2017 and should be read in conjunction with our audited consolidation financial statements and the related notes included in Part III, Item 17, “Financial Statements.” Our selected financial information are reported for the fiscal years ended January 31, 2019 and 2018, for the seven month period ended January 31, 2017, and for the fiscal year ended June 30, 2016. In order to provide additional meaningful information to investors, we have included unaudited consolidated information for the 12 month period ended January 31, 2017, and for the seven month period ended January 31, 2016. This unaudited information is presented for comparative purposes to the corresponding fiscal year ended January 31, 2018 and for the seven month period ended January 31, 2017, and is derived from accounting records.

The following discussion contains forward-looking statements that reflect our future plans, estimates, belief, and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed elsewhere in this Form 20-F, particularly in Part I, Item 3.D, “Risk Factors” and in “Cautionary Note Regarding Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

Basis of Presentation

The Audited Annual Consolidated Financial Statements of the Company have been prepared in accordance with IFRS as issued by the IASB, and are presented in thousands of New Zealand dollars, except where otherwise indicated. However, certain financial measures contained in this MD&A are non-IFRS measures and are discussed further under “Non-IFRS Measures” below. All references to “$” and “dollars” refer to New Zealand dollars, unless otherwise indicated. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Introduction

We are a designer, distributor, wholesaler and retailer of women’s and men’s intimates apparel and swimwear. Our merchandise is sold through retail and outlet stores located in New Zealand and Australia, wholesale operations in New Zealand, Australia, the United States of America and Europe, and through online channels. We operate licensed brands including Heidi Klum and Frederick’s of Hollywood, and owned brands including Pleasure State, Davenport, Lovable, Bendon, Fayreform, VaVoom, Evollove, and Hickory. We also operated the Stella McCartney brand until June 30, 2018, at which time Bendon Limited’s license to use the brand terminated. Key customers include Farmers, Myer, David Jones and Woolworths.

All dollar values discussed below are presented in New Zealand dollars.

In keeping with customary practice in New Zealand, our fiscal years end on June 30. Subsequent to registration, Bendon Limited changed its fiscal year end to January 31 and align with Naked’s fiscal year end.

Overview

Year ended January 31, 2019 and year ended January 31, 2018

During the 12- month period ended January 31, 2019 and 12-month period ended January 31, 2018 we incurred a net comprehensive loss of ($49.2m) and ($37.4m) respectively.

Net sales in the 12-month period ended January 31, 2019 decreased by $19.5m, or 14.8%, to $111.9m when compared with $131.4m in the 12-month period ended January 31, 2018. The sales in the 12-month period ending January 31, 2019 were negatively impacted by a stock supply issue because of liquidity issues. In addition, we also ended our wholesale relationship with key major accounts in the U.S. market. Our strategic decision to exit the E.U./U.K. market as well as the loss of the Stella McCartney license also contributed to the reduction in sales for the Company.

Brand management expenses decreased by $4.4m, or 8.2% from $53.7m to $49.3m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was largely due to cost savings in our store overheads and reduced marketing spend.

Corporate expenses increased by $1.3m, or 10.1%, from $12.8m to $14.1m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, primarily driven by increased salary allocation and rental costs.

Finance expenses decreased by $4.8m, or 54.5% from $8.8m to $4.0m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, due to a reduction in interest on both external borrowings and shareholder loans.

Brand transition, restructure and transaction expenses increased by $6.8m, or 212.5%, from $3.2m to $10.0m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by costs incurred in respect of the U.S. listing process.

Impairment expense increased by $6.3m, or 331.6%, from $1.9m to $8.2m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by stock supply issue because of liquidity issues.

Other foreign currency gains increased by $1.2m or 159.2% from $0.7m to $1.9m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, due to positive movements in exchange rates on foreign exchange contracts.

Year ended January 31, 2018 and 12-month period ended January 31, 2017 (unaudited)

During the 12- month period ended January 31, 2018 and 12-month period ended January 31, 2017, we incurred a net comprehensive loss of ($37.4m) and ($39.9m) respectively.

Net sales in the 12-month period ended January 31, 2018 decreased by $20.75m, or 13.6%, to $131.4m when compared with $152.1m in the 12-month period ended January 31, 2017. The sales in the 12-month period ending January 31, 2018 were negatively impacted by a stock supply issue because of liquidity issues.

During the 12-month period ended January 31, 2018 and the 12-month period ended January 31, 2017, the gross margin was 33.4% and 44.6% respectively. The reduction in gross margin was caused by increased discounts provided to customers and sub-optimal stock mix because of the stock supply issue.

Finance expenses decreased by $2.4m, or 21.6% from $11.2m to $8.8m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, due to a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses increased by $0.8m, or 34.7%, from $2.4m to $3.2m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017, which was driven by costs incurred in respect of the U.S. listing process.

Other foreign currency gains/(losses) reduced from a loss of $14.3m in 12-month period ended January 31, 2017 to a gain of $0.7m in the 12-month period ended Jan 31, 2018, due to positive movements in exchange rates on foreign exchange contracts.

7-month period ended January 31, 2017, 7-month period ended January 31, 2016 (unaudited), the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015

During the 7-months ended January 31, 2017 and 12-month period ended June 30, 2016 and 12-month period ended June 30, 2015, we incurred a net comprehensive loss of ($16.0m), ($20.7m) and ($13.2m) respectively.

Net sales in the 12 month period ended June 30, 2016 increased by $12.2m, or 8.8%, to $151.0m when compared with $138.8m in the 12 month period ended June 30, 2015. This was driven by extension of the business into providing advisory and management services to other intimates apparel businesses, favorable foreign exchange rate fluctuations between the New Zealand dollar and United States Dollar, growth in U.S. wholesale distribution through a new contract with Macy’s, growth in the online business and introduction of 8 new stores across Australia.

Net sales in the 7-month period ended January 31, 2017 increased by $1.6m, or 1.7%, to $96.2m when compared with $94.7m in the 7-month period ended January 31, 2016. Sales were negatively impacted by a stock supply issue, and less favorable foreign exchange rate fluctuations between the New Zealand dollar and U.S. Dollar, which was offset by the beneficial impact of a new licensing agreement with Frederick’s of Hollywood.

During the 7-month period ended January 31, 2017, the 7-month period ended January 31, 2016, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015, the gross margin was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but has improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations.

Brand management expenses increased by $6.2m, or 14.6%, from $42.2m to $48.4m between the 12 month period ended June 30, 2015 and the 12 month period ended June 30, 2016. This was largely driven by growth in business and associated employee costs, as well as additional marketing expenditures to support the introduction of new swimwear ranges. The increase of $4.4m, or 15.9%, from $27.6m to $32.0m in the 7-month period to January 31, 2017 as compared with the 7-month period to January 31, 2016, was also driven by additional marketing expenditures.

Finance expenses increased by $4.5m, or 77.3%, between the 12 month period ended June 30, 2015 and the 12 month period ended June 30, 2016 from $5.9m to $10.4m, due to additional interest expense associated with an increase in debt. The finance expense in the 7-month period to January 31, 2016 and January 31, 2017 increased slightly due to additional interest on convertible loan notes being partially offset by a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses of $1.3m, $2.2m and $12.2m were incurred in the 7-month period ended January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015, respectively. The biggest driver for this decrease was a reduction in brand transition expenses incurred in relation to the transition from the Elle MacPherson to Heidi Klum brand which decreased over time given the Elle MacPherson license was terminated in the fiscal year 2015.

An impairment expense of $2.2m was recognized in the 12 month period ended June 30, 2016 and 7-month period to January 31, 2016 in relation to a goodwill write-off. An impairment expense of $0.3m was recognised in 7-month period to January 31, 2017.

Other foreign currency gains/(losses) reduced from a gain of $4.7m the 12 month period ended June 30, 2015 to a loss of $2.4m in the 12 month period ended June 30, 2016 due to weakening of the New Zealand dollar and the impact of unfavorable hedge contracts entered into. Other foreign currency gains/(losses) reduced from a gain of $5.7m in the 7-month period to January 31, 2016 to a loss of $3.3m in the 7-month period to January 31, 2017 as a result of the same foreign exchange drivers.

Application of Critical Accounting Policies, Estimates, and Judgements

Our accounting policies form the basis for preparation of our financial statements and our financial statements in tum are an essential factor in understanding our operations. Our accounting policies are in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and are fully described in the notes to our audited financial statements as of and for the year ended January 31, 2019, year ended January 31, 2018, 7-month period ended January 31, 2017 and the two years ended June 30, 2016 and June 30, 2015. The preparation of our financial statements required management to make judgments, estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities and expenses. Our management re-evaluates estimates on an on-going basis and such estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Unless otherwise stated, all dollar amounts stated in our financial statements are expressed in the currency of the Commonwealth of Australia.

Critical accounting policies

Critical accounting policies that reflect our industry and activity specific accounting treatments used in preparing our financial statements as of the 12 month period ended January 31, 2019, 12 month period ended January 31, 2018, the 7- month period ended January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015 or that have significant potential to result in a material adjustment to the carrying amounts of assets and liabilities during each of the years.

(a) Going concern

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 2019 the Group experienced a loss after income tax from continuing operations of NZ$49.227million (2018: NZ$37.445million) and operating cash outflows of NZ$9.434 million (2018: NZ$4.116million). It also is in a net current liability position of $NZ29.426 million (2018: NZ$20.752million) and a positive net asset position of NZ$10.519 million (2018: net liability position of NZ$5.710million).

The losses in the year ended 31 January 2019 were a result of reduced revenue from wholesale customers, increased rebates and discounts, and the plateauing of sales in retail outlets believed to be due to the stores and stockists not having new high margin inventory. The business is experiencing challenging trading conditions which have been impacted by the cancellation of the Stella McCartney licence held by the Group which expired on 30 June 2018, the lack of working capital to purchase sufficient levels of inventory required for trading, reduced customer foot traffic in retail stores and outlets, and a reduction of revenue from wholesale customers. The business also incurred NZ$10.075 million of non-trading costs in relation to brand transition, restructure, and transaction costs associated with listing the Group on the Nasdaq stock exchange. The Group also has trade creditors that are trading beyond their original credit terms.

The Group has also breached its Bank debt loan covenants during financial year, and is the process of extending their facilities which are currently due on 31 January 2020 to provide the Group and the Bank time to consider a refinance of the facility to a longer term to assist the group continue as a going concern.

In consequent to the challenging trading conditions and the negative working capital the business raised NZ$24 million of funds in the form of issued capital and convertible notes over the course of the financial year and generated further working capital by reducing inventory by NZ$9.993million. The Group used the funds to reduce the bank debt from NZ$38.489 million to NZ$20 million, reduce long overdue trade creditors, fund operating losses, reduce costs, rebuild higher margin inventory, recruit new staff, and pay the costs of listing on the Nasdaq stock exchange.

It is expected the group will need to continue to fund losses through to the start of the year ending 31 January 2022. This capital raising/recapitalisation is continuing, and management had raised US$32.4 million between March 2019 and the date of this report. At the date of this report management is intending on raising up to a further US$15 million. The Group must complete the fundraising to finalise the recapitalization plan and continue as a going concern

As part of the discussions to renegotiate the Bank facilities the Bank appointed Korda Mentha to review the cash flow and working capital history and forecasts. Korda Mentha produced a report which is consistent with the information in this note and the Bank has advised they will continue to monitor the Group’s performance during the Bank debt renegotiation process. The Directors expect the Bank to offer a new two year facility. The offer of a new Bank facility is dependent on the Group achieving inventory covenants set by the Bank, and the Bank being satisfied with the raising of the remaining capital planned of US$15 million.

Despite the ongoing losses, reduced cash flow and cash facilities, and the other negative financial conditions, 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 its 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:

●	Raising further funding before 28 February 2020 in order to meet all debts due in the 12 months after signing of these financial statements;

●	Generating sufficient sales and increasing gross margins and reducing overheads in line with forecasts;

●	Having sufficient funds to maintain a positive cashflow position, and to reduce bank debt in line with agreed bank amortisation;

●	Continuing 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 debts in full; and

●	Renegotiating the current bank facilities of NZ$20 million to a facility that is at least a 12 month facility.

As a result, the viability of the Group is dependent on the above matters. The dependence on these matters indicate a material uncertainty exists, that may cast significant doubt as to whether the Group will continue as 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

(b) Revenue recognition

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. The Company assess the expected customer returns and rebates according to the specific information in its possession and its past experience in similar cases.

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 Company also provides a reserve for projected merchandise returns based on prior experience.

The Company sells gift cards to customers. The Company recognises revenue from gift cards when they are redeemed by the customers. In addition, the Company recognises revenue on all of its unredeemed gift cards when the gift cards have expired.

Significant Accounting Judgments, Estimates, and Assumptions

Significant accounting judgments, estimates, and assumptions that have been used in the preparation of our financial statements are set out below. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

We make estimates and assumptions concerning the future in determining accounting treatments and quantifying amounts for transactions and balances in certain circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed 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 realizable value. During the period, management have written down inventory based on best estimate of the net realizable value, although until the time that inventory is sold this is an estimate.

Key estimates — impairment of goodwill

In accordance with IAS 36 Impairment of Assets, the Company 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 Company’s impairment evaluation and hence results.

The Company’s review includes the key assumptions related to sensitivity in the cash flow projections. Further details are provided in note15(c) to the consolidated financial statements.

Key estimates — fair value of financial instruments

The Company 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 IFRS 36 Impairment of Assets, the Company 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 Company’s impairment evaluation and hence results.

The Company’s review includes the key assumptions related to sensitivity in the model. Further details are provided in note 15 to the consolidated financial statements.

Key estimates — taxes

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.

Recent Accounting Pronouncements

New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for January 31, 2019 reporting periods and have not been early adopted by the Company. The Company’s assessment of the impact of these new standards and interpretations is set out below.

Title of Standard	Nature of change	Impact	Mandatory application date/Date of adoption by Company
IFRS 16 Leases	In February 2016 the IASB issued a new standard for leases. This AASB 16 replaces IAS 17. The main impact on lessees is that almost all leases go on balance sheet. This is because the balance sheet distinction between operating and finance leases is removed for lessees. Instead, under the new standard an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exemptions are short-term and low-value leases.	Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Company’s consolidated financial statements. The new standard will require that we record a liability and a related asset on the balance sheet for our leased facilities.	Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Company’s consolidated financial statements. Mandatory for financial years commencing on or after January 1, 2019. Expected date of adoption by the Company: February 1, 2019.

IFRC 23 Uncertainty over Income Tax Treatments (IFRIC 23)	On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”). IFRIC 23 clarifies the application of recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. The IFRIC 23 interpretation specifically addresses whether an entity considers uncertain tax treatments separately; the assumptions an entity makes about the examination of tax treatments by taxation authorities; how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances.	The Company is currently evaluating the impact of adopting this standard on the consolidated financial statements.	IFRIC 23 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Recent Developments

On February 14, 2019, Carole Hochman resigned from the board of directors and as Executive Chairman.

In March 2019, the following share transactions occurred :

	(1)	1.4m ordinary shares and 1.4m warrants were issued in exchange for services to the value of NZ $0.1m / US$ 87k. The warrants have an exercise price of US$0.50 and expire 2 years from the date of issue.

	(2)	The issue of 11,248,415 ordinary shares to trade creditors in satisfaction of NZ$6.6m / US$4.5m trade payables, at a share price of US$0.40.

	(3)	The issue of 2,119,178 ordinary shares in settlement of a promissory notes in the amount of NZ$1.25m / US$847,671, at a share price of US$0.40 per share.

	(4)	The issue of 4,510,588 ordinary shares to investors in a private placement at a share price of US$0.255 for a total cash consideration of NZ$1.69m / US$1.15m. The investors also received warrants to purchase 4.510,588 ordinary shares, at an exercise price of US$0.306 and expiry 2 years from the date of issue.

	(5)	The issue of 10,784,313 ordinary shares to certain investors at a share price of US$0.255 for a total cash consideration of NZ$4.05m / US$2.75m, as well as “pre-funded” warrants to purchase ordinary shares in lieu of such shares if an investor would own more than 9.9% of the total outstanding ordinary shares. Each investor also received “investment” warrants to purchase 100% of the number of ordinary shares, and as a result 3,914,846 ordinary shares, pre-funded warrants to purchase 6,869,467 ordinary shares and investment warrants to purchase 10,784,313 ordinary shares were issued to investors. The investment warrants have an exercise price of US$0.306 per share and expire 5 years from the date of issue. The pre-funded warrants have an exercise price of US$0.01 per share and expire 5 years from the date of issue. If the exercise price of the warrants was higher than the last closing bid price of the ordinary shares, the warrants could be exercised on a cashless basis using a Black-Scholes valuation (but not less than US$0.10). In July and August 2019, the holders of the pre-funded warrants exercised such warrants in full, resulting in the issue of 6,869,467 shares, and the holders of the investment warrants exercised them as to 9,078,877 on a cashless basis, resulting in the issuance of 19,586,048 ordinary shares at that time.

On April 2, 2019, the board of directors appointed Anna Johnson as Chief Executive Officer. Previously Ms. Johnson was Chief Executive Officer of Bendon Limited, the main operating entity within the Company. At the same time, Justin Davis-Rice was appointed as Executive Chairman and resigned as our Chief Executive Officer.

In May 2019, the following share of funding transactions occurred:

	(1)	NZ$4.3m / US$3m cash was raised via a secured convertible promissory note to St. George Investments, with a US$3.32m note principal value. The note accrues daily interest at 10% p.a, and matures on November 13, 2020. The Company has the right to prepay the note, subject to a 15% premium. The note is secured by a second priority security interest over all the Company’s assets and is subordinated to the Company’s existing senior secured credit facility with the Bank of New Zealand. The noteholder has the right to convert the note into Naked ordinary shares at a conversion price of US$0.90 per share, and also has the right, from December 13, 2019, to request redemption of any portion of the note, up to a maximum of US$0.4m per month.

	(2)	NZ$2.17m / US$1.5m cash was raised via the issue of 6m Naked ordinary shares to an investor in a private placement at a share price of US$0.25. The investor also received warrants to purchase 1m Naked ordinary shares. The warrants have an exercise price of US$0.25, and expire 2 years from the date of issue.

	(3)	653,595 ordinary shares were issued in exchange for the cancellation of NZ$0.3m / US$0.2m in debt held by a shareholder, at a price of US$0.306 per share.

In July 2019, the following share transactions occurred:

	(1)	The issue of 25,068,250 ordinary shares to certain suppliers at a price of US$0.10 per share, in cancellation of NZ$3.7m / US$2,506,825 trade payables.

	(2)	The issue of 15.75m ordinary shares to certain investors at a price of US$0.10 per share, and warrants to purchase up to 15.75m ordinary shares, at an exercise price of US$0.10 per share, for a total cash consideration of NZ$2.35m / US$ 1.575m. Warrants to purchase 1.26m ordinary shares were also issued to various designees of the placement agent at an exercise price of US $0.125 per share. The placement agent warrants are immediately exercisable and expire 5.5 years from date of the cash offering.

	(3)	The exercise prices of certain outstanding warrants to purchase 2.8m ordinary shares held by one of the investors were reduced to US$0.10 per share, with the exercise prices previously ranging from US$1.55 to US$3.75.

On July 31, 2019, Kelvin Fitzalan was appointed as a member of the board of directors.

