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Level 2, 315 Ferntree Gully Rd, Mount Waverley VIC 3149, Australia
Ph: (03) 9081 9100 Fax: (03) 9081 9199 Email: investor-relations@toysrus.com.au
www.toysrus.com.au ABN 94 063 886 199
25 OCTOBER 2024
ANNUAL REPORT
Toys”R”Us ANZ Limited (ASX:TOY) (TOY or Company) attaches it’s Annual Report for
Shareholders attention and advises that the report released earlier today should be
disregarded.
This Announcement has been approved for release by the Chair of the Board.
About Toys“R”Us ANZ Limited
Toys"R"Us ANZ Limited (ASX: TOY) is an Australian-based company with a vision of 'A lifetime journey
with every child'. The Company trades under 4 leading e-commerce brands: Toys “R” Us, Babies “R”
Us, RIOT and Hobby Warehouse. The Company changed its name from Funtastic Limited to Toys"R"Us
ANZ Limited on 24 June 2021. Further information is available at corporate.toysrus.com.au.
For further information please contact
Toys“R”Us ANZ
Email: investor-relations@toysrus.com.au
For personal use only
2024
ANNUAL
REPORT
TOYS“R”US
ANZ LIMITED
For personal use only
Contents
Our Story
01
Chair and CEO’s Letter
02
Directors’ Report
04
Auditor’s Independence Declaration
24
Financial Statements
25
Consolidated Entity
Disclosure Statement
86
Directors’ Declaration
87
Independent Auditor’s Report
88
Shareholder Information
94
Corporate Directory
97
For personal use only
At Toys “R” Us ANZ Limited, we believe
that creativity and play have the power
to change lives. Play enables children
and adults alike to develop their
imagination, collaborate, problem
solve, explore and create.
We’re proud to be home to some
of Australia’s most trusted brands.
Our house of brands enriches every
stage of a child’s life journey, from
infancy through to adulthood.
Our Story
01
Toys“R”Us ANZ Limited
Annual Report 2024
01
For personal use only
Chair and CEO’s Letter
Dear Shareholders,
On behalf of the Board, it is a pleasure to present
the Toys “R” Us ANZ Limited FY24 Annual Report.
As we reflect on FY24, we are pleased to report that
TOY has made significant strides in addressing the
challenges we’ve faced to reposition the Company.
During the year we successfully executed several key
initiatives as outlined in our transformation plan:
•
Completed our exit from the UK market,
allowing us to focus our resources on more
promising opportunities.
•
Acquired the assets of RIOT Art and Craft,
expanding our product offering and strengthening
our position in the creative play segment.
•
Significantly reduced overheads, renegotiating
key contracts, right sizing our cost base to better
align with current operations and future goals.
•
Cleared a significant amount of obsolete
and aged inventory which, although impacting
short-term profitability in H1, has set the stage
for improving margins into the future.
Our financial performance this year reflects
both the challenges we’ve faced and the progress
we’ve made. While we experienced a 65% reduction
in revenue year on year, gross profit dropped
by only 27%, while our aggressive cost-cutting
measures reduced operating costs by $4.1 million
and delivered a stable and scalable cost base.
Most importantly, we saw the, overall gross
margin in the ANZ B2C business growing from
16% in H1 to 33% in the second half of the year
indicating that our strategies are beginning to
yield positive results.
The leaner underlying cost base and higher
margins, combined with optimized inventory
management will allow us to operate more
efficiently and productively and respond more
nimbly to market demands. While our journey
to full recovery is ongoing, we believe that we
have laid a solid foundation for future growth
and profitability.
02
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The Board and Management Team remain
committed to creating value for shareholders
through delivering our strategic pillars:
House of Brands: investment in our core
brands, further enhancing our product range,
with a particular focus on the Baby category
and our newly acquired art and crafts segment.
Adding complementary brands to the portfolio
through acquisition or organic growth.
Channels to Market: Introducing new ways
to shop online, exploring new channels to market
and expanding wholesale channels.
Operational Excellence: Using technology to support
scalability and to leverage data to strengthen our
marketing initiatives and increase market share.
The success of our strategic pillars is underpinned
by delivering outstanding customer experience.
We have implemented same-business-day shipping
as well as improving on all our customer service
metrics. We have improved marketing efficiency
and effectiveness through the implementation of
new systems and processes.
