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Cedar Fair2023
Annual
Report
Contents
Our story
Chair’s Letter
CEO’s Letter
Directors’ Report
Financial Statements
Shareholder Information
Corporate Directory
01
02
04
06
27
89
91
Toys“R”Us ANZ Limited
Annual Report 2023
Our story
At Toys”R”Us, we believe that toys have the
power to change lives. Play enables children to
develop their imagination, collaborate, problem
solve, explore, create or simply express
themselves spontaneously.
Our mission at Toys”R”Us is to encourage
children to engage with as many forms
of play as we possibly can.
We have relaunched in 2019,
as a new company, to bring
play back into the lives of
children of all ages.
01
current shopper database
with aims to double within
the next 12 months
Chair’s Letter
Dear Fellow Shareholders, on behalf
of the Board of Directors, I present
the 2023 Annual Report for Toys“R”Us
ANZ Limited (ASX:TOY) (“the Company”)
The financial results for FY23 were very
disappointing with the Company failing to
navigate a technology, marketing and
operational pathway through a challenging
macro environment. This has led to a change
of leadership in your Company, and its
business activity.
During FY23, Toys”R”Us ANZ achieved
overall flat revenue with high inflation and
low consumer confidence impacting the toy
market globally. In ANZ, top line revenue
declined by 15.2%, largely driven by lower
e-commerce revenue. With a greater focus
later in the year on driving profitability, the
overall profitability in ANZ was similar to
FY22. The UK market, delivering sales below
forecast, placed unsustainable working capital
demands on the group, well in excess of those
previously forecast by management. This led
to the decision to exit the UK business.
By end of H1 of FY23 the Board of Directors
agreed to instigate a full strategic review of
the Group in the post-holiday season of 2022.
On 10 May 2023 the Board announced that,
following the strategic review, the Company
had shortlisted applicants for the new
Managing Director role for the ANZ region,
and on 15 May Louis Mittoni resigned as CEO.
As Non-Executive Chair, I took on the role of
Interim CEO and Executive Chair. Mr Mittoni
subsequently resigned from the Board of
Directors on 27 July 2023.
On 13 June 2023, the Board announced
the appointment of Penny Cox, MA, MBA,
a seasoned e-commerce executive with
multinational expertise in the UK, Asia and
Australia growing e-commerce businesses,
as CEO.
With the appointment of our new CEO, the
Company implemented several initiatives that
included the development of a business model
to reach breakeven in ANZ by 2025, through
02
Toys“R”Us ANZ Limited
Annual Report 2023
the reduction of fixed operating costs, a focus on
margin improvement, several strategic marketing
and partnership initiatives, exiting the UK
business, clearing of aged inventory, the upgrade
of business systems and a review of goodwill.
The short-term priority for the Company is to
reduce fixed overheads while implementing
strategic marketing and associated business
systems to profitably grow the top line. Since
August, the Company has decreased the
annualised staff and salary overhead by
c.$1.3 million and implemented a plan to replace
fixed costs with variable costs which should see
further cost reductions, exited warehousing in
NSW with stock to be consolidated in Victoria.
The Company’s near-term focus is on improving
productivity through a step-change in
e-commerce conversion rates and automating
marketing activities to target additional revenue
streams such as gift cards and drop shipping.
The Company commenced the migration from
its legacy OsCommerce website infrastructure
to Shopify Plus in June 2023, with a go-live date
of late October 2023. The new technology will
facilitate more effective marketing including the
introduction of drop shipping which will allow
additional products to be offered to our shoppers,
without the need to tie up cash in inventory
and warehousing space.
Under the new CEO, the Company began
systematically applying its marketing spend,
reducing customer acquisition costs by 50%
without impacting customer acquisition
performance. The Company is increasing its
customer reach through partner programs,
targeting a doubling of its current shopper
database from c.1 million to 2 million over the
next 12 months.
The Company plans to accelerate and scale the
Toys“R”Us, Babies“R”Us and Hobby Warehouse
operations in Australia and New Zealand over
the next 12 months through improved functional
leadership, merchant and marketing capability,
more productive technology-enabled footprint
and sub-licensing through physical retail partners.
With the change in our Executive and Board
leadership, with our new CEO Penny Cox, and new
Chair Kelly Humphreys, I believe our company
has a pathway to profitable growth based
upon capability of its people and capacity of
its technology platforms, supporting the best
toy, baby and hobby brands in the world.
Kevin A Moore
Chair of the Board
26 October 2023
03
CEO’s Letter
Dear Shareholders,
As the new CEO of Toys “R” Us ANZ Limited,
I am excited to be here, and by the potential
of the business. In FY23, the Company did not
meet the expectations of the Board or our
Shareholders, and we have a lot of work to
do to turn things around.
My initial focus is on fixing the Company’s
declining revenue and profitability, and
rebuilding the balance sheet. I am committed
to addressing the Company’s challenges and
have already started a plan to turn things
around, to deliver growth and profitability.
This plan includes:
• Exiting the UK market, which
was unsustainable;
• Reducing our overheads and right-sizing
the cost base;
• Reducing aged inventory and managing
new inventory more carefully;
• Better measurement of operational KPIs
and marketing effectiveness;
• Re-building of the technology and data
stack, including website relaunch;
• Creating new channels to market, including
physical retail (e.g store-in-store models);
and
• Delivering growth in the Baby category,
which has significant untapped potential.
Whilst it will take time to see the results of
all these streams of work, I am confident
in the plan we have in place to address the
huge market opportunity, with one of the
strongest brands in the world.
With almost 1 million loyal shoppers, we
have a large and active database and are
well-positioned to grow our market share in
Toys and Hobbies from < 1% to 5% over the
next three years. We will be particularly
focused on improving our product range,
developing new products and services that
will better meet the needs of our existing
customers, and developing marketing
strategies to reach a larger pool of toy,
hobby and baby goods buyers.
I would like to thank the Board of Directors for
their confidence in me and their unwavering
support during this period of transition. I would
also like to thank you, our Shareholders, for
your continued support and investment in
Toys “R” Us ANZ Ltd. The path forward is
becoming clear, and there is an opportunity
for the Company to create significant value
for our customers, our partners and our
shareholders as we deliver on our plan.
Penny Cox
CEO
04
Toys“R”Us ANZ Limited
Annual Report 2023
05
Directors’ Report
The directors present their report, together with the consolidated financial statements, on the consolidated
entity (referred to hereafter as the ‘Group’) consisting of Toys“R”Us ANZ Limited (referred to hereafter as
‘Toys“R”Us ANZ’, ‘TOY’, the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during,
the year ended 31 July 2023.
Directors
The following persons were directors of Toys“R”Us ANZ Limited during the whole of the financial year and
up to the date of this report unless otherwise stated:
• Kevin Moore;
•
John Tripodi;
• Silvio Salom (appointed 11 November 2022);
•
Louis Mittoni (resigned 27 July 2023);
• Nicki Anderson (resigned 31 August 2022);
• Penny Cox (appointed 24 August 2023 & ceased 18 October 2023); and
• Kelly Humphreys (appointed 5 October 2023).
Principal activities
Toys“R”Us ANZ Limited is an Australian based listed company with a mission to enrich the lives of people
by encouraging exploration, creativity and living life more fully through the enjoyment of toys and hobbies.
The Company acquired 100% of the Hobby Warehouse Group in November 2020, including Australian
e‑commerce websites Toys“R”Us, Babies“R”Us and Hobby Warehouse and the distribution business Mittoni
Pty Ltd. In October 2021, a 100% owned subsidiary UK Toys”R”Us Limited was incorporated for the distribution
of toys and baby products under the brand name Toys“R”Us® and Babies“R”Us® in the United Kingdom.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Financial and operational review
Financial results
Key Financials AUD ‘m
Revenue from continuing operations
EBITDA from continuing operations
Profit/(Loss) before Tax from continuing operations
Net profit/(loss) after tax from continuing operations
Basic EPS (cents) from continuing operations
Dividend per share (cents)
ROE1
Net cash balance/(Net debt) ($m)
Gearing2
1. NPAT/average shareholder equity.
2. Debt/shareholder equity.
FY22
% Change
FY23
32.1
(9.0)
(25.6)
(25.3)
(3.2)
N/A
37.9
(9.1)
(24.6)
(24.3)
(2.8)
N/A
(11.15%)
(8.48%)
(10.8)
831%
2.5
29%
(15.2)
7.2
11.6
11.6
11.1
(2.67)
(533.8)
n/a
The Group’s statutory loss after income tax for the year ended 31 July 2023 was $32.7 million
(2022: Loss after income tax $24.8 million).
06
Toys“R”Us ANZ Limited
Annual Report 2023
Operating review
During FY23, Toys”R”Us achieved overall flat revenue growth, against a challenging macro environment.
High inflation and low consumer confidence hit the toy market globally. In ANZ, the topline revenue declined
by 15.2% largely driven by lower e‑commerce revenue, but a greater focus on driving towards profitability
meant that the overall profitability in ANZ was similar to FY22. The UK market, while growing, placed
unsustainable working capital demands on the Company that led to the decision to exit that business.
By end of H1 of FY23, it became clear that Toys“R”Us revenue and margin growth in ANZ were both slowing,
and the working capital demands of the new UK market entry were greater than previously forecasted.
The Board of Directors agreed to instigate a full strategic review of the Group post‑holiday season 2022.
On 10 May 2023 the Board announced, following the strategic review, that the Company had:
• Realised cost reductions of c.$4 million in calendar year 2023.
• Released c.$1 million of previously secured working capital and highlighted a further $1 million of secured
working capital.
• Accessed $1.5 million of debt facilities of c.$5 million in new funds, bringing total debt utilised to
$11.5 million.
• Appointed a UK Commercial Director.
• Shortlisted applicants for the new Managing Director role for the ANZ region.
•
Improved the Company’s gross margin in the Australian direct to consumer e‑commerce division from
16.4% for the month of February 2023 to 22.3% for the month of April 2023.
On 15 May 2023 Louis Mittoni resigned as CEO and subsequently resigned from the Board of Directors
on 26 July 2023. Kevin Moore Non‑Executive Chair took on the role of Interim CEO and Executive Chair.
On 13 June 2023 the Board announced the appointment of Penny Cox, MA, MBA, a seasoned e‑commerce
executive with multinational expertise in the UK, Asia and Australia growing e‑commerce businesses as
CEO. Penny began consulting to the Company on 19 June 2023 and formally joined as CEO and Managing
Director on 24 August 2023 and ceased as Managing Director on 18 October 2023.
On 21 July 2023, the Company announced the successful raising of $1.3 million in new equity. On 15 August 2023
the Company announced the restructure of its operations in order to refocus working capital on the ANZ
e‑commerce business and reduce operating costs. The Company reached an agreement in principle with
licence owner TRU Kids Inc (TRUK), to facilitate an orderly transition of the UK business and the transfer of
the UK licence to TRUK. The benefit of transferring the licence is anticipated to release $7 million of working
capital, reduce operating loss by $6 million over the next 12 months as well as reduce debt by $2.9 million.
With the appointment of the new CEO, the Company instigated a number of initiatives which included the
development of a business model to reach breakeven by 2025, reduction of operating costs, focus on margin
improvement, exiting the UK business, clearing of aged inventory, upgrade of business systems and review
of goodwill.
Clearing of aged inventory in ANZ commenced in June, reducing the ANZ business’ total inventory holding
from $10.3 million (FY22) to $6.3 million (FY23).
After review, the Company decided to recognise further impairment of goodwill and intangible assets based
on its planned exit of the UK market and revised forecasts for the ANZ e‑commerce business. Similarly to the
previous financial year, a driver of the Company’s statutory net loss after tax was the recognition of
impairment of goodwill and intangible assets valued at $13.3 million.
The UK business brought in $5.3 million revenue for the year, largely from e‑commerce revenue from launch
in September 2022 and culminating in the launch of 9 x WHSmith store‑in‑stores in June 2023.
07
Directors’ Report
(Cont.)
Overall, the UK business had a negative $5.1 million impact to EBITDA and required a significant investment
in working capital to build up the inventory for the physical stores, building up to $3.3 million inventory value
in May 2023. Team expansion in the UK was also a driver of increased overheads. After detailed review, the
Company has made the decision to exit the UK business and focus its resources on developing the
ANZ business.
The Company commenced the migration from its legacy OsCommerce website infrastructure to Shopify Plus
in June 2023. The benefits of migration to this global standard platform allows for access of a wide range of
capabilities to deliver improved productivity, website performance, shopper experience and better management
of all digital communications assets and spend in ANZ. Roll out is planned for late October 2023.
The Company is reviewing its warehousing and robotics facilities in Clayton, Victoria with a view of significantly
reducing the cost of that operation by early 2024.
Shanghai Allocacoc Industrial Design Co
On 6 July 2023 the Company announced that a court case begun in China in 2018 had been successfully found
in its favour. The court awarded the Company approximately AUD $940,000 net of court costs in its favour.
This ruling was not appealed and was subsequently confirmed by the Chinese court. The Company continues
to pursue its right of payment in China and all other jurisdictions available to it.
Outlook and Strategic Plan
The Company is focused on putting in place cost structures and operating strategy to ensure that it reaches
profitable operations by end of Q1 2024 and continues to pursue its aspirations of driving top line growth and
deploying capital efficiently to achieve its medium‑term goal of 5% market share penetration in the toys,
baby and hobby markets in ANZ.
The Company plans to accelerate and scale Toys“R”Us, Babies“R”Us and Hobby Warehouse operations in
Australia under new leadership, with improved merchant and marketing capability, and more productive
technology enabled footprint as well as investigating expansion through physical partners.
The Company continues to review strategic options to expand and realise its growth ambitions by identifying
suitable business opportunities in addition to the growth initiatives reported above.
Significant changes in the state of affairs
UK licence and operations
Prior to year end, the Group have made the decision to restructure and refocus on the ANZ operation
and has reached agreement in principle with TRUK to surrender the UK licence and exit the UK operations.
The Group agreed to facilitate an orderly transition of the UK business and the transfer of its UK licence
to TRUK by 31 January 2024. Official announcement was issued to the ASX on the 15 August 2023.
Other than the above matters, no other significant changes in the state of affairs of the Group occurred
during the year ended 31 July 2023.
08
Toys“R”Us ANZ Limited
Annual Report 2023
Matters subsequent to the end of the financial year
On 28 September 2023, the Company received a letter from the lender waiving the requirement to comply
with the financial covenants of the facility agreement for the period ended 31 July 2023.
No other matter or circumstance has arisen since 31 July 2023 that has significantly affected, or may
significantly affect, the Group’s operations, the results of these operations, or the Group’s state of affairs
in future years.
Environmental regulations
The Group is not subject to any significant environmental regulation under Australian Commonwealth
or State law.
Information on Directors
Experience and expertise:
Kevin has multinational board and governance experience, specialising in digital
marketing, and is a growth director with a focus on $10 to $100 million businesses.
He has a corporate career with director level marketing and general management
experience across 30 countries, with success in launching and growing Australian
and Global brands. His private company career saw him build a small technology
based retail marketing business into the sector leader with 2,500 team members
in ANZ, and clients that include Apple, Amazon, Bunnings, Coles and Woolworths.
Kevin Moore
Independent
Non‑Executive Director
and Chair of the Board
Other current directorships:
None
Former directorships (last three years):
Chair of the Board of Raiz Invest Limited
Special responsibilities:
Chair of the Board and member of the Remuneration and Nomination Committee
and Audit and Risk Committee
Interests in shares:
4,032,462
Interest in options over shares:
5,114,465
09
Directors’ Report
(Cont.)
Experience and expertise:
Louis is the founder of the Mittoni and Hobby Warehouse businesses. He has over
20 years’ experience in operating and managing Australian retail businesses
in both distributor and online channels. As a qualified physicist and engineer,
Louis has intimate knowledge of process optimisation, programming and
artificial intelligence.
Louis Mittoni
Other current directorships:
None
Executive Director
(resigned 27 July 2023)
Former directorships (last three years):
None
PhD – Chemical
Engineering, BSc –
Physics, MAICD, MAIP
Special responsibilities:
Chief Executive Officer and member of the Remuneration and Nomination
Committee and Audit and Risk Committee
Interests in shares:
291,455,818 (as at date of resignation)
Experience and expertise:
Nicki is an accomplished leader and director with broad experience in strategy,
sales, marketing, licensing and innovation within branded food, beverage and
consumer goods businesses both in Australia and internationally. Nicki is a true
global citizen having lived in Denmark, Canada and the United States, where she
was Vice President Innovation for Cadbury Schweppes Americas Beverages based
in New York. Nicki has strong links to Australia’s e‑commerce, manufacturing and
agricultural sectors.