In August 2019, the following equity transactions occurred:

	(1)	28,571,431 ordinary shares, at a price of $0.07 per share in a cash offering and 28,571,431 warrants to purchase ordinary shares were issued to certain investors, for a total cash consideration of NZ $3.1m / US$2.0m. The warrants are immediately exercisable, expiring 5.5 years from the date of issue, at an exercise price per share of US$0.07, and may be exercised on a ‘cashless’ basis based on as Black Scholes valuation from 6 months after the issue. The Company also issued warrants to certain designees of the placement agent to purchase 2,285,714 ordinary shares at an exercise price of US$0.0875 per share. The placement agent warrants are immediately exercisable and expire 5.5 years from date of the cash offering.

	(2)	The Company agreed to reduce the exercise price of outstanding warrants held by certain investors, consisting of warrants to purchase up to 18,550,000 ordinary shares at an exercise price of US$0.10 per share that expire in October 2021, June 2023 and July 2025. The Company agreed to amend each of the outstanding warrants to reduce the exercise price to US$0.07.

	(3)	The Company issued 57,142,857 ordinary shares to suppliers at a price of US$0.07 per share in exchange for the cancellation of NZ$6.2m / US$4.0m trade payables and the establishment of prepayment credits.

In October 2019, the following funding transaction occurred:

(1)

The Company completed a private placement of a convertible promissory note and a warrant to purchase ordinary shares, for a purchase price of NZ$3.2m / US$2.0m, with a principal balance before discount and expenses of US$2.12m. The holder had the right to exchange the warrant for a 5% increase in the balance of the note. On October 9, 2019, the holder exercised this right, and as result the warrant was cancelled and the balance of the note was increased by US$106,100. The note balance was further increased to US$2.51m on November 21, 2019 due to additional funding requirement deadline not being met. The note accrues daily interest at 20% per annum, and matures on October 4, 2021. 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 April 7, 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$0.05 per share.

In November 2019, the following funding transaction occurred:

	(1)	The Company issued a NZ$4.8m / US$3.0m convertible note in a private placement, maturing November 12, 2021. The face value of the note is NZ$5.0m / US$3.17m after discount and costs, with a cash consideration of US$3.0m. The holder had the right to exchange the warrant for a 5% increase in the balance of the note. On November 15, 2019, the holder exercised this right, and as result the warrant was cancelled and the balance of the note was increased by US$158,600. The note balance was further increased by $340,900 on December 27, 2019 due to additional funding requirement deadline not being met. The interest rate is 20% per annum. The Company has the right to prepay the note at a 25% premium. The note is subordinated to the Company’s existing BNZ facility. The note outstanding balance is convertible into ordinary shares from May 13, 2020, at a conversion price of US$0.04 per share. From May 13, 2020, the holder can request the company redeem any portion of the note, up to a maximum of US$0.6m per month. At same time warrants to purchase the number of ordinary shares issued under the notes (estimated to be approximately 63,400,000 shares), at a US$0.05 exercise price, were issued to the note holder, exercisable at any time, with a November 30, 2021 expiry date.

	(2)	The holder of the convertible notes issued by us in May 2019 exchanged a portion of the notes at negotiated prices, for a US$0.028 average price, reducing the principal value of the convertible note by US$340k.

In December 2019, the following funding transactions occurred :

	(1)	The holder of the convertible notes issued by us in May 2019 exchanged an additional portion of the notes at negotiated prices, for a US$0.021 average price, reducing the principal value of the convertible note by an additional US$2.265m.

	(2)	The Company issued a NZ$4.8m / US$3.0m convertible note in a private placement, maturing December 19 2021. The face value of the note is NZ$5.0m / US$3.17m after discount and costs, with a cash consideration of US$3.0m. The holder had the right to exchange the warrant for a 5% increase in the balance of the note. On January 2, 2020, the holder exercised this right, and as result the warrant was cancelled and the balance of the note was increased by US$159,600. The interest rate is 20% per annum. The Company has the right to prepay the note at a 25% premium. The note is subordinated to the Company’s existing BNZ facility. The note outstanding balance is convertible into ordinary shares from May 13, 2020, at a conversion price of US$0.04 per share. From June 19, 2020, the holder can request the company redeem any portion of the note, up to a maximum of US$0.6m per month. At same time warrants to purchase the number of ordinary shares issued under the December notes (estimated to be approximately 79,300,000 shares), at a US$0.05 exercise price, were issued to the note holder, exercisable at any time, with a December 31, 2021 expiry date.

In January 2020, the holder of the convertible notes issued by us in May 2019 exchanged an additional portion of the notes at a negotiated prices, for a US$0.012 average price, reducing the principal value of the convertible note by an additional US$0.2m.

On February 5, 2019, we received a notice from the Listing Qualifications Department of Nasdaq stating that, for the last 30 consecutive business days, the closing bid price for our Ordinary Shares had been below the minimum of US$1.00 per share required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). We will be afforded until February 3, 2020 to regain compliance with the minimum bid price requirement. In order to regain compliance, the bid price for shares of our ordinary shares must close at US$1.00 per share or more for a minimum of ten consecutive business days.

At the annual general meeting of the Company’s shareholders held on December 16, 2019, it was resolved to complete a reverse stock split of our ordinary shares, pursuant to which every 100 ordinary shares outstanding as of the effective time of the reverse stock split were combined into one ordinary share. Pursuant to a resolution of our Board of Directors, the reverse stock split became effective on December 20, 2019. All share and per share information in this MD&A is presented on a pre-reverse split basis.

The senior secured credit facility with the Bank of New Zealand has been extended from August 31, 2019 to January 31, 2020, with discussions underway to extend for a further period beyond 12 months. The bank covenants were breached throughout the 6 months ended July 31, 2019, and were reset, with a minimum inventory to bank debt ratio required to be maintained from May 1, 2019. This new ratio has been breached every month to the date of signing of the accounts, creating an event of review, but the bank has taken no further action in relation to these breaches.

A restructure or operations was commenced in October 2019 with initiatives to close the US wholesale business as well as the Australian office and to reduce the number of employees by 67 globally by the end of the year, subject to consultation with employees.

A.	Operating Results

Year ended January 31, 2019 compared to year ended January 31, 2018

The following table sets forth certain selected operating results and other financial information for each of the years ended January 31, 2019, 2018 and 2017:

	Jan. 31, 2019 NZ$000 12 months			Jan. 31, 2018 NZ$000 12 months			% movement FY19 v FY18			*Unaudited* *Jan. 31,* *2017* *NZ$000* *12 months*			% movement FY18 v FY17
Revenue		111,920			131,388			-14.8	%		152,144			-13.6	%
Cost of goods sold		(74,480	)		(87,459	)		-14.8	%		(84,358	)		3.7	%
Gross profit		37,440			43,929			-14.8	%		67,786			-35.2	%
Brand management		(49,256	)		(53,653	)		-8.2	%		(53,957	)		-0.6	%
Administrative expenses		(3,432	)		(4,131	)		-16.9	%		(3,712	)		11.3	%
Corporate expenses		(14,145	)		(12,851	)		10.1	%		(12,920	)		-0.5	%
Finance expense		(4,041	)		(8,791	)		-54.0	%		(11,214	)		-21.6	%
Brand transition, restructure and transaction expenses		(10,075	)		(3,272	)		207.9	%		(2,430	)		34.7	%
Impairment expense		(8,173	)		(1,914	)		326.9	%		(2,865	)		-33.2	%
Other foreign currency gains/(losses)		1,963			757			159.3	%		(14,327	)		-105.3	%
Fair value gain/(loss) on convertible notes derivative		(775	)		2,393			-132.4	%		(592	)		-504.5	%
Loss before income tax		(50,494	)		(37,533	)		34.5	%		(34,230	)		9.7	%
Income tax benefit/(expense)		1,274			(60	)		-2223.3	%		(6,123	)		-99.0	%
Loss for the period		(49,220	)		(37,593	)		30.9	%		(40,352	)		-6.8	%
Other comprehensive loss
Exchange differences on translation of foreign operations		(7	)		148			-104.7	%		384			-61.5	%
Total comprehensive loss for the period		(49,227	)		(37,445	)		31.5	%		(39,968	)		-6.3	%

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The following table sets forth certain selected operating results and other financial information for each of the years ended January 31, 2018 and 2017:

				Unaudited
	Jan. 31,			Jan. 31,
	2018			2017
	NZ$000			NZ$000			%
	12 months			12 months			movement
Revenue		131,388			152,144			-13.6	%
Cost of goods sold		(87,459	)		(84,358	)		3.7	%
Gross profit		43,929			67,786			-35.2	%
Brand management		(53,653	)		(53,957	)		-0.6	%
Administrative expenses		(4,131	)		(3,712	)		11.3	%
Corporate expenses		(12,851	)		(12,920	)		-0.5	%
Finance expense		(8,791	)		(11,214	)		-21.6	%
Brand transition, restructure and transaction expenses		(3,272	)		(2,430	)		34.7	%
Impairment expense		(1,914	)		(2,865	)		-33.2	%
Other foreign currency gains/(losses)		757			(14,327	)		-105.3	%
Fair value gain/(loss) on convertible notes derivative		2,393			(592	)		-504.5	%
Loss before income tax		(37,533	)		(34,230	)		9.7	%
Income tax benefit/(expense)		(60	)		(6,123	)		-99.0	%
Loss for the period		(37,593	)		(40,352	)		-6.8	%
Other comprehensive loss
Exchange differences on translation of foreign operations		148			384			-61.5	%
Total comprehensive loss for the period		(37,445	)		(39,968	)		-6.3	%

* Note that January 31, 2017 is not an annual period, rather it has been derived from accounting records, to provide a 12 month comparative to the January 31, 2018 annual period.

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

The following table sets forth certain selected operating results and other financial information for each of the 7-month periods ended January 31, 2017 and 2016, and each of the years ended June 30, 2016 and 2015:

	Jan. 31, 2017 NZ$000 seven months			Unaudited Jan. 31, 2016 NZ$000 seven months			% movement			Jun. 30, 2016 NZ$000 12 months			Jun. 30, 2015 NZ000$ 12 months			% movement
Revenue		96,284			94,667			1.7	%		151,000			138,838			8.8	%
Cost of goods Sold		(57,144	)		(51,998	)		9.9	%		(83,525	)		(79,031	)		5.7	%
Gross Profit		39,140			42,669			-8.3	%		67,475			59,807			12.8	%
Brand Management		(32,040	)		(27,647	)		15.9	%		(48,362	)		(42,203	)		14.6	%
Administrative expenses		(2,383	)		(2,109	)		13.0	%		(4,090	)		(4,691	)		-12.8	%
Corporate expenses		(8,082	)		(8,236	)		-1.9	%		(13,002	)		(13,940	)		-6.7	%
Finance expense		(6,238	)		(5,436	)		14.8	%		(10,409	)		(5,870	)		77.3	%
Brand transition, restructure and transaction expense		(1,321	)		(1,122	)		17.7	%		(2,232	)		(12,182	)		-81.7	%
Impairment expense		(292	)		(2,157	)		-86.5	%		(2,157	)		-			100.0	%
Other foreign currency gains/(losses)		(3,306	)		5,685			-158.2	%		(2,423	)		4,700			-151.6	%
Fair value gain/(loss) on convertible notes derivative		(592	)		-			100.0	%		-			-			0	%
Profit/(Loss) before income tax		(15,114	)		1,647			-1017.7	%		(15,200	)		(14,379	)		5.7	%
Income tax benefit/(expense)		(865	)		(289	)		199.3	%		(5,546	)		1,274			-535.3	%
Profit/(Loss) for the period		(15,979	)		1,358			-1276.7	%		(20,746	)		(13,105	)		58.3	%
Other comprehensive income
Exchange differences on translation of foreign operations		(29	)		(379	)		-92.3	%		31			(93	)		-133.3	%
Total comprehensive income/(loss) for the period		(16,008	)		979			-1735.2	%		(20,715	)		(13,198	)		57.0	%

Revenue

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

During the 12-month period ended January 31, 2019 the net sales decreased by $19.5m or 14.8% when compared with $131.4m in the 12-month period ended January 31, 2018. The sales in the 12-month period ended January 31, 2019 continued to be negatively impacted by a stock supply issue because of liquidity issues. In addition, we also ended our wholesale relationship with key major accounts in the US market. Our strategic decision to exit the EU/UK market as well as the loss of the Stella McCartney license also contributed to the reduction in sales for the Company.

One new store was opened in Australia, as well as three new stores in New Zealand to continue to expand our brand presence across the Australasian market during the year ended January 31, 2019. During the current financial year, we also successfully acquired both the Naked and Fredricks of Hollywood entities.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

During the 12-month period ended January 31, 2018 the net sales decreased by $20.75m or 13.6% when compared with $152.1m in the 12-month period ended January 31, 2017. The sales in the 12-month period ended January 31, 2018 were negatively impacted by a stock supply issue because of liquidity issues. Three new stores were opened in Australia, as well as two new stores in New Zealand to continue to expand our brand presence across the Australasian market.

7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 compared to the 12-month period ended June 30, 2015

Net sales in the 12-month period ended June 30 2016 increased by $12.2m, or 8.8%, to $151.0m when compared with $138.8m in the 12-month period ended June 30 2015. This was driven by the extension of the business into providing advisory and management services to other intimate apparel businesses, favorable foreign exchange rate fluctuations between the New Zealand dollar and U.S. Dollar, growth in U.S. wholesale distribution through a new contract with Macy’s, growth in the online business and introduction of 8 new stores across Australia.

Gross margins

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

During the 12-month period ended January 31, 2019 and the 12-month period ended January 31, 2018, the gross margin was 33.5% and 33.4% respectively. The movement year on year is consistent, however the margin continues to be impacted by the sales mix, discounts provided to customers and a lack of current season stock because of the supply issue.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

During the 7-month period ended January 31, 2017, the 7-month period ended January 31, 2016, 12-month period ended June 30 2016 and 12-month period ended June 2015, the gross margin was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but has improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations.

Operating expenses

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

	Jan. 31, 2019 NZ$000 12 months			Jan. 31, 2018 NZ$000 12 months			% movement FY19 v FY18			*Unaudited* *Jan. 31,* *2017* *NZ$000* *12 months*			% movement FY18 v FY17
Brand management		(49,256	)		(53,653	)		-8.2	%		(53,957	)		-0.6	%
Administrative expenses		(3,432	)		(4,131	)		-16.9	%		(3,712	)		11.3	%
Corporate expenses		(14,145	)		(12,851	)		10.1	%		(12,920	)		-0.5	%
Finance expense		(4,041	)		(8,791	)		-54.0	%		(11,214	)		-21.6	%
Brand transition, restructure and transaction expenses		(10,075	)		(3,272	)		207.9	%		(2,430	)		34.7	%
Impairment expense		(8,173	)		(1,914	)		326.9	%		(2,865	)		-33.2	%
Other foreign currency gains/(losses)		1,963			757			159.3	%		(14,327	)		-105.3	%
Fair value gain/(loss) on convertible notes derivative		(775	)		2,393			-132.4	%		(592	)		-504.5	%

Brand management decreased by $4.4m, or 8.2% from $53.6m to $49.2m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was largely due to cost savings in our store overheads and reduced marketing spend.

Administrative expenses decreased by $0.7m, or 17% from $4.1m to $3.4m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018. This was due to cost saving initiatives implemented by our new CEO who joined us during the financial year ended January 31, 2019.

Corporate expenses increased by $1.3m, or 10.1%, from $12.8m to $14.1m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was primarily driven by an increase in salary and rental costs.

Brand transition, restructure and transaction expenses increased by $6.4m, or 195.9%, from $3.2m to $9.6m in the 12-month period ended January 31, 2019 as compared with the 12-month period ended January 31, 2018, which was driven by costs incurred in respect of the US listing process.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

				Unaudited
	Jan. 31,			Jan. 31,
	2018			2017
	NZ$000			NZ$000			%
	12 months			12 months			movement
Brand management		(53,653	)		(53,957	)		-0.6	%
Administrative expenses		(4,131	)		(3,712	)		11.3	%
Corporate expenses		(12,851	)		(12,920	)		-0.5	%
Finance expense		(8,791	)		(11,214	)		-21.6	%
Brand transition, restructure and transaction expenses		(3,272	)		(2,430	)		34.7	%
Impairment expense		(1,914	)		(2,865	)		-33.2	%
Other foreign currency gains/(losses)		757			(14,327	)		-105.3	%
Fair value gain/(loss) on convertible notes derivative		2,393			(592	)		-504.5	%

Brand management expenses decreased by $0.3m, or 0.6%, from $53.9m to $53.6m in the 12-month period to January 31, 2018 as compared with the 12-month period to January 31, 2017. This reduction was due to the increased focus on cost control in this area.

Administrative expenses increased by $0.4m or 11.3% from $3.7m to $4.1m in the 12-month period to January 21, 2018 as compared with the 12-month period to January 31, 2017. This increase was due to a higher spend on accounting and tax fees associated with the US listing process.

Corporate expenses are consistent with the prior 12-month period. The slight decrease of $69k, or 0.5% between the 12-month period ended to January 31, 2018 and 12- month period to January 31, 2017, from $12.92m to $12.85m is considered immaterial.

Impairment expense decreased by $0.95m or 33.2% from $2.8m to $1.9m in the 12-month period ended January 31, 2018 as compared with the 12-month period ended January 31, 2017. During the current financial year an impairment expense of $1.6m was incurred as management impaired the costs incurred on the ERP upgrade, as this software will need to be replaced and updated with a more advanced system. In the 12-month period ended January 31, 2017 an impairment expense of $2.2m was recognized in relation to a goodwill write-off.

Other foreign currency gains/(losses) reduced from a loss of $14.3m in 12-month period ended January 31, 2017 to a gain of $0.7m in the 12-month period ended Jan 31, 2018, due to gains on foreign exchange contracts.

Fair value gain/(loss) on convertible notes derivative was a gain of $2.4m in 12-month period ended January 31, 2018 compared to a loss of $0.6m the period ended January 31, 2017. This is because the derivative ended at conversion date.

7-month period ended January 31, 2017 compared to 7-month period ended January 31, 2016 and 12-month period ended June 30, 2016 compared to 12-month period ended June 30, 2015

	Jan. 31, 2017 NZ$000 seven months			Unaudited Jan. 31, 2016 NZ$000 seven months			% movement			Jun. 30, 2016 NZ$000 12 months			Jun. 30, 2015 NZ000$ 12 months			% movement
Brand management		(32,040	)		(27,647	)		15.9	%		(48,362	)		(42,203	)		14.6	%
Administrative expenses		(2,383	)		(2,109	)		13.0	%		(4,090	)		(4,691	)		-12.8	%
Corporate expenses		(8,082	)		(8,236	)		-1.9	%		(13,002	)		(13,940	)		-6.7	%
Finance expense		(6,238	)		(5,436	)		14.8	%		(10,409	)		(5,870	)		77.3	%
Brand transition, restructure, and transaction expenses		(1,321	)		(1,122	)		17.7	%		(2,232	)		(12,182	)		-81.7	%
Impairment expense		(292	)		(2,157	)		-86.5	%		(2,157	)		—			100.0	%
Other foreign currency gains/(losses)		(3,306	)		5,685			-158.2	%		(2,423	)		4,700			-151.6	%
Fair value gain/(loss) on convertible notes derivative		(592	)		-			100.0	%		-			-			0	%

Brand management expenses increased by $6.2m, or 14.6%, from $42.2m to $48.4m between the 12-month period ended June 30 2015 and 12-month period ended June 30 2016. This was largely driven by growth in business and associated employee costs, as well as additional marketing expenditures to support the introduction of new swimwear ranges. The increase of $4.4m, or 15.9%, from $27.6m to $32.0m in the 7-month period to January 31, 2017 as compared with the 7- month period to January 31, 2016, was also driven by additional marketing expenditures.