With a database of over 1.3 million loyal customers
and some of the most well-known and trusted
brands in the region, we have a strong base upon
which to build. Our goal of growing market share
in Toys and Hobbies to 5% over the next three years
remains firmly in our sights.
During the year Mr Kevin Moore, Chair of the Board,
stepped down and we note our appreciation for
his contribution to TOY. Ms Teresa Smith joined
our Board as Non-Executive Director bringing an
impressive marketing, retail and ecommerce skillset.
We express our gratitude and thanks to our
dedicated team for their hard work and resilience
during this transformative period. We also extend
thanks to you, our loyal shareholders for your
continued faith in our vision.
While challenges remain, we are confident that
the significant steps taken this year have position
TOY for a stronger future. We look forward to
delivering increased value to our customers,
partners, and shareholders.
Yours sincerely,
Kelly Humphreys
Penny Cox
Chair of the Board
CEO
Toys“R”Us ANZ Limited
Annual Report 2024
03
For personal use only
Directors’ Report
The Directors present their report, together with the financial statements, on the consolidated entity (referred
to hereafter as the ‘Group’) consisting of Toys “R” Us ANZ Limited (referred to hereafter as the ‘Company’)
and the entities it controlled at the end of, or during, the year ended 31 July 2024.
Directors
The following persons were Directors of Toys “R” Us ANZ Limited during or since the end of the year:
•
Kelly Humphreys – Chair and Independent Non‑Executive Director (appointed 5 October 2023
and Chair effective 21 December 2023);
•
Teresa Smith – Independent Non‑Executive Director (appointed on 1 April 2024);
•
John Tripodi – Independent Non‑Executive Director;
•
Kevin Moore – Independent Non‑Executive Director (Chair until 21 December 2023, resigned on 1 April 2024);
•
Silvio Salom – Independent Non‑Executive Director (resigned on 2 January 2024); and
•
Penny Cox – Chief Executive Officer (and Managing Director from 24 August 2023 to 18 October 2023).
Principal activities
Toys “R” Us ANZ Limited is an Australian based listed company with a vision to enrich the lives of people
by encouraging exploration, creativity and living life more fully through the enjoyment of toys, hobbies,
art and craft.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
Financial results
31 July 2024
$’000
31 July 2023
$’000
Change
%
Revenue from continuing operations
7,668
21,642
(64.6%)
EBITDA from continuing operations
(6,080)
(9,510)
(36.1%)
Profit/(Loss) before Tax from continuing operations
(11,818)
(26,107)
(54.7%)
Net profit/(loss) after tax from continuing operations
(11,501)
(25,791)
(55.4%)
Basic EPS (cents) from continuing operations
(11.24)
(29.89)
(62.4%)
ROE1
283.9%
(183.1%)
255.0%
Net cash balance/(Net debt)
(17,496)
(10,845)
61.3%
Gearing2
(119.9%)
830.7%
(114.4%)
1.
NPAT/average shareholder equity.
2. Debt/shareholder equity.
The Group’s statutory loss after income tax for the year ended 31 July 2024 was $19.4 million (2023: Loss after
income tax $32.7 million).
04
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Operating Results
During FY24, the Group achieved Sales Revenues of $17.4 million ($7.7 million from continuing operations,
$9.8 million from discontinued operations) as compared to $37.3 million in the previous comparative period
($21.6 million from continuing operations, $15.7 million from discontinued operations). During FY24, the reduction
in revenue compared to the previous year, in part, was due to a strategic decision to cutback unprofitable
sales and focus on higher-margin customers and orders. In H2, the Company completed the exit from the
unsustainable UK market, allowing for a refocus of resources on more promising opportunities, and discharging
debt obligations from this business.
As laid out in the Financial Report for FY23, the Company has been focused on initiatives that drive the
business towards profitability: reduction of operating costs, focus on margin improvement, exiting the UK
business, clearing of the aged inventory, and upgrade of business systems, all which have been achieved
in FY24.
At the beginning of FY24, Toys “R” Us ANZ Limited welcomed a new CEO, Penny Cox, marking the start
of a significant transformation in the Company’s leadership and strategic direction. The CEO has since
recruited a fresh leadership team, bringing in new perspectives and expertise. The Board also appointed
a new Chair, Kelly Humphreys, and a new board member, Teresa Smith. The refreshed Board and management
team has worked together to deliver significant progress in the turnaround of the Company.