Nicki Anderson
Independent
Non‑Executive director
(resigned 31 August 2022)
B Bus, EMBA, GAICD
Other current directorships:
Graincorp (ASX:GNC)
Former directorships (last three years):
Select Harvests Limited, Health and Plant Protein Group Limited
Special responsibilities:
Previous Chair of the Remuneration and Nomination Committee
and member of the Audit and Risk Committee
Interests in shares:
2,300,957 (as at date of resignation)
10
Toys“R”Us ANZ Limited
Annual Report 2023
Experience and expertise:
John is a business leader with extensive multinational FMCG experience in various
strategic and operational roles with a track record of championing innovative
brand strategies that deliver successful commercial outcomes. He is currently
the CEO of the diversified sport, entertainment and consumer lifestyle agency,
Twenty3 Group. Prior to co‑founding the Twenty3 Group, John held senior sales
and marketing roles with Mars Inc. before moving into general management
with the L’Oréal Group.
John Tripodi
Independent
Non‑Executive Director
B Com, B Bus (Hons)
Other current directorships:
None
Former directorships (last three years):
None
Special responsibilities:
Chair of the Audit and Risk Committee
and member of the Remuneration and Nomination Committee
Interests in shares:
110,803
Interest in service rights:
500,000
Experience and expertise:
Silvio has more than 30 years of senior leadership experience at both Board and
operational level of private and public companies, spanning some 40 countries
across UK, Europe, North America and Asia. Silvio has founded a number of iconic
Australian companies including Adacel Technologies Ltd (ASX:ADA) and Lochard
Limited and has run numerous technology companies at all stages of the business
life cycle – successfully developing new products, expanding companies into
international markets, raising capital and leading companies towards profitability.
Other current directorships:
Adacel Technologies Limited (ASX:ADA); Sky & Space Co Limited (ASX:SAS).
Former directorships (last three years):
None
Special responsibilities:
Chair of the Remuneration and Nomination Committee
and a member of the Audit and Risk Committee.
Interests in shares:
24,825,000
Silvio Salom
Independent
Non‑Executive Director
(appointed
11 November 2022)
Bachelor of Engineering
(M.Eng.) and Master
of Fine Arts MFA
11
Directors’ Report
(Cont.)
Kelly Humphreys
Independent
Non‑Executive Director
(appointed
05 October 2023)
MMgt, GAICD, FAIM,
Dip Fin Serv
Experience and expertise:
Ms Humphreys was appointed as a Director to fill a casual vacancy with
effect from 5 October 2023. As her appointment will terminate at the end of
the Annual General Meeting, she submits herself for election by Shareholders.
Ms Humphreys is considered an independent Non‑Executive Director.
Ms Humphreys is an experienced ASX director, currently serving as Chair of Raiz
Invest Limited (ASX:RZI) and Non‑Executive Director and Chair of Audit, Risk and
Finance Committees on the Boards of The National Stock Exchange (ASX:NSX),
Latrobe Health Services and the Victorian Building Authority.
Prior to her board career, Ms Humphreys had an extensive senior executive career
in insurance and lending and has deep technical expertise in operations, risk
management and governance. She brings a strong commercial approach to
achieving objectives in complex regulatory environments and demonstrated ability
in engaging stakeholders and working effectively to deliver business growth and
improved performance.
Ms Humphreys holds a Masters of Management, a Diploma of Financial Services
and is a graduate member of the Australian Institute of Company Directors.
Other current directorships (last three years):
National Stock Exchange of Australia (ASX:NSX), Raiz Invest (ASX:RZI)
Former directorships (last three years):
Victory Office Limited (ASX:VOL) from 1 December 2021 to 23 May 2022
Special responsibilities:
None
Interests in shares:
None
Interest in service rights:
None
12
Toys“R”Us ANZ Limited
Annual Report 2023
Experience and expertise:
Penny’s international career includes roles in the UK, Australia, and Southeast
Asia with LEK Consulting, Ocado, Coles, Redmart, Alibaba & Carousell.
Penny’s strong proven capability and background in scaling e‑commerce
businesses, have specific applicability to the next chapter of Toys R Us ANZ’s
expansion, in the Company’s e‑commerce, retail and sublicence retail business
streams in Australia.
Penny Cox
Executive Director
(appointed
24 August 2023
& ceased
18 October 2023).
Other current directorships:
None
Former directorships (last three years):
None
Bachelor of Engineering
and MBA (INSEAD)
Special responsibilities:
Chief Executive Officer and invited member of the Remuneration and Nomination
Committee and Audit and Risk Committee.
Interests in shares:
None
‘Other current directorships’ quoted above are current directorships for listed entities only and exclude
directorships of all other types of entities unless otherwise stated.
‘Former directorships (last three years)’ quoted above are directorships held in the last three years for
listed entities only and exclude directorships of all other types of entities unless otherwise stated.
13
Directors’ Report
(Cont.)
Company Secretary
Kim Clark is the Company Secretary of the Group. Kim is the Head of Corporate Services for Boardroom Pty
Limited’s Queensland office and currently acts as Company Secretary for various ASX listed and unlisted
companies in Australia. Kim is an experienced business professional with 23 years’ experience in banking
and finance and six years as in‑house Company Secretary of an ASX 300 company prior to joining Boardroom
in April 2013. Kim Clark was appointed to the position of Company Secretary on 21 February 2023. Prior to
Kim Clark, Wei Si was the Company Secretary of the Group.
Meetings of Directors
The number of meetings of the Group’s Board of Directors held during the year ended 31 July 2023 and the
number of meetings attended by each director were:
Remuneration &
Nomination Committee
Board of
Directors
Audit & Risk
Committee
A
3
–
–
3
2
B
3
–
–
3
2
A
22
22
1
21
18
B
22
22
1
22
19
A
2
–
–
2
1
B
2
–
–
2
1
Kevin Moore
Louis Mittoni
Nicki Anderson
John Tripodi
Silvio Salom
Notes:
A Number of meetings attended during the year the director was a member of the Board and/or Committee(s).
B Number of meetings eligible to attend during the year the director was a member of the Board and/or Committee(s).
Remuneration report (audited)
The Directors present the Remuneration report for the Group and its controlled entities for the year ended
31 July 2023. The Remuneration report forms a part of the Directors report and has been prepared in
accordance with section 300A of the Corporations Act 2001. The information provided in the Remuneration
report has been audited by the company auditors as required by section 308(3C) of the Corporations Act 2001.
The Remuneration report outlines the remuneration policies and arrangements for the Company’s Key
Management Personnel (KMP) including Directors and Executives who have authority and responsibility
for planning, directing and controlling the activities of the Group.
14
Toys“R”Us ANZ Limited
Annual Report 2023
Details of key management personnel
The directors and key management personnel of the Group during or since the end of the financial year were:
Name
Position
Period in position during the year
Kevin Moore
Chair and Independent Non‑Executive Director
Appointed 26 November 2020
Interim CEO & Executive Chair
Louis Mittoni
Managing Director
Penny Cox
Chief Executive Officer and Managing Director
Appointed 15 May
– Resigned 20 July 2023
Appointed 26 November 2020
– Resigned 26 July 2023
Appointed 24 August 2023
Ceased as Managing Director
18 October 2023
John Tripodi
Independent Non‑Executive Director
Appointed 25 October 2018
Nicki Anderson
Independent Non‑Executive Director
Appointed 25 October 2018
– Resigned 31 August 2022
Silvio Salom
Independent Non‑Executive Director
Appointed 11 November 2022
Kelly Humphreys
Independent Non‑Executive Director
Appointed 5 October 2023
Wei Si
Chief Financial Officer and Company Secretary
Appointed 28 March 2022
– Resigned as Company Secretary
on 21 February 2023
Lian Yu
Chief Operating Officer
Appointed 1 May 2021
Remuneration policy for directors and executives
The objective of the Toys“R”Us ANZ remuneration policy is to attract, retain and motivate the people required
to sustainably manage and grow the business. Executive remuneration packages include a balance of fixed
remuneration, short‑term cash incentives and long‑term equity incentives. The framework endeavours to align
executive reward with market conditions and shareholders’ interests.
Principles of Compensation
The Remuneration & Nomination Committee makes specific recommendations to the Board on compensation
packages and other terms of employment for directors and other senior executives. The Board then considers
these recommendations and makes appropriate determinations, with compensation packages set at a level
that is intended to attract and retain directors and executives capable of managing the consolidated entity’s
diverse operations.
Compensation of the senior executives is reviewed on an annual basis by the Remuneration & Nomination
Committee having regard to personal and corporate performance and relevant comparative information.
Compensation for senior executives comprises both fixed compensation and an “at risk” component.
The “at risk” component comprises a short‑term incentive payment based on a combination of the company’s
results and individual performance levels, and a long‑term incentive component pursuant to the Employee
Incentive Plan.
The payment of short‑term incentives (in the form of cash bonus) is dependent on the achievement
of operating and financial targets set at the beginning of each year and assessed on an annual
basis by the Board.
15
Directors’ Report
(Cont.)
Compensation and other terms of employment for senior executives are formalised in service agreements.
The Group’s executive remuneration is directly related to the performance of the Group through the linking
of short and long‑term incentives to certain financial performance measures. These performance measures,
as described below, are selected by the Board of Directors and considered relevant to the management of
the operations of the Group and to effectively align the long‑term interests of the directors, executives and
shareholders. The performance conditions are assessed periodically by the Remuneration & Nomination
Committee to ensure they remain relevant.
Compensation and company performance
Toys“R”Us ANZ Limited’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) has been
the key performance measure for the Company’s incentive plan for executives, linked to individual key
performance objectives.
Components of Compensation
Fixed Compensation
The terms of employment for all executive management contain a fixed compensation component, which is
expressed in local currency. This fixed component is set in accordance with the market rate for a comparable
role by reference to appropriate external benchmark information and having regard to an individual’s
responsibilities, performance, qualifications, experience and location. An executive’s compensation is also
reviewed on promotion.
Fixed compensation includes contributions to superannuation and pension plans in accordance with relevant
legislation or as contractually required. Fixed compensation is structured as a total employment cost package
which may be delivered to the executive as a mix of cash and prescribed non‑financial benefits at the
executive’s discretion. There are no guaranteed pay increases in any senior executive’s contract.
Benefits for termination of employment may be payable subject to the circumstances of the termination
and within the terms of the employment contract.
At risk Compensation
Short‑Term Incentives
• The Short‑Term Incentive (STI) plan is linked to specific targets (predominantly financial) with the
opportunity to earn incentives based on a percentage of fixed compensation.
• Performance measurements have been applied to each component of STI and accordingly, entitlements
were determined with consideration to the executive’s level and area of responsibility. Performance
against the objectives was determined and incentives and entitlements assessed against the audited
financial results.
16
Toys“R”Us ANZ Limited
Annual Report 2023
Voting and comments made at the company’s 2022 Annual General Meeting (‘AGM’)
At the 2022 AGM, 83% of the votes received supported the adoption of the remuneration report for the
year ended 31 July 2022. The company did not receive any specific feedback at the AGM regarding its
remuneration practices.
The table below shows the Group’s earnings in the reporting period and the previous four financial
periods/years as well as an indication of the Group’s value over the corresponding period:
Post Share Consolidation
NPAT ($’000)
Basic EPS (Cents)
Diluted EPS (Cents)
Total Dividends ($’000)
Year End Share Price ($)
Shares on Issue (No.)
Year Ended
31‑Jul‑23
Year Ended
31‑Jul‑22
Year Ended
31‑Jul‑21
Year ended
31‑Jul‑20
Year ended
31‑Jul‑19
(32,658)
(24,759)
(3.78)
(3.78)
Nil
0.011
(2.89)
(2.89)
Nil
0.061
(3,113)
(0.48)
(0.48)
Nil
0.160
(9,313)
(3.94)
(3.94)
Nil
0.022
7,596
3.64
3.61
Nil
0.065
863,086,674
861,861,184 848,358,858 240,404,075
233,176,894
Market Capitalisation ($’000)
9,494
52,574
135,737
5,289
15,156
Remuneration of Key Management Personnel
The aggregate compensation of the key management personnel of the Group is set out below:
Short‑term employee benefits
Post‑
employ‑
ment
benefits
Other
long‑term
employee
benefits
Share‑based payments
Salary
and fees
$
Cash
bonus
$
Non‑
monetary
benefits
$
Super‑
annuation
$
Long
service
leave
$
Termi‑
nation
Benefits
$
Year ended
31 July 2023
Directors
Kevin Moore4
137,500
–
Louis Mittoni2
374,515
26,250
Nicki Anderson1
John Tripodi
Silvio Salom3
5,000
64,417
43,333
–
–
–
Sub‑Totals
624,765
26,250
Executives
Wei Si
Lian Yu
200,833
10,000
240,734
15,000
Sub‑Totals
441,568
25,000
TOTALS
1,066,333
51,250
Shares
$
–
–
62,500
–
–
12,388
27,500
525
6,791
4,577
51,780
–
–
–
–
–
–
–
278,419
–
–
–
278,419
62,500
22,225
3,556
24,913
47,138
4,186
7,741
–
–
–
–
–
–
98,918
7,741
278,419
62,500
–
–
–
–
–
–
–
–
–
–
1. Appointed 25 October 2018, resigned 31 August 2022.
2. Appointed 26 November 2020, resigned 26 July 2023.
3. Appointed 11 November 2022.
4.
Interim CEO & Executive Chair appointed 15 May and resigned 20 July 2023.
Share
Appre‑
ciation
Rights
$
–
–
–
–
–
–
–
–
–
–
Share
Options
$
Total
$
16,385
214,441
– 706,684
–
68,025
30,000
101,208
–
47,910
46,384 1,090,098
– 236,614
32,406
317,239
32,406 553,853
78,790 1,643,951
17
Directors’ Report
(Cont.)
Short‑term employee benefits
Post‑
employ‑
ment
benefits
Other
long‑term
employee
benefits
Share‑based payments
Year ended
31 July 2022
Directors
Kevin Moore
Louis Mittoni
Nicki Anderson1
John Tripodi
Sub‑Totals
Executives
Howard Abbey2
Wei Si3
Lian Yu
Sub‑Totals
TOTALS
Salary
and fees
$
Cash
bonus
$
Non‑
monetary
benefits
$
Super‑
annuation
$
Long
service
leave
$
Termi‑
nation
Benefits
$
90,000
355,533
60,000
60,000
565,533
154,690
69,744
207,272
431,706
997,239
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,038
27,693
6,025
6,025
–
9,947
–
–
48,781
9,947
18,858
7,057
20,089
46,004
94,785
–
–
9,266
9,266
19,213
–
–
–
–
–
30,931
–
–
30,931
Shares
$
20,000
–
–
–
20,000
–
–
–
–
Share
Appre‑
ciation
Rights
$
Share
Options
$
Total
$
–
–
–
–
–
–
–
–
–
–
95,403
214,441
477,016
870,189
30,000
96,025
30,000
96,025
632,419 1,276,680
–
–
204,479
76,801
43,209
279,836
43,209
561,116
675,628 1,837,796
30,931
20,000
1. Appointed 25 October 2018, resigned 31 August 2022.
2. Appointed 2 May 2018, resigned 8 April 2022.
3. Employed and appointed Chief Financial Officer and Company Secretary 28 March 2022.
Fixed
remuneration
Remuneration linked
to performance*
2023
2022
2023
2022
100%
96.3%
100%
100%
100%
–
95.8%
95.3%
100%
100%
100%
100%
–
100%
100%
100%
–
3.7%
–
–
–
–
4.2%
4.7%
–
–
–
–
–
–
–
–
Directors
Kevin Moore
Louis Mittoni (resigned 26 July 2023)
John Tripodi
Nicki Anderson (resigned 31 August 2022)
Silvio Salom
Executive Officers
Howard Abbey
Wei Si
Lian Yu
* Represents cash bonus.
18
Toys“R”Us ANZ Limited
Annual Report 2023
Short term incentives
In 2023, STI payments made in the form of cash bonus were $51,250 (2022: $nil).
During the year, 100% of the eligible cash bonus was paid.
Long term incentives
In 2023, LTI payments of $78,790 were made in the form of share options (2022: $675,628).