Finance expenses increased by $4.5m, or 77.3%, between the 12-month period ended June 30 2015 and 12-month period ended June 30 2016, from $5.9m to $10.4m, due to additional interest expense associated with an increase in debt. The finance expense in the 7- month period to January 31, 2016 and January 31, 2017 remained consistent due to additional interest on convertible loan notes being partially offset by a reduction in interest on the shareholder loan due to the principal amount of such loans being reduced, the majority of which was converted to equity in September 2016.

Brand transition, restructure and transaction expenses decreased by $10.0m from $12.2m in fiscal year 2015 to $2.2m in fiscal year 2016. This was largely driven by a reduction in brand transition expenses incurred in relation the transition from the Elle MacPherson to Heidi Klum brand of $9.2m, given the licence arrangement terminated in fiscal year 2015 and therefore majority of the associated costs were recognized in the same period.

Brand transition, restructure and transaction expenses decreased by $0.9m from $2.2m in the 12-month period ended June 30 2016 to $1.3m in the 7-month period ended January 31, 2017, largely due to a $0.9m decrease in Heidi Klum brand transition costs due to any non-recurring costs associated with the transition having been incurred prior to the 7-months ended January 31, 2017.

An impairment expense of $2.2m was recognized in the 12-month period ended June 30 2016 and 7-month period to January 31, 2016 in relation to a goodwill write-off. An impairment expense of $0.3m was recognised in the 7- month period to January 31, 2017.

Other foreign currency gains/(losses) reduced a gain of $4.7m in the 12-month period ended June 30 2015 to a loss of $2.4m in the 12-month period ended June 30 2016, due to weakening of the New Zealand dollar and the impact of unfavorable hedge contracts.

Other foreign currency gains/(losses) reduced a gain of $5.7m in the 7-month period to January 31, 2016 to a loss of $3.3m in the 7-month period to January 31, 2017 as a result of the same foreign exchange drivers.

Taxation

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

The tax benefit of $1,274k in the 12 month period ended January 31, 2019 was an increase of $1,334k when compared to the tax expense of $60k for the 12 month period ended January 31, 2018. This year on year movement is due to increased tax benefits resulting from the increased losses and adjustments for current tax for prior periods.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The tax expense of $60k in the 12month period ended January 31, 2018 decreased by $6.06m when compared to the 12-month period ended January 31, 2017. The variance was due to the write off of the carrying value of prior year tax losses and deferred tax in the due to the uncertainty over whether the deferred tax asset could be utilized.

7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

The tax benefit of $1.3m in the 12-month period ended June 30 2015, increased by $6.8m, which resulted in a tax expense of $5.5m in the 12-month period ended June 30 2016. A tax expense of $0.9m was recognised in the 7- month period to January 31, 2017. The variances were caused by a write off of the carrying value of prior year tax losses and deferred tax temporary differences in the 12-month period ended June 30 2016 due to uncertainty over future profitability to ensure utilization of the deferred tax assets.

The effective tax rate for the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016 and the 12-month period ended June 30 2015 was 5.7%, 36.5% and 8.9%, respectively. These effective tax rates can be explained by deferred tax credits not brought to accounts due to uncertainty over their availability for utilization.

Net loss and comprehensive loss

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

The net loss in the 12-month period ended January 31, 2019 increased by $11.2m, or 29.9%, to ($48.9m) when compared with ($37.4m) in the 12-month period ended January 31, 2018. This was due to both the decrease in gross profit of $6.5m and the increase in expenses of $6.4m in the 12-month period ended January 31, 2019 when compared with the 12-month period ended January 31, 2018.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

The net loss in the 12-month period ended January 31, 2018 decreased by $2.5m, or 6.3%, to ($37.4m) when compared with ($39.9m) in the 12-month period ended January 31, 2017. The decrease in gross profit of $23.9m in the 12-month period ended January 31, 2018 when compared with the 12-month period ended January 31, 2017 was significantly offset by the reduction in expenses of $20.5m when comparing the same 12 month periods. Tax expense also decreased by $6.06m when compared to the 12-month period ended January 31, 2017 to $60k in the 12month period ended January 31, 2018. The variance was due to the write off of the carrying value of prior year tax losses and deferred tax in the due to the uncertainty over whether the deferred tax asset could be utilized.

7-month period ended January 31, 2017 compared to the 7-month period ended January 31, 2016 (unaudited) and 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

For the seven months ended January 31, 2017 and fiscal years ended June 30, 2016 (fiscal year 2016) and June 30, 2015 (fiscal year 2015), we incurred a net comprehensive loss of ($16.0m), ($20.7m) and ($13.2m) respectively. Gross profit for the seven month period ended January 31, 2017, the seven month period ended January 31, 2016, fiscal year 2016 and fiscal year 2015 was 40.7%, 45.1%, 44.7%, and 43.1%, respectively. The movement in gross margin has remained fairly consistent, but improved due to changes in the sales mix including additional online revenue, as well as positive foreign exchange rate fluctuations. The tax benefit of $1.3m in fiscal year 2015, increased by $6.8m, which resulted in a tax expense of $5.5m in fiscal year 2016. A tax expense of $0.9m was recognised in the seven month period to January 31, 2017. The variances were caused by a write off of the carrying value of prior year tax losses and deferred tax temporary differences in fiscal year 2016 due to uncertainty over future profitability to ensure utilization of the deferred tax assets.

The net loss in the 6-month period ended July 31, 2017 increased by $4.8m, or 34.8%, to ($18.5m) when compared with ($13.7m) in the 12-month period ended July 31, 2016. This net loss was due to a reduction in gross profit, which decreased $13.6m in the 6-month period ended July 31, 2017 when compared with the 6-month period ended July 31, 2016, however this was partially offset by a reduction in expenses of $2.2m and a reduction in income tax expense of $5.9m for the 6-month period ended July 31, 2017 when compared with the 6-month period ended July 31, 2016.

Segmented Reporting

Bendon Limited has seven reportable segments: Australia retail, New Zealand retail, Australia wholesale, New Zealand wholesale, US wholesale, Europe 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.

	●	E-commerce. This segment covers the Company’s online retail activities.

The following table provides our segment net sales, gross margin and EBITDA for the 12-month period to January 31, 2019, 2018 and 2017.

Year ending January 31, 2019

	NZ Retail		AU Retail			NZ Wholesale			AU Wholesale			US Wholesale			EU Wholesale			e-commerce			Unallocated
	NZ$000’s		NZ$000’s			NZ$000’s			NZ$000’s			NZ$000’s			NZ$000’s			NZ$000’s			NZ$000’s			Total
Revenue		31,801		18,547			7,154			11,491			5,798			4,996			32,133			-			111,920
Gross margin		16,377		9,355			782			2,993			576			506			10,885			(4,034	)		37,440
EBITDA		3,373		(1,337	)		(10	)		(1,309	)		(2.120	)		(1,006	)		(210	)		(22,983	)		(25,602	)

Year ending January 31, 2018

	NZ Retail		AU Retail			NZ Wholesale		AU Wholesale			US Wholesale			EU Wholesale		e-commerce			Unallocated
	NZ$000’s		NZ$000’s			NZ$000’s		NZ$000’s			NZ$000’s			NZ$000’s		NZ$000’s			NZ$000’s			Total
Revenue		34,269		18,236			10,453		15,512			6,390			14,192		32,234			102			131,388
Gross margin		17,781		8,779			2,240		2,967			(48	)		3,971		11,260			(3,021	)		43,929
EBITDA		4,330		(2,550	)		1,172		(814	)		(3,349	)		1,067		(260	)		(23,649	)		(24,053	)

Year ending January 31, 2017 (Unaudited)

	NZ Retail		AU Retail		NZ Wholesale		AU Wholesale		US Wholesale		EU Wholesale		e-commerce		Unallocated
	NZ$000’s		NZ$000’s		NZ$000’s		NZ$000’s		NZ$000’s		NZ$000’s		NZ$000’s		NZ$000’s			Total
Revenue		35,968		19,395		13,636		27,174		15,695		15,148		23,424		1,702			152,143
Gross margin		20,761		10,958		4,072		9,764		4,979		5,013		10,879		1,358			67,785
EBITDA		7,683		310		1,157		5,623		907		925		4,551		(19,060	)		2,098

For the 7-months ended January 31, 2017

	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
Revenue		21,953		12,053		7,484		18,091		9,015		9,548		18,140		-			96,284
Gross margin		12,246		6,461		2,523		6,660		2,081		3,271		6,238		(340	)		39,140
EBITDA		4,766		265		2,048		4,571		16		1,258		2,584		(17,634	)		(2,126	)

Year to June 30, 2016

	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
Revenue		37,389		20,680		15,071		28,021		18,876		16,531		6,722		7,710			151,000
Gross margin		21,336		11,750		4,350		9,965		4,336		4,873		3,140		7,725			67,475
EBITDA		9,073		1,915		3,641		6,445		1,519		1,669		1,101		(14,893	)		10,470

Year to June 30, 2015

	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
Revenue		37,089		18,491		16,333		29,817		13,853		17,548		5,683		24			138,838
Gross margin		20,819		10,425		5,355		11,356		2,924		6,290		2,611		27			59,807
EBITDA		8,934		2,801		3,568		8,907		388		3,024		620		(24,822	)		3,420

(1)	Unallocated revenue, gross margin and EBITDA relates to revenue, gross margin and EBITDA that cannot be attributed directly to the other reportable segments above including various brand management and head office costs.

New Zealand and Australia Retail

In the 12-month period ended January 31, 2019 New Zealand retail EBITDA was $3.4m compared with $4.3m in the 12-month period to January 31, 2018. Australian Retail EBITDA for the 12-month period ended January 31, 2019 was a loss of $1.3m compared with a loss of $2.5m in the 12-month period to January 31, 2018. The retail environment continued to be challenging for our Bendon stores, and this along with a lack of current season stock supply were the key reasons for both the reduction in the New Zealand market EBITDA year on year as well as the continued operating loss in the Australian market.

In the 12-month period ended January 31, 2018 New Zealand retail EBITDA was $4.3m compared with $7.7m in the 12-month period to January 31, 2017. Australian Retail EBITDA for the 12-month period ended January 31, 2018 was a loss of $2.5m compared with a profit of $0.3m in the 12-month period to January 31, 2017. A challenging retail environment, seasonal product mix and vendor supply issues were the key reasons for this reduced EBITDA across both the New Zealand and Australian retail markets.

New Zealand Retail Gross margin reduced 5.8% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 57.7% to 51.9%. Australia Retail Gross margin reduced 8.4% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 56.5% to 48.1%. The reduction in the gross margin in both markets was caused by increased discounts provided to customers and sub-optimal stock mix because of the stock supply issue.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, the 12-month period ended June 30 2015, New Zealand retail EBITDA was $4.8m, $9.1m, an d $8.9m respectively, as a result of similar trading conditions and consistent store numbers.

In the 12-month period ended June 30 2016, Australia retail recognized increased revenue and reduced EBITDA of $20.7m and $1.9m, respectively, as compared with $18.5m and $2.8m, respectively, in the 12-month period ended June 30 2015. The increase in revenue was due to the introduction of 8 new outlet stores, which due to early trading losses experienced reduced EBITDA. The revenue and EBITDA in the 7-month period to January 31, 2017 showed a consistent trend as compared with the 12-month period ended June 30 2016.

NZ Wholesale, AU Wholesale, US Wholesale and EU wholesale

In the 12-month period ended January 31, 2019 the EBITDA loss decreased in the US market and increased in the NZ, AU and EU markets when compared with the 12-month period ended January 31, 2018. New Zealand wholesale EBITDA was a loss of $0.01m in the 12-months ended January 31, 2019 compared with an EBITDA profit of $1.1m in the 12-months ended January 31, 2018. AU wholesale EBITDA was a loss of $1.3m in the 12-months ended January 31, 2019 compared with an EBITDA loss of $0.8m in the 12-months ended January 31, 2018. US wholesale EBITDA was a loss of $2.1m in the 12-months ended January 31, 2019 compared with an EBITDA loss of $3.3m in the 12-months ended January 31, 2018. EU Wholesale EBITDA was a loss of $1.0m in the 12-months ended January 31, 2019 compared with a profit of $1.1m in the 12-months ended January 31, 2018.

In the 12-month period January 31, 2019, and 12-month period ended January 312, 2018 New Zealand wholesale revenue was $7.1m and $10.4m respectively. In the 12-month period ended January 31, 2019 New Zealand Wholesale EBITDA was a loss of $0.01m compared with a profit of $1.1m in the 12-month period to January 31, 2018. Both the reduction in sales, and EBITDA loss in the New Zealand market is attributed to a lack of order fulfillment due to the reduced stock supply, additional costs were also incurred as a result of unfulfilled orders.

In the 12-month period ended January 31, 2019 and 12-month period ended January 31, 2018, Australia wholesale revenue was $11.5m and $15.5m, respectively. In the 12-month period ended January 31, 2019 Australia Wholesale EBITDA was a loss of $1.3m compared with a loss of $0.8m in the 12-month period to January 31, 2018. The EBITDA loss for the Australian market was also due to a lack of fulfillment of orders because of the reduced stock supply.

US wholesale revenue dropped from $6.4m for the 12-month period ended January 31, 2018 to $5.8m for the 12-month period ended January 31, 2019. The EBITDA Loss for the period ended January 31, 2019 was $2.1m compared to the EBITDA loss of $3.3m for the year ended January 31,2018. The EBITDA loss incurred for the US Wholesale market was primarily due to our relationship ending with key major wholesale accounts.

In the 12-month period ended January 31, 2019, and the 12-month period ended January 31, 2018, EU wholesale revenue was $5.0m, and $14.2m respectively. The EBITDA Loss for the period ended January 31, 2019 was $1.0m compared to the EBITDA profit of $1.1m for the year ended January 31, 2018. A strategic decision was made by the business to exit the EU market and this is the key driver for reduction in sales and the loss for the current period.

In the 12-month period ended January 31, 2018 EBITDA increased in the NZ Wholesale and EU Wholesale markets and decreased in the AU Wholesale and US Wholesale markets when compared with the 12-month period ended January 31, 2017. New Zealand wholesale EBITDA was $1.17m in the 12-months ended January 31, 2018, compared with $1.15m in the 12-months ended January 31, 2017. AU wholesale EBITDA was a loss of $0.8m in the 12-months ended January 31, 2018, compared with an EBITDA profit of $5.6m in the 12-months ended January 31, 2017. US wholesale EBITDA was a loss of $3.3m in the 12-months ended January 31, 2018 compared with an EBITDA profit of $0.9m in the 12-months ended January 31, 2017. EU wholesale EBITDA was a profit of $1.1m in the 12-months ended January 31, 2018, compared with a profit of $0.9m in the 12-months ended January 31, 2017.

In the 12-month period ended January 31, 2018 and 12-month period ended January 31, 2017 New Zealand wholesale revenue was $10.4m and $13.6m, respectively. Cancellation of orders from our key account holders due to vendor supply issues were the key reasons for these reduced sales.

In the 12-month period ended January 31, 2018 and 12-month period ended January 31, 2017, Australia wholesale revenue was $15.5m and $27.1m, respectively. In the 12-month period ended January 31, 2018 Australia Wholesale EBITDA was a loss of $0.8m compared with a profit of $5.6m in the 12-month period to January 31, 2017. The EBITDA loss for the Australian market was due to the cancellation of multiple orders as a result of delayed supply, due to vendor delays and discounts offered to customers for delayed ranges.

US wholesale revenue dropped from $15.7m for the 12-month period ended January 31, 2017 to $6.4m for the 12-month period ended January 31, 2018. The EBITDA Loss for the period ended January 31, 2018 was $3.3m compared to the EBITDA profit of $0.9m for the year ended January 31,2017. The EBITDA loss incurred for the US Wholesale market was primarily due to our relationship ending with Macy’s

In the 12-month period ended January 31, 2018, and the 12-month period ended January 31, 2017, EU wholesale revenue was $14.2m, and $15.1m respectively. EU Wholesale Gross margin decreased 5.1% between the 12-month period to January 31, 2018 and 12- month period to January 31, 2017 from 33.1% to 28%. These fluctuations were driven by changes in customer mix. EBITDA increased year on year, driven by a reduction in expenses.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, New Zealand wholesale revenue was $7.5m, $15.1m, and $16.3m, respectively. In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, Australia wholesale revenue was $18.1m, $28.0m and $29.8m, respectively. These fluctuations were driven by changes in customer mix and a general trend in the business to focus on its direct to consumer strategy. EBITDA for these respective segments was in line with sales movements.

US wholesale revenue grew from $13.9m in the 12-month period ended June 30 2015 to $18.9m in the 12-month period ended June 30 2016 as a result of a new Macy’s contract and favorable foreign exchange rate variances. U.S. wholesale revenue was $9.0m and EBITDA was $0.0m in the 7-month period to January 31, 2017 which was due to reduced business from Macy’s and less favorable foreign exchange movements than in the 12-month period ended June 30 2016. EBITDA for this segment was in line with sales movements.

In the 7-month period ended January 31, 2017, the 12-month period ended June 30 2016, and the 12-month period ended June 30 2015, EU wholesale revenue was $9.6m, $16.5m, and $17.5m respectively. These fluctuations were driven by changes in customer mix and general trend in the business to focus on its direct to consumer strategy. EBITDA for segments was in line with sales movements.

E-commerce

For the 12-months ended January 31, 2019 the e-commerce EBITDA was a loss of $0.2m compared with a loss of $0.3m for the 12-months ended January 31, 2018. The loss for this period was impacted by the reduction in gross margin between the 12-month period to January 31, 2019 and 12-month period to January 31, 2018 from 34.9% to 33.9%, sales are comparable year on year.

For the 12-months ended January 31, 2018 our e-commerce EBITDA was a loss of $0.3m compared with a profit of $4.5m for the 12-months ended January 31, 2017. The loss for this period is due to decrease in margin as a result of the new license fee under the license agreement with FOH and discounts offered to customers. E-commerce Gross margin reduced 11.5% between the 12-month period to January 31, 2018 and 12-month period to January 31, 2017 from 46.4% to 34.9%.

In the 12-month period ended June 30 2016, e-commerce Revenue grew to $6.7m from $5.7m in the 12-month period ended June 30 2015. This was as a result of changing consumer trends and a conscious shift in the business to focus on this revenue stream. EBIDA for this segment was in line with sales movements.

The e-commerce revenue and EBITDA increased significantly in the 7-month period to January 31, 2017, to $18.4m and $2.6m respectively. This was as a result of entering into a license agreement with Frederick’s of Hollywood. The previous management service arrangement with Frederick’s of Hollywood that existed in the 12-month period ended June 30 2016 was not allocated to this segment.

Non-IFRS Financial Measures

EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortization and impairment. Our management uses EBITDA as a measure of our operating results and considers it to be a meaningful supplement to net income as a performance measurement, primarily because we incur significant depreciation and depletion and impairment charges, and the exclusion of such amounts in EBITDA eliminates the non-cash impact.