Aggressive cost-rationalisation reduced operating costs by approximately $6.0 million from FY23, delivering
a more stable and scalable cost base. The Company’s focus on clearing aged inventory and optimizing
inventory management for new products, while impacting short-term profitability in FY24, has set the stage
for improving margins.
The acquisition of RIOT Art and Craft in H2 has strengthened the House of Brands business model.
Integration of RIOT into the TOY operation was completed swiftly and affordably, meaning synergies
between the brands have been realised almost immediately, with minimal additional cost.
Importantly, overall gross margin in the ANZ B2C business grew from 16% in H1 to 33% in the second half
of the year, indicating that the implemented strategies are beginning to yield positive results.
Overall, EBITDA losses narrowed, despite significantly lower revenues and a challenging macro-economic
environment. With the new right-sized cost base, the Company is well positioned to grow profitably in future.
Outlook and Strategic Plan
The Company’s efforts in FY24 were guided by three strategic pillars with notable progress made in each
area, and provide a clear roadmap for progression on each in FY25 and beyond.
House of Brands:
•
Successfully acquired the assets of RIOT Art and Craft, expanding the product offering and strengthening
the Company’s position in the creative play, and art and craft segments.
•
Continued investment in core brands, with a particular focus on optimising product ranges in the Toys “R” Us
and RIOT Brands.
•
FY25 and Beyond: Rebuild healthy inventory levels across all brands, new product development including
Private Label.
New Channels to Market:
•
Technical groundwork has been laid in FY24 to support a wider variety of channels to market.
•
FY25 and beyond: Continued focus on growing existing and adding new online shopping methods,
including expansion of drop-shipping and introduction of click and collect.
•
Expansion via RIOT’s existing wholesale channel to diversify revenue streams and bring in new types
of customers such as schools and childcare centres.
Toys“R”Us ANZ Limited
Annual Report 2024
05
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Directors’ Report
(Cont.)
Operational Excellence:
•
Significantly reduced overheads by renegotiating key contracts and right-sizing the cost base to better
align with current operations and future goals. Aggressive cost-cutting and efficiency-enhancing measures
reduced operating costs by $4.4 million (34%), which excludes the savings on the partial surrender of the
Clayton lease.
•
Continued rebuilding of the technology and data stack to support scalability and leverage data for
stronger marketing initiatives. Migration to Shopify for all websites has improved conversion rates and
provided a more scalable platform.
•
Enhanced measurement of operational KPIs and effectiveness to drive data-informed decision-making.
•
The Company maintains an active database of over 1.3 million loyal customers, which has grown with the
acquisition of RIOT.
•
FY25 and beyond: Continue to deliver an excellent customer experience to all customers. The Company’s
automated fulfilment centre ships orders on the same-business-day if ordered before 2pm, and CSAT
Scores (our measure of customer satisfaction) have been consistently above benchmark of 4.5 (out of 5).
The Company maintains its goal to grow its market share in Toys and Hobbies to 5% over the next three years,
this remains firmly in sight given the strong foundation laid in FY24. While challenges remain, the significant
steps taken this year have positioned Toys “R” Us ANZ Limited for a stronger future. The Company is now
more agile and better equipped to respond to market demands, setting the stage for improved performance
and increased value creation for customers, partners, and shareholders alike.
Funding and Capital Developments
Since the half year, the Group has successfully raised new capital and funding from a convertible securities
facility, a summary is below:
Up to $4.2 million Additional Funding from Mercer Street Global Fund
Following their initial equity investment of $200,000, plus the provision of an unsecured $600,000 Loan,
US-based Investment Fund Mercer agreed to provide up to a further $4.2 million in funding via Convertible
Securities subject to the mutual agreement of the parties and subject to shareholder approval being provided.
TRUK loan Facility
Under the Exit Agreements the Company will transfer ownership of all UK business assets to TRUK in
settlement of its US$1.8 million outstanding loan balance, which TRUK provided to support the transition
of the UK business. TRUK has agreed to release the Group from all remaining liabilities and obligations.
Private Placement of $0.6 million
In February 2024, the Group raised $550,000 through a placement to new and existing institutional and
sophisticated investors.