Service Agreements
Remuneration and other terms of appointment and employment for the Chair, Executive Director, Non‑Executive
Directors and the other executives are formalised in service agreements/employment letters. In the case
of the Executive Director and other executives, these allow for the provision of performance‑related short‑term
incentives and, where eligible, participation in the Toys“R”Us ANZ Limited Employee Incentive Plan.
Additionally, other benefits including car allowances can be provided to all Key Management Personnel.
Other major provisions of the service agreements relating to the remuneration of Directors and Executives
are set out below:
Kevin Moore – Chair and Independent Non‑Executive Director
• Term of the agreement – full‑time and no specific term.
• Payment of a termination benefit on early termination by the employer is not applicable.
John Tripodi – Non‑Executive Director
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer is not applicable.
Nicki Anderson – Non‑Executive Director (resigned 31 August 2022)
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer is not applicable.
Louis Mittoni – Executive Director and Chief Executive Officer (resigned 26 July 2023)
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer, other than for gross misconduct,
equal to six months base salary.
• Notice period six months.
Silvio Salom – Non‑Executive Director (appointed 11 November 2022)
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer is not applicable.
Kelly Humphreys – Non‑Executive Director (appointed 5 October 2023)
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer is not applicable.
19
Directors’ Report
(Cont.)
Wei Si – Chief Financial Officer
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer, other than for gross misconduct,
equal to three months base salary.
• Notice period three months.
Lian Yu – Chief Operating Officer
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer, other than for gross misconduct,
equal to six months base salary.
• Notice period six months.
Penny Cox – Chief Executive Officer and Managing Director
• Term of the agreement – full‑time permanent and no specific term.
• Payment of a termination benefit on early termination by the employer, other than for gross misconduct,
equal to six months base salary.
• Notice period six months.
Key management personnel equity holdings
The number of ordinary shares and options/rights over ordinary shares in the company held during the
financial year by each director of Toys”R”Us ANZ Limited and each of the key management personnel
of the consolidated entity, including their related entities, are set out below.
Ordinary shares
Year ended
31 July 2023
Directors
Kevin Moore
Louis Mittoni1
John Tripodi
Nicki Anderson2
Silvio Salom3
Sub‑Total
Executives
Lian Yu
Wei Si
Sub‑Total
Grand Total
Balance at
the start of
the year
Shares
purchased
on market
Shares
Issued as
Remuner‑
ation
Balance at
the end of
the period
Balance
held
nominally
Other4
3,027,462
1,005,000
291,455,818
110,803
1,075,467
–
–
–
–
–
–
–
–
–
4,032,462
4,032,462
(291,455,818)
–
–
–
110,803
110,803
1,225,490
(2,300,957)
–
–
–
24,825,000
24,825,000
24,825,000
295,669,550
1,005,000
1,225,490 (268,931,775)
28,968,265
28,968,265
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
295,669,550
1,005,000
1,225,490 (268,931,775)
28,968,265
28,968,265
1. Resigned on 26 July 2023.
2. Resigned on 31 August 2022.
3. Appointed on 11 November 2022.
4. Represents appointment/resignation during the year.
20
Toys“R”Us ANZ Limited
Annual Report 2023
Year ended
31 July 2022
Directors
Kevin Moore
Louis Mittoni
John Tripodi
Nicki Anderson
Balance at
the start of
the year
Shares
purchased
on market
Shares
Issued as
Remuner‑
ation
Balance at
the end of
the period
Balance
held
nominally
Other1
2,759,352
291,205,818
110,803
1,075,467
160,000
250,000
–
–
108,110
–
–
–
–
–
–
–
3,027,462
3,027,462
291,455,818
291,455,818
110,803
110,803
1,075,467
1,075,467
Sub‑Total
295,151,440
410,000
108,110
– 295,669,550 295,669,550
Executives
Howard Abbey1
Lian Yu
Sub‑Total
Grand Total
454,545
–
454,545
–
–
–
–
–
–
(454,545)
–
(454,545)
–
–
–
–
–
–
295,605,985
410,000
108,110
(454,545) 295,669,550 295,669,550
1. Resigned on 8 April 2022.
Share options
The tables below include balances for unlisted options.
Year ended
31 July 2023
Directors
Kevin Moore1
Louis Mittoni1,2
Nicki Anderson
John Tripodi
Executives
Lian Yu
Totals
Balance at
the start of
the year
Granted
during the
year
Expired
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
3,388,293
1,726,172
16,941,463
8,630,860
–
–
1,691,956
–
–
–
22,021,712
10,180,306
–
–
–
–
–
–
–
5,114,465
5,114,465
(25,572,323)
–
–
–
–
–
–
–
–
–
1,691,956
1,691,956
(25,572,323)
6,806,421
6,806,421
Issue Date 14 December 2021, Vesting Date 14 December 2021, Issue Price $0.166, Expiry Date 1 November 2024.
1.
2. Resigned on 26 July, share options was forfeited upon resignation.
21
Directors’ Report
(Cont.)
Year ended
31 July 2022
Directors
Kevin Moore1
Louis Mittoni1
Nicki Anderson
John Tripodi
Executives
Lian Yu
Totals
Balance at
the start of
the year
Granted
during the
year
Expired
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
1,691,575
1,696,718
8,457,875
8,483,588
–
–
1,691,956
–
–
–
11,841,406
10,180,306
–
–
–
–
–
–
–
–
–
–
–
–
3,388,293
3,388,293
16,941,463
16,941,463
–
–
1,691,956
–
–
–
22,021,712
20,329,756
1.
Issue Date 14 December 2021, Vesting Date 14 December 2021, Issue Price $0.166, Expiry Date 1 November 2024.
Service Rights
Year ended
31 July 2023
Directors
Nicki Anderson1
John Tripodi
Totals
Balance at
the start of
the year
Granted
during the
year
Exercised
during the
year1
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
500,000
500,000
1,000,000
–
–
–
(347,489)
(152,511)
–
–
–
–
500,000
500,000
(347,489)
(152,511)
500,000
500,000
1. Service right was exercised and converted to 1,225,490 equity shares during the year.
Year ended
31 July 2022
Directors
Nicki Anderson1
John Tripodi1
Totals
Balance at
the start of
the year
Granted
during the
year1
Exercised
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
–
–
–
500,000
500,000
1,000,000
–
–
–
–
–
–
500,000
500,000
1,000,000
–
–
–
1. Ms Anderson and Mr Tripodi were each issued 240,000 Share Appreciation Rights (SARs) under the Employee Incentive
Plan 2020 during FY 2021. These SARs were cancelled and replaced by Service Rights on 14 December 2021. Grant Date
14 December 2021, Vesting Date 31 Jul 2023, Expiry Date 14 Dec 2036, Exercise Price is $Nil. Grant Value for each tranche
of Share Rights to be issued to Ms Anderson and Mr Tripodi is $30,000, and the number of Shares these convert to shall
be determined by the Share Price on the relevant Vesting Date. If the person ceases to hold the office of non‑executive
director of the Company for any reason prior to 31 July 2023, then they will forfeit Service Rights in the proportion that
the period following the date of cessation of holding the office of NED until 31 July 2023 bears to 3 years. Any Service
Rights that are not forfeited will vest.
22
Toys“R”Us ANZ Limited
Annual Report 2023
Other statutory disclosures
Loans to key management personnel and their related parties
During FY23 and to the date of this report, the Group made no loans to directors and other KMP.
As at 31 July 2023, Louis Mittoni owed the Company $28,575 (2022: $16,719) related to personal expenses
incurred on a company credit card.
Transactions with Key Management Personnel
During FY23 there were no other reportable transactions between the Group and its directors, KMP,
or their personally related entities (Related Parties).
This concludes the Remuneration report which has been audited.
23
Directors’ Report
(Cont.)
Unissued shares
As at the date of this report and at the reporting date, there were 6,806,421 unissued ordinary shares under
options. The number of options and rights over ordinary shares in the Company held during and after the end
of the financial year by each director of Toys“R”Us ANZ Limited and each of the key management personnel
(KMP) of the Group, including their related entities, are set out in the remuneration report.
Shares issued on the exercise of options
During the financial year, there were no employees or executives that exercised options to acquire ordinary
shares in the Company.
Indemnity of and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there
is a lack of good faith.
During the financial year the Company paid a premium in respect of a contract to insure the directors and
executives of the Company and of any related body corporate against a liability to the extent permitted
by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability
and the amount of the premium.
Indemnity and insurance of auditor
To the extent permitted by law, the Company has agreed to indemnify its auditors, RSM Australia Partners,
as a part of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount), other than a loss arising from RSM Australia Partners negligent, wrongful or wilful acts
or omissions. No payment has been made to indemnify RSM Australia Partners during the financial year or
up to the date of this report.
Proceedings on behalf of the Company
No person has applied to the Court under section 327 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
Non‑audit services
Details of amounts paid or payable to the auditor for non‑audit services provided during the year by the
auditor are outlined in Note 30 to the financial statements. The directors are satisfied that the provision of
non‑audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
24
Toys“R”Us ANZ Limited
Annual Report 2023
The Directors are of the opinion that the services as disclosed in Note 30 to the financial statements do not
compromise the external auditor’s independence, based on advice received from the Audit & Risk Committee,
for the following reasons:
• all non‑audit services have been reviewed and approved to ensure that they do not impact the integrity
and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in Code
of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
& Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a
management or decision‑making capacity for the Company, acting as advocate for the Company
or jointly sharing economic risks and rewards.
Officers of the Company who are former partners
of RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners.
Rounding of amounts
The company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’
Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument
amounts in the directors’ report and the financial statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Auditor’s independence declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
is set out on the following page.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the
Corporations Act 2001.
On behalf of the directors,
Kevin A Moore
Chair of the Board
Gold Coast
28 September 2023
25
Auditor’s Independence Declaration
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Toys“R”Us ANZ Limited and its controlled entities for the
year ended 31 July 2023, I declare that, to the best of my knowledge and belief, there have been no contraventions
of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Dated: 28 September 2023
Melbourne, Victoria
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
26
Toys“R”Us ANZ Limited
Annual Report 2023
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
for the year ended 31 July 2023
Continuing operations
Revenue
Cost of goods sold
Gross profit
Other income
Warehouse and distribution expenses
Marketing and selling expenses
Employee benefits expenses
Administration expenses
Earnings before interest, taxation,
depreciation and amortisation (EBITDA)
Finance costs
Impairment of intangible assets
Depreciation and amortisation expenses
Loss before income tax expense from continuing operations
Income tax (expense)/benefit
Note
31‑Jul‑23
$’000
31‑Jul‑22
$’000
6
7
7
7
14
7
8
32,143
(27,008)
5,135
399
(2,012)
(4,191)
(5,502)
(2,836)
(9,007)
(2,561)
(11,128)
(2,915)
(25,611)
316
37,927
(29,956)
7,971
3
(2,374)
(5,806)
(6,329)
(1,942)
(8,477)
–
(14,500)
(1,594)
(24,571)
295
Loss after income taxes from continuing operations
(25,295)
(24,276)
Discontinued operations
Profit/(loss) after income taxes from discontinued operations
Loss for the year attributable to the members
of Toys“R”Us ANZ Limited
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive (loss)/income for the year (net of tax)
Total comprehensive loss for the year attributable to the
members of Toys“R”Us ANZ Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Earnings per share
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
Earnings per share – continuing operations
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
Earnings per share – discontinued operations
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
5
(7,363)
(483)
(32,658)
(24,759)
(235)
(235)
20
20
(32,893)
(24,739)
(25,295)
(7,598)
(32,893)
(24,256)
(483)
(24,739)
(3.78)
(3.78)
(2.93)
(2.93)
(0.85)
(0.85)
(2.89)
(2.89)
(2.83)
(2.83)
(0.06)
(0.06)
21
21
21
21
21
21
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes. Consolidated Statement of Financial Position as at 31 July 2023.
27
Consolidated Statement
of Financial Position
as at 31 July 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets of disposal group held for sale
Total current assets
Non‑current assets
Property, plant and equipment
Goodwill and other intangibles
Right‑of‑use assets
Other non‑current assets
Total non‑current assets
Total Assets
Current Liabilities
Trade payables
Borrowings
Contract liabilities/deferred revenue
Employee benefits
Provision for restructuring
Lease liabilities
Other current liabilities
Liabilities directly associated with disposal group held for sale
Total current liabilities
Non‑current liabilities
Borrowings
Employee benefits
Deferred tax
Lease liabilities
Total non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total Equity
Note
25 (a)
9
10
11
5 (c)
13
14
12
11
16
17
5 (e)
18
19
5 (d)
16
17
8 (f)
18
20
20
31‑Jul‑23
$’000
31‑Jul‑22
$’000
1,766
837
4,905
208
7,716
3,119
12,538
794
9,851
679
23,862
–
10,835
23,862
2,767
6,899
11,167
2,935
23,768
34,603
3,405
12,084
114
460
280
576
2,044
18,963
1,565
20,528
526
9
738
11,284
12,557
33,085
1,518
2,384
21,447
–
3,763
27,594
51,456
3,263
–
422
393
–
281
1,884
6,243
–
6,243
10,000
11
1,054
–
11,065
17,308
34,148
292,920
(291,878)
476
1,518
292,965
(260,958)
2,141
34,148
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
28
Toys“R”Us ANZ Limited
Annual Report 2023
Consolidated Statement
of Changes in Equity
for the year ended 31 July 2023
Issued
Capital
$’000
Note
Accum‑
ulated
Losses
$’000
Foreign
Currency
Translation
Reserve
$’000
Equity
settled
Employee
Benefits
Reserve
$’000
Total
$’000
1,454
55,800
Balance at 31 July 2021
Loss after income taxes
for the year
Other comprehensive income
for the year, net of taxes
Total comprehensive
income/(loss)
Issue of ordinary shares,
net of transaction costs
Issue of share appreciation/
service rights (net)
Issue of employee options
Balance at 31 July 2022
Loss after income taxes
for the year
Other comprehensive income
for the year, net of taxes
Total comprehensive
income/(loss)
Purchase of
unmarketable parcels
Issue of stock warrants
Issue of options
Options forfeited/cancelled
Issue of share appreciation/
service rights (net)
Issue of employee options
290,545
(236,199)
–
–
–
(24,759)
–
(24,759)
20
2,420
–
–
–
–
–
292,965
(260,958)
–
–
20
20
–
–
–
20
–
–
–
–
(32,658)
–
(234)
(32,658)
(234)
20
(107)
–
–
–
62
–
20
–
–
–
1,738
–
–
–
–
–
–
–
–
–
–
–
–
46
621
2,121
–
–
–
–
113
131
(1,738)
57
6
690
Balance at 31 July 2023
292,920
(291,878)
(214)
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
(24,759)
20
(24,739)
2,420
46
621
34,148
(32,658)
(234)
(32,892)
(107)
113
131
–
119
6
1,518
29
Consolidated Statement of Cash Flows
for the year ended 31 July 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Receipts from other income (including government grants)
Payments to suppliers (inclusive of GST)
Payments to employees
Cash utilised in operations
Income taxes refunded
Interest and other costs of finance paid
Net cash outflow from operating activities
Cash flows from investing activities
Interest and other investment income received
Payments for plant and equipment
Payments for intangible assets
(Receipt)/Payments for security deposits
Proceeds from disposal of property, plant and equipment
Net cash inflow/(outflow) from investing activities
Cash Flows from Financing Activities
Proceeds from borrowings
Repayment of lease liabilities
Payments for buyback of unmarketable parcels
Payments for share issue costs
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Note
Year ended
31‑Jul‑23
Year ended
31‑Jul‑22
$’000
$’000
40,542
347
43,746
–
(44,062)
(48,680)
(6,844)
(10,017)
–
(2,448)
(5,980)
(10,914)
12
–
25(c)
(12,465)
(10,902)
56
(1,014)
(16)
828
9
(137)
2,610
(673)
(107)
–
1,830
(10,772)
12,538
1,766
3
(980)
(33)
(2,629)
6
(3,633)
10,000
(254)
–
(11)
9,735
(4,800)
17,338
12,538
Cash and cash equivalents at the end of the year
25(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
30
Toys“R”Us ANZ Limited
Annual Report 2023
Notes to the Consolidated
Financial Statements
for the year ended 31 July 2023
NOTE 1: Significant accounting policies
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with
other requirements of the law. The financial statements comprise the consolidated financial statements
of the Group.
For the purpose of preparing the consolidated financial statements the Company is a for profit entity.
Accounting Standards include Australian Accounting Standards (AASB). Compliance with Australian
Accounting Standards ensures that the financial statements and notes comply with International
Financial Reporting Standards (IFRS).