Reconciliations

Reconciliation of segment EBITDA to the consolidated statements of profit or loss and other comprehensive income follows:

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

	12 months ended January 2019 NZ$000			12 months ended January 2018 NZ$000
Segment EBITDA		(25,602	)		(24,053	)
Income tax (expense)/benefit		1,274			(60	)
Any other reconciling items		(24,892	)		(13,480	)
Total net loss after tax		(49,220	)		(37,593	)

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

	12 months			*Unaudited* *12 months*
	ended			ended
	January 2018			January 2017
	NZ$000			NZ$000
Segment EBITDA		(24,053	)		2,098
Income tax (expense)/benefit		(60	)		(6,123	)
Any other reconciling items		(13,480	)		(36,327	)
Total net loss after tax		(37,593	)		(40,352	)

7-month period ended January 31, 2017 compared to the 12-month period ended June 30, 2016 and the 12-month period ended June 30, 2015

	7 months ended January 2017 NZ$000’s			12 months ended June 2016 NZ$000’s			12 months ended June 2015 NZ$000’s
Segment EBITDA		(2,126	)		10,470			3,420
Income tax (expense)/ benefit		(865	)		(5,546	)		1,274
Other Revenue					7,710			24
Any other reconciling items		(12,988	)		(33,380	)		(17,823	)
Total net loss after tax		(15,979	)		(20,746	)		(13,105	)

In each of the tables above, “other reconciling items” consist of brand transition, restructure and transaction expenses, finance expense, impairment expense, depreciation and amortization, fair value (gain)/loss on foreign exchange contracts, and unrealized foreign exchange (gain)/loss.

B.	Liquidity, and Capital Resources

Liquidity

We finance our business through cash from operations and equity and debt financing. Our cash requirements have been principally to fund working capital needs, to support the growth of the business and to partially repay our bank loan.

Management intends to continue to raise funds from equity financing to fund our operations and objectives. There is no assurance the additional funding will be achieved. If we are unable to achieve the additional funding, we may not be able to conduct our operations and pursue our objectives as presently contemplated, which may adversely affect our results of operations and financial condition.

12-month period ended January 31, 2019 compared to 12-month period ended January 31, 2018

As at January 31, 2019 and January 31, 2018 the Company had cash totaling $1.9m and $10.7m respectively. During the 12-months ended January 31, 2019 and the 12-months ended January 31, 2018 insufficient cash availability directly contributed to a lack of stock.

During the year ended January 31, 2019, the Company has undertaken a number of financing activities and raised $23.6m. Of this amount, $18.5m was utilized to repay Bank debt and the balance was utilized as working capital in the operating business.

12-month period ended January 31, 2018 compared to 12-month period ended January 31, 2017

As of January 31, 2018, and January 31, 2017, the Company had cash totaling $10.7m and $2.6m respectively. During the 12-months ended January 31, 2018 and the 12-months ended January 31, 2017, insufficient cash liquidity contributed to a stock supply issue as described above.

During the year ended January 31, 2018, the Company issued an aggregate amount of USD $2,600,000 (NZ$3,544,649) of convertible notes.

Working capital

We have managed and continue to manage our working capital constraints through the deferral of creditor settlement. Our relationships with our suppliers are managed carefully and we do not have any significant concerns about the deferred payment arrangements. We are continuing to raise capital and believe that this will assist greatly in reducing the overdue creditor position in the coming financial year.

As of January 31, 2019 and January 31, 2018

	January 31, 2019 NZ$000			January 31, 2018 NZ$000

Current Assets		33,369			70,343
Current Liabilities		(62,795	)		(91,095	)
Working Capital		(29,426	)		(20,752	)

As of January 31, 2019, current assets decreased due to the reduction in related party receivables, the reduction in inventory because of the reduced stock supply, and the reduced trade and other receivables because of cancelled orders from our wholesale accounts due to ongoing stock supply issues. Our cash balance also reduced by $8.8m from $10.7m as at the year ended January 31, 2018 to $1.9m as at the year ended January 31, 2019.

As of January 31, 2018 and January 31, 2017

	January 31,			January 31,
	2018			2017
	NZ$000			NZ$000
Current Assets		70,343			81,588
Current Liabilities		(91,095	)		(101,232	)
Working Capital		(20,752	)		(19,644	)

The negative working capital is primarily driven by the classification of bank debt and shareholder loan as current liabilities. As of January 31, 2018, current assets decreased due to both the reduction in inventory because of vendor supply issues and the reduced trade and other receivables as a result of cancelled orders from our wholesale accounts due to vendor supply issues

As of January 31, 2017, June 30, 2016 and June 30, 2015

	January 31, 2017 NZ$000’s			June 30, 2016 NZ$000’s			June 30, 2015 NZ000’s
Current Assets		81,588			74,807			70,026
Current Liabilities		(108,027	)		(94,794	)		(94,093	)
Working Capital		(26,439	)		(19,987	)		(24,067	)

The negative working capital is primarily driven by the classification of bank debt and shareholders loan as current liabilities.

Cash flows

Year ended January 31, 2019 compared to 12-month period ended January 31, 2018

	12 months ended			12 months ended
	January 31, 2019			January 31, 2018
	NZ$000			NZ$000
Net cash outflow from operating activities		(9,434	)		(4,116	)
Net cash outflow from investing activities		(1,867	)		(2,312	)
Net cash inflow from financing activities		2,168			14,496
Net increase/(decrease) in cash and cash equivalents held		(9,133	)		8,068
Cash and cash equivalents at end of the year		1,962			10,739

Operating Activities

Net cash outflow from operating activities for the 12-month period to January 31, 2019 and, 12-month period to January 31, 2018 was $9.4m, and $4.1m, respectively. This was largely because of the increased net loss for the current period. The company is committed to a strategic plan lead by our new CEO to create cost savings and manage the overhead structure moving forward, we anticipate that this plan will have a positive impact on our operating cashflow moving forward.

Investing Activities

Net cash outflow from investing activities for the 12-month period to January 31, 2019 and for the 12-month period to January 31, 2018 was $1.9m and $2.3m respectively. This was driven by the proceeds from the businesses acquired during the period.

Financing Activities

Net cash inflow from financing activities for the 12-month period to January 31, 2019 and, 12-month period to January 31, 2018 was $2.2m, and $14.5m, respectively. During the 12-month period to January 31, 2019 the company raised $23.2m through the issue of shares. These funds were partially used to fund interest charges of $2.3m during the period, and to also repay the bank $18.5m.

Year ended January 31, 2018 compared to 12-month period ended January 31, 2017 (unaudited)

	12 months ended			12 months ended
	January 31, 2018			January 31, 2017
	NZ$000			NZ$000
Net cash outflow from operating activities		(4,116	)		(15,160	)
Net cash outflow from investing activities		(2,312	)		(2,933	)
Net cash inflow from financing activities		14,496			17,039
Net increase/(decrease) in cash and cash equivalents held		8,068			(1,053	)
Cash and cash equivalents at end of the year		10,739			2,645

Operating Activities

Net cash outflow from operating activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $4.1m, and $15.1m, respectively. This was largely as a result of the net loss for the periods. Bendon Limited will continue to implement a restructure plan to create cost savings and manage the overhead structure, which will show as favorable impact in the cash flow going forward.

Investing Activities

Net cash outflow from investing activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $2.3m, and $2.9m, respectively. This was largely driven by capital expenditure on property, plant and equipment in stores including enhancement of existing stores and introduction of new stores.

Financing Activities

Net cash inflow from financing activities for the 12-month period to January 31, 2018 and, 12-month period to January 31, 2017 was $14.5m, and $17m, respectively. During the 12-month period to January 31, 2018 the company raised $22m through the issue of shares and an additional $4.5m through convertible note issuance. These funds were used partly to fund interest charges of $3.4m during the period, and to also repay the bank $9.7m.

7-month period ended January 31, 2017 compared to 12-month period ended June 30, 2016 and 12-month period ended June 30 2015

	7 months ended January 31, 2017 NZ$000’s			12 months ended June 30, 2016 NZ$000’s			12 months ended June 30, 2015 NZ000’s
Net cash (outflow) from operating activities		(13,518	)		(5,040	)		(17,199	)
Net cash (outflow) from investing activities		(1,074	)		(3,178	)		(5,794	)
Net cash inflow from financing activities		13,082			11,251			20,524
Net increase/decrease in cash and cash equivalents held		(1,510	)		3,033			(2,469	)
Cash and cash equivalents		2,644			4,193			1,246

Operating Activities

Net cash (outflow) from operating activities for the 7-month period to January 31, 2017, 12 month period ended June 30 2016 and the 12 month period ended June 30, 2015 was $13.5m, $5.0m, and $17.2m, respectively, which was largely as a result of the net loss for the periods.

Investing Activities

Net cash (outflow) from investing activities for the 7-month period to January 31, 2017, the 12 month period ended June 30, 2016 and the 12 month period ended June 30, 2015 was $1.1m, $3.2m, and $5.8m respectively. This was largely driven by capital expenditure on property, plant and equipment in stores including enhancement of existing stores and introduction of new stores.

Financing Activities

Net cash inflow from financing activities for the 7- month period to January 31, 2017, the 12 month period ended June 30, 2016, and the 12 month period ended June 30, 2015 was $13.1m, $11.3m, and $20.5m respectively. Bank debt and shareholder loan finance increased in the 12 month period ended June 30 2015 and the 12 month period ended June 30 2016 to fund operating cash outflows. During the 7- month period ended January 31, 2017, in addition to additional bank and shareholder debt, cash was also raised through issuance of $16.5m in convertible note debt.

Indebtedness

Bank loan

On June 27, 2016, all banking facilities were repaid and a new banking arrangement with BNZ commenced. This debt arrangement with BNZ was entered into on June 27, 2016 and included a term loan facility and revolving (working capital) loan facility. The facility limits of the term loan and revolving loan were $54,000,000 in aggregate.

On June 13, 2018, we entered into a Deed of Amendment with BNZ to reduce the facility limits from $54,000,000 in the aggregate to a single revolving facility limit of $20,000,000. In addition, the new facility takes over guarantees and financial instruments totalling $1,345,000. In connection with the Deed of Amendment, we repaid approximately $18 million of the outstanding loans.

The new facility of $20,000,000 has been extended to January 31, 2020 and discussions are continuing to extend the facility beyond that point. The current amount outstanding under the facilities (including the instruments referenced above) is $20,000,000 (January 31, 2018: $38,489,428, 2017: $41,710,000). The current interest rate on this loan is 5.57% (January 31, 2019: 5.57%, 2018: 5.55%, 2017: 4.84%) per annum.

BNZ has the first ranking charge over all assets of the Company and its subsidiaries. Under the terms of the major borrowing facility, the new facility is subject to four undertakings being: Interest cover ratio of three times that is first tested as at April 30, 2019; gross EBITDA ratio measured to 3 months to September 2018 had to be greater than $0, six months to December 30, 2018 is greater than $3 million; inventory and receivables ratio must be greater than 2 times being first measured as at September 30, 2018; and the actual sales and gross margin must not vary by more than 10% from the budget submitted to the Bank. The covenants were reset as at 1 May 2019 and only the inventory covenant remains.

As at October 31, 2018, there was a breach in minimum gross EBITDA ratio. As at January 31, 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the inventory and receivables ratio. The reset inventory ratio has been breached up until November 30, 2019. The Bank has advised that they are currently taking these breaches under review.

Shareholder loan

On September 29, 2016, Bendon Limited issued 24,839 Bendon Ordinary Shares to the shareholders as part of an agreement to convert debt to equity. The amount of debt converted on this date amounted to $24,839,783.

On June 19, 2018, Bendon Limited issued additional 24,221 Bendon Ordinary Shares to the shareholders as part of an agreement to convert the remainder of the shareholder debt to equity. The amount of debt converted on this date amounted to a fair value of $12,244,208.

After this conversion, the shareholder loan is fully converted to equity and the outstanding balance as at January 31, 2019 was zero (January 31, 2018: $10,951,295, 2017: $8,200,000). The interest rate on the shareholder loans up to the date of conversion was 30%, and was capitalised quarterly. Total interest capitalised during the twelve months to January 31, 2019 was $641,000 (January 31, 2018: $553,000, 2017: $275,000).

Convertible notes

On September 29, 2017, the holders of US$11.75m (NZ$16.79m) of convertible notes converted to 23,961 Bendon Ordinary Shares. On June 19, 2018, in connection with the closing of the Reorganization, the holders of US$2.8m (NZ$4.2m) of convertible notes converted to 16,408 Bendon Ordinary Shares.

The holder of US$1.0m (NZ$1.42m) of convertible notes elected for their convertible note to be repaid which is due at a future date to be agreed between us and the holder. The amount owing has been classified as a current borrowing and amounted to NZ$1.247m as at January 31, 2019.

All the convertible notes have now converted to equity due to the closing of the Reorganization, or been reclassified as other loans. Accordingly, the outstanding balance of the convertible notes was zero as at January 31, 2019 (January 31, 2018: US$2,600,000 (NZ$3,624,198), 2017: US$12,000,000 (NZ$16,474,465)). The convertible notes had been issued pursuant to an Investment Agreement dated on August 9, 2017. The convertible notes accrued interest at 10% interest, were subject to a conversion at a fixed value on the business day immediately prior to the Reorganization and had a maturity date of August 10, 2019. Conversion was at the noteholders option. If conversion had not occurred the convertible notes would have been redeemable at maturity. The issuer could have elected to redeem the convertible notes at any time prior to maturity.

The carrying value of the convertible notes at initial recognition was determined as the difference between the consideration received and the fair value of the embedded derivative recognised. The convertible notes are subsequently measured at amortised cost using the effective interest rate method. The carrying value of the convertible notes at January 31, 2019 was zero (2018: $1,740,000, 2017: $13,744,000).

C.	Research and Development, Patents and Licenses

We do not have any set research and development policies and have not spent a significant amount on research and development in the last three fiscal years

D.	Trend Information

For a discussion of trends relating to revenues, please see Item 5.A, “Results of Operations,” contained in this Annual Report and incorporated herein by reference.

E.	Off-balance Sheet Arrangements

Except for amounts due under operating lease commitments disclosed below under Item E, “Contractual Obligations,” of this Annual Report, we do not have any material off-balance sheet commitments or arrangements.

F.	Contractual Obligations

As of January 31, 2019, our contractual, obligations, excluding trade creditors, were as set forth below:

	Total January 31, 2019		Not later than one year		Between one year and five years		Later than five years
	NZ$000		NZ$000		NZ$000		NZ$000
Bank loan		20,000		20,000
Shareholder loans		1,049		1,049
Other Loans		967		967
Working capital financing bank facility		-		-
Convertible notes		0		0
Minimum lease payments under non-cancellable operating leases		28,057		8,974		18,532		1,485
Contracted commitements		12,982		4,286		8,696
Total		64,066		35,354		27,228		1,485

G.	Safe Harbor

The safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act applies to forward-looking information provided under “Off-Balance Sheet Arrangements” and “Contractual Obligations.”

PART III

ITEM 17. FINANCIAL STATEMENTS

See Item 18, “Financial Statements,” of this Form 20-F/A.

ITEM 18. FINANCIAL STATEMENTS

Our Audited Annual Consolidated Financial Statements are included at the end of this Form 20-F/A.

ITEM 19. EXHIBITS

Exhibit No.		Description
12.1		Certification of Principal Executive Officer required by Rule 13a-14(a).

12.2		Certification of Principal Financial Officer required by Rule 13a-14(a).

13.1		Certification required by Section 1350 of Chapter 63 of Title 18 of the United States Code.

15.1		Consent of BDO Audit Pty Ltd.

15.2		Consent of PricewaterhouseCoopers.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Naked Brand Group Limited

	By:	/s/ Justin Davis-Rice
	Name:	Justin Davis-Rice
	Title:	Executive Chairman

	By:	/s/ David Adams
	Name:	David Adams
	Title:	Interim Chief Financial Officer

Date: January 3, 2020

Naked Brand Group Limited

ACN 619 054 938

Consolidated Financial Statements

(Expressed in New Zealand Dollars)

For the Periods Ended 31 January 2019, 31 January 2018, and 31 January 2017 and 30 June 2016

Naked Brand Group Limited

ACN 619 054 938

Contents

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

	Page
Report of the Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Profit or Loss and Other Comprehensive Income	F-5
Consolidated Balance Sheets	F-7
Consolidated Statements of Changes in Equity	F-9
Consolidated Statements of Cash Flows	F-11
Notes to the Consolidated Financial Statements	F-13

F-1

Naked Brand Group Limited

ACN 619 054 938

Report of the Independent Registered Public Accounting Firm

F-2

F-3

F-4

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

	Note	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Revenue	5		111,920			131,388			96,284			151,000
Cost of goods sold			(74,480	)		(87,459	)		(57,144	)		(83,525	)

Gross profit			37,440			43,929			39,140			67,475
Brand management			(49,256	)		(53,653	)		(32,040	)		(48,362	)
Administrative expenses			(3,432	)		(4,131	)		(2,383	)		(4,090	)
Corporate expenses			(14,145	)		(12,851	)		(8,082	)		(13,002	)
Finance expense	6		(4,041	)		(8,791	)		(6,238	)		(10,409	)
Brand transition, restructure and transaction expenses	6		(10,075	)		(3,272	)		(1,321	)		(2,232	)
Impairment expense	6		(8,173	)		(1,914	)		(292	)		(2,157	)
Other foreign currency gains/(losses)	6		1,963			757			(3,306	)		(2,423	)
Fair value gain/(loss) on Convertible Notes derivative			(775	)		2,393			(592	)		-
Loss before income tax			(50,494	)		(37,533	)		(15,114	)		(15,200	)
Income tax (expense)/benefit	7		1,274			(60	)		(865	)		(5,546	)
Loss for the period			(49,220	)		(37,593	)		(15,979	)		(20,746	)

Other comprehensive income

Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	22		(7	)		148			(29	)		31

Other comprehensive income/(loss) for the period, net of tax			(7	)		148			(29	)		31

Total comprehensive income/(loss) for the period			(49,227	)		(37,445	)		(16,008	)		(20,715	)
Total comprehensive income/(loss) attributable to:
Owners of Naked Brand Group Limited			(49,227	)		(37,445	)		(16,008	)		(20,715	)

F-5

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2019

	Note	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Loss per share for profit from continuing operations attributable to the ordinary equity holders of the Group:
Basic loss per share (NZ$)	23		(2.01	)		(1.79	)		(0.82	)		(1.13	)
Diluted loss per share (NZ$)	23		(2.01	)		(1.79	)		(0.82	)		(1.13	)

A stock reorganisation occurred on the 19th June 2018 upon completion of the merger between Naked Brands Inc. and Bendon Limited. As a result , the calculation of the basic and diluted earnings per share for 2018, 2017 and 2016 has been adjusted restrospectively. The number of ordinary shares outstanding has been adjusted to reflect the proportionate change in the number of shares. See note 23 for further information.