Successful Completion of $2.49 million Placement
On 9 July 2024, The Group announced it had secured $2.49 million through a placement to new and existing
institutional and sophisticated investors. This placement was subject to shareholder approval, which was
received on 23 August 2024.
06
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Significant changes in the state of affairs
Apart from the developments outlined above, there were no significant changes in the state of affairs of the
group during the financial year ended 31 July 2024.
Matters subsequent to the end of the financial year
On 23 August 2024, the shareholders approved the drawdown of up to $2.715 million from the convertible
securities facility, subject to further agreement between the parties.
On 23 August 2024, the Group raised $2.49 million through a placement to new and existing institutional
and sophisticated investors.
On 20 September 2024, 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 2024.
No other matter or circumstance has arisen since 31 July 2024 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs
in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have
not been included in this report because the Directors believe it would be likely to result in unreasonable
prejudice to the Group.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth
or State law.
Toys“R”Us ANZ Limited
Annual Report 2024
07
For personal use only
Directors’ Report
(Cont.)
Information on Directors
Kelly Humphreys
Chair and Independent
Non-Executive Director
(appointed
5 October 2023
and Chair effective
21 December 2023)
Experience and expertise:
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) and Latrobe Health Services.
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 Master of Management, a Diploma of Financial Services
and is a fellow member of the Australian Institute of Company Directors.
Other current directorships:
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:
350,000
Interests in options:
None
Interests in rights:
818,182
08
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Teresa Smith
Independent
Non-Executive Director
(appointed
1 April 2024)
Experience and expertise:
Ms Smith is highly skilled in building and enhancing brand equity, with a proven
track record in structuring and empowering teams to achieve impactful results.
She is recognised as an expert in multi-channel marketing, adept at developing
and executing comprehensive strategies that drive brand awareness and foster
deep customer engagement.
Ms Smith is the former Head of Marketing at Country Road Group, former
Brand Manager and Digital Marketing Manager at Bunnings and is currently
a Non-Executive Deputy Chair of the Yea & District Memorial Hospital, and
Non-Executive Director of Urban Camp.
Other current directorships:
None
Former directorships (last three years):
None
Interests in shares:
None
Interests in options:
None
Interests in rights:
None
John Tripodi
Independent
Non‑Executive Director
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.
Other current directorships:
None
Former directorships (last three years):
None
Special responsibilities:
Chair of the Audit and Risk Committee
Interests in shares:
147,444
Interests in options:
None
Interests in rights:
868,182
Toys“R”Us ANZ Limited
Annual Report 2024
09
For personal use only
Directors’ Report
(Cont.)
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes
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 excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Kim Larkin 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.
Meetings of Directors
The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee
held during the year ended 31 July 2024, and the number of meetings attended by each director were:
Board of Directors
Remuneration &
Nomination Committee*
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Kelly Humphreys
33
33
–
–
1
1
Teresa Smith
16
16
–
–
1
1
John Tripodi
36
36
2
2
4
4
Kevin Moore
19
20
2
2
3
3
Silvio Salom
8
8
2
2
2
2
Penny Cox
2
2
–
–
–
–
Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
*
The Remuneration & Nomination Committee is part of the full board and not a separate committee from 16 May 2024.
10
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Remuneration report (audited)
The Directors present the Remuneration report for the Group and its controlled entities for the year ended
31 July 2024. 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 Senior Executives who have authority and responsibility
for planning, directing and controlling the activities of the Group.
Remuneration policy
The remuneration policy has been designed to align KMP objectives with the Company’s strategy, culture
and performance. The aim of the remuneration policy is to attract, retain and motivate KMP to sustainably
manage and grow the business. Senior Executive remuneration packages include a balance of fixed
remuneration and may also include, short-term cash incentives and long-term equity incentives based
on key performance areas. The framework endeavours to align executive reward with market conditions
and creating shareholder value.
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 in line with
market and 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 Directors reflects the demands and responsibilities of their role. Director remuneration
is reviewed on an annual basis by the Remuneration and Nomination Committee. Compensation for Directors
comprises both fixed compensation and an “at risk” component and may include share-based payments.
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.
Compensation and other terms of employment for Senior Executives are formalised in service agreements.
The Senior 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, Senior Executives
and shareholders. The performance conditions are assessed periodically by the Remuneration & Nomination
Committee to ensure they remain relevant.