Basis of preparation
The financial report has been prepared on the basis of historical cost, except for derivative financial
instruments that have been measured at fair value. Cost is based on the fair values of the consideration
given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise stated.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group
only. Supplementary information about the parent entity is disclosed in Note 31.
Going concern basis of accounting
The financial report has been prepared on the going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and the discharge of liabilities in the normal course of business.
As disclosed in the financial report, the Group has incurred a net loss after income tax of $32.7 million and has
cash outflows from operating activities of $12.5 million for the year ended 31 July 2023, and as of that date,
the Group’s current liabilities exceeded its current assets by $9.7 million.
These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will
continue as a going concern and therefore whether it will realize its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report.
The Directors believe that there are reasonable grounds to believe that the Group will be able to continue
as a going concern, after consideration of the following factors:
• The Group holds cash and cash equivalents of $1.8 million as at 31 July 2023;
• The Group has an undrawn facility of $3.5 million on the term loan to support its working capital and
capital expenditure requirements;
• The Group has successfully raised $1.3 million in capital from existing and new investors in August 2023
and intends to raise additional capital in the next 6‑12 months;
• As disclosed in Note 35 Subsequent events, the Company received a letter from the lender waiving the
requirement to comply with the financial covenants of the facility agreement for the period ended
31 July 2023; and
• The budget and cashflow forecast prepared by the Group for the twelve‑month period from the date
of signing the financial statements, which are based on the directors’ estimates and assumptions about
certain economic factors, and the operating and trading performance of the Group, support the Directors’
assertion, and suggest that the group has cash and other financial resources sufficient to support its
operations for the relevant period.
31
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is
appropriate to adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded
assets or liabilities that might be necessary if the Group does not continue as a going concern.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries), together referred to as “the Group” in these financial statements.
Control is achieved when the Company:
• Has the power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Consolidation
of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company
losses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss and other comprehensive income
from the date the Company gains control until the date the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non‑controlling interests. Total comprehensive income of subsidiaries is attributed to the
owners of the Company and to the non‑controlling interests even if this results in the non‑controlling interest
having a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non‑controlling interest in the subsidiary together with any cumulative translation differences recognised in
equity. The Group recognises the fair value of the consideration received and the fair value of any investment
retained together with any gain or loss in profit or loss.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra‑Group assets and liabilities, equity, income and expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on
the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM
is responsible for the allocation of resources to operating segments and assessing their performance.
32
Toys“R”Us ANZ Limited
Annual Report 2023
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates. Financial statements are presented in
Australian dollars, which is Toys“R”Us ANZ Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year‑end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement, except when deferred in equity
as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non‑monetary items, such as equities held at fair value through profit or loss,
are reported as part of the fair value gain or loss.
(iii) Group companies
The results and financial position of all the Group entities, (none of which has the currency of a
hyperinflationary economy), that have a functional currency different from the presentation currency,
are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of that balance sheet;
•
income and expenses for each profit or loss presented are translated at the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other currency instruments designated as hedges of such investments, are taken to
equity. When a foreign operation is sold or borrowings repaid, a proportionate share of such exchange
differences are recognised in the profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods to a customer. Revenue arises mainly from the sale of goods
to customers.
To determine whether to recognise revenue, the Group follows a 5‑step process:
1.
Identifying the contract with a customer;
2.
Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when/as performance obligation(s) are satisfied.
33
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
(i) Sale of Goods
The Group generates the majority of its revenue from the sales of goods. Sale of goods is recognised when
the customer obtains control of the goods. Revenue from the sale of goods is recognised on delivery of goods
to the customer.
(ii) Government Grants
Government grants relating to costs are deferred and recognised in profit and loss over the period necessary
to match them with the costs that they are intended to compensate. Government payments received in
relation to COVID‑19 have been recognised under other income.
(iii) Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
(i) Current tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based
on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
(ii) Deferred tax
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be
applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted
or substantively enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred
tax assets are recognised to the extent that it is probable that there are future taxable profits available
to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they
relate to the same taxable authority on either the same taxable entity or different taxable entities which
intend to settle simultaneously.
(iii) Current and deferred tax for the period
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
34
Toys“R”Us ANZ Limited
Annual Report 2023
(iv) Tax Losses
A deferred tax asset in respect to tax losses is only recognised where there is a reasonable certainty that
future taxable profits will be guaranteed. Management assesses continuity of ownership test and same
business test hurdles bi‑annually.
(v) Tax Consolidation
The company and its wholly‑owned Australian resident entities are part of a tax‑consolidated Group
under Australian taxation law. Toys“R”Us ANZ Limited is the head entity in the tax‑consolidated Group.
Tax expense/revenue, deferred tax liabilities and deferred tax assets arising from temporary differences
of the members of the tax‑consolidated Group are recognised in the separate financial statements of the
members of the tax‑consolidated Group using the “separate taxpayer within Group” approach by reference
to the carrying amounts in the separate financial statements of each entity and the tax values applying
under tax consolidation.
Due to the existence of a tax funding arrangement between the entities in the tax‑consolidated Group,
amounts are recognised as payable to or receivable by the company and each member of the Group in
relation to the tax contribution amounts paid or payable between the parent entity and the other members
of the tax‑consolidated Group in accordance with the arrangement. Further information about the tax
funding arrangement is detailed in Note 8 to the financial statements.
Discontinued operations and non‑current assets/disposal groups classified
as held for sale
A discontinued operation is a component of the Group’s business, the operations, and cash flows of which
can be clearly distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographical area of operations;
is part of a single co‑ordinated plan to dispose of a separate major line of business or geographical
area of operations; or
is a subsidiary acquired exclusively with a view to re‑sell.
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria
to be classified as held‑for‑sale, if earlier. When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and other comprehensive income is re‑presented as if the operation
had been discontinued from the start of the comparative year.
Non‑current assets and assets of disposal groups are classified as held for sale if their carrying amount will
be recovered principally through a sale transaction rather than through continued use. They are measured
at the lower of their carrying amount and fair value less costs of disposal. For non‑current assets or assets
of disposal groups to be classified as held for sale, they must be available for immediate sale in their present
condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non‑current assets and
assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent
increases in fair value less costs of disposal of a non‑current assets and assets of disposal groups, but
not in excess of any cumulative impairment loss previously recognised.
Non‑current assets are not depreciated or amortised while they are classified as held for sale. Interest and
other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non‑current assets classified as held for sale and the assets of disposal groups classified as held for sale
are presented separately on the face of the statement of financial position, in current assets. The liabilities of
disposal groups classified as held for sale are presented separately on the face of the statement of financial
position, in current liabilities.
35
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
Current and non‑current classification
Assets and liabilities are presented in the statement of financial position based on current and
non‑current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets
are classified as non‑current.
A liability is classified as current when: it is either expected to be settled in the Group’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting
period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after
the reporting period. All other liabilities are classified as non‑current.
Deferred tax assets and liabilities are always classified as non‑current.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits 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 are subject to an insignificant risk of changes in value. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method less any allowances for expected credit losses. Trade receivables are generally
due for settlement within 30‑60 days. The Group has applied the simplified approach to measure expected
credit losses which uses a lifetime expected loss allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost less any allowance for expected credit losses.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items
of stock on the basis of weighted average costs. Cost comprises of direct materials and delivery costs, import
duties and other taxes. Costs of purchased inventory are determined after deducting rebates and discounts
received or receivable. Net realisable value represents the estimated selling price less the carrying value of
inventory and costs necessary to make the sale.
Stock write downs occur where the estimated selling price of stock, in the ordinary course of business, is
less than the estimated costs of completion and costs necessary to make the sale. Excess stock levels are
reviewed on a regular basis, where discussions with the sales teams are undertaken.
Derivative financial instruments
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risk,
including forward contracts comprising foreign exchange forward contracts and options. Further details of
derivative financial instruments are disclosed in Note 26 to the financial statements.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re‑measured to their fair value at each reporting date. The resulting gain or loss is recognised in
profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which
36
Toys“R”Us ANZ Limited
Annual Report 2023
event, the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The Group
designates certain derivatives as either hedges of the fair value of recognised assets or liabilities or firm
commitments (fair value hedges), or hedges of highly probable forecast transactions or hedges of foreign
currency risk of firm commitments (cash flow hedges).
The fair value of hedging derivatives is classified as a current asset or current liability if the remaining
maturity of the hedge relationship is less than 12 months and as a non‑current asset or a non‑current liability
if the remaining maturity of the hedge relationship is more than 12 months.
Financial assets
(i) Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through profit or loss, which are measured initially at fair value.
Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
(ii) Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
(iii) Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective
as hedging instruments, are classified into the following categories upon initial recognition:
•
•
financial assets at amortised cost;
financial assets at fair value through profit or loss (FVPL).
Classifications are determined by both:
• The entity’s business model for managing the financial asset;
• The contractual cash flow characteristics of the financial assets.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
(iv) Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments.
37
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
(v) Impairment of financial assets
AASB 9’s impairment model uses more forward‑looking information to recognize expected credit losses – the
‘expected credit losses (ECL) model’. The application of the impairment model depends on whether there has
been a significant increase in credit risk.
The Group considers a broader range of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, reasonable and supportable forecasts that affect
the expected collectability of the future cash flows of the instrument.
In applying this forward‑looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition
or that have low credit risk (‘Stage 1’); and
financial instruments that have deteriorated significantly in credit quality since initial recognition and
whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12‑month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’
are recognised for the second category.
Measurement of the expected credit losses is determined by a probability‑weighted estimate of credit losses
over the expected life of the financial instrument.
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes
expenditure that is directly attributable to the acquisition of the item.
Depreciation is calculated on a straight‑line basis to write off the net cost of each item of plant and
equipment over the shorter of its expected useful life and the lease term. Estimates of remaining useful
lives are made on a regular basis for all assets, with annual reassessments for major items.
The cost of improvements to or on leasehold properties is amortised over the estimated useful life of the
improvement to the Group. The expected useful lives are as follows:
Plant and equipment:
2.5‑10 years
Leasehold improvements:
3‑5 Years
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds
are taken to profit or loss.
Right‑of‑use Assets
A right‑of‑use asset is recognised at the commencement of a lease. The right‑of‑use asset is measured at
cost, which comprises the initial amount of the lease liability adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred and, except where included in the cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset and restoring the site or asset.
Right‑of‑use assets are depreciated on a straight‑line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right‑of‑use assets
are subject to impairment or adjusted for any remeasurement of lease liabilities.
38
Toys“R”Us ANZ Limited
Annual Report 2023
The Group has elected not to recognise a right‑of‑use asset and corresponding lease liability for short‑term
leases with terms of 12 months or less and leases of low‑value assets. Lease payments on these assets are
expensed to profit and loss as incurred.
Intangible assets
Intangible assets acquired separately or in a business combination are initially measured at cost.
The cost of an intangible asset acquired in a business combination is its fair value as at the date of
acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated
amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the
year in which the expenditure is incurred. Amortisation of the Group’s intangible assets is recognised on
a straight‑line basis over their estimated useful lives. The estimated useful life and amortisation method
are reviewed at the end of each annual reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested
annually for impairment, or more frequently if events or changes in circumstances indicate that it might
be impaired and is carried at cost less accumulated impairment losses. Impairment losses on goodwill
are taken to profit or loss and are not subsequently reversed.
Intangible assets are amortised, based on the useful lives assessed by management, on a straight‑line
basis, as follows:
• Software
• Customer database
• Patents
• Trademarks
3 years
5 years
20 years
3‑5 years
•
Licenced distribution agreements
1‑20 years
Impairment of tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the CGU to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated
to individual CGU, or otherwise they are allocated to the smallest group of CGU for which a reasonable
and consistent allocation basis can be identified.
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment, or more frequently if events or changes in circumstances indicate that
they might be impaired. Other non‑financial assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of fair value less cost to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre‑tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its
recoverable amount. An impairment loss is recognised immediately in the profit and loss.
39
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset (CGU) in prior years.
Trade payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year for which an invoice has been processed through the Group’s payables system and the amount
remains unpaid.
The amounts are unsecured and usually paid within 30 to 90 days of recognition. The average credit period on
purchases of certain goods from international supplier’s ranges from 4 weeks to 4 months. There is no interest
charged on trade payables. The Group has financial risk management policies in place to ensure that, as
often as possible, all payables are paid within a reasonable timeframe.
Contract liabilities
Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are
recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its
unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or
services to the customer.
Licence guarantee commitments
The Group enters into royalty agreements. The terms of the royalty agreements require minimum levels of
royalty payments to be offset against the minimum guarantees received at the start of the agreement. If,
after calculating the net contribution relating to the products sold under the specific agreement, there is a
shortfall between the minimum guarantee and the actual royalty derived (or forecast to be derived in future
periods) from the reported sales the agreement is impaired. Net contribution is calculated after taking into
account net sales revenue, cost of goods sold, applicable royalties and direct selling costs. If the royalty
shortfall cannot be recovered from the resulting net contribution a provision is made through profit or loss.
Borrowings
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include:
interest on bank overdrafts and short‑term and long‑term borrowings;
finance lease charges; and
certain exchange differences arising from foreign currency borrowings.
•
•
•
40
Toys“R”Us ANZ Limited
Annual Report 2023
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be made over the term of the lease, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s
incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable,
variable lease payments that depend on an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain
to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an
index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an index
or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the corresponding right‑of‑use asset, or to
profit or loss if the carrying amount of the right‑of‑use asset is fully written down.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation.
The amount recognised as a provision is a best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligations, its carrying
amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from
a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received
and the amount of the receivable can be measured reliably.
Employee benefits
(i) Wages and salaries annual leave and long service leave
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave
and long service leave where it is probable that settlement will be required and they are capable of being
measured reliably.
Liabilities recognised in respect of short‑term employee benefits expected to be settled within 12 months, are
measured at their nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months
are measured at the present value of the estimated future cash outflows to be made by the Group in respect
of services provided by employees up to reporting date. 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 reporting date on corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows.
(ii) Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
(iii) Profit sharing and bonus plans
Liabilities for profit sharing and bonus plans are expected to be settled within 12 months and are measured
at the amounts expected to be paid when they are settled.
41
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
(iv) Employee benefit on‑costs
Employee benefit on‑costs, including payroll tax, are recognised and included in employee benefit liabilities
and costs, when the employee benefits to which they relate are recognised as liabilities.
(v) Share‑based payments
Share‑based compensation benefits are provided to employees via the Company Employee Incentive Plan.
The fair value of options and performance and service share rights granted under the Company Employee
Incentive Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair
value is measured at grant date and recognised over the period during which the employees become
unconditionally entitled to the options (vesting period).
The fair value at grant date is independently determined using an appropriate option pricing model that
takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact
of dilution, the non‑tradeable nature of the option, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield, total shareholder performance hurdles and the risk‑free
interest rate for the term of the option.
The fair value of the options, performance and service share rights and schemes granted excludes the impact
of any non‑market vesting conditions (for example, profitability and sales growth targets). Non‑market
vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. At each balance sheet date, the entity revises its estimate of the number of options that are
expected to become exercisable. The employee benefit expense recognised each period takes into account
the most recent estimate.
Upon the exercise of options or performance and service share rights, the balance of the share‑based
payments reserve relating to those options is transferred within equity. The market value of shares issued to
employees for no cash consideration under the employee incentive plan is recognised as an employee benefits
expense with a corresponding increase in equity when the employees become entitled to the shares.
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non‑financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes, based on the methods as stated below. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
In estimating the fair value of an asset or liability, the Group uses market observable data to the extent it is
available. Where it is not available, the Group engages third party qualified valuers to perform the valuation.
The fair value of the asset or liability is the price that would be received to sell the asset or paid to transfer
the liability in an orderly transaction between market participants at measurement date.
The Group shall use valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.
To increase consistency and comparability in fair value measurements and related disclosures, the Group has
adopted the fair value hierarchy established in AASB 13 ‘Fair Value Measurement’ that categorises fair value
measurement into three levels:
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
42
Toys“R”Us ANZ Limited
Annual Report 2023
•
•
Level 2 fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the
asset or liability that are not based on observable market data (unobservable inputs).
Valuation techniques used to measure fair value shall be applied consistently. However, a change in a
valuation technique or its application (e.g. a change in its weighting when multiple valuation techniques
are used or a change in an adjustment applied to a valuation technique) is appropriate if the change
results in a measurement that is equally or more representative of fair value in the circumstances.