The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

F-6

Naked Brand Group Limited

ACN 619 054 938

Consolidated Balance Sheets

As at 31 January 2019, 31 January 2018, and 31 January 2017

	Note	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

ASSETS
CURRENT ASSETS
Cash and cash equivalents	11		1,962		10,739		2,644
Trade and other receivables	12		9,650		13,165		28,090
Inventories	13		21,120		31,113		37,751
Current tax receivable			355		-		52
Related party receivables	34		282		15,326		13,051

TOTAL CURRENT ASSETS			33,370		70,343		81,588

NON-CURRENT ASSETS

Property, plant and equipment	14		3,763		4,741		4,964
Deferred tax assets	28		692		-
Intangible assets	15		37,864		13,012		14,680

TOTAL NON-CURRENT ASSETS			42,319		17,753		19,644

TOTAL ASSETS			75,688		88,096		101,232

LIABILITIES
CURRENT LIABILITIES
Trade and other payables	18		35,545		32,516		28,565
Borrowings	19		20,967		52,121		68,998
Foreign currency derivative financial instruments	16		1,484		2,087		4,188
Derivative on Convertible Notes	17		-		1,110		4,112
Current tax liabilities			140		786
Related party payables	34		3,738		1,369		635
Provisions	20		921		1,106		1,528

TOTAL CURRENT LIABILITIES			62,795		91,095		108,026

F-7

Naked Brand Group Limited

ACN 619 054 938

Consolidated Balance Sheets

As at 31 January 2019, 31 January 2018, and 31 January 2017

	Note	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s

NON-CURRENT LIABILITIES
Provisions	20		2,372			2,711			2,249

TOTAL NON-CURRENT LIABILITIES			2,372			2,711			2,249

TOTAL LIABILITIES			65,167			93,806			110,275

NET ASSETS/(LIABILITIES)			10,519			(5,710	)		(9,043	)

EQUITY
Share capital	21		134,183			68,727			27,948
Other reserves	22		(2,013	)		(2,006	)		(2,154	)
Accumulated profit/(losses)	24		(121,651	)		(72,431	)		(34,838	)

TOTAL EQUITY			10,519			(5,710	)		(9,044	)

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

F-8

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statements of Changes in Equity

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

	Ordinary Shares NZ$000’s		Retained Earnings/ (Accumulated Losses) NZ$000’s			Foreign Currency Translation Reserve NZ$000’s			Total NZ$000’s

Balance at 1 July 2015		3,108		1,887			(2,156	)		2,839
Loss for the year		-		(20,746	)		-			(20,746	)
Other comprehensive loss for the year		-		-			31			31
Balance at 30 June 2016		3,108		(18,859	)		(2,125	)		(17,876	)

Balance at 1 July 2016		3,108		(18,859	)		(2,125	)		(17,876	)
Loss for the year		-		(15,979	)		-			(15,979	)
Other comprehensive loss for the year		-		-			(29	)		(29	)
Transactions with owners in their capacity as owners		-		-			-			-
Issuance new shares		24,840		-			-			24,840
Balance at 31 January 2017		27,948		(34,838	)		(2,154	)		(9,044	)

Balance at 1 February 2017		27,948		(34,838	)		(2,154	)		(9,044	)
Loss for the year		-		(37,593	)		-			(37,593	)
Other comprehensive income for the year		-		-			148			148
Transactions with owners in their capacity as owners
Issuance new shares		22,990		-			-			22,990
Value of conversion rights - convertible notes		17,789		-			-			17,789
Balance at 31 January 2018		68,727		(72,431	)		(2,006	)		(5,710	)

F-9

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statements of Changes in Equity

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

	Ordinary Shares NZ$000’s		Retained Earnings/ (Accumulated Losses) NZ$000’s			Foreign Currency Translation Reserve NZ$000’s			Total NZ$000’s

Balance at 1 February 2018		68,727		(72,431	)		(2,006	)		(5,710	)
Loss for the year		-		(49,220	)		-			(49,220	)

Other comprehensive income for the year		-		-			(7	)		(7	)

Transactions with owners in their capacity as owners
Issuance new shares		40,228		-						40,228

Issuance new shares from business combination Naked		14,196								14,196

Issuance new shares from business combination FOH		6,873								6,873

Value of conversion rights - convertible notes		4,159		-			-			4,159

Balance at 31 January 2019		134,183		(121,651	)		(2,013	)		10,519

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

F-10

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statements of Cash Flows

For the Year Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

	Note	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers			140,736			159,042			92,066			160,880
Payments to suppliers and employees			(149,750	)		(163,304	)		(105,389	)		(165,708	)
Income taxes paid			(420	)		146			(195	)		(530	)

Net cash (outflow) from operating activities	35		(9,434	)		(4,116	)		(13,518	)		(5,040	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for intangible asset			(151	)		(118	)		(351	)		(475	)
Payments for property, plant and equipment			(2,585	)		(2,194	)		(723	)		(2,703	)
Proceeds from business combination, net of cash acquired			870			-			-			-

Net cash (outflow) from investing activities			(1,867	)		(2,312	)		(1,074	)		(3,178	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares			23,248			22,721			-			-
Proceeds from borrowings - Bank			-			463			1,940			62,127
Proceeds from borrowings - Convertible notes issue			-			4,521			16,474			-
Repayment of borrowings - Bank			(18,489	)		(9,684	)		(2,832	)		(46,986	)
Debt issuance costs			(322	)		(107	)		(367	)		(750	)
Interest paid			(2,269	)		(3,418	)		(2,133	)		(3,140	)

Net cash inflow from financing activities			2,168			14,496			13,082			11,251

F-11

Naked Brand Group Limited

ACN 619 054 938

Consolidated Statements of Cash Flows

For the Year Ended 31 January 2019, 31 January 2018, 31 January 2017 and 30 June 2016

Net increase/(decrease) in cash and cash equivalents held		(9,134	)	8,068	(1,510	)	3,033

Cash and cash equivalents at beginning of year		10,739		2,644	4,193		1,246

Effects of exchange rate changes on cash and cash equivalents		355		27	(39	)	(86	)

Cash and cash equivalents at end of the half year	11	1,962		10,739	2,644		4,193

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

F-12

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

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:

	●	On 19^th June 2018, Bendon Limited (Bendon) and Naked Brand Group Inc. (Naked) completed a business combination pursuant to the Merger Agreement.
	●	On 30^th June 2018, the licence agreement with Stella McCartney was terminated
	●	On 15^th November 2018 the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp Inc (FOH)

The financial report was authorised for issue by the Directors on 31 December 2019.

Comparatives are consistent with prior years, unless otherwise stated.

The amounts in the financial statements have been rounded to the nearest thousand dollars.

1	Basis of Preparation

	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).

F-13

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

1	Basis of Preparation

	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 comparative period represents Bendon Limited and its controlled entities only.

	(a)	Historical cost convention

		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

	(a)	Going concern

		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 2019 the Group experienced a loss after income tax from continuing operations of NZ$49.227million (2018: NZ$37.445million) and operating cash outflows of NZ$9.434 million (2018: NZ$4.116million). It also is in a net current liability position of $NZ29.426 million (2018: NZ$20.752million) and a positive net asset position of NZ$10.519 million (2018: net liability position of NZ$5.710million).

		The losses in the year ended 31 January 2019 were a result of reduced revenue from wholesale customers, increased rebates and discounts, and the plateauing of sales in retail outlets believed to be due to the stores and stockists not having new high margin inventory. The business is experiencing challenging trading conditions which have been impacted by the cancellation of the Stella McCartney licence held by the Group which expired on 30 June 2018, the lack of working capital to purchase sufficient levels of inventory required for trading, reduced customer foot traffic in retail stores and outlets, and a reduction of revenue from wholesale customers. The business also incurred NZ$10.075 million of non-trading costs in relation to brand transition, restructure, and transaction costs associated with listing the Group on the Nasdaq stock exchange. The Group also has trade creditors that are trading beyond their original credit terms.

		The Group has also breached its Bank debt loan covenants during financial year, and is the process of extending their facilities which are currently due on 31 January 2020 to provide the Group and the Bank time to consider a refinance of the facility to a longer term to assist the group continue as a going concern.

		In consequent to the challenging trading conditions and the negative working capital the business raised NZ$24 million of funds in the form of issued capital and convertible notes over the course of the financial year and generated further working capital by reducing inventory by NZ$9.993million. The Group used the funds to reduce the bank debt from NZ$38.489 million to NZ$20 million, reduce long overdue trade creditors, fund operating losses, reduce costs, rebuild higher margin inventory, recruit new staff, and pay the costs of listing on the Nasdaq stock exchange.

F-14

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(a)	Going concern

		It is expected the group will need to continue to fund losses through to the start of the year ending 31 January 2022. This capital raising/recapitalisation is continuing, and management had raised US$32.4 million between March 2019 and the date of this report. At the date of this report management is intending on raising up to a further US$15 million. The Group must complete the fundraising to finalise the recapitalization plan and continue as a going concern.

		As part of the discussions to renegotiate the Bank facilities the Bank appointed Korda Mentha to review the cash flow and working capital history and forecasts. Korda Mentha produced a report which is consistent with the information in this note and the Bank has advised they will continue to monitor the Group’s performance during the Bank debt renegotiation process. The Directors expect the Bank to offer a new two year facility. The offer of a new Bank facility is dependent on the Group achieving inventory covenants set by the Bank, and the Bank being satisfied with the raising of the remaining capital planned of US$15 million.

		Despite the ongoing losses, reduced cash flow and cash facilities, and the other negative financial conditions, 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 its 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:

	●	Raising further funding before 28 February 2020 in order to meet all debts due in the 12 months after signing of these financial statements;
	●	Generating sufficient sales and increasing gross margins and reducing overheads in line with forecasts;
	●	Having sufficient funds to maintain a positive cashflow position, and to reduce bank debt in line with agreed bank amortisation;
	●	Continuing 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 debts in full; and
	●	Renegotiating the current bank facilities of NZ$20 million to a facility that is at least a 12 month facility.

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.

F-15

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(a)	Going concern

		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.

	(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.

	(c)	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.

F-16

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(c)	Business combinations

		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 and then 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.

	(d)	Income Tax

		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).

		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:

	●	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).
	●	Taxable temporary differences arising on the initial recognition of goodwill.
	●	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.

F-17

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(d)	Income Tax

		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.

	(e)	Leases

		Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the Group, are classified as finance leases.

		Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

		Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the life of the lease term.

		Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

F-18

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(f)	Revenue and other income

		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 it’s unredeemed gift cards when the gift cards have expired.

		(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.

F-19

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(f)	Revenue and other income

		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.

	(g)	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.

	(h)	Borrowing costs

		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.

	(i)	Inventories

		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.

F-20

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(j)	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.

		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		Useful life

Leasehold improvements		1 - 10 years
Plant, furniture, fittings and motor vehicles		3 - 7 years

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.

F-21

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(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:

	●	those to be measured subsequently at fair value (either through OCI or through profit or loss), and
	●	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).

		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.

F-22

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(k)	Financial instruments

		(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:

	●	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.

	●	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.

	●	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.

F-23

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(k)	Financial instruments

		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.

		(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.

F-24

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(l)	Impairment of 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.

	(n)	Trade receivables

		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.

F-25

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(p)	Intangibles

		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 to have an indefinite life and are therefore not amortised. They are considered to have indefinite lives because there is no foreseeable limit to the period over which the asset is expected to generate net cash flows for the entity. The brands have been in existence for many years, are well established and show no signs of deteriorating. They are assessed for impairment annually or more frequently if impairment indicators exist.

F-26

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(p)	Intangibles

		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 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.

	(q)	Employee benefits

	(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.

F-27

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(r)	Provisions

		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.

F-28

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(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.

	(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.

	(t)	Borrowings

		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.

F-29

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(u)	Convertible Notes

		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.

	(v)	Share capital

		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.

F-30

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(w)	Foreign currency transactions and balances

		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.

F-31

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

	(x)	New and amended accounting standards adopted by the Group

		A number of new or amended accounting standards become applicable for the current reporting period and the Group had to change it accounting policies as a result of adopting the following accounting standards.

		- IFRS 9 Financial Instruments
		- IFRS 15 Revenue from contract with customers

		There were no material impacts on adoption of IFRS 9 and IFRS 15. The other accounting standards did not have any impact on the Group’s accounting policies and did not require retrospective adjustments.

	(y)	New Accounting Standards and Interpretations

		Certain new accounting standards and interpretations have been published that are not mandatory for 31 January 2018 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below.

F-32

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

(y)

New Accounting Standards and Interpretations

Title of Standard

Nature of change

Impact

Mandatory application date/Date of adoption by Group

IFRS 16

Leases

The IASB issued a new standard for leases. This will replace IAS 17

The main impact on lessees is that almost all leases go on balance sheet. This is because the balance sheet distinction between operating and finance leases is removed for lessees. Instead, under the new standard an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exemptions are short-term and low-value leases.

Management is currently assessing the impact of the new rules and believes the adoption of the provisions of this update will have a material impact on the Group’s consolidated financial statements.

The new standard will require that we record a liability and a related asset on the balance sheet for our leased facilities.

Mandatory for financial years commencing on or after 1 January 2019.

Expected date of adoption by the Group: 1 February 2019.

F-33

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

2	Summary of Significant Accounting Policies

(y)

New Accounting Standards and Interpretations

Title of Standard

Nature of change

Impact

Mandatory application date/Date of adoption by Group

IFRC 23

Uncertainty over Income Tax Treatments (IFRIC 23)

On June 7, 2017, the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (“IFRIC 23”). IFRIC 23 clarifies the application of recognition and measurement requirements in IAS 12, Income Taxes, when there is uncertainty over income tax treatments. The IFRIC 23 interpretation specifically addresses whether an entity considers uncertain tax treatments separately; the assumptions an entity makes about the examination of tax treatments by taxation authorities; how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances.

The Group is currently evaluating the impact of adopting this standard on the consolidated financial statements.

IFRIC 23 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

		There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

	(z)	Operating segments

		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.

F-34

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

3	Changes in accounting policies

	This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers on the group’s financial statements and also discloses the new accounting policies that have been applied from 1 February 2018, where they are different to those applied in prior periods.

	(a)	Impact on the financial statements

		There were no impacts on the Group’s accounting policies on adoption of IFRS 9 and IFRS 15, and no retrospective adjustments required either.

	(b)	IFRS 9 Financial Instruments – Accounting policies applied from 1 February 2018

		Impairment

		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.

	(c)	IFRS 15 Revenue from Contracts with Customers – Accounting policies

		(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.

F-35

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

3	Changes in accounting policies

	(c)	IFRS 15 Revenue from Contracts with Customers – Accounting policies

		(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) 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.

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.

F-36

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

4	Critical Accounting Estimates and Judgments

	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 12 to the consolidated financial statements.

F-37

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

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 note 8 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.

F-38

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

5	Revenue and Other Income

	Revenue from continuing operations

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Gross revenue		120,278			145,452			104,007			163,481
Rebates		(8,359	)		(14,064	)		(7,723	)		(12,481	)
		111,920			131,388			96,284			151,000

Sale of goods
- Retail		50,443			53,150			34,460			58,837
- Wholesale		29,394			45,901			43,379			77,729
- Online		32,082			32,234			18,157			6,724
		111,920			131,285			95,996			143,290
Services		-			-			-			7,702
Other income		-			103			288			8
		111,920			131,388			96,284			151,000

Sales of goods by geography
- New Zealand		40,791			46,665			30,676			62,109
- Australia		32,065			38,208			32,913			53,193
- United States		34,112			32,323			23,146			19,167
- Europe		4,996			14,192			9,549			16,531
		111,920			131,388			96,284			151,000

Other income relates to non-recurring advisory, managemen and design services provided to other third party intimates apparel brand owners.

All revenue is recognised at a point in time.

F-39

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

6	Loss for the Period

	The loss for the half year was derived after charging / (crediting) the following items that are unusual and of significance because of their size, nature and incidence:

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s
Finance Costs
- Interest expense on external borrowings		2,338			5,431			2,923		3,140
- Interest expense on shareholder loans		1,062			2,807			3,040		7,042
- Amortisation on loan set up costs		641			553			275		227
		4,041			8,791			6,238		10,409

Other (gains)/losses
- Fair value (gain)/loss on foreign exchange contracts		1,065			(502	)		2,135		7,660
- Net foreign exchange (gains)/losses		(3,027	)		(256	)		171		(5,237	)
		(1,963	)		(758	)		3,306		2,423

F-40

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

6	Loss for the Period

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s

Brand transition, restructure and transaction expenses
- Brand transition expenses		291			-			-		884
- Onerous contracts		(109	)		(265	)		1,166		789
- Restructure expenses		626			215			103		559
- Transaction expenses		9,268			3,322			52		-
		10,075			3,272			1,321		2,232

The onerous contracts expense reversal relates to a reversal of the provision raised in the prior year.

Transaction expenses relate to costs incurred in respect of the US listing process.

F-41

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

6	Loss for the Period

	The loss for the year includes the following specific expenses:

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s
Employee benefits expense:
- Salaries and wages		30,872		33,613			19,917			33,666
- Defined contribution expenses		508		545			1,022			1,588
		31,380		34,158			20,939			35,254

Depreciation		2,151		2,724			1,664			2,966
Amortisation		231		306			178			323
Impairment loss		8,173		1,914			292			2,157
		10,555		4,944			2,134			5,446

Rental expense on operating leases:
- Lease payments		9,760		10,807			6,485			11,034
- Sublease payments received		-		(483	)		(354	)		(567	)
		9,760		10,324			6,131			10,467

F-42

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

7	Income Tax Expense/(benefit)

	(a) The major components of tax expense/(benefit) comprise:

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Current tax
Current tax on profits for the period		(667	)		537			807			301
Adjustments for current tax of prior periods		(607	)		(478	)		58			(344	)
Total current tax expense/(benefit)		(1,274	)		60			865			(43	)
Deferred tax expense/(benefit)
Decreased/(increase) in deferred tax assets (note 28)		-			-			-			5,589
Income tax expense/(benefit) for continuing operations		(1,274	)		60			865			5,546

(b) Reconciliation of income tax to accounting profit:
Loss before income tax		(50,494	)		(37,533	)		(15,114	)		(15,200	)
Tax at New Zealand tax rate of 28%		(14,138	)		(10,509	)		(4,232	)		(4,256	)

Tax effect of:
- permanent differences (including impairment expense)		753			(105	)		(6	)		757
- adjustments in respect of current income tax of previous years		(522	)		(449	)		41			(237	)
- effects of different tax rates of subsidiaries operating in other jurisdictions		493			(30	)		(15	)		(42	)
- deferred tax assets relating to prior periods no longer recognised (note 28)		12,077			11,150			5,119			3,934
- deferred tax assets relating to the current year not brought to account								-			5,589
- other		63			3			(42	)		(199	)
Income tax expense/(benefit)		(1,274	)		60			865			5,546

F-43

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

7	Income Tax Expense/(benefit)

	(c) Tax losses not recognised

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months Ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s

Unused tax losses for which no deferred tax asset has been recognised		130,587		87,455		43,269		23,765
Potential tax benefit at 28%		36,564		24,487		12,115		6,654

	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 2019. Unused tax losses do not have an expiry date.

	(d) Temporary differences not recognised

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months Ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s

Temporary differences for which no deferred tax asset has been recognised		14,504		14,661		18,703		19,924
Potental tax benefit at 28%		4,061		4,105		5,237		5,579

F-44

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

8	Business Combination

	On 19th June 2018, Bendon Limited (Bendon) and Naked Brand Group Inc. (Naked) completed a business combination pursuant to the Merger Agreement. The business combination was executed after Bendon Limited reorganised its group and inserted a new entity as its parent entity in which the Bendon shareholders rolled over their shares into the new entity. The new parent entity is called Naked Brand Group Limited. Bendon Limited was considered the accounting acquirer of the consolidated group and the consolidated accounts represents a continuation of the Bendon Limited financial statements.