The Remuneration & Nomination Committee is part of the full Board and not a separate committee from
16 May 2024.
Toys“R”Us ANZ Limited
Annual Report 2024
11
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Directors’ Report
(Cont.)
Compensation and Company performance
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) has been the key performance measure
for the Company’s incentive plan for Senior Executives, linked to individual key performance objectives.
Details of remuneration
Fixed compensation
The terms of employment for all Senior Executives is based on a fixed compensation component. 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. Senior Executive’s compensation may also be 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 Senior Executive as a mix of cash and prescribed non‑financial benefits at
the Senior 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.
Voting and comments made at the Company’s 2023 Annual General Meeting (‘AGM’)
At the 2023 AGM, 98.76% of the votes received supported the adoption of the remuneration report for
the year ended 31 July 2023. 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:
Year Ended
31-Jul-24
Year Ended
31-Jul-23
Year Ended
31-Jul-22
Year Ended
31-Jul-21
Year Ended
31-Jul-20
Post Share Consolidation
NPAT ($’000)
(19,393)
(32,658)
(24,759)
(3,113)
(9,313)
Basic EPS (Cents)
(18.94)
(37.84)
(28.90)
(4.80)
(39.40)
Diluted EPS (Cents)
(18.94)
(37.84)
(28.90)
(4.80)
(39.40)
Total Dividends ($’000)
–
–
–
–
–
Year End Share Price ($)
0.10
0.11
0.61
1.60
0.22
Shares on Issue (No.)
115,690,728
86,308,667
86,186,118
84,835,886
24,040,408
Market Capitalisation ($’000)
11,569
9,494
52,574
135,737
5,289
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Remuneration of Key Management Personnel
The aggregate compensation of the key management personnel of the Group is set out below:
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Total
$
31 July 2024
Cash
salary
and fees
$
Cash
bonus
$
Non–
monetary
$
Super
annuation
$
AL/LSL &
Termin.
Payout
$
Shares
Rights
$
Share
Options
$
Directors:
Kelly Humphreys(i)
68,750
–
–
6,038
–
17,500
–
92,288
Teresa Smith(ii)
21,666
–
–
2,492
–
–
–
24,158
John Tripodi
65,000
–
–
7,312
–
17,500
–
89,812
Kevin Moore(iii)
70,000
–
–
7,813
–
–
–
77,813
Silvio Salom(iv)
31,146
–
–
3,426
–
–
–
34,572
Executives:
Penny Cox(v)
395,897
–
–
32,715
–
31,111
–
459,723
Wei Si(vi)
35,000
52,500
–
9,625
16,806
–
–
113,931
Lian Yu(vii)
115,909
57,955
–
19,125
–
–
–
192,989
803,368
110,455
–
88,546
16,806
66,111
– 1,085,286
(i)
Appointed 5 October 2023, and Chair effective 21 December 2023.
(ii) Appointed 1 April 2024.
(iii) Resigned 1 April 2024.
(iv) Resigned 2 January 2024.
(v) Appointed as CEO from 23 August 2023, and managing director from 24 August 2023 to 18 October 2023.
(vi) Appointed as CFO on 31 March 2022, resigned 29 September 2023.
(vii) Resigned 9 February 2024.
Toys“R”Us ANZ Limited
Annual Report 2024
13
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Directors’ Report
(Cont.)
31 July 2023
Short-term benefits
Post-
employment
benefits
Other
long‑term
employee
benefits
Termin
ation
Benefits
$
Share-based
payments
Total
$
Cash
salary
and
fees
$
Cash
bonus
$
Super
annuation
$
Long
service
leave
$
Shares
$
Share
Options
$
Directors:
Kevin Moore(iv)
137,500
–
12,388
–
–
–
16,385
166,273
Louis Mittoni(ii)
374,515
26,250
27,500
–
278,419
–
–
706,684
Nicki Anderson(i)
5,000
–
525
–
–
62,500
–
68,025
John Tripodi
64,417
–
6,791
–
–
–
30,000
101,208
Silvio Salom(iii)
43,333
–
4,577
–
–
–
–
47,910
Executives:
Wei Si
200,833
10,000
22,225
3,556
–
–
–
236,614
Lian Yu
240,734
15,000
24,913
4,186
–
–
32,406
317,239
1,066,332
51,250
98,919
7,742
278,419
62,500
78,791
1,643,953
(i)
Appointed 25 October 2018, resigned 31 August 2022.