Financial instruments issued by the Group
(i) Equity instruments
Equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangement. Transaction costs arising on the issue of equity instruments are recognised
directly in contributed equity.
(ii) Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition‑date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount
of any non‑controlling interest in the acquiree. For each business combination, the non‑controlling interest in
the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net
assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the
Group assesses the financial assets acquired and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic conditions, the Group’s operating or
accounting policies and other pertinent conditions in existence at the acquisition‑date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition‑date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is
recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity.
The difference between the acquisition‑date fair value of assets acquired, liabilities assumed and any
non‑controlling interest in the acquiree and the fair value of the consideration transferred and the fair value
of any pre‑existing investment in the acquiree is recognised as goodwill. If the consideration transferred and
the pre‑existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on
the acquisition‑date, but only after a reassessment of the identification and measurement of the net assets
acquired, the non‑controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
43
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 1: Significant accounting policies (Cont.)
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively
adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the
measurement period, based on new information obtained about the facts and circumstances that existed at
the acquisition‑date. The measurement period ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Toys “R” Us ANZ
Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings 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 shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
• where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an item of expense; or
•
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the tax authority is included as a current asset or
liability in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the tax authority
are classified as operating cash flows.
Rounding of amounts
The company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’
Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument
amounts in the directors’ report and the financial statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
44
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 2: Application of new and revised Accounting Standards
2.1 Amendments to AASBs and the new Interpretation that are mandatorily effective
for the current year
In the current year, the Group has applied all amendments to AASBs issued by the Australian Accounting
Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after
1 August 2022.
2.2 Accounting Standards issued but not yet effective and not early adopted
Any new or amended Accounting Standard or Interpretations that are not yet mandatory have not been
early adopted.
Other amending accounting standards
Other amending accounting standards issued are not considered to have a significant impact on the financial
statement of the Group as the amendments provide either clarification of existing accounting treatment or
editorial amendments.
NOTE 3: Critical accounting judgments and key sources
of estimation uncertainty
In the application of the Group’s accounting policies, which are described in Note 1, the directors are required
to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
In addition to the key sources of estimation uncertainty on the going concern basis as disclosed in Note 1, the
following are the key assumptions concerning the future, and other key sources of estimation uncertainty at
the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
(i) Useful life and impairment of intangible assets
Management has assessed the useful life of intangibles on the following basis:
• Software – based on the licence or expected useful lives, not exceeding 3 years;
• Customer database – based on the expected churn rates;
• Patents and Trademarks – based on the contractual life of the patent/trademark, ranging from
10‑20 years; and
•
Licenced distribution agreements – based on the term of the agreement or the expected Brand product
life cycle, ranging from 1‑20 years.
Whilst the current useful lives are management’s best estimate, a periodic review is undertaken to ensure
that these remain appropriate.
45
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 3: Critical accounting judgments and key sources
of estimation uncertainty (Cont.)
The Group tests annually for intangibles assets with indefinite useful lives or when impairment indicators are
identified, whether intangible assets have suffered any impairment, in accordance with the accounting policy.
The recoverable amounts of cash‑generating units have been determined based on value‑in‑use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current
cost of capital and growth rates of the estimated future cash flows. The recoverable amounts of the other
intangible assets have been determined on a relief from royalty basis. These calculations require the use
of assumptions. A significant change to the assumptions affects the recoverable amount of the other
intangible assets.
(ii) Recoverability of inventory
The Group periodically assesses whether the net realisable value (NRV) of its inventories is reasonable in
light of changing market conditions within the retail sector and the Group’s reassessment of brand portfolio.
Whilst the Group has provided to recognise the best estimate for the amount for which its inventory will
be realised, the final amounts will be subject to the prevailing market conditions and may differ from the
amounts provided for. The Group’s assessment for inventory obsolescence for the reporting period was
on the below criteria:
If there is no purchase during the last 12 months, a 50% provision is allocated.
At management’s discretion, stock items which are deemed to become slow‑moving or aged inventory soon
after reporting period, a 50% provision is allocated.
(iii) Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss grouped based on days overdue and industry type and makes
assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent
sales experience and historical collection rates. The allowance for expected credit losses is calculated based
on the information available at the time of preparation. The actual credit losses in future years may be higher
or lower.
(iv) Taxation timing differences recognised as asset and deferral of tax liability
The amount of deferred tax asset in respect of revenue tax losses is determined based upon expected future
taxable income, and judgement as to the loss availability under the “continuity of ownership test”, and where
applicable the “similar business test”. Based on the current assessment, determined using budget forecasts
for FY2022, the Group has continued to not recognise an amount within the deferred tax asset for temporary
differences. Refer to Note 8 for details.
(v) Share‑based payment transactions
The Group measures the cost of equity‑settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using either the
Binomial or Black‑Scholes model taking into account the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions relating to equity‑settled share‑based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
46
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 4: Operating segments
Identification of reportable operating segments
The Group is organised into two operating segments based on differences in products sold: Business to
Consumer (B2C) and Business to Business (B2C). These operating segments are based on the internal reports
that are reviewed and used by the Board of Directors and KMP (who are identified as the Chief Operating
Decision Makers (‘CODM’)) to make strategic and operating decisions, in assessing business performance
and in determining the allocation of resources. There is no aggregation of operating segments.
The CODM reviews 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. The information reported to the CODM is on a monthly basis.
Information about products and services
The principal products of each of these operating segments are as follows:
• B2C – direct‑to‑consumer sale of consumer products (toys, hobby and baby goods); and
• B2B – wholesaling and distribution of IT products.
Intersegment transactions and balances are eliminated on consolidation. There were no inter‑segment
transactions during the year or account balances at 31 July 2023.
The directors have assessed that there are no major customers.
Operating segment Information
The Group’s operating segment information from continuing operations is as follows:
Year ended 31‑Jul‑23
Revenue
Other income
Cost of goods sold
Other expenses
EBITDA
Year ended 31‑Jul‑22
Revenue
Other income
Cost of goods sold
Other expenses
EBITDA
B2C
$’000
21,642
–
(18,819)
(10,618)
(7,795)
B2C
$’000
26,029
–
(20,569)
(10,701)
(5,257)
B2B
$’000
10,501
–
(8,189)
(1,497)
811
B2B
$’000
13,098
–
(9,388)
(1,295)
1,318
Corporate
$’000
–
399
–
(2,426)
(2,027)
Corporate
$’000
–
3
–
(4,438)
(4,435)
Total
$’000
32,143
399
(27,008)
(14,541)
(9,007)
Total
$’000
39,127
3
(29,957)
(16,510)
(8,477)
47
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 4: Operating segments (Cont.)
Reconciliation from segment reporting to net profit/(loss) after tax from
continuing operations
EBITDA
Depreciation, amortisation and impairment expenses
Finance costs (net)
Loss before income tax expenses
Income tax benefit/(expense)
Loss after income tax expense
Depreciation, amortisation and impairment expense by segment
B2C *
B2B
Corporate
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(9,007)
(14,043)
(2,561)
(25,611)
316
(8,477)
(16,094)
–
(24,571)
295
(25,295)
(24,276)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
12,692
15,966
–
1,351
–
128
14,043
16,094
* Includes impairment of goodwill of $11,128,000 (2022: 14,500,000).
Geographical information
The Group’s revenue from continuing operations are generated in Australia.
The Group’s non‑current assets are situated in Australia. The geographical non‑current assets below are
exclusive of, where applicable, financial instruments.
31‑Jul‑23
$’000
31‑Jul‑22
$’000
4,100
4,067
15,601
23,768
19,764
4,067
3,763
27,594
B2C
B2B
Corporate
Total
48
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 5: Discontinued operations and Disposal Group held for sale
During the current year, following a strategic review, the Board concluded to restructure its operations in order
to reduce its operating costs and has reached agreement in principle with TRU Kids Inc to facilitate an orderly
transition of the UK business and the transfer of its UK licence to TRU Kids Inc.
Consequent to the above, the UK business operations have been classified as discontinued operations and its
assets and liabilities have been classified as disposal group held for sale in accordance with AASB 5 Non‑current
Assets Held for Sale and Discontinued Operations.
The erstwhile Funtastic business continues to be disclosed as discontinued operations.
(a) Financial performance of discontinued operations
Revenue
Cost of Goods Sold
Warehouse and Distribution Expenses
Marketing and Selling Expenses
Employee benefits Expenses
Administration Expenses
Restructuring costs
Earnings/(loss) before interest, taxation, depreciation
and amortisation (EBITDA)
Finance costs
Depreciation and amortisation expenses
Impairment of intangible assets
Profit/(loss) before income taxes
Income tax expense
Profit/(loss) after income taxes from discontinued operations
(b) Cash flow information relating to discontinued operations
Net cash from/(used in) operating activities
Net cash from investing activities
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
from discontinued operations
Year ended
31 July 2023
$’000
Year ended
31 July 2022
$’000
5,278
(4,368)
910
(1,564)
(2,421)
(1,234)
(553)
(280)
1,200
(1,036)
164
(79)
(169)
(342)
(51)
–
(5,142)
(477)
–
–
(2,221)
(7,363)
–
(7,363)
–
(6)
–
(483)
–
(483)
Year ended
31 July 2023
$’000
Year ended
31 July 2022
$’000
(6,575)
–
814
149
–
(254)
(5,761)
(105)
49
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 5: Discontinued operations and Disposal Group held for sale
(Cont.)
(c) Assets of disposal group classified as held for sale
Trade and other receivables
Inventories
Other current assets
31 July 2023
$’000
31 July 2022
$’000
336
2,173
610
3,119
–
–
–
–
(d) Liabilities directly associated with assets classified as held for sale
Trade payables
Other current liabilities
(e) Restructuring costs
31 July 2023
$’000
31 July 2022
$’000
1,249
316
1,565
–
–
–
As at 31 July 2023, the Group has provided for an amount of $280,000 towards restructuring and legal costs
in association with exiting the UK operations and surrender of the UK licence. The targeted exit date is
31 January 2024.
Provision for restructuring costs
Carrying amount at the start of the year
Provisions recognised during the year
Provisions utilised during the year
Carrying amount at the end of the year
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
–
280
–
280
–
–
–
–
50
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 6: Revenue
From continuing operations
Revenues from contracts with customers
Gross revenue from the sale of goods
Total revenue from the sale of goods
Other Revenue
Total other revenue
Total revenue
Disaggregation of revenues
The disaggregation of revenue from contracts with customers from continuing
operations is as follows:
Operating segments
B2C
B2B
Timing of revenue recognition
Goods transferred at a point in time
Geographical regions
Australia
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
31,988
31,988
155
155
37,822
37,822
105
105
32,143
37,927
21,642
10,501
32,143
26,029
11,898
37,927
32,143
37,927
32,143
37,927
51
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 7: Profit/(loss) for the year
Profit/(loss) before income taxes from continuing operations includes the following specific expenses:
Other income
Interest from bank deposits
Rental income from sub‑lease of right‑of‑use assets
Total other income
Employee benefits expense
Other employee benefits
Post‑employment benefits – Defined contribution
superannuation expense
Share‑based payments
Total employee benefits expense
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable in lease liabilities
Other borrowing costs
Depreciation and amortisation expense
Depreciation of property, plant & equipment
Depreciation of right‑of‑use assets
Amortisation of other intangible assets
Total depreciation and amortisation expense
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
Note
56
343
399
3
–
3
4,836
5,625
410
256
5,502
1,045
1,053
463
2,561
613
1,086
1,216
2,915
378
668
6,671
–
–
–
–
533
–
1,061
1,594
13
12
14
52
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 8: Income tax
(a) Income tax (benefit)/expense
Tax expense comprises:
Current tax (benefit)/expense in respect of the current year
Adjustments for prior periods
Deferred tax expense comprises:
Deferred tax (benefit)/expense relating to the origination
and reversal of temporary differences
Total income tax (benefit)/expense
Income tax (benefit)/expense is attributable to:
Loss from continuing operations
Profit/(loss) from discontinued operations
Total tax (benefit)/expense
(b) Income tax recognised in profit or loss
The expense for the year can be reconciled to the accounting
profit/(loss) as follows:
Loss before income taxes from continuing operations
Loss before income taxes from discontinued operations
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(4,160)
(2,339)
–
(5)
(4,160)
(2,344)
3,844
(316)
(316)
–
(316)
2,049
(295)
(295)
–
(295)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(25,611)
(7,363)
(24,571)
(483)
(32,974)
(25,054)
Tax expense/(benefit) at the Australian tax rate of 25% (FY 2022: 25%)
(8,244)
(6,264)
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Impairment of goodwill and other intangible assets
Other expenses that are not deductible in determining taxable loss
Effect of current year’s unrecognised and unused tax losses and
temporary differences
Effect of reversal of deferred tax liabilities
Adjustment for prior period
Income tax (benefit)/expense recognised in profit or loss
3,337
32
4,875
(316)
–
(316)
3,625
552
2,087
(290)
(5)
(295)
53
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 8: Income tax (Cont.)
(c) Income tax recognised directly in equity
Deferred Tax
(d) Current tax balances
Current tax liabilities and assets
Income tax (payable)/receivable
(e) Deferred tax assets
31‑Jul‑23
$’000
31‑Jul‑22
$’000
–
–
31‑Jul‑23
$’000
31‑Jul‑22
$’000
–
–
No movements in deferred tax asset balances were recognised in the financial year 2022 (2021: $0).
The following deferred tax assets relating to tax losses
have not been brought to account as assets:
Tax losses – Revenue (gross)
Tax losses – Capital (gross)
Potential tax benefit on revenue losses at 25% (FY 2022: 25%)
Tax Losses and temporary differences
31‑Jul‑23
$’000
31‑Jul‑22
$’000
90,080
32,834
122,914
22,520
79,436
11,023
90,459
19,859
The Company has made losses in current and previous reporting periods. Following the assessment of the
probability of recovery, having considered forecast future taxable income and current tax legislation with
respect to carrying forward tax losses and temporary differences, the full balance of tax losses available
at 31 July 2023 has not been booked as a deferred tax asset in these financial statements.
(f) Deferred tax liabilities
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Customer database intangible assets
Movement in deferred tax liabilities
Opening balance
Additions through business combinations
Credited to profit or loss
Closing balance
54
31‑Jul‑23
$’000
31‑Jul‑22
$’000
738
1,054
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
1,054
–
(316)
738
1,344
–
(290)
1,054
Toys“R”Us ANZ Limited
Annual Report 2023
Unrecognised taxable temporary differences associated with investments and interests in subsidiaries
Under the tax law, the taxable profit made by a tax‑consolidated group in relation to an entity leaving
the group depends on a range of factors, including the tax values and/or carrying values of the assets and
liabilities of the leaving entities, which vary in line with the transactions and events recognised in each entity.
The taxable profit or loss ultimately made on any disposal of the investments within the tax‑consolidated
group will therefore depend upon when each entity leaves the tax‑consolidated group and the assets and
liabilities that the leaving entity holds at that time.
The Group considers the effects of entities entering or leaving the tax‑consolidated group to be a change of
tax status that is only recognised when those events occur. As a result, temporary differences and deferred
tax liabilities have not been measured or recognised in relation to investments remaining within the
tax‑consolidated group.
Tax consolidation
(i) Relevance of tax consolidation to the Group
The Company and its wholly owned Australian resident entities formed a tax‑consolidated Group with effect
from 1 January 2003 and are therefore taxed as a single entity from that date. The head entity within the
tax‑consolidated Group is Toys”R”Us ANZ Limited. The members of the tax‑consolidated Group are identified
in Note 24.
(ii) Nature of tax funding arrangement and tax sharing agreement
Entities within the tax‑consolidated Group have entered into a tax funding arrangement and a tax sharing
agreement with the head entity. Under the terms of the tax funding arrangement, Toys”R”Us ANZ Limited
and each of the entities in the tax‑consolidated Group have agreed to pay a tax equivalent payment to or
from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are
reflected in amounts receivable from or payable to the other entities in the tax consolidated Group.
The tax sharing agreement entered into between members of the tax‑consolidated Group provide for the
determination of the allocation of income tax liabilities between the entities should the head entity default
on its tax payment obligations or if an entity should leave the tax consolidated Group. The effect of the tax
sharing agreement is that each member’s liability for tax payable by the tax consolidated Group is limited
to the amount payable to the head entity under the tax funding arrangement.