	Pursuant to the Merger Agreement, (i) Bendon undertook a reorganization (the “Reorganization”) pursuant to which all of the shareholders of Bendon Limited exchanged all of the outstanding ordinary shares of Bendon Limited (the “Bendon Ordinary Shares”) for ordinary shares in Naked Brand Group Limited (“Naked Brand Group Ordinary Shares”), and (ii) immediately thereafter, the parties effectuated a merger of Merger Sub and Naked, with Naked surviving as a wholly owned subsidiary of Naked Brand Group Limited and the Naked stockholders receiving Naked Brand Group Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (the “Merger” and together with the Reorganization, the “Transactions”).

F-45

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

8	Business Combination

	Details of the purchase consideration, the net assets acquired and goodwill are as follows:

	Naked NZ$000’s
Purchase consideration:
Shares issued		14,196

The assets and liabilities recognised as a result of the acquisition are as follows:

	Fair value NZ$000’s
Cash		592
Trade and other receivables		4,186
Inventories		1,810
Intangible assets
- Brand		2,726
Trade and other payables		(916	)
Net identifiable assets acquired		8,398
Add: goodwill		5,798
Net assets acquired		14,196

	There were no acquisitions in the year ended 31 January 2018.

	(a) Acquisition-related costs

	Acquisition related costs of $3,739,279 that were not directly attributable to the issue of shares are included in administrative expenses in profit or loss and in operating cash flows in the statement of cash flows. In addition, approximately 100,000 Naked Brand Group’s share was issued to advisors as part of their consultancy in lieu of cash payment. The fair value of these was $700 thousand and that cost has been recognised as an expense in the profit and loss.

F-46

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

8	Business Combination

	(b)	Revenue and profit contribution

	The acquired business contributed revenues of $2,244,095 and net loss of $813,808 to the group for the period from 19 June 2018 to 31 January 2019. If the acquisition occurred on 1 February 2018, the full year revenue of the combined group would have been $113,969,040 and loss of $49,255,319.

	(c)	Provisional accounting

	The initial accounting for the business combination is incomplete at the time of the end of the reporting period and will be recognised using provisional amounts. During the measurement period, the Group will retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstance that existed as at the acquisition date. The measurement period ends as soon the Group receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtained. The measurement shall not exceed one year from the acquisition date.

F-47

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

9	Acquisition of FOH Online Corp Inc.

	On November 15, 2018 the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp Inc (FOH), which included Cullen Investments Limited (Cullen) a related entity, that the Group purchased all of the issued and outstanding shares of FOH. The transaction was settled on December 6, 2019. The sub licence agreement which was in place between the Group and FOH was terminated upon completion of this transaction. The Group has treated this transaction as an asset acquisition as the activities of FOH did not constitute a business.

	Details of the purchase consideration, the net assets acquired and goodwill are as follows:

	FOH NZ$000’s
Purchase consideration:
Shares issued		6,872
Debt Forgiveness		13,073
Total purchase consideration		19,946

The assets and liabilities recognised as a result of the acquisition are as follows:

	Fair value NZ$000’s
Cash		278
Net balance with sub licencee		(3,119	)
Loan payable to EJ Watson		(2,172	)
Patents and Licences		24,959
Total of assets acquired		19,946

F-48

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	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.

F-49

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	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 2019, 31 January 2018 and 31 January 2017 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 Makers (‘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.

F-50

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	Other assets and liabilities

	We manage our assets and liabilities 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.

	(a) Reconciliations

	Reconciliation of segment revenue to consolidated statements of profit or loss and other comprehensive income:

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Total segment revenue		136,844			156,311			113,031			176,145
Intersegment eliminations		(24,924	)		(24,923	)		(16,747	)		(32,855	)
Other revenue		-			-			-			7,710
Total revenue		111,920			131,388			96,284			151,000

F-51

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(a) Reconciliations

	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 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s

Segment EBITDA		(25,602	)		(24,053	)		(2,126	)		10,470
Income tax (expense)/benefit		1,274			(60	)		(865	)		(5,546	)
Other revenue								-			7,710
Any other reconciling items		(24,892	)		(13,481	)		(12,988	)		(33,380	)
Total net loss after tax		(49,220	)		(37,593	)		(15,979	)		(20,746	)

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.

F-52

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(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.

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s

New Zealand		40,747		46,665		30,676		62,109
Australia		32,065		38,208		32,913		53,193
United States		34,112		32,323		23,146		19,167
Europe		4,996		14,192		9,549		16,531
		111,920		131,388		96,284		151,000

The revenues resulting from the Naked business combination are included in the United States segment as shown above

F-53

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(c) Segment performance

	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
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
Service income		-			-			-			-			-			-			-			-			-
		31,801			18,547			7,154			11,491			5,798			4,996			32,133			-			111,920

Cost of sales		(15,423	)		(9,192	)		(6,372	)		(8,498	)		(5,222	)		(4,490	)		(21,248	)		(4,034	)		(74,480	)
Gross margin		16,378			9,355			781			2,993			576			506			10,885			(4,034	)		37,440
Other segment expenses*		(13,537	)		(11,003	)		(912	)		(4,495	)		(2,724	)		(1,536	)		(11,248	)		-			(45,454	)
Unallocated expenses
Administrative expenses		-			-			-			-			-			-			-			(1,050	)		(1,050	)
Corporate expenses		-			-			-			-			-			-			-			(17,947	)		(17,947	)
Other foreign exchange gain/loss		-			-			-			-			-			-			-			1,409			1,409
EBITDA		2,842			(1,648	)		(130	)		(1,502	)		(2,148	)		(1,030	)		(363	)		(21,623	)		(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 (gain)/loss on foreign exchange contracts		-			-			-			-			-			-			-			(1,704	)		(1,704	)
Unrealised foreign exchange gain/(loss)		-			-			-			-			-			-			-			2,258			2,258
Fair value gain/(loss) on Convertible Note derivative		-			-			-			-			-			-			-			(775	)		(775	)
Loss before income tax expense		2,842			(1,648	)		(130	)		(1,502	)		(2,148	)		(1,030	)		(363	)		(46,514	)		(50,494	)
Income tax expense		-			-			-			-			-			-			-			1,274			1,274
Loss after income tax expense		2,842			(1,648	)		(130	)		(1,502	)		(2,148	)		(1,030	)		(363	)		(45,240	)		(49,220	)

F-54

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(c) Segment performance

	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
For the year ended 31 January 2018
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 gain/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		-			-			-			-			-			-			-			(3,030	)		(3,030	)
Fair value (gain)/loss on foreign exchange contracts		-			-			-			-			-			-			-			(502	)		(502	)
Unrealised foreign exchange gain/(loss)		-			-			-			-			-			-			-			1,636			1,636
Fair value gain/(loss) on Convertible Note derivative		-			-			-			-			-			-			-			2,393			2,393
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	)
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.

F-55

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(c) Segment performance

	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
For the 7 months ended 31 January 2017
Revenue from external customers		21,953			12,053			7,484			18,091			9,015			9,548			18,140			-			96,284
		21,953			12,053			7,484			18,091			9,015			9,548			18,140			-			96,284

Cost of sales		(9,707	)		(5,592	)		(4,961	)		(11,431	)		(6,934	)		(6,277	)		(11,902	)		(340	)		(57,144	)
Gross margin		12,246			6,461			2,523			6,660			2,081			3,271			6,238			(340	)		39,140
Other segment expenses*		(7,480	)		(6,196	)		(475	)		(2,089	)		(2,065	)		(2,013	)		(3,654	)		(8,068	)		(32,040	)
Unallocated expenses
Administrative expenses		-			-			-			-			-			-			-			(541	)		(541	)
Corporate expenses		-			-			-			-			-			-			-			(8,082	)		(8,082	)
Other foreign exchange gain/loss		-			-			-			-			-			-			-			(603	)		(603	)
EBITDA		4,766			265			2,048			4,571			16			1,258			2,584			(17,634	)		(2,126	)
Brand transition, restructure and transaction expenses		-			-			-			-			-			-			-			(1,321	)		(1,321	)
Finance expense		-			-			-			-			-			-			-			(6,238	)		(6,238	)
Impairment expense		-			(281	)		-			-			-			-			-			(11	)		(292	)
Depreciation and amortisation expense		-			-			-			-			-			-			-			(1,842	)		(1,842	)
Fair value gain/(loss) on foreign exchange contracts		-			-			-			-			-			-			-			(2,135	)		(2,135	)
Unrealised foreign exchange (gain)/loss		-			-			-			-			-			-			-			(568	)		(568	)
Fair value (gain)/loss on Convertible Note derivative		-			-			-			-			-			-			-			(592	)		(592	)
Loss before income tax expense		4,766			(16	)		2,048			4,571			16			1,258			2,584			(30,341	)		(15,114	)
Income tax expense		-			-			-			-			-			-			-			(865	)		(865	)
Loss after income tax expense		4,766			(16	)		2,048			4,571			16			1,258			2,584			(31,206	)		(15,979	)

* Other segment expenses relate to brand management expenses and some corporate expenses.

F-56

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

10	Operating Segment

	(c) Segment performance

	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
For the year ended 30 June 2016
Revenue from external customers		37,389			20,680			15,071			28,021			18,876			16,531			6,722			-			143,290
Service income		-			-			-			-			-			-			-			7,702			7,702
Other income		-			-			-			-			-			-			-			8			8
		37,389			20,680			15,071			28,021			18,876			16,531			6,722			7,710			151,000
Cost of sales		(16,053	)		(8,930	)		(10,721	)		(18,056	)		(14,540	)		(11,658	)		(3,582	)		15			(83,525	)
Gross margin		21,336			11,750			4,350			9,965			4,336			4,873			3,140			7,725			67,475
Other segment expenses*		(12,263	)		(9,835	)		(709	)		(3,520	)		(2,817	)		(3,204	)		(2,039	)		(13,975	)		(48,362	)
Unallocated expenses
Administrative expenses		-			-			-			-			-			-			-			(801	)		(801	)
Corporate expenses		-			-			-			-			-			-			-			(13,002	)		(13,002	)
Other foreign exchange gain/loss		-			-			-			-			-			-			-			5,160			5,160
EBITDA		9,073			1,915			3,641			6,445			1,519			1,669			1,101			(14,893	)		10,470
Brand transition, restructure and transaction expenses		-			-			-			-			-			-			-			(2,232	)		(2,232	)
Finance expense		-			-			-			-			-			-			-			(10,409	)		(10,409	)
Impairment expense		-			-			-			-			-			-			-			-			-
Depreciation and amortisation expense		-			-			-			(2,157	)		-			-			-			(3,289	)		(5,446	)
Fair value gain/(loss) on foreign exchange contracts		-			-			-			-			-			-			-			(7,660	)		(7,660	)
Unrealised foreign exchange (gain)/loss		-			-			-			-			-			-			-			77			77
Loss before income tax expense		9,073			1,915			3,641			4,288			1,519			1,669			1,101			(38,406	)		(15,200	)
Income tax expense		-			-			-			-			-			-			-			(5,546	)		(5,546	)
Loss after income tax expense		9,073			1,915			3,641			4,288			1,519			1,669			1,101			(43,952	)		(20,746	)

* Other segment expenses relate to brand management expenses and some corporate expenses.

F-57

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

11	Cash and Cash Equivalents

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

Cash on hand		47		54		48
Cash at bank		1,915		10,685		2,596
		1,962		10,739		2,644

12	Trade and Other Receivables

		31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s
CURRENT
Trade receivables			7,789			9,982			26,499
Provision for impairment	(a)		(609	)		(326	)		(537	)
			7,180			9,656			25,962
Prepayments			2,288			1,792			1,779
Other receivables			183			1,717			349
			9,650			13,165			28,090

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

F-58

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

12	Trade and Other Receivables

	(a) Impairment of receivables

	The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 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 2019 is determined as follows, the expected credit losses incorporate forward looking information.

31 January 2019	0 - 30 days		31 - 60 days		60 - 90 days		> 90 days overdue		Total
Expected loss rate (%)		-		-		-		48.40
Gross carrying amount ($)		5,577		852		101		1,259		7,789
ECL provision		-		-		-		609		609

F-59

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

12	Trade and Other Receivables

	(a) Impairment of receivables

	Reconciliation of changes in the provision for impairment of receivables is as follows:

	For the Year Ended 31 January 2019			For the Year Ended 31 January 2018			For the 7 Months Ended 31 January 2017
	NZ $000’s			NZ $000’s			NZ $000’s
Balance at beginning of the period (calculated in accordance with AASB 139)		(326	)		(537	)		(268	)
Amount restated through opening retained earnings on adoption of AASB 9		-			-			-
Opening impairment allowance calculated under AASB 9		(326	)		(537	)		(268	)
Additional impairment loss recognised		-			-			-
Amounts written off as uncollectable
Directly to P&L		-			-			-
Movement through provision		(1,037	)		(92	)		(364	)
Unused amounts reversed		772			316			80
Foreign exchange movement		(18	)		(13	)		15
Balance at end of the period		(609	)		(326	)		(537	)

	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 48.40% 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.

F-60

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

12	Trade and Other Receivables

	(b) Aged analysis

	The ageing analysis of receivables is as follows:

	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

0-30 days		5,577			7,945		14,883
31-60 days		852			335		2,566
61-90 days (past due not impaired)		101			489		2,166
61-90 days (considered impaired)		-			-		-
91+ days (past due not impaired)		3,295			1,213		6,884
91+ days (considered impaired)		(2,036	)		-		-
		7,789			9,982		26,499

	(c) Transferred receivables

	During the periods ended 31 January 2018 and 31 January 2017 the carrying amounts of the trade receivables included receivables which were subject to a bank funding arrangement. Under this arrangement, Bendon had transferred the relevant receivables to BNZ in exchange for cash and is prevented from selling or pledging the receivables. However, Bendon has retained credit risk. The group therefore continues to recognise the transferred assets in their entirety in the balance sheet. The amount repayable under the factoring agreement is presented as secured borrowings.

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

Transferred receivables		-		9,790		11,649

F-61

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

13	Inventories

	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s

Finished goods		21,564			31,451			37,904
Provision for impairment		(444	)		(338	)		(153	)
		21,120			31,113			37,751

Write downs of inventories to net realisable value during the period were NZ$106,433 (2018: NZ$185,026, 2017: NZ$364,660).

14	Property, plant and equipment

	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s
Plant, furniture, fittings and motor vehicles
At cost		25,666			27,801			25,455
Accumulated depreciation		(25,168	)		(25,789	)		(23,182	)
		499			2,013			2,273

Leasehold improvements
At cost		12,035			10,762			10,132
Accumulated depreciation		(8,770	)		(8,034	)		(7,441	)
		3,264			2,728			2,691
Total property, plant and equipment		3,763			4,741			4,964

F-62

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

14	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 2019
Balance at the beginning of the period		2,728			2,013			4,741
Additions		1,501			1,084			2,585
Disposals		(105	)		(2,736	)		(2,841	)
Depreciation expense		(982	)		(1,170	)		(2,151	)
Impairment		-			(239	)		(239	)
Foreign exchange movements		121			1,547			1,668
Balance at the end of the year		3,264			499			3,763

F-63

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

14	Property, plant and equipment

	(a) Movements in carrying amounts of property, plant and equipment

	Leasehold improvements NZ $000’s			Plant, furniture, fittings and motor vehicles NZ$000’s			Total NZ $000’s
Year ended 31 January 2018
Balance at the beginning of the period		2,691			2,273			4,964
Additions		285			2,032			2,317
Disposals		(4	)		(118	)		(122	)
Depreciation expense		(496	)		(2,228	)		(2,724	)
Foreign exchange movements		253			54			306
Balance at the end of the year		2,728			2,013			4,741

F-64

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

14	Property, plant and equipment

	(a) Movements in carrying amounts of property, plant and equipment

	Leasehold improvements NZ $000’s			Plant, furniture, fittings and motor vehicles NZ$000’s			Total NZ $000’s
7 months ended 31 January 2017
Balance at the beginning of the year		2,795			3,414			6,209
Additions		241			482			723
Depreciation expense		(296	)		(1,368	)		(1,664	)
Impairment		-			(281	)		(281	)
Foreign exchange movements		49			26			75
Balance at the end of the year		2,691			2,273			4,964

	The group is currently assessing the impact of IFRS 16 Leases and believes adoption of the provisions of this standard will have a material impact on the Group’s consolidated financial statements

	IFRS16 Leases will require that the group record a liability and a related asset on the balance sheet for our leased facilities

F-65

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s

Goodwill
Cost		5,607			-			-
Accumulated impairment		(3,287	)		-			-
		2,320			-			-

Patents, licences and trademarks
Cost		25,993			919			1,169
Accumulated amortisation and impairment		(918	)		(718	)		(573	)
		25,076			201			596

Brands
Cost		14,769			12,463			12,036
Accumulated amortisation and impairment		(4,563	)		-			-
		10,205			12,463			12,036

Software
Cost		15,718			15,788			17,308
Accumulated amortisation and impairment		(15,455	)		(15,440	)		(15,260	)
		263			348			2,048
Total intangible assets		37,864			13,012			14,680

F-66

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

	(a) Software Impairment

	For the year ended 31 January 2018, management decided to fully impair the costs on the ERP upgrade and are currently reviewing alternatives.

	(b) Movements in carrying amounts of intangible assets

	Software NZ $000’s			Patents and licences NZ $000’s			Brands NZ $000’s			Goodwill NZ $000’s			Total NZ $000’s
Year ended 31 January 2019
Balance at the beginning of the year		348			201			12,463			-			13,012
Additions		33			25,076			2,726			5,798			33,634
Amortisation		(29	)		(202	)		-			-			(231	)
Impairment (refer note 12c)		(83	)		-			(4,563	)		(3,287	)		(7,934	)
Foreign exchange movements		(7	)		1			(420	)		(192	)		(618	)
Closing value at 31 January 2019		263			25,076			10,205			2,320			37,864

F-67

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

	(b) Movements in carrying amounts of intangible assets

	Software NZ $000’s			Patents and licences NZ $000’s			Brands NZ $000’s		Goodwill NZ $000’s		Total NZ $000’s
Year ended 31 January 2018
Balance at the beginning of the year		2,048			596			12,036		-		14,680
Additions		106			12			-		-		118
Amortisation		(163	)		(143	)		-		-		(306	)
Impairment (refer note 12c)		(1,650	)		(264	)				-		(1,914	)
Foreign exchange movements		7			1			427		-		434
Closing value at 31 January 2018		348			201			12,463		-		13,012

15	Intangible Assets

	(a) Movements in carrying amounts of intangible assets

	Software NZ $000’s			Patents and licences NZ $000’s			Brands NZ $000’s			Goodwill NZ $000’s		Total NZ $000’s
7 months ended 31 January 2017
Balance at the beginning of the period		2,251			128			12,554			-		14,933
Additions		10			808			-			-		818
Amortisation		(318	)		(33	)		-			-		(351	)
Impairment					(331	)					-		(331	)
Foreign exchange movements		105			24			(518	)		-		(389	)
Closing value at 31 January 2017		2,048			596			12,036			-		14,680

F-68

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

	(c) Impairment of goodwill

	For the purpose of impairment testing, goodwill is allocated to cash-generating units as below:

	Description of cash-generating unit (CGU)

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
United States		2,320		-		-
Impairment expense		2,320		-		-

	Impairment assumption

	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. The recoverable amount of the CGU was determined based on value in use calculations which require the use of assumptions. The 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 stated 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 exceeded the fair value less costs to sell by an amount of $3.2m. As such, the goodwill has been partially impaired for the year ended 31 January 2019.