(ii) Appointed 26 November 2020, resigned 27 July 2023.
(iii) Appointed 11 November 2022.
(iv) Interim CEO & Executive Chair appointed 15 May and resigned 20 July 2023.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Fixed remuneration
Remuneration linked
to performance*
31 July 2024
31 July 2023
31 July 2024
31 July 2023
Non-Executive Directors:
Kelly Humphreys
100.0%
–
–
–
Teresa Smith
100.0%
–
–
–
John Tripodi
100.0%
100.0%
–
–
Kevin Moore
100.0%
100.0%
–
–
Silvio Salom
100.0%
100.0%
–
–
Louis Mittoni
–
96.3%
–
3.7%
Nicki Anderson
–
100.0%
–
–
Other Key Management Personnel:
Wei Si
53.9%
95.8%
46.1%
4.2%
Lian Yu
70.0%
95.3%
30.0%
4.7%
Penny Cox
100.0%
–
–
–
*
Represents cash bonus.
14
For personal use only
Short-term incentives
In FY24, STI payments made in the form of cash bonus were $110,455 (2023: $51,250). During the year, 100%
of the eligible cash bonus was paid.
Long-term incentives
In FY24, LTI payments of $66,111 were made in the form of share rights (2023: share options $78,791).
Service agreements
Remuneration and other terms of appointment and employment for the Chair, Executive Director,
Non‑Executive Directors and the other Senior Executives are formalised in service agreements/employment
letters. In the case of the Executive Director and Senior 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 KMP.
Kelly Humphreys – Chair and Independent Non‑Executive Director
(appointed 5 October 2023 and Chair effective 21 December 2023)
Term of agreement: Full‑time and no specific term.
Details: Payment of a termination benefit on early termination by the employer is not applicable.
Teresa Smith – Independent Non‑Executive Director (appointed 1 April 2024)
Agreement commenced: Full‑time and no specific term.
Details: Payment of a termination benefit on early termination by the employer is not applicable.
John Tripodi – Independent Non‑Executive Director
Term of agreement: Full‑time permanent and no specific term.
Details: Payment of a termination benefit on early termination by the employer is not applicable.
Kevin Moore – Independent Non‑Executive Director
(Chair until 21 December 2023, resigned on 1 April 2024)
Term of agreement: Full‑time and no specific term.
Details: Payment of a termination benefit on early termination by the employer is not applicable.
Silvio Salom – Independent Non‑Executive Director (resigned on 2 January 2024)
Term of agreement: Full‑time permanent and no specific term.
Details: Payment of a termination benefit on early termination by the employer is not applicable.
Penny Cox – Chief Executive Officer and (Managing Director from 24 August 2023 to 18 October 2023)
Term of agreement: Full‑time permanent and no specific term.
Details: 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.
Toys“R”Us ANZ Limited
Annual Report 2024
15
For personal use only
Directors’ Report
(Cont.)
Wei Si – Chief Financial Officer (resigned on 29 September 2023)
Term of agreement: Full‑time permanent and no specific term.
Details: 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 agreement: Full‑time permanent and no specific term.
Details: 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.
The Board has considered what constitutes independence of Directors and assesses the materiality of Directors
interests, positions, associations or relationships on a case-by-case basis to determine whether it might
influence, or reasonably be perceived to influence, in a material respect, the capacity to apply independent
judgment on matters that come before the Board and to act in the best interest of the Company. All Directors
are noted as being independent from the date of their appointment. Key management personnel have no
entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
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.
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation
during the year ended 31 July 2024.
Options
There were no options over ordinary shares issued to Directors and other key management personnel as part
of compensation that were outstanding as at 31 July 2024.
There were no options over ordinary shares granted to or vested by Directors and other key management
personnel as part of compensation during the year ended 31 July 2024.