55
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 9: Current assets – Trade and other receivables
Trade receivables
Allowance for expected credit losses
Other receivables
Total
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
811
(2)
809
28
837
779
(2)
777
17
794
The Group does not hold any collateral over these balances. The Group’s trade and other receivables have
been reviewed for indicators of impairment and include an allowance for expected credit losses as described
in Note 3 (iii). The Group has recognised $Nil in profit and loss in respect of the expected credit losses for the
year ended 31 July 2023 (FY 2022: gain of $75,340)
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit
loss rate
Carrying
amount
Allowance for expected
Credit losses
Consolidated
Not overdue
1 – 60 days overdue
91 – 90 days overdue
Over 90 days overdue
Total
2023
%
0%
0%
0%
9%
2022
%
0%
0%
0%
100%
2023
$’000
872
214
11
23
1,120
Movement in allowances for expected credit losses
Year ended 31 July 2023
Balance at beginning of year
Additional provisions recognised
Provisions reversed
Balance at end of the period
Year ended 31 July 2022
Balance at beginning of year
Additional provisions recognised
Provisions reversed
Balance at end of the period
2022
$’000
2023
$’000
2022
$’000
667
108
2
2
779
–
–
–
2
2
–
–
–
2
2
$’000
(2)
–
–
(2)
(2)
(1)
1
(2)
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality
of the trade receivable from the date credit was initially granted up to the reporting date. The concentration
of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe
that there is no further credit provision required in excess of the allowance for impairment.
56
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 10: Current assets – Inventories
Stock at cost
Less: Provision for obsolescence
Movement in provision for obsolescence
Balance at the beginning of the year
Additional provisions recognised
Provisions utilised/adjusted
Balance at the end of the year
NOTE 11: Other assets
Current
Prepaid expenses
Prepaid deposits for purchase of inventory
Non‑current
Bonds and security deposits
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
6,344
(1,439)
4,905
10,324
(473)
9,851
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(473)
(1,000)
34
(1,439)
(530)
–
57
(473)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
134
74
208
2,935
2,935
113
566
679
3,763
3,763
57
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 12: Right‑of‑use assets
Land and buildings
Right‑of‑use assets – at cost
Less: Accumulated depreciation
Reconciliation
Balance at 1 August 2022
Additions
Depreciation expense
Balance at 31 July 2023
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
12,252
(1,086)
11,167
–
12,252
(1,086)
11,167
–
–
–
–
–
–
–
The Company entered into to an arrangement with the landlord on 20 July 2021 for lease of office and warehouse
space in Clayton, Victoria for a period of ten years (with an option to extend for a further two terms of five
years each) with an objective to consolidate all of its office and warehouse operations. The lease commenced
in September 2022. The arrangement includes a lease incentive of $10.90 million, to be offset proportionally
against monthly rental payments over the initial period of lease.
As at 31 July 2023, the Group leased office and warehouse premises under agreements of less than one year.
These leases are either short‑term or low‑value, so have been expensed as incurred and not capitalised as
right‑of‑use assets.
NOTE 13: Non‑current assets – Property, Plant and equipment
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
2,997
(1,099)
1,898
951
(81)
870
2,932
(560)
2,372
16
(4)
12
2,768
2,384
Plant and equipment – at cost
Less: accumulated depreciation
Leasehold improvements – at cost
Less: accumulated depreciation
58
Toys“R”Us ANZ Limited
Annual Report 2023
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the
current financial year are set out below:
Year ended 31‑Jul‑23
Year ended 31‑Jul‑22
Plant and
equipment
$’000
Leasehold
improvements
$’000
Opening Balance
Additions during the year
Transfer
Disposal
Depreciation expense
Closing Balance
2,372
564
(498)
(6)
(534)
1,898
12
442
498
(3)
(79)
870
Total
$’000
2,384
1,006
–
(9)
(613)
2,768
Plant and
equipment
$’000
Leasehold
improvements
$’000
1,933
974
–
(6)
(529)
2,372
4
12
–
–
(4)
12
Total
$’000
1,937
986
–
(6)
(533)
2,384
NOTE 14: Non‑current Assets – Goodwill and Other Intangibles
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
Goodwill
Less: Accumulated Impairment
Software costs
Less: Accumulated amortisation
Customer database
Less: Accumulated amortisation
Other Licences and trademarks
Less: Accumulated amortisation
Total Goodwill and Other Intangibles
29,695
(25,628)
4,067
284
(245)
39
5,271
(2,810)
2,461
375
(43)
332
6,899
29,695
(14,500)
15,195
265
(220)
45
5,271
(1,756)
3,515
2,786
(94)
2,692
21,447
59
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 14: Non‑current Assets – Goodwill and Other Intangibles (Cont.)
Reconciliations
Reconciliations of the carrying amounts of each class of intangibles at the beginning and end of the current
financial year are set out below:
2023
Opening Balance
Additions
Disposals
Impairment
Amortisation
Closing Balance
Opening Balance
Additions
Disposals
Impairment
Amortisation
Closing Balance
Goodwill
$’000
Software
costs
$’000
Customer
Database
$’000
Other
Licences
and
Trademarks
$’000
15,195
–
–
(11,128)
–
4,067
45
16
–
–
(22)
39
3,515
–
–
–
(1,054)
2,461
2,692
–
–
(2,221)1
(139)
332
Goodwill
$’000
Software
costs
$’000
Customer
Database
$’000
29,695
–
–
(14,500)
–
15,195
24
31
(4)
–
(6)
45
4,480
–
–
–
(965)
3,515
Other
Licences
and
Trademarks
$’000
370
2,412
–
–
(90)
2,692
Total
$’000
21,447
16
–
(13,349)
(1,215)
6,899
Total
$’000
34,569
2,443
(4)
(14,500)
(1,061)
21,447
Impairment testing – Intangible Assets
Recoverability of software and licences has been assessed at the time of creation/subscription based on their
useful life and is then amortised accordingly. All software and licences are reviewed for their usefulness and
validity annually and impaired if required.
1. UK licence intangible asset (pertaining to B2C operating segment and CGU) with a net book value of $2,221,000
at 31 July 2023 has been fully impaired on the basis of the Group’s decision to transition out of and discontinue
the UK operations.
The Group has identified that there are two cash‑generating units which are aligned with the operating
segments disclosed in Note 4 and against which goodwill and other intangible assets are allocated
and tested.
60
Toys“R”Us ANZ Limited
Annual Report 2023
Goodwill
Business to consumer (B2C)
Business to business (B2B)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
–
4,067
4,067
11,128
4,067
15,195
The recoverable amount of the Group’s goodwill has been determined by a value‑in‑use calculation using a
discounted cash flow model, based on budgets and forecast for FY 2024 and FY 2025 approved by the Board
and extrapolated for a further 3 years using a steady rate, together with a terminal value. As at 31 July 2023,
the recoverable value of value‑in‑use calculation of the B2C CGU was below the carrying value of the CGU.
As a result of this analysis, the Group has recognised an impairment charge of $11.1 million in the current year
against goodwill. The impairment charge was recorded as a separate line in the statement of profit or loss.
Key assumptions
Key assumptions are those to which the recoverable amount of the cash‑generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model for the CGUs:
Key assumptions
Revenue and expenses for FY 2024 and FY 2025
Projected revenue and cost of sales growth rate
per annum after budget period
Projected operating costs and overheads increase
after budget period
Pre‑tax discount rate
Long‑term growth rate
B2C
Based on
approved
budgets
4%
(2022: 16%)
5%
(2022: 2.4%)
21.43%
(2022: 19.43%)
3%
(2022: 3%)
B2B
Based on
approved
budgets
3%
(2022: 3.5%)
5%
(2022: 2.4%)
21.43%
(2022: 2.4%)
3%
(2022: 2%)
The pre‑tax discount rates reflect management’s estimate of the time value of money and the Group’s
weighted average cost of capital, the risk‑free rate and the volatility of the share price relative to
market movements.
Management believes the projected revenue growth rates are prudent and justified, based on historical
performance of the businesses.
61
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 14: Non‑current Assets – Goodwill and Other Intangibles (Cont.)
Outcome of impairment assessment
Based on the above:
• an impairment charge of $11,128,000 (2022: 14,500,000) has been recognised, as the carrying amount
of goodwill exceeded its recoverable amount for the B2C CGU.
•
the recoverable amount of the B2B CGU exceeded the carrying amount by $518,000.
Sensitivity
As disclosed in Note 3, the directors have made judgements and estimates in respect of impairment testing
of goodwill.
Should these judgements and estimates not occur, the resulting goodwill carrying amount may decrease.
The sensitivities are as follows:
B2C
Any negative changes in the key assumptions on which the recoverable amount of goodwill is based,
would result in a further impairment charge for the B2C CGU.
B2B
• Revenue growth during the budget period would need to decrease by more than 7% before goodwill
would need to be impaired, with all other assumptions remaining constant.
• The pre‑tax discount rate would need to increase by 7% or more before goodwill would need to be
impaired, with all other assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable
amount of both the CGUs’ goodwill is based would not cause the CGUs’ carrying amount to exceed its
recoverable amount.
NOTE 15: Assets pledged as security
In accordance with the security arrangements of liabilities as disclosed in Note 16 to the financial statements,
all assets of the Group, present and future, have been pledged as security. The Group does not have the right
to sell or re‑pledge the assets.
62
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 16: Borrowings
Secured – at amortised cost
Current:
Term loan1
UK loan facility
Non‑current:
UK loan facility2
Total Current
1. Term loan
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
11,500
584
526
12,610
–
–
10,000
10,000
In July 2022, the Company obtained a three‑year secured loan facility of $15 million to support working capital and
capital expenditure requirements for the Group, including the acquisition of inventory. The loan is repayable at the end
of July 2025 and as at the balance sheet date, the Group had utilised $11.5 million of the total facility limit. The facility
is secured against all assets of the Group, both present and future.
Covenant breach
The term loan provided is subject to the provision of customary financial covenants, including maintaining specified
asset‑backed ratio, holding a minimum amount of cash balance and maintaining shareholders’ funds above a specified
amount. At 31 July 2023, the Group is in breach of the shareholders’ funds covenant.
The Company is in active communication with the lender in relation to the breach and has requested the lender for
a waiver of the shareholders’ funds covenant for the reporting period ended 31 July 2023.
Due to the breach of the covenant clause, the lender could be contractually entitled to request immediate repayment
of the outstanding loan facility amount of $11.5 million. However, the lender has not requested early repayment of the
loan. The outstanding loan facility balance is therefore presented as a current liability as at 31 July 2023. Refer Note
35 Subsequent Events for information on the waiver obtained from the lender subsequent to year‑end.
2. UK loan facility
During the year, the Company entered into a secured loan agreement on the 22 June 2023 with TRU Kids Inc (TRUK)
as lender for a commitment of up to USD$2 million (circa. AUD $3 million) for the UK business, in particular to support
working capital requirement related to the retail Toys “R” Us branded stores within WH Smith High Street Limited stores
in the UK. AUD $1.11 million (USD $0.75 million) was drawn as at 31 July 2023.
63
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 17: Employee benefits
Current
Employee benefits(i), (ii)
Total Current
Non‑current
Employee benefits(i)
Total Non‑current
Total
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
460
460
9
9
469
393
393
11
11
404
(i) The provision for employee benefits represents annual leave and long service leave entitlements accrued.
(ii) The current provision for employee benefits includes all unconditional entitlements where employees have completed
the required period of service and also those where employees are entitled to pro‑rata payments in certain circumstances.
The entire amount is presented as current, since the Group does not have an unconditional right to defer settlement.
However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave
or require payment within the next 12 months.
NOTE 18: Lease liabilities
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
576
11,284
11,860
281
12,252
1,053
(1,726)
11,860
–
281
281
535
–
–
(254)
281
Current
Non‑Current
Reconciliation:
Opening balance
Additions during the year
Interest expense
Lease payments
Closing balance
64
Toys“R”Us ANZ Limited
Annual Report 2023
Maturity analysis of lease liabilities
2023
Lease payments
Less: Finance charge
Discounted
Lease Liabilities
2022
Lease payments
Less: Finance charge
Discounted
Lease Liabilities
Within
1 year
$’000
1,677
(1,101)
1‑2 years
$’000
2‑3 years
$’000
3‑4 years
$’000
4‑5 years
$’000
1,728
(1,043)
1,813
(971)
1,900
(884)
1,989
(779)
After
5 years
$’000
9,181
(1,649)
Total
$’000
18,287
(6,427)
576
685
841
1,016
1,210
7,532
11,860
Within
1 year
$’000
294
(13)
281
1‑2 years
$’000
2‑3 years
$’000
3‑4 years
$’000
4‑5 years
$’000
–
–
–
–
–
–
–
–
–
–
–
–
After
5 years
$’000
–
–
–
Total
$’000
294
(13)
281
NOTE 19: Other current liabilities
Accrued royalties
GST payable/(receivable) – net
Payroll accruals
Other accrued expenses
Total
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
57
12
375
1,600
2,044
726
(22)
178
1,002
1,884
65
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 20: Equity and reserves
Share Capital
863,086,674 (2022: 861,861,184) fully paid ordinary shares
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
292,920
292,965
Year ended 31‑Jul‑23
Year ended 31‑Jul‑22
Date
Number
of Shares
Share
Capital
$’000
Number
of Shares
Share
Capital
$’000
861,861,184
292,965 848,358,858
290,545
Movements in Ordinary Share Capital
Opening balance
Shares issued as payment
for intangible assets (net of
transaction costs of $11,000)
Shares issued as consideration
for remuneration
Shares issued as consideration
for remuneration 31 August 2022
14‑Dec‑21
15‑Dec‑21
–
–
31‑Aug‑22
1,225,490
–
–
62
(107)
13,394,216
2,401
108,110
–
–
19
–
–
Buy‑back of Unmarketable Parcels1
4‑Jul‑23
–
Closing balance
863,086,674
292,920
861,861,184
292,965
1. During the year, the Company bought back 4,260,395 shares at $0.025 per share and are held by the company at the
end of the reporting period.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the parent
entity in proportion to the number of members’ shares held. At members’ meetings, each fully paid ordinary
share is entitled to vote when ta poll is called, otherwise each shareholder has one vote on a show of hands.
The fully paid ordinary shares have no par value and the company does not have a limited amount of
authorised capital.
Foreign currency translation reserve
The foreign translation reserve account accumulates exchange differences arising on translation of foreign
controlled entities which are recognised in other comprehensive income. The carrying amount is reclassified
to profit or loss when the net investment is disposed of.
Equity‑settled employee benefits reserve
Movements in the reserve are detailed in the consolidated statement of changes in equity. The reserve records
amount for the fair value of options granted and recognised as an employee benefits expense but not exercised.
66
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 21: Earnings per share
Basic earnings/(loss) per share
From continuing operations
From discontinued operations
Total Basic Earnings/(loss) per share
Diluted earnings/(loss) per share
From continuing operations
From discontinued operations
Total Diluted Earnings/(loss) per share
Basic earnings per share calculation:
Net loss after tax for the year – continuing operations
Net profit after tax for the year – discontinued operations
Profit/(Loss) used in the calculation of total basic EPS
Weighted average number of ordinary shares (‘WANOS’) outstanding
during the year used in the calculation of basic earnings/(loss) per share
Diluted earnings per share calculation:
WANOS outstanding during the year used in the calculation of basic
earnings/(loss) per share
Add: Shares deemed to be issued for no consideration in respect of:
Performance and service rights1
WANOS and potential ordinary shares used as the denominator
in calculating diluted earnings per share
31‑Jul‑23
Cents per
share
31‑Jul‑22
Cents per
share
(2.93)
(0.85)
(3.78)
(2.93)
(0.85)
(3.78)
(2.83)
(0.06)
(2.89)
(2.83)
(0.06)
(2.89)
$’000
(25,295)
(7,363)
$’000
(24,276)
(483)
(32,658)
(24,759)
No. ’000
No. ’000
862,986
856,867
862,986
856,867
–
22,184
862,986
879,051
1. Potential shares comprising performance and service rights have not been considered in the calculation of WANOS
for diluted earnings per share as they are anti‑dilutive in nature, due to the losses incurred.
67
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 22: Dividends on equity instruments
There were no dividends declared or paid during the financial year (2022: nil). The franking account balance
at 31 July 2023 is $19,318,846 (2022: $19,318,846).