	Significant assumptions used for the purposes of the value in use calculation include:

	United States
	Post-tax discount rate - 10.50%
	EBITDA growth rate - 10%
	Terminal growth - 2%

F-69

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

(c)

Impairment of goodwill

	Impact of possible changes in key assumptions

	The directors have made judgements and estimates to assess goodwill for impairment. Should these judgements and estimates not occur the resulting carrying amount may decrease.

	The sensitivities that have been separately modelled are as follows: (a) a 3.25% increase in the post-tax discount rate (b) sales growth rate reduced to 5%

	The carrying amount of the goodwill is sensitive to assumptions used in the impairment test calculations including the post tax discount rate and sales growth rate. A 3.25% increase in the post tax discount rate would result in an additional impairment of $2,320 thousand against the carrying amount of the goodwill. A reduction of the EBITDA growth rate to 5% would not result in a further impairment as goodwill would be fully impaired from the increase of the post-tax discount rate.

(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. The intangible assets increased in the current period as result of the business combinations with Naked Brand Group Inc. See note 8 for further information.

	The brand intangible assets of $10,205,000 (2018: $12,463,000, 2017: $12,036,000) 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 $3.9m. As such, the indefinite lived brand assets has been partially impaired for the year ended 31 January 2019.

F-70

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

15	Intangible Assets

(d)

Impairment testing for indefinite-lived brand intangibles

	Management’s approach and the key assumptions used to determine the FVLCOD were as follows: Sales growth: 2.5% (31 January 2018: 5%) Royalty rate: 5.0% (31 January 2018: 6.6%) Cash flow - revenue forecast period: 5 years (31 January 2018: 5 years) Post tax discount rate (%) for US brands: 10.5% (31 January 2018: 0%) Post-tax discount rate (%) for NZ brands: 11.75% (31 January 2018: 11.4%) Long term sales growth rate (%): 2% (31 January 2018: 2%)

	Impact of possible changes in key assumptions

	The directors have made judgements and estimates to assess indefinite-lived brand assets for impairment. Should these judgements and estimates not occur the resulting carrying amount may decrease.

	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 $951 thousand (31 January 2018: an increase of 1.5% would result an impairment of $929 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 $1,554 thousand (31 January 2018: a reduction to 2% would result an impairment of $611 thousand) against the carrying amount of the indefinite lived brand intangible assets.

16	Derivative Financial Instruments

31 January 2019
NZ $000’s

31 January 2018
NZ $000’s

31 January 2017
NZ $000’s

Current liabilities

Forward exchange contracts

1,484

2,087

4,188

In order to mitigate exchange rate movements and to manage the inventory costing process, the Group has entered into forward currency contracts to purchase US dollars.

F-71

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

17	Derivative on Convertible Notes

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

Derivative on Convertible Notes		-		1,110		4,112

	The Group has an embedded derivative feature in convertible notes due to foreign currency. Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss as incurred. Fair value of the derivative is determined on inception using the Black-Scholes model. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted in profit or loss.

	The fair value of the separable embedded derivative in the convertible notes has been determined using Black-Scholes model. Measurement inputs include share price on measurement date, expected term of the instrument, risk free rate (based on government bonds), expected volatility (based on weighted average historic volatility) and expected dividend rate.

18	Trade and Other Payables

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
CURRENT
Trade payables		23,580		21,143		19,221
Accruals		10,150		9,568		7,503
Employee benefits liabilities		1,815		1,805		1,842
		35,545		32,516		28,565

Trade and other payables are unsecured, non interest bearing and are normally settled within 30 days however some the trade creditors are out of term as at 31 January 2019 and subsequent to the end of the financial period the Group has reduced the out of term trade creditors but further work is required to bring all of the creditors in term. The carrying amounts are considered to be a reasonable approximation of fair value.

F-72

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

19	Borrowings

	Note	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s
CURRENT
Secured liabilities:
Bank overdraft			-			-			-
Shareholder loans			-			10,951			8,200
Leased liability			-			-			-
Bank Loans			20,000			16,000			16,000
Debt issuance costs in relation to bank loan			(270	)		(218	)		(656	)
Working capital financing bank facility			-			22,489			31,710
Convertible notes			-			1,740			13,744
Other loan			1,236			1,159			-
			20,967			52,121			68,998

	The fair value of borrowings is not considered to be materially different to their carrying amounts.

	(a) Assets pledged as security:

	Borrowings are secured 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.

	(b) Bank overdrafts and bank loans

	On 27 June 2016, all banking facilities were repaid and a new banking arrangement with BNZ commenced. BNZ has a first ranking charge over all assets of the Bendon Limited group.

	The new debt arrangement entered into on 27 June 2016 includes a term loan facility and interchangeable (working capital) loan facility.

	On 13 June 2018, the Company entered into a Deed of Amendment with BNZ to reduce the facility to NZD$20,000,000 (31 January 2018: NZD$38,489,428). In addition the new facility takes over guarantees and financial instruments totalling NZD$1,345,000.

F-73

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

19	Borrowings

	(b) Bank overdrafts and bank loans

	The term loan facility of NZD$20,000,000 is repayable on 14 June 2019. The current interest rate on this loan is 5.57% (31 January 2018: 5.55%) per annum. There has been a breach of covenant during the period.

	Bank of New Zealand has the first ranking charge over all assets of Naked Brand Group Limited. Under the terms of the major borrowing facility, the facility is subject to four undertakings being: Interest cover ratio of three times that is first tested as at 30 April 2019; gross EBITDA ratio measured to 3 months to September 2018 had to be greater than $0, six months to 30 December 2018 is greater than $3 million; inventory and receivables ratio must be greater than 2 times being first measured as at 30 September 2018; and the actual sales and gross margin must not vary by more than 10% from the budget submitted to the Bank.

	(c) Shareholder loan - Related party

	On 19 June 2018, Naked Brand Group Limited issued additional 24,221 Naked shares to the shareholders as part of an agreement to convert a portion of the outstanding liability (Debt) to equity. The amount of debt converted on this date amounted to a fair value of $12,244,208. After this conversion, the shareholder loan is fully converted to equity and the outstanding balance as at 31 January 2019 is nil (31 January 2018: $10,951,295).

	The interest rate on the shareholder loans up to the date of conversion was 30% (31 January 2018: 30%) and was increased at the end of 2014, and was capitalised quarterly. Total interest capitalised during the year ended 31 January is $1.062 million (year ended 31 January 2018: $2.807 million, 7 months to 31 January 2017 is $3.040 million).

	(d) Convertible Notes

	On 19th June 2018, the holders of USD$2.8m (NZ$4.2m) of convertible notes converted to 16,408 Bendon ordinary shares. The holder of US$1.0m (NZ$1.42m) of convertible notes elected for their convertible note to be repaid at a future date as agreed. The amount owing has been classified as a current borrowing and amounted to $1.159 million as at 31 January 2019.

	(e) Loan covenants

	As at 31 January 2019, there was a breach of the minimum Gross EBITDA ratio and a breach of the Inventory and Receivables ratio. The Bank has advised that they are currently taking these Breaches under review.

	(f) Other loan

	The other loan is convertible note which the note holder elected not to convert. This loan is payable at a future date to be agreed.

F-74

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

20	Provisions

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
CURRENT
Lease contributions		179		412		480
Onerous contracts		-		264		377
Make good		742		430		671
		921		1,106		1,528

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
NON-CURRENT
Lease contributions		906		910		702
Onerous contracts		-		-		176
Make good		1,466		1,801		1,371
		2,372		2,711		2,249

	Lease contributions NZ $000’s			Onerous contracts NZ $000’s			Make good NZ $000’s			Total NZ $000’s
Opening balance at 1 February 2018		1,321			264			2,230			3,815
Additional provisions recognised		337			-			717			1,054
Unused amounts reversed		-			-			(600	)		(600	)
Unwinding of discounts		-			-			(84	)		(84	)
Amounts used during the year		(510	)		(264	)		-			(774	)
Exchange differences		(62	)		-			(56	)		(118	)
Balance at 31 January 2019		1,086			-			2,208			3,294

F-75

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

20	Provisions

	Lease contributions NZ $000’s			Onerous contracts NZ $000’s			Make good NZ $000’s			Total NZ $000’s
Opening balance at 1 February 2017		1,182			553			2,042			3,777
Additional provisions recognised		635			-			595			1,230
Unused amounts reversed		-			-			(658	)		(658	)
Unwinding of discounts		-			-			271			271
Amounts used during the year		(547	)		(289	)		(77	)		(913	)
Exchange differences		50			(0	)		58			108
Balance at 31 January 2018		1,321			264			2,230			3,815

	Lease contributions NZ $000’s			Onerous contracts NZ $000’s			Make good NZ $000’s			Total NZ $000’s
Opening balance at 1 February 2017		1,318			275			1,817			3,410
Additional provisions recognised		145			508			353			1,006
Unused amounts reversed		-			-			(112	)		(112	)
Unwinding of discounts		-			-			(9	)		(9	)
Amounts used during the year		(269	)		(230	)		-			(499	)
Exchange differences		(12	)		-			(7	)		(19	)
Balance at 31 January 2018		1,182			553			2,042			3,777

	Onerous contracts

	The onerous provision relates to a head office lease for which the space is not fully utilised. The provision is calculated using a pre-tax discount rate of 10.25% (2018: 11.4%, 2017: 11.4%).

	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% (2018: 2%, 2017: 2%), and other market assumptions and re-assessed annually.

	During the 2018 financial year an additional $595 thousand was recognised in relation to new retail leases in Australia. As a result of the new Auckland office lease, make good requirements were reversed.

F-76

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

21	Share Captial

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

29,640,965(2018: 306,028, 2017: 274,839) Ordinary shares		134,183		68,727		27,948

(a)

Ordinary shares

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months Ended 31 January 2017 NZ$000’s

At the beginning of the reporting period		68,727		27,948		3,108
Issuance of new shares						24,840
- Cash collected		23,248		22,990		-
- Settle Shareholder loan		12,242		0
- Shares issued in lieu of consultancy fee		692		-
- Shares issued in lieu of stock payment		4,045		-
Convertible note maturity		4,159		17,789
Business combination with Naked Brand Group Inc.		14,196		-
Business combination with FOH Online Inc.		6,872
At the end of the reporting period		134,183		68,727		27,948

The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company. On a show of hands at meetings of the Company, each holder of ordinary shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote.

The Company does not have authorised capital or par value in respect of its shares.

F-77

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

21	Share Captial

	For the Year Ended 31 January 2019 Number		For the Year Ended 31 January 2018 Number		For the 7 Months Ended 31 January 2017 Number

Naked Brand Group Limited shares issued on close of the merger between Bendon Limited and Naked Brand Group Inc.
- Bendon shareholders		20,889,940		306,028		274,839
- Naked shareholders		2,068,438				-
Shares issued during the period		6,682,587				-
At the end of the period		29,640,965		306,028		274,839

The number of shares for the year ended 31 January 2018 and 31 January 2017 relates to the pre-merger entity Bendon Limited.

(b)

Other equity

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

Value of conversion rights - convertible notes		4,159		17,789		-

The amount shown for other equity is the value of the conversion rights relating to the 15% convertible notes, details of which are shown in note 16(d).

(c)

Capital Management

The key objectives of the Company 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 Company defines capital as its equity and net debt.

F-78

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

21	Share Captial

(c)

Capital Management

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 2019, 31 January 2018 and 31 January 2017 are as follows:

	Note		31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s
Total borrowings		19		20,967			52,121			68,998
Less Cash and cash equivalents		11		(1,962	)		(10,739	)		(1,965	)
Net debt				19,005			41,382			67,033
Equity				10,519			(5,710	)		(9,044	)
Total capital				29,524			35,672			57,989
Gearing ratio				64	%		116	%		116	%

F-79

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

22	Reserves

	31 January 2019 NZ $000’s			31 January 2018 NZ $000’s			31 January 2017 NZ $000’s
Foreign currency translation reserve
Opening balance		(2,006	)		(2,154	)		(2,125	)
Trasnfers in		(7	)		148			(29	)
Balance at the end of the year		(2,013	)		(2,006	)		(2,154	)

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.

F-80

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

23	Loss per Share

(a)

Basic and diluted loss per share

	For the Year Ended 31 January 2019 NZ$			For the Year Ended 31 January 2018 NZ$			For the 7 Months Ended 31 January 2017 NZ$			For the Year Ended 30 June 2016 NZ$

From continuing operations attributable to the ordinary equity holders of the company		(2.01	)		(1.79	)		(0.82	)		(1.13	)
Total basic and diluted loss per share attributable to the ordinary equity holders of the company		(2.01	)		(1.79	)		(0.82	)		(1.13	)

All convertible notes issued during the period are not included in the calculation of diluted loss per share because they are antidilutive in nature for the period ended 31 January 2018. These notes could potentially dilute earnings/loss per share in the future.

(b)

Reconciliation of loss used in calculating earnings per share

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$

Basic and diluted loss per share
Profit/(loss) attributable to the ordinary equity holders of the company used in calculating basic earnings per share:		(48,946	)		(37,445	)		(16,008	)		(20,715	)

F-81

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

23	Loss per Share

(c)

Weighted average number of shares used as the denominator

		31 January 2019 Number				31 January 2018 Number				31 January 2017 Number				30 June 2016 Number
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share			24,379,019				20,915,036				19,404,681				18,345,000

* As a result of the merger between Bendon and Naked on 19 June 2018 the calculation of basic and diluted earnings per share for 2018 and 2017 has been adjusted retrospectively. Number of ordinary shares outstanding has been adjusted to reflect the proportionate change in the number of shares.

(d)

Information concerning the classification of securities

Convertible notes

At 31 January 2019, the Group had no convertible notes.

24	Accumulated Losses

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s

(Accumulated losses)/retained earnings at the beginning of ther period		(72,431	)		(34,838	)		(18,859	)
Loss for the period		(49,220	)		(37,593	)		(15,979	)
Accumulated losses at the end of ther period		(121,651	)		(72,431	)		(34,838	)

F-82

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

25	Capital and Leasing Commitments

(a)

Operating Leases

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
Minimum lease payments under non-cancellable operating lease
- not later than one year		8,533		9,618		9,472
- between one year and five years		18,039		14,943		14,435
- later than five years		1,485		528		59
		28,058		25,089		23,966

Operating leases are in place for leased premises and vehicles, and normally have a term between 1 and 11 years. Lease payments are increased on an annual basis to reflect market rentals.

(b)

Contracted Commitments

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
Licence contract
- not later than one year		4,286		3,797		3,652
- between one year and five years		8,696		12,009		15,917
- later than five years		-		-		-
		12,982		15,806		19,569

The Group has an exclusive licence to use the trademark and name Heidi Klum in the manufacture, promotion, sale and distribution of product. The contract was executed on 26 September 2014 and commenced on 1 January 2015. The contract has a 7 year term with no rights to renew. Licence royalties are calculated based on net sales, and the minimum guarantee payments payable by the Group are set out above.

F-83

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

26	Lessor Commitments

The Group sub leases its US and Australian premises under a commercial lease. These non-cancellable leases have terms between 1 and 6 years. All leases include an option for the Group to increase rent to current market rental on an annual basis.

The future minimum lease payments under non-cancellable leases are:

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

- not later than one year		441		166		503
- between one year and five years		493		-		1,076
- later than five years		-		-		-
Total minimum lease payments		934		166		1,579

F-84

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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 instrument 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 receives 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.

F-85

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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.

F-86

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

The Group’s liabilities have contractual maturities which are summarised below:

	Non-derivatives Borrowings NZ$000’s		Non-derivatives Trade paybles 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 2019		1,329		23,580		24,908		18,325		(19,212	)		(887	)
31 January 2018		24,677		21,143		45,820		13,577		(13,950	)		(373	)
31 January 2017		56,333		19,221		75,554		2,078		(2,250	)		(172	)

1 to 3 months
31 January 2019		184		-		184		9,610		(10,061	)		(451	)
31 January 2018		148		-		148		13,836		(14,453	)		(617	)
31 January 2017		129		-		129		9,900		(11,326	)		(1,426	)

3 months to 1 year
31 January 2019		20,184		-		20,184		4,976		(5,121	)		(145	)
31 January 2018		27,247		-		27,247		20,895		(21,993	)		(1,098	)
31 January 2017		18,631		-		18,631		37,855		(40,445	)		(2,590	)

1 to 5 years
31 January 2019		-		-		-		-		-			-
31 January 2018		-		-		-		-		-			-
31 January 2017		323		-		323		-		-			-

Total
31 January 2019		21,697		23,580		45,277		32,912		(34,395	)		(1,483	)
31 January 2018		52,072		21,143		73,215		48,308		(50,396	)		(2,088	)
31 January 2017		75,416		19,221		94,637		49,833		(54,021	)		(4,188	)

F-87

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions.

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.

F-88

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

Credit Risk

On a geographical basis, the Group has significant credit risk exposures in New Zealand, Australia, United States and United Kingdom 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.

	31 January 2019		31 January 2018		31 January 2017
	NZ $000’s		NZ $000’s		NZ $000’s
Trade receivables
Counterparty without external credit ratings
New customer less than 6 months		42		12		187
Existing customers (more than 6 months with default in past)		7,747		9,970		26,312
Total trade receivables		7,789		9,982		26,499

	31 January 2019		31 January 2018		31 January 2017
	NZ $000’s		NZ $000’s		NZ $000’s
Credit ratings
AA-		1,915		10,591		265
A+		-		94		(11	)
		1,915		10,685		254

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties.

F-89

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

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.

(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 financial instruments are held in currencies other than the functional currency.

Exposures to currency exchange rates arise from overseas sales and purchases, which are primarily denominated in currencies other than the functional currency, in particular USD.

F-90

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

Foreign currency denominated financial assets and liabilities, translated into New Zealand Dollars at the closing rate, are as follows:

	AUD NZ$000’s		USD NZ$000’s		GBP NZ$000’s		EUR NZ$000’s		HKD NZ$000’s		Total NZ$000’s
31 January 2019
Trade receivables		51		42		-		285		-		378
Trade payables		1		9,035		8		61		7		9,111
Cash and cash equivalents		623		149		38		8		11		829

31 January 2018
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		9,185

31 January 2017
Trade receivables		424		211		-		1,509		-		2,144
Trade payables		315		8,557		131		32		16		9,051
Cash and cash equivalents		926		401		131		388		28		1,874

The following table 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 2019 (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / US Dollar exchange rate (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / GB Pound exchange rate (31 January 2018: 10%, 31 January 2017: 10%). A 10% change is considered for the New Zealand Dollar / Euro exchange rate (31 January 2018: 10%, 31 January 2017: 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 rate is 0.9513 AUD, 0.6903 USD, 0.5265 GBP, 0.6008 EUR and 5.4138 HKD.