16
For personal use only
Service rights
The terms and conditions of each grant of service rights over ordinary shares affecting remuneration
of Directors and other key management personnel in this financial year or future reporting years are
as follows:
Name
Number
of rights
granted1
Grant date
Vesting
date and
exercisable
date
Expiry date
Exercise
price
Fair value
per right
at grant
date1
Kelly-Anne Humphreys
272,727
27/12/2023
27/12/2024
27/12/2025
–
$0.1100
Kelly-Anne Humphreys
272,727
27/12/2023
27/12/2025
27/12/2026
–
$0.1100
Kelly-Anne Humphreys
272,727
27/12/2023
27/12/2026
27/12/2027
–
$0.1100
John Anthony Tripodi
272,727
27/12/2023
27/12/2024
27/12/2025
–
$0.1100
John Anthony Tripodi
272,727
27/12/2023
27/12/2025
27/12/2026
–
$0.1100
John Anthony Tripodi
272,727
27/12/2023
27/12/2026
27/12/2027
–
$0.1100
Silvio Salom2
272,727
27/12/2023
27/12/2024
27/12/2025
–
$0.1100
Silvio Salom2
272,727
27/12/2023
27/12/2025
27/12/2026
–
$0.1100
Silvio Salom2
272,727
27/12/2023
27/12/2026
27/12/2027
–
$0.1100
1.
The appreciation rights numbers, share price and fair value are post consolidation of shares (1:10).
2. Lapsed during the year due to failure to meet vesting conditions.
Service rights granted carry no dividend or voting rights.
Appreciation rights
The terms and conditions of each grant of appreciation rights over ordinary shares affecting remuneration of
Directors and other key management personnel in this financial year or future reporting years are as follows:
Name
Number of
rights
granted
Grant date
Vesting
date and
exercisable
date
Expiry
date
Exercise
price
Fair value
per right
at grant
date1
Penny Cox
484,848
27/12/2023
1/09/2024
27/12/2028
–
$0.1100
Penny Cox
484,848
27/12/2023
1/09/2025
27/12/2028
–
$0.1100
Penny Cox
484,848
27/12/2023
1/09/2026
27/12/2028
–
$0.1100
1.
The appreciation rights numbers, share price and fair value are post consolidation of shares (1:10).
Appreciation rights granted carry no dividend or voting rights.
Toys“R”Us ANZ Limited
Annual Report 2024
17
For personal use only
Directors’ Report
(Cont.)
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
The number of shares in the Company held during the financial year by each Director and other members
of key management personnel of the Group, including their personally related parties, is set out below:
Year ended 31 July 2024
Balance at
the start
of the year
Shares
purchased
on market
Shares
issued as
remuneration
Others
Balance at
the end of
the year
Ordinary shares
Kelly Humphreys
–
350,000
–
–
350,000
John Tripodi
11,080
–
–
136,364
147,444
Kevin Moore(i)
403,246
–
–
(403,246)
–
Silvio Salom(ii)
2,482,500
–
–
(2,482,500)
–
Penny Cox(iii)
–
–
–
1,063,830
1,063,830
2,896,826
350,000
–
(1,685,552)
1,561,274
The ordinary shares numbers are post consolidation of shares (1:10).
(i) Resigned 1 April 2024.
(ii) Resigned 2 January 2024.
(iii) Appointed as CEO from 23 August 2023, and managing director from 24 August 2023 to 18 October 2023.
Year ended 31 July 2023
Balance at
the start
of the year
Shares
purchased
on market
Shares
issued as
remuneration
Others
Balance at
the end of
the year
Ordinary shares
Kevin Moore
302,746
100,500
–
–
403,246
Louis Mittoni(i)
29,145,582
–
–
(29,145,582)
–
John Tripodi
11,080
–
–
–
11,080
Nicki Anderson(ii)
107,547
–
122,549
(230,096)
–
Silvio Salom(iii)
–
–
–
2,482,500
2,482,500
29,566,955
100,500
122,549
(26,893,178)
2,896,826
The ordinary shares numbers are post-consolidation of shares (1:10).
(i) Resigned 27 July 2023.
(ii) Resigned 31 August 2022.
(iii) Appointed on 11 November 2022.
18
For personal use only
Share options
The number of options over ordinary shares in the Company held during the financial year by each Director
and other members of key management personnel of the Group, including their personally related parties,
is set out below:
The tables below include balances for unlisted options.
Year ended 31 July 2024
Balance at
the start
of the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Options over ordinary shares
Kevin Moore(i)
511,447
–
–
(511,447)
–
Lian Yu
169,196
–
–
–
169,196
680,643
–
–
(511,447)
169,196
The share options numbers are post consolidation of shares (1:10).
(i) Resigned on 1 April 2024.
The ordinary shares numbers are post consolidation of shares (1:10).