NOTE 23: Licence guarantee commitments
Under the terms of various Licence Agreements, the company guarantees the minimum level of licence
payments. The commitment in relation to these guarantees not already recognised is as follows:
Not later than one year
Later than one year but not later than two years
Later than two years but not later than five years
Later than five years
NOTE 24: Subsidiaries
Name of Entity
Company
Toys”R”Us ANZ Limited(i), (v)
Subsidiaries
UK TRU Limited (UK Toys R Us Limited)(iii), (v)
Mittoni Pty Limited(ii), (v)
Hobby warehouse Pty Limited(ii), (v)
Toys R Us Licensee Pty Limited(ii), (v)
FUN International Limited(iv)
NSR (HK) Limited(iv)
Funtastic America Inc.(iv)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
4,780
8,279
16,404
56,781
86,244
1,713
1,713
5,138
26,545
35,109
Equity Holding
Year ended
31‑Jul‑23
%
Year ended
31‑Jul‑22
%
100
100
100
100
100
–
–
–
100
100
100
100
100
100
100
100
Country of
Incorporation
Australia
United Kingdom
Australia
Australia
Australia
Hong Kong
Hong Kong
USA
(i) Toys”R”Us ANZ Limited is the head entity within the tax consolidated Group.
(ii) These companies are members of the tax consolidated Group.
(iii) During the year, the Company updated its name from UK Toys R Us Limited to UK TRU limited.
(iv) These subsidiaries were wound down and deregistered during the year.
(v) These subsidiaries are parties to a Deed of Cross Guarantee with Toys”R”Us ANZ Limited created on 15 June 2022
pursuant to ASIC Class Order 2016/785 and are relieved from the requirement to prepare and lodge an audited
Financial Report. Refer to disclosure for Consolidated Statement of Profit or Loss and Other Comprehensive Income
and Consolidated Balance Sheet of the entities who are a party to the Deed of Cross Guarantee.
68
Toys“R”Us ANZ Limited
Annual Report 2023
The consolidated Statements of Profit or Loss and Other Comprehensive Income of the entities party to the
deed of cross guarantee are:
Revenue
Cost of Goods Sold
Gross profit
Other income
Warehouse and distribution expenses
Marketing and Selling Expenses
Employee benefit expenses
Administration Expenses
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Finance costs (net)
Impairment of goodwill
Depreciation and amortisation expenses
Loss before income tax
Income tax (expense)/benefit
Loss for the period from continuing operations
Profit/(Loss) after income taxes from discontinued Operations
Loss for the year
Other comprehensive income/(loss) for the year (net of tax)
Total comprehensive income/(loss) for the year
Financial performance of discontinued operations
Revenue
Cost of Goods Sold
Gross Profit
Other Income (including government grants)
Warehouse and Distribution Expenses
Marketing and Selling Expenses
Employee benefits Expenses
Administration Expenses
Restructuring costs
Earnings/(loss) before interest, taxation, depreciation
and amortisation (EBITDA)
Finance costs
Depreciation, amortisation and impairment expenses
Profit/(Loss) before income taxes
Income tax expense
Profit/(Loss) after income taxes from discontinued operations
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
32,143
(27,008)
5,135
399
(2,012)
(4,191)
(5,502)
(2,836)
(9,007)
(2,561)
(11,128)
(2,915)
(25,611)
316
37,927
(29,956)
7,971
3
(2,374)
(5,805)
(6,329)
(1,942)
(8,477)
–
(14,500)
(1,594)
(24,571)
295
(25,295)
(24,276)
(7,363)
(483)
(32,658)
(24,759)
(234)
20
(32,893)
(24,739)
$’000
5,278
(4,368)
910
–
(1,564)
(2,421)
(553)
(1,234)
(280)
(5,142)
–
(2,221)
(7,363)
–
(7,363)
$’000
1,200
(1,036)
164
–
(79)
(169)
(342)
(51)
–
(477)
–
(6)
(483)
–
(483)
69
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 24: Subsidiaries (Cont.)
The consolidated Statements of Financial Position of the entities party to the deed of cross guarantee are:
31‑Jul‑23
$’000
31‑Jul‑22
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Assets of disposal group held for sale
Total current assets
Non‑current assets
Property, plant and equipment
Goodwill and other intangibles
Right‑of‑use assets
Other non‑current assets
Total non‑current assets
Total Assets
Current Liabilities
Trade payables
Borrowings
Contract liabilities/deferred revenue
Employee benefits
Provision for restructuring
Lease liabilities
Other current liabilities
Liabilities directly associated with disposal group held for sale
Total current liabilities
Non‑current liabilities
Borrowings
Employee benefits
Deferred tax
Lease liabilities
Total non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total Equity
70
1,766
837
4,905
208
7,716
3,119
10,835
2,767
6,899
11,167
2,935
23,768
34,603
3,405
12,084
114
460
280
576
2,044
18,963
1,565
20,528
526
9
738
11,284
12,557
33,085
1,518
12,538
794
9,851
679
23,862
–
23,862
2,384
21,447
–
3,763
27,594
51,456
3,263
–
422
393
–
281
1,884
6,243
–
6,243
10,000
11
1,054
–
11,065
17,308
34,148
292,920
(291,878)
476
292,965
(260,958)
2,141
1,518
34,148
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 25: Notes to the cash flow statements
(a) Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks
and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents
at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the
Statement of Financial Position as follows:
Cash
Cash equivalents
(b) Financing facilities
Total Financing Facilities
Bank Guarantees
Secured Loan(i), (ii)
Reconciliation of Finance facilities
Used at Balance Date
Bank Guarantees
Secured Loan(i), (ii)
Unused at Balance Date
Bank Guarantees
Secured Loan(i), (ii)
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
–
1,766
1,766
–
12,538
12,538
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
–
18,000
18,000
–
12,610
12,610
–
5,390
5,390
–
15,000
15,000
–
10,000
10,000
–
5,000
5,000
(i)
In July 2022, the Company had obtained a three‑year secured loan facility of $15 million for the UK business operations,
repayable at the end of July 2025. As at 31 July 2023, the Company had utilised $11.5 million of the total facility limit.
(ii) On 22 June 2023, the Company entered into a secured loan agreement with TRU Kids Inc (TRUK) as lender for
a commitment of up to USD $2 million (circa. AUD $3 million) for the UK business, in particular to support working
capital requirement related to the retail Toys “R” Us branded stores within WH Smith High Street Limited stores
in the UK. As at 31 July 2023, the Company had utilised AUD $1.11 million (USD $0.75 million) of the total facility limit.
71
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 25: Notes to the cash flow statements (Cont.)
(c) Reconciliation of Profit/(Loss) after Income Tax to Net Cash Flow
from Operating Activities
Loss after income tax
Depreciation and amortisation
Impairment of goodwill and other intangible asset
Share‑based payments expense
Shares issued as consideration for salaries and bonus
Other revenue
Changes in net assets and liabilities, net of effects
from acquisition and disposal of businesses:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments and other assets
(Decrease)/Increase in trade and other payables
Increase/(decrease) in provisions
Decrease in income tax receivable
(Decrease) in deferred tax liabilities
(Decrease) in other liabilities
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(32,658)
(24,759)
2,915
13,349
369
–
(106)
(379)
2,773
(139)
1,148
64
–
(316)
515
1,600
14,500
668
19
(3)
1,088
(3,845)
270
688
(16)
12
(290)
(834)
Net cash outflow from operating activities
(12,465)
(10,902)
NOTE 26: Financial Instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which comprises the borrowings detailed in Note 16,
cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital,
accumulated losses and reserves as disclosed in the Statement of Changes in Equity.
The Board reviews the capital structure on a regular basis. As part of this review the cost of capital and the
risks associated with each class of capital is considered. The Group balances its overall capital structure
through the payment of dividends, new share issues and share buy‑backs as well as the issue of new debt
and the repayment of debt.
Significant accounting policies
Details of significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.
These policies were consistent throughout the current year and the previous year.
72
Toys“R”Us ANZ Limited
Annual Report 2023
Categories of financial instruments1
Financial assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total non‑derivative financial assets
Total derivative financial assets
Total financial assets
Financial liabilities
Non‑interest bearing
Other liabilities
Fixed interest rate instruments – Lease liabilities
Fixed interest rate instruments – Borrowings
Total non‑derivative financial liabilities
Total derivative financial liabilities
Total financial liabilities
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
1,766
1,173
2,935
5,874
–
5,874
4,655
2,349
11,860
12,610
31,474
–
12,538
794
3,763
17,095
–
17,095
3,263
1,906
281
10,000
15,450
–
31,474
15,450
1. Balances include financial instruments pertaining to discontinued operations (assets and liabilities directly associated
with classified as held for sale) as well.
Financial risk management objectives
The Group’s finance function provides services to the business, co‑ordinates access to domestic and
international financial markets, monitors and manages the financial risks relating to the operations
of the Group through internal risk reports which analyse exposures by degree and magnitude of risk.
These risks include market risk (including currency risk, interest rate risk), credit risk and liquidity risk.
The Group seeks to minimise the effects of these risks, by using various financial instruments to hedge
these exposures. The use of financial instruments is governed by the Group’s policies approved by the Board
of Directors, who provide written principles on foreign exchange risk, interest rate risk, credit risk, the use
of financial derivatives and non‑derivative financial instruments and the investment of excess liquidity.
Compliance with policies and exposure limits is reviewed on a continual basis. The Group does not enter
into any trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange
rates and interest rates. The Group enters into a variety of derivative financial instruments to manage
its exposure to interest rate risk and foreign currency risk, including:
• Foreign exchange forward contracts to hedge the exchange rate risk arising on the import of goods
denominated in US dollars; and
•
Interest rate swaps to mitigate the risk of rising interest rates.
At a Group level, market risk exposures are measured through sensitivity analysis and stress
scenario analysis.
73
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 26: Financial Instruments (Cont.)
In FY 2023, while there have been interest rate increases, there has been no material change to the
Group’s exposure to market risk or the manner in which it manages and measures the risk.
Foreign currency risk management
Foreign currency risk refers to the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Group’s exposure to foreign exchange risk arises
from the net investment in the UK operations and the undertaking of certain transactions denominated in
foreign currencies.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date is as follows:
US Dollars
GBP
SGD
Liabilities
Assets
2023
$’000
697
691
22
2022
$’000
1,317
304
–
2023
$’000
–
258
–
2022
$’000
–
78
–
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rates fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and
financial liabilities denominated in a currency that is not the Group’s functional currency. This is measured
using sensitivity and cash flow forecasting.
Foreign currency sensitivity
The Group is mainly exposed to the US dollar (USD) and the UK Pound Sterling (GBP). The following table
details the Group’s sensitivity to a 10% increase and 10% decrease in the Australian dollar against the
relevant foreign currencies. 10% is the sensitivity rate which represents management’s assessment of the
possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in foreign
currency rates. A positive number indicates an increase in profit or loss where the Australian dollar strengthens
against the respective currency. For a weakening of the Australian dollar against the respective currency
there would be an equal and opposite impact on profit or loss and the balances below would be equal and
opposite. A positive number indicates an increase in other equity where the Australian dollar weakens against
the respective currency. For a strengthening of the Australian dollar against the respective currency there
would be an equal and opposite impact on other equity and the balances below would be negative.
10% increase in AUD against foreign currency
USD
GBP
SGD
74
Impact on profit or loss
Gain/(loss)
2023
$’000
2022
$’000
70
43
2
115
132
23
–
155
Toys“R”Us ANZ Limited
Annual Report 2023
10% decrease in AUD against foreign currency
USD
GBP
SGD
Impact on profit or loss
Gain/(loss)
2023
$’000
2022
$’000
(70)
(43)
(2)
(115)
(132)
(23)
–
(155)
Forward foreign exchange contracts
At 31 July 2023, there were no foreign exchange contracts (2022: Nil).
Interest rate risk management
Interest rate risk refers to the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk as it borrows
funds at both fixed and floating interest rates. The risk is managed by the use of interest rate swap contracts.
Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring
optimal hedging strategies are applied, by either positioning the statement of financial position or protecting
interest expense through different interest rate cycles.
The Group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk management section below.
Interest rate sensitivity
As at 31 July 2023, the Group has a fixed interest rate of 11.5% p.a. on its secured borrowings of $11.5 million
as at the balance sheet date. In an event of default payment of interest, the Group will have an additional
interest expense of $0.17 million per annum at an incremental 1.5% interest rate. It is the Group’s policy
to protect part of the loans from exposure to increasing interest rates.
In addition, the Group has a loan facility with its Licensor TRU Kids Inc. (TRUK) as at 31 July 2023. USD $0.75 million
(circa. AUD $1.11 million) was drawn at balance sheet date. Repayment of the UK loan Facility (including accrued
interest calculated at 10.56% per annum) is required to be made in six equal instalments of USD $390,000
(or proportional to the extent of the loans drawn down) each on 30 June 2024, 30 October 2024, 30 January 2025,
30 April 2025, 30 July 2025, and 30 October 2025 (being the final repayment date).
The Group does not have any variable rate borrowings as at the balance sheet date.
Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group’s
exposure and the credit ratings of its counterparties are monitored continuously and the aggregate value
of transactions concluded is spread amongst approved counterparties.
Trade receivables consist of a large number of customers spread across diverse industries. Ongoing credit
evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit
guarantee insurance is purchased.
75
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 26: Financial Instruments (Cont.)
The Group has a credit risk exposure to a small number of major ASX listed corporations for which credit
guarantee insurance is not purchased. Ongoing credit evaluation is performed on the financial condition
of these accounts receivable.
The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses,
represents the Group’s maximum exposure to credit risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators
of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and
a failure to make contractual payments for a period greater than 1 year.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an
appropriate liquidity risk management framework for the management of the Group’s short, medium and
long‑term funding and liquidity management requirements. The Group manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Liquidity and interest tables – financial liabilities
The following table details the Group’s remaining contractual maturity for its non‑derivative financial
liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the Group can be required to pay.
Weighted
average
effective
interest
rate
%
–
–
11.42%
–
–
9.50%
0– 3
months
$’000
3 months
to 1 year
$’000
1 – 5
years
$’000
5+
years
$’000
4,655
2,348
11,500
18,503
3,263
1,906
–
5,169
–
–
584
584
–
–
–
–
–
–
526
526
–
–
10,000
10,000
–
–
–
–
–
–
–
–
Total
$’000
4,655
2,348
12,610
19,613
3,263
1,906
10,000
15,169
2023
Non‑interest bearing
Other liabilities
Fixed interest rate
instruments
2022
Non‑interest bearing
Other liabilities
Fixed interest rate
instruments
Refer note 18 for maturity analysis of lease liabilities.
76
Toys“R”Us ANZ Limited
Annual Report 2023
Liquidity and interest tables – financial assets
The following table details the Group’s expected maturity for its non‑derivative financial assets. The table
below has been drawn up based on the understood contractual maturities of the financial assets including
interest that will be earned on those assets except where the Group anticipates that the cash flow will occur
in a different period.
2023
Cash
Non‑interest bearing
Fixed interest rate
instruments
2022
Cash
Non‑interest bearing
Fixed interest rate
instruments
Weighted
average
effective
interest
rate %
0.00%
–
1.37%
0.00%
–
0.20%
0 – 3
months
$’000
3 months
to 1 year
$’000
1 – 5
years
$’000
5+
years
$’000
1,766
1,173
–
3,756
12,538
794
–
13,332
–
–
–
–
–
–
–
–
–
–
2,935
2,935
–
–
–
–
–
–
–
–
–
–
3,763
3,763
Total
$’000
1,766
1,173
2,935
5,874
12,538
794
3,763
17,095
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
• The fair value of other financial assets and financial liabilities (excluding derivative instruments) are
determined in accordance with generally accepted pricing models based on discounted cash flow analysis
using prices from observable current market transactions; and
• The fair value of derivative instruments are calculated using quoted prices. Where such prices are not
available, discounted cash flow analysis using the applicable yield curve for the duration of the
instruments for non‑optional derivatives and option pricing models for optional derivatives is used.
The directors consider that the carrying amounts of financial assets and financial liabilities recorded
at amortised cost in the financial statements approximates their fair values.
Fair value measurements recognised in the consolidated statement of financial position
Fair value measurements are discussed in Note 1 and in the notes specific to that asset or liability.
77
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 27: Share‑based payments
(a) Expenses recognised
An expense of $368,964 (2022: $667,543) has been recognised in the profit and loss in relation to share‑based
payments granted.