The sensitivity analysis is based on the foreign currency financial instruments held at the reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

F-91

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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 2018: 10%, 31 January 2017: 10%) and 10% (31 January 2018: 10%, 31 January 2017: 10%) respectively then this would have had the following impact:

	NZ$000’s
	+10%			-10%
USD
Net results/Equity (31 January 2018)		(954	)		954
Net results/Equity (31 January 2017)		(1,509	)		1,509
Net results/Equity (30 June 2016)		(1,196	)		1,196

AUD
Net results/Equity (31 January 2018)		(5	)		5
Net results/Equity (31 January 2017)		(805	)		805
Net results/Equity (30 June 2016)		86			(86	)

GBP
Net results/Equity (31 January 2018)		(1	)		1
Net results/Equity (31 January 2017)		(175	)		175
Net results/Equity (30 June 2016)		34			(34	)

EUR
Net results/Equity (31 January 2018)		(32	)		32
Net results/Equity (31 January 2017)		(136	)		136
Net results/Equity (30 June 2016)		186			(186	)

HKD
Net results/Equity (31 January 2018)		(1	)		1
Net results/Equity (31 January 2017)		(14	)		14
Net results/Equity (30 June 2016)		1			(1	)

F-92

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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 open forward exchange contracts at the end of the reporting period relating to highly probable forecast transactions and recognised financial assets and financial liabilities. These contracts commit the Group to buy specified amounts of foreign currencies in the future at specified exchange rates. The Group has a policy of requiring that forward exchange contracts be entered into where future commitments are entered into requiring settlement at a time in excess of 1 month but less than 1 year, to a value of approximately 75% total foreign exchange exposure. Contracts are taken out with terms that reflect the underlying settlement terms of the commitment to the maximum extent possible so that hedge ineffectiveness is minimised.

F-93

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

The following table summarises the notional amount of the Group’s commitments in relation to forward exchange contracts.

	Notional Accounts						Average Exchange Rate
	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s		31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
Buy USD/ sell NZD
Settlement
Less than 6 months		34,395		48,149		47,292		0.6620		0.7061		0.6687
6 months to 1 year		-		-		3,479		-		-		0.7186

Buy AUD/ sell NZD
Settlement
	NZ$000’s		NZ$000’s		NZ$000’s		$		$		$
Less than 6 months		-		2,247		2,250		-		0.8900		0.8890

Buy GBP/ sell NZD
Settlement
Less than 6 months	NZ$000’s		NZ$000’s		NZ$000’s		$		$		$
		-		-		1,000		-		-		0.5784

F-94

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	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 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s

Floating rate instruments
Bank overdrafts		-		-		-
Working capital financing bank facility		-		22,489		31,710
Convertible notes		-		1,740		16,474
Borrowings		20,000		16,000		16,000
		20,000		40,229		64,184

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% (2018: +1.00%/ 1.00%, 2017: +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.

F-95

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

27	Financial Risk Management

	NZ $000’s
	1.00%		1.00%
Net results/Equity (31 January 2019)		200		(200	)
Net results/Equity (31 January 2018)		402		(402	)
Net results/Equity (31 January 2017)		642		(642	)

F-96

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

28	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		630			692		-		-		-		1,322
Intangible assets		(630	)		-		-		-		-		(630	)
Balance at 31 January 2019		-			692		-		-		-		692

Carried forward tax losses		630			-		-		-		-		630
Intangible assets		(630	)		-		-		-		-		(630	)
Balance at 31 January 2018		-			-		-		-		-		-

Carried forward tax losses		630			-		-		-		-		630
Intangible assets		(630	)		-		-		-		-		(630	)
Balance at 31 January 2017		-			-		-		-		-		-

F-97

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

29	Dividends

No final dividend will be paid in respect of the period ended 31 January 2019 (31 January 2018: Nil, 31 January 2017).

Franking account

	31 January 2019 NZ $000’s		31 January 2018 NZ $000’s		31 January 2017 NZ $000’s
Australian franking credits available for subsequent financial years at a tax rate of 30%		3,995		3,995		3,757
New Zealand imputation credits available for subsequent financial years at a tax rate of 28%		236		236		235

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.

30	Key Management Personnel Remuneration

Key management personnel remuneration included within employee expenses for the period is shown below:

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months Ended 31 January 2017 NZ$000’s		For the Year Ended 30 June 2016 NZ$000’s

Short-term employee benefits		2,056		1,743		1,492		1,752
		2,056		1,743		1,492		1,752

F-98

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

31	Interests in Subsidiaries

Composition of the Group

	Principal place of business / country of Incorporation	Percentage Owned (%)* 31 January 2019		Percentage Owned (%)* 31 January 2018		Percentage Owned (%)* 31 January 2017
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		-		-
Naked Brand Inc.	United States of America		100		-		-
FOH Online Corp Inc.	United States of America		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 periods ended 31 January 2018 and 31 January 2017.

F-99

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

32	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

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.

F-100

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

32	Fair Value Management

Fair value hierarchy

The table below shows the assigned level for each asset and liability held at fair value by the Group:

	Level 1 NZ$000’s		Level 2 NZ$000’s		Level 3 NZ$000’s		Total
31 January 2019
Recurring fair value measurements
Financial assets
Foreign exchange contracts		-		-		-		-
Financial liabilities
Foreign exchange contracts		-		1,484		-		1,484
Derivative on Convertible Notes		-		-		-		-

31 January 2018
Recurring fair value measurements

Financial assets
Foreign exchange contracts		-		-		-		-

Financial liabilities
Foreign exchange contracts		-		2,087		-		2,087
Derivative on Convertible Notes		-		-		1,110		1,110

F-101

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

32	Fair Value Management

31 January 2017
Recurring fair value measurements

Financial assets
Foreign exchange contracts	-	-	-	-

Financial liabilities
Foreign exchange contracts	-	4,188	-	4,188
Derivative on Convertible Notes	-	-	4,112	4,112

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

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.

F-102

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

32	Fair Value Management

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
Changes in fair value
Conversion		(1,110	)
Balance at 31 January 2019		-

F-103

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

33	Contingencies

Contingent Liabilities

The Group had the following contingent liabilities at the end of the reporting period:

	For the Year Ended 31 January 2019 NZ$000’s		For the Year Ended 31 January 2018 NZ$000’s		For the 7 Months Ended 31 January 2017 NZ$000’s

Rent guarantees to certain landlords		419		419		571
Standby letter of credit to JP Morgan Chase Bank		291		291		286
Guarantee provided to UK Customs Department		329		329		282
Guarantee provided to ANZ for Merchant Service		172		172		-

A shareholder has 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 on 19 June 2018. 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.

F-104

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

34	Related Parties

(a)

The Group’s main related parties are entities owned/controlled by shareholders:

(b)

Loans (to)/from related parties

	Opening balance NZ$			Closing balance NZ$

Loans to related parties
Cullen Investments Limited - 31 January 2019		11,535,677			-
Cullen Investments Limited - 31 January 2018		13,051,321			11,535,677
Cullen Investments Limited - 31 January 2017		9,613,014			13,051,321
Whitespace Atelier Limited - 31 January 2019		272,665			281,714
Whitespace Atelier Limited - 31 January 2018		-			272,665
FOH Online Inc. - 31 January 2018		3,518,009			-
FOH Online Inc. - 31 January 2018		-			3,518,009

Loans from related parties
SBL Holdings - 31 January 2019		-			(1,448,646	)
Naked Inc. - 31 January 2019		(1,368,577	)		-
Naked Inc. - 31 January 2018		-			(1,368,577	)
Naked Inc. - 31 January 2017		-			-
EJ Watson - 31 January 2019					(2,289,212	)

F-105

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

34	Related Parties

(b)

Loans (to)/from related parties

On 15th November 2018, the Group entered into a Stock Purchase Agreement with the shareholders of FOH Online Corp (FOH), which included Cullen Investments Limited (Cullen), that the Group will purchase all of the issued and outstanding shares of FOH. Under the terms of the Agreement, the amount owed by Cullen was fully forgiven by the Group (31 January 2018: $11,535,677).

Whitespace Atelier Limited (“Whitespace”) is owned by a shareholder of the Naked Brand Group Limited. Beginning 1 Feb 2017, Whitespace is engaged by the Group to procure stock from various suppliers at competitive prices. During the year ended 31 January 2019, purchases amounting to $12,720,499 (31 January 2018: $13,281,727) have been made from Whitespace. As at 31 January 2018, the Group has made prepayments to Whitespace amounting to $281,714 (31 January 2018: $272,665).

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 (31 January 2018: $1,368,557).

Subsequent to the acquisition of FOH Online Inc. on 15th November 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 (31 January 2018: $3,518,009).

During the period, a shareholder SBL Holdings Limited loaned the business funds to be utilised as working capital in the business.

During the period, and subsequent to the acquisition of FOH Online Inc, the balance of the loan outstanding from EJ Watson as at 31 January 2019 was$ 2,289,212, which includes interest accrued for the period of $81,866 (31 January 2018: Nil)

F-106

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

35	Cash Flow Information

Reconciliation of result for the year to cashflows from operating activities

Reconciliation of net income to net cash provided by operating activities:

	For the Year Ended 31 January 2019 NZ$000’s			For the Year Ended 31 January 2018 NZ$000’s			For the 7 Months Ended 31 January 2017 NZ$000’s			For the Year Ended 30 June 2016 NZ$000’s
Loss for the period		(49,220	)		(37,593	)		(15,979	)		(20,746	)
Cash flows excluded from profit attributable to operating activities interest paid on borrowings		3,400			8,792			6,238			10,182
Non-cash flows in profit:
- depreciation and amortisation expense		2,382			3,030			1,842			3,516
- impairment expense		8,173			1,914			292			2,157
- fair value gain/(loss) on Convertible Notes derivative		775			(2,393	)		592			-
Changes in assets and liabilities:
- (increase) in trade and other receivables		14,267			14,925			(4,748	)		(6,518	)
- (increase) in current tax receivables		(355	)		52			35			(88	)
- (increase)/decrease in derivative assets		-			-			-			(2,289	)
- (increase)/decrease in inventories		13,350			6,638			(179	)		8,088
- (increase)/decrease in deferred tax asset/(liability)		(692	)		-			-			5,589
- (increase)/decrease in related party receivables		6,531			(906	)		(3,438	)		(5,603	)
- (increase)/decrease in trade and other payables		(5,681	)		6,956			2,078			(11,113	)
- (increase)/decrease in income taxes payable		226			152			635			(483	)
- (increase)/decrease in provisions		(522	)		39			367			311
- (increase)/decrease in foreign currency derivative liability		(1,712	)		(5,104	)		(1,343	)		5,530
- net exchange differences		(355	)		(618	)		90			1,849
Cashflows from operations		(9,434	)		(4,116	)		(13,518	)		(5,040	)

F-107

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

36	Events occurring after the reporting date

On February 14, 2019, Carole Hochman resigned from the board of directors and as Executive Chairman.

In March 2019 the following share transactions occurred :

	(1)	1.4m ordinary shares and 1.4m warrants were issued in exchange for services to the value of NZ $0.1m / US$ 87k. The warrants have an exercise price of US$0.50 and expire 2 years from the date of issue.
	(2)	The issue of 11,248,415 ordinary shares to trade creditors in satisfaction of NZ$6.6m / US$4.5m trade payables, at a share price of US$0.40.
	(3)	The issue of 2,119,178 ordinary shares in settlement of a promissory notes in the amount of NZ$1.25m / US$847,671, at a share price of US$0.40 per share.
	(4)	The issue of 4,510,588 ordinary shares to investors in a private placement at a share price of US$0.255 for a total cash consideration of NZ$1.69m / US$1.15m.
		The investors also received warrants to purchase 4.510,588 ordinary shares, at an exercise price of US$0.306 and expiry 2 years from the date of issue.

In May 2019, the following share of funding transactions occurred :

	(1)	NZ$4.3m / US$3m cash was raised via a secured convertible promissory note to St. George Investments, with a US$3.32m note principal value. The note accrues daily interest at 10% p.a, and matures on November 13, 2020. The Company has the right to prepay the note, subject to a 15% premium. The note is secured by a second priority security interest over all the Company’s assets and is subordinated to the Company’s existing senior secured credit facility with the Bank of New Zealand. The noteholder has the right to convert the note into Naked ordinary shares at a conversion price of US$0.90 per share, and also has the right, from December 13, 2019, to request redemption of any portion of the note, up to a maximum of US$0.4m per month.
	(2)	NZ$2.17m / US$1.5m cash was raised via the issue of 6m Naked ordinary shares to an investor in a private placement at a share price of US$0.25. The investor also received warrants to purchase 1m Naked ordinary shares. The warrants have an exercise price of US$0.25, and expire 2 years from the date of issue.
	(3)	653,595 ordinary shares were issued in exchange for the cancellation of NZ$0.3m / US$0.2m in debt held by a shareholder, at a price of US$0.306 per share.

F-108

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

36	Events occurring after the reporting date (continued)

In July 2019, the following share transactions occurred :

	(1)	The issue of 25,068,250 ordinary shares to certain suppliers at a price of US$0.10 per share, in cancellation of NZ$3.7m / US$2,506,825 trade payables.
	(2)	The issue of 15.75m ordinary shares to certain investors at a price of US$0.10 per share, and warrants to purchase up to 15.75m ordinary shares, at an exercise price of US$0.10 per share, for a total cash consideration of NZ$2.35m / US$ 1.575m. Warrants to purchase 1.26m ordinary shares were also issued to various designees of the placement agent at an exercise price of US $0.125 per share. The placement agent warrants are immediately exercisable and expire 5.5 years from date of the cash offering.
	(3)	The exercise prices of certain outstanding warrants to purchase 2.8m ordinary shares held by one of the investors were reduced to US$0.10 per share, with the exercise prices previously ranging from US$1.55 to US$3.75.

On July 31, 2019, Kelvin Fitzalan was appointed as a member of the board of directors

In August 2019, the following equity transactions occurred :

	(1)	28,571,431 ordinary shares, at a price of $0.07 per share in a cash offering and 28,571,431 warrants to purchase ordinary shares were issued to certain investors, for a total cash consideration of NZ $3.1m / US$2.0m. The warrants are immediately exercisable, expiring 5.5 years from the date of issue, at an exercise price per share of US $0.07, and may be exercised on a ‘cashless’ basis based on as Black Scholes valuation from 6 months after the issue. The Company also issued warrants to certain designees of the placement agent to purchase 2,285,714 ordinary shares at an exercise price of $0.0875 per share. The placement agent warrants are immediately exercisable and expire 5.5 years from date of the cash offering.
	(2)	The Company agreed to reduce the exercise price of outstanding warrants held by certain investors, consisting of warrants to purchase up to 18.55m ordinary shares at an exercise price of US$0.10 per share that expire in October 2021, June 2023 and July 2025. The Company agreed to amend each of the outstanding warrants to reduce the exercise price to US$0.07.
	(3)	The Company issued 57,142,857 ordinary shares to suppliers at a price of $0.07 per share in exchange for the cancellation of NZ$6.2m / US$4.0m trade payables and the establishment of prepayment credits.

F-109

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

36	Events occurring after the reporting date (continued)

In October 2019, the following funding transaction occurred :

The Company completed a private placement of a convertible promissory note and a warrant to purchase ordinary shares, for a purchase price of NZ$3.2m / US$2m, with a principal balance before discount and expenses of US$2.12m. The holder had the right to exchange the warrant for a 5% increase in the balance of the note. On October 9, 2019, the holder exercised this right, and as result the warrant was cancelled and the balance of the note was increased by US$106,100. The note balance was further increased to US$2.51m on November 21 2019 due to additional funding requirement deadline not being met. The note accrues daily interest at 20% p.a., and matures on October 4, 2021. 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 April 7, 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$0.05 per share.

In November 2019, the following funding transaction occurred :

The Company issued a NZ $ 4.8m / $US 3m convertible note in a private placement, maturing November 12 2021. The face value of the note is NZ $ 5.0m / $US 3.17m after discount and costs, with a cash consideration of $US 3m. The interest rate is 20% p.a.. The Company has the right to prepay the note at a 25% premium. The note is subordinated to the Company’s existing BNZ facility. The note outstanding balance is convertible into ordinary shares from May 13, 2020, at a conversion price of $US 0.04 per share. From May 13, 2020, the holder can request the company redeem any portion of the note, up to a maximum of $US0.4m per month. At same time 63.4m warrants were issued to the note holder at a $US 0.05 exercise price, exercisable at any time, with a November 30 2021 expiry date.

St. George Investments converted 12.1m convertible notes at an agreed $US 0.028 average price, reducing the principal value of the convertible note by $US 340k.

In December 2019, the following funding transactions occurred (prior to reverse stock split on December 20 2019, referred to below) :

St. George Investments converted 108.2m convertible notes at an $US 0.021 average price, reducing the principal value of the convertible note by $US 2.265m

The Company issued a NZ $ 4.8m / $US 3m convertible note in a private placement, maturing December 19 2021. The face value of the note is NZ $ 5.0m / $US 3.17m after discount and costs, with a cash consideration of $US 3m. The interest rate is 20% p.a.. The Company has the right to prepay the note at a 25% premium. The note is subordinated to the Company’s existing BNZ facility. The note outstanding balance is convertible into ordinary shares from May 13, 2020, at a conversion price of $US 0.04 per share. From June 19, 2020, the holder can request the company redeem any portion of the note, up to a maximum of $US0.6m per month. At same time 79.3m warrants were issued to the note holder at a $US 0.05 exercise price, exercisable at any time, with a December 31 2021 expiry date.

F-110

Naked Brand Group Limited

ACN 619 054 938

Notes to the Consolidated Financial Statements

For the Periods Ended 31 January 2019, 31 January 2018, 31 January 2017, 30 June 2016

36	Events occurring after the reporting date (continued)

On February 5, 2019, we received a notice from the Listing Qualifications Department of Nasdaq stating that, for the last 30 consecutive business days, the closing bid price for our Ordinary Shares had been below the minimum of US$1.00 per share required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Compliance has been extended in November 2019 until February 3, 2020. In order to regain compliance, the bid price for shares of our Ordinary Shares must close at US$1.00 per share or more for a minimum of ten consecutive business days.

At the AGM on held on December 16, 2019 and in conjunction with a Board decision on timing, it was resolved to complete on December 20 2019 a reverse stock split of our Ordinary Shares, pursuant to which every 100 Ordinary Shares outstanding as of the effective time of the reverse stock split were combined into one Ordinary Share. This should resolve the Nasdaq requirement for a US $1.00 minimum share price.

The senior secured credit facility with the Bank of New Zealand matured on August 31, 2019 and has been extended to January 31 2020, with discussions underway to extend for a further period beyond 12 months. The bank covenants were breached since January 2019 and were reset at April 30, 2019. The reset inventory ratio has been breached to the date of signing these accounts.

A restructure or operations was commenced in October 2019 with initiatives to close the US wholesale business as well as the Australian office and to disestablish up to 50 roles globally by the end of the year, subject to consultation.

F-111

Exhibit 12.1

CERTIFICATIONS

I, Justin Davis-Rice, certify that:

1. I have reviewed this Annual Report on Form 20-F/A of Naked Brand Group Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

Dated: January 3, 2020

	By:	/s/ Justin Davis-Rice
		Justin Davis-Rice
		Executive Chairman
		(Principal Executive Officer)

Exhibit 12.2

CERTIFICATIONS

I, David Adams, certify that:

1. I have reviewed this Annual Report on Form 20-F/A of Naked Brand Group Limited;

Dated: January 3, 2020

	By:	/s/ David Adams
		David Adams
		Interim Chief Financial Officer
		(Principal Accounting Officer and
		Principal Financial Officer)

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Naked Brand Group Limited (the “Company”) on Form 20-F/A for the year ended January 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: January 3, 2020

	By:	/s/ Justin Davis-Rice
		Justin Davis-Rice
		Executive Chairman

	By:	/s/ David Adams
		David Adams
		Interim Chief Financial Officer

Exhibit 15.1