(b) Share options and share appreciation rights
An employee incentive plan has been established by the Group and approved by shareholders at a general
meeting whereby the Group may, at the discretion of the Remuneration and Nomination Committee, grant
options and rights over ordinary shares in the company to directors and employees. The grant of options and
rights forms a part of the Company’s long term incentive objectives to encourage directors and employees
to have a greater involvement in the achievement of the Company’s objectives. Options and rights provide an
incentive to strive to that end by participating in the future growth and prosperity of the Company through
share ownership. The options and rights are issued for nil consideration and are only subject to a vesting
condition relating to the participant’s continued employment with the Company. The options and rights must
be exercised before their expiry date, or they will lapse. On the exercise of an option, the holder must pay to
the Company the relevant exercise price multiplied by the number of options being exercised by the holder.
The Company will issue the holder with a share for each option or right that the participant validly exercises.
(c) Reconciliation
Set out below are the summaries of options granted under the employee incentive plan as at 31 July 2023:
Grant date
Vesting
date
Expiry
date
Exercise
price
Balance
at the
start of
the year Granted Exercised Cancelled2
Balance
at the
end of
the year
23‑Nov‑201
23‑Nov‑20
1‑Nov‑23 3
$0.14 10,149,450
1‑Nov‑21
1‑Nov‑24
$0.17 10,180,305
–
–
–
(8,457,875)
1,691,575
– (8,483,588)
1,691,956
1‑Nov‑22
1‑Nov‑25
$0.20 10,342,333
14,707
– (8,630,867)
1,696,717
1‑May‑21
1‑May‑23
1‑May‑25
$0.14
1,691,956
Weighted average exercise price
32,364,044
$0.166
–
14,707
$0.199
–
–
1,726,173
– 25,572,330 6,806,421
$0.160
–
$0.168
1. All employee options under the employee incentive plan approved at the 2020 AGM, have been entirely granted.
The balance at the start of the half year for Tranche 3 was an estimate and has been adjusted for the actual options
issued based on the actual shares on issue at 1 November 2022. Share‑based payment expenses recognised in relation
to options granted during the year are based on fair value of options determined at grant date.
2. Cancelled as a result of resignation of Director Louis Mittoni on the 26 July 2023.
3. Options are exercisable at the end of the financial year.
78
23‑Nov‑201
23‑Nov‑201
Toys“R”Us ANZ Limited
Annual Report 2023
The weighted average remaining contractual life of options outstanding at the end of the financial year was
1.39 years (2022: 2.29 years).
Set out below are the summaries of rights granted under the employee incentive plan as at 31 July 2023:
Grant date
Vesting
date
Expiry
date
Exercise
price
Balance
at the
start of
the year Granted Exercised Cancelled
Balance
at the
end of
the year
21‑Sep‑21
31‑Jul‑24 21‑Sep‑26
$0.180
340,000
23‑Nov‑20*
31‑Jul‑23 10‑Dec‑36
$0.180**
1,000,000
Weighted average exercise price
1,340,000
$0.180
–
–
–
(210,000)1
130,000
(347,489)2
(152,511)2 500,000
(347,489)
$0.000
(362,511)
$0.000
630,000
$0.180
* Service Rights replaced Share Appreciation Rights originally granted on 23 November 2020. The Service Rights were
approved at the AGM dated 14 December 2021.
** Calculated based on the amount of Directors’ fee sacrificed There is no cash payable in relation to these rights.
1. Cancelled as a result of resignation of employees.
2. Non‑Executive Director, Nicki Anderson resigned on 31 August 2022. Service rights vested up to date of resignation were
exercised. The unvested service Rights scheduled to vest during the period from date of resignation to vesting date have
been cancelled and forfeited.
The weighted average remaining contractual life of rights outstanding at the end of the financial year was
11.14 years (2022: 11.78 years).
Set out below is a summary of share warrants granted to the lender of the term loan as at 31 July 2023:
Grant date
Vesting
date
Expiry
date
Exercise
price
Balance
at the
start of
the year Granted Exercised Cancelled
Balance
at the
end of
the year
28‑Jul‑22
28‑Jul‑22
27‑Jul‑25
$0.150 18,000,000
–
–
– 18,000,000
(d) Fair value inputs
For options granted during the current financial year, the valuation model inputs used to determine the fair
value at the grant date, are as follows:
Share
price at
grant
date
Vesting
date
Exercise
price
Expected
volatility
Dividend
yield
Risk‑free
interest
rate
Fair
value at
grant
date
1‑Nov‑22
$0.135
$0.199
80%
0%
0.09%
$0.072
Grant date
23‑Nov‑20
(e) Other information
The weighted average share price during the financial year was $0.026 (2022: $0.140).
79
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 28: Key management personnel compensation
Details of key management compensation
The aggregate compensation made to key management personnel of the Group is set out below:
Short‑term employee benefits
Post‑employment benefits
Other long‑term benefits
Termination benefits
Share‑based payments
Year ended
31‑Jul‑23
$
Year ended
31‑Jul‑22
$
1,117,583
98,918
7,741
278,419
141,290
997,239
94,785
19,213
30,931
695,628
1,643,951
1,837,796
NOTE 29: Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 24 to the
financial statements.
(b) Transactions with Key Management Personnel
Key management personnel compensation
Details of key management personnel compensation are disclosed in Note 28 to the financial statements.
Loans to key management personnel and their related parties
During the financial year and to the date of this report, the Group made no loans to directors and other KMP.
As at 31 July 2023, Louis Mittoni owed the Company $28,575 (31 July 2022: $16,719) related to personal expenses
incurred on a company credit card. As at the date of this report, the balance outstanding was $28,575.
During the financial year, there were no other reportable transactions between the Group and its directors,
KMP, or their personally related entities (Related Parties) (2022: $Nil).
(c) Transactions with other related parties
Transactions between Toys”R”Us ANZ Limited and other entities in the wholly owned Group during the
financial years ended 31 July 2023 and 31 July 2022, which were eliminated on consolidation, consist of:
•
loans advanced by Toys”R”Us ANZ Limited;
• management services provided by Toys”R”Us ANZ Limited;
• management services provided to Toys”R”Us ANZ Limited; and
• payment to/from Toys”R”Us ANZ Limited for the above services.
80
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 30: Remuneration of Auditors
RSM Australia Partners
Audit Services
Audit and review of the financial reports of the entity
122,899
118,210
Year ended
31‑Jul‑23
$
Year ended
31‑Jul‑22
$
Other Services
Transaction services(1)
Compliance Services(2)
–
29,986
22,000
82,644
152,885
222,854
1. FY 2022 relates to security and privacy services.
2. Relates to services performed by network firms of RSM Australia Partners in relation to winding down and
deregistration of overseas subsidiaries
NOTE 31: Parent entity disclosures
Financial Position
Assets
Current assets
Non‑current assets
Liabilities
Current liabilities
Non‑current liabilities
Net Assets
Issued capital
Accumulated losses
Equity‑settled employee benefits reserve
Total Equity
Financial Performance
Profit/Loss for the year – continuing operations
Profit/Loss for the year – discontinued operations
Total comprehensive loss
As at
31‑Jul‑23
$’000
As at
31‑Jul‑22
$’000
16,069
22,337
38,406
(5,018)
(22,839)
(27,857)
10,549
30,737
24,725
55,462
(4,192)
(10,000)
(14,192)
41,270
292,920
292,965
(283,060)
(251,900)
689
10,549
205
41,270
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
(31,033)
(19,067)
49
297
(30,984)
(18,770)
81
Notes to the Consolidated
Financial Statements
(Cont.)
NOTE 31: Parent entity disclosures (Cont.)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each
company guarantees the debts of the others. No deficiencies of assets exist in any of these subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 July 2023 (2022: $Nil).
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 July 2023 (2022: $Nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed
in Note 1, except for the following:
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Indicator of an impairment of the investment.
NOTE 32: Contingent liabilities and contingent assets
As at 31 July 2023, the Group had issued bank guarantees of $2.96 million (2022: $3.66 million). The Group has
placed an equivalent amount of cash deposit with the banks in relation to these bank guarantees (see note 11).
There are no contingent assets as at 31 July 2023 (2022: $Nil).
NOTE 33: Non‑cash investing and financing activities
Additions to right‑of‑use assets
Shares issued as consideration for intangible assets
Year ended
31‑Jul‑23
$’000
Year ended
31‑Jul‑22
$’000
12,252
–
12,252
–
2,412
2,412
82
Toys“R”Us ANZ Limited
Annual Report 2023
NOTE 34: Changes in liabilities arising from financing activities
Balance at 1 August 2021
Net cash from/(used in) financing activities
Balance at 31 July 2022
Balance at 1 August 2022
Addition
Net cash from/(used in) financing activities
Balance at 31 July 2023
Borrowings
$’000
Lease
Liabilities
$’000
–
10,000
10,000
10,000
–
2,610
12,610
535
(254)
281
281
12,252
(673)
11,860
Total
$’000
535
9,746
10,281
10,281
12,252
1,937
24,470
NOTE 35: Subsequent events
On 28 September 2023, the Company received a letter from the lender waiving the requirement to comply
with the financial covenants of the facility agreement for the period ended 31 July 2023.
No other matters or circumstance has arisen since 31 July 2023 that has significantly affected, or may
significantly affect, the Group’s operations, the results of these operations, or the Group’s state of affairs
in future years.
NOTE 36: General Information
Toys”R”Us ANZ Limited (“the Company”) is a listed public company limited by shares, incorporated and
domiciled in Australia. The addresses of its registered office and principal place of business are disclosed
in the Corporate Directory. The principal activities of the Company and its subsidiaries (the Group) are
described in Note 4.
The financial statements were authorised for issue, in accordance with a resolution of directors,
on 28 September 2023. The directors have the power to amend and reissue the financial statements.
83
Directors’ Declaration
The directors declare that, in the directors’ opinion:
(a) the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting standards;
(b) the attached financial statements and notes comply with International Financial Reporting Standards,
as issued by the International Accounting Standards Board as stated in Note 1 to the financial statements;
(c) the attached financial statements and notes give a true and fair view of the Group’s financial position
as at 31 July 2023 and of its performance for the year ended on that date; and
(d) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable;
At the date of this declaration, the Company is within the class of companies affected by ASIC Legislative
Instrument 2016/785 and has entered into a deed of cross guarantee as contemplated in that order.
The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees
to each creditor payment in full of any debt in accordance with the deed of cross guarantee.
In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to
which the ASIC Class Order applies, as detailed in Note 24 to the financial statements will, as a Group, be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed
of cross guarantee.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations
Act 2001.
On behalf of the Directors,
Kevin A Moore
Chair of the Board
28 September 2023
Gold Coast, Queensland
84
Toys“R”Us ANZ Limited
Annual Report 2023
Independent Auditor’s Report
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of Toys“R”Us ANZ Limited
Opinion
We have audited the financial report of Toys“R”Us ANZ Limited (“the Company”) and its subsidiaries (together
referred to as “the Group”) which comprises the consolidated statement of financial position as at 31 July 2023,
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Group’s financial position as at 31 July 2023 and of its financial performance
for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
85
Independent Auditor’s Report
(Cont.)
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $32.7
million and had cash outflows from operating activities of 12.5 million during the year ended 31 July 2023 and, as
of that date, the Group’s current liabilities exceeded its current assets by $9.7 million. As stated in Note 1, these
events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that
may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section of our report, we
have determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
Impairment assessment of goodwill
Refer to Note 14 in the financial statements
At 31 July 2023, the Group had goodwill with a
carrying amount of $4.10 million
to
acquisitions in the previous years.
relating
As required by AASB 136 Impairment of Assets
(“AASB 136”), management has performed an
impairment assessment over the goodwill balance at
31 July 2023 by:
•
•
•
calculating the recoverable amount of each
identified cash generating unit (“CGU”), which
was determined to be the value-in-use of the
CGUs, using a discounted cash flow model. This
model used cashflow projections for the CGUs for
5 years, with a terminal growth rate applied to the
5th year;
discounting the cash flow projections to their net
present value using
the Group’s weighted
average cost of capital (“WACC”); and
comparing the resulting value-in-use of each
CGU to its carrying amount.
Management has identified that there are two CGUs
for the purpose of performing impairment testing
(being B2B and B2C businesses).
As a result of this exercise, an impairment of goodwill
of $11.13 million was recognised during the year in
the B2C CGU. Management also
relation
performed a sensitivity analysis over
the VIU
calculation, by varying the assumptions used (growth
to
86
How our audit addressed this matter
Our audit procedures in relation to the impairment testing of
goodwill involved the assistance of our Corporate Finance
team, and included:
• Holding discussions with senior management, reviewing
the Group’s ASX announcements and reading minutes
of directors’ meetings to gather sufficient information
regarding the operations of the current period, as well as
the expectations going forward;
• Assessing
the
reasonableness of management’s
determination that goodwill should be allocated to two
CGUs based on the Group’s business and the manner
in which the results are monitored and reported;
• Assessing and challenging the reasonableness of key
assumptions used in the discounted cash flow model,
including the cash flow projections, future growth rates,
discount rate applied and terminal value. We also
assessed whether the key assumptions adopted were
applied on a consistent basis across the models;
• Verifying the mathematical accuracy of the cash flow
model and reconciling input data to supporting evidence,
such as approved budgets and considering
the
reasonableness of these budgets;
• Reviewing management’s sensitivity analysis over the
key assumptions in the model and assessing the
reasonableness of the changes in key assumptions
used in the analysis to determine when those changes
would cause an additional impairment to be recognised;
Page 2 of 4
Toys“R”Us ANZ Limited
Annual Report 2023
Key Audit Matter
rates, terminal growth rate and WACC) to assess the
impact on the valuations.
How our audit addressed this matter
• Reviewing management’s calculation of the impairment
loss determined at 31 July 2023; and
We determined impairment testing of goodwill to be a
Key Audit Matter due to the materiality of the goodwill
balance. Also, because this test involves significant
level of management judgements and estimates such
as the determination of the existing CGUs, the
estimation of future cash flows of the business,
including the growth rates and the discount rates
applied to the estimated cash flows.
Revenue recognition
Refer to Note 6 in the financial statements
Revenue recognition is considered a Key Audit
Matter because of its significance to the Group’s
reported financial performance.
The risk is heightened due to having revenue streams
across two distinct segments.
Revenue recognition can be impacted by a failure to
correctly measure revenue
in accordance with
applicable accounting standards and/or by applying
an incorrect approach to period end cut-off.
• Reviewing the disclosures in Note 14 to the financial
statements
appropriateness,
completeness, and compliance with the disclosure
requirements of AASB 136 and AASB 138 Intangible
Assets.
assess
the
to
Our audit procedures in relation to revenue recognition
included:
• Assessing whether the Group’s revenue recognition
policies were in compliance with the requirements of
AASB 15 Revenues from Contracts with Customers;
• Evaluating and testing the operating effectiveness of
key controls related to revenue recognition;
• Reviewing any large or unusual transactions close to the
end of the financial year;
• Performing cut-off testing over transactions recorded
either side of the period end, to ensure that revenues
were recorded in the appropriate period;
• Conducting a combination of
tests of controls,
substantive analytical procedures and tests of details in
respect of revenue transactions; and
Reviewing disclosures to corroborate they are appropriate
and meet the requirements of AASB 15.
Other Information
The directors of the Company are responsible for the other information. The other information comprises the
information included in the Group's annual report for the year ended 31 July 2023; but does not include the
financial report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report, or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Page 3 of 4
87
Independent Auditor’s Report
(Cont.)
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance; but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 31 July 2023.
In our opinion, the Remuneration Report of Toys“R”Us ANZ Limited for the year ended 31 July 2023, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Melbourne, Victoria
Dated: 29 September 2023
88
Page 4 of 4
Toys“R”Us ANZ Limited
Annual Report 2023
Shareholder Information
Distribution of equity securities as at 16 October 2023.
Analysis of numbers of equity security holders by size of holdings:
Fully Paid Ordinary Shares
Holding Ranges
Holders
Total Units
1 1,000
1,001 5,000
5,001 10,000
10,001 100,000
100,001 and over
% Issued
Share
Capital
0.00%
0.01%
0.02%
2.96%
Options
Rights
–
–
–
–
–
–
100,000
30,000
119
37
29
25,799
92,499
217,410
545
27,341,865
417 895,240,475
97.00%
6,806,421
500,000
1,147 863,086,674
100.00%
6,806,421
500,000
The number of shareholders holding less than a marketable parcel of shares was 368 holding 4,652,220
shares (based on the closing market price on 16 October 2023).
Twenty largest quoted equity security holders
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Louis Mittoni
Jaszac Two Investment Trust
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