Year ended 31 July 2023
Balance at
the start
of the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Options over ordinary shares
Kevin Moore
338,829
172,618
-
-
511,447
Louis Mittoni(i)
1,694,146
863,086
-
(2,557,232)
-
Executives
-
-
-
-
-
Lian Yu
169,196
-
-
-
169,196
2,202,171
1,035,704
-
(2,557,232)
680,643
The share options numbers are post consolidation of shares (1:10).
(i) Resigned on 27 July 2023, share options was forfeited upon resignation.
Service Rights
The number of performance rights over ordinary shares in the Company held during the financial year by each
director and other members of key management personnel of the Group, including their personally related
parties, is set out below:
Year ended 31 July 2024
Balance at
the start
of the year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
Service rights over ordinary shares
Kelly-Anne Humphreys
–
818,182
–
–
818,182
John Tripodi
50,000
818,182
–
–
868,182
50,000
1,636,364
–
–
1,686,364
The service rights numbers are post consolidation of shares (1:10).
Toys“R”Us ANZ Limited
Annual Report 2024
19
For personal use only
Directors’ Report
(Cont.)
Year ended 31 July 2023
Balance at
the start
of the year
Granted
Exercised
Exercised/
forfeited/
other
Balance at
the end of
the year
Service rights over ordinary shares
Nicki Anderson
50,000
–
(34,749)
(15,251)
–
John Tripodi
50,000
–
–
–
50,000
100,000
–
(34,749)
(15,251)
50,000
The service rights numbers are post consolidation of shares (1:10).
Share Appreciation Rights
The number of share appreciation rights over ordinary shares in the Company held during the financial year
by each director and other members of key management personnel of the Group, including their personally
related parties, is set out below:
Year ended 31 July 2024
Balance at
the start
of the year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
Share appreciation rights over
ordinary shares
Penny Cox
–
1,454,545
–
–
1,454,545
–
1,454,545
–
–
1,454,545
The share appreciation rights numbers are post consolidation of shares (1:10).
Other statutory disclosures
Loans to key management personnel and their related parties
During FY24 and to the date of this report, the Group made no loans to Directors and other KMP.
As at 31 July 2024, Louis Mittoni owed the Company $Nil (2023: $28,575) related to personal expenses
incurred on a company credit card.
Transactions with Key Management Personnel
During FY24 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.
20
For personal use only
Shares under option
Unissued ordinary shares of Toys “R” Us ANZ Limited under option at the date of this report are as follows:
Grant date
Expiry
date
Exercise
price
Number
under
option1
23‑Nov‑20
1‑Nov‑25
$1.9900
172,618
23‑Nov‑20
1‑Nov‑24
$1.6600
169,672
1‑May‑21
1‑May‑25
$1.3800
169,196
31-May-24
31-May-27
$0.1162
5,593,804
6,105,290
1.
Post consolidation of shares (1:10).
No person entitled to exercise the options had or has any right by virtue of the option to participate in any
share issue of the Company or of any other body corporate.
Shares under service rights
Unissued ordinary shares of Toys “R” Us ANZ Limited under performance rights at the date of this report are
as follows:
Grant date
Expiry
date
Exercise
price
Number
under
rights1
23‑Nov‑20
10‑Dec‑26
$1.8000
50,000
27‑Dec‑23
11-Dec-24
$0.1100
545,454
27‑Dec‑23
11-Dec-25
$0.1100
545,454
27‑Dec‑23
11-Dec-26
$0.1100
545,456
1,686,364
1.
Post consolidation of shares (1:10).
No person entitled to exercise the service rights had or has any right by virtue of the service right to
participate in any share issue of the Company or of any other body corporate.
Shares under share appreciation rights
Unissued ordinary shares of Toys “R” Us ANZ Limited under retention rights at the date of this report are
as follows:
Grant date
Expiry
date
Exercise
price
Number
under
rights1
14-Oct-21
21-Sep-26
$1.8000
8,001
27-Dec-23
27-Dec-28
$0.1300
1,454,545
1,462,546
1.
Post consolidation of shares (1:10).
Toys“R”Us ANZ Limited
Annual Report 2024
21
For personal use only
Directors’ Report
(Cont.)
No person entitled to exercise the share appreciation rights had or has any right by virtue of the share
appreciation right to participate in any share issue of the Company or of any other body corporate.
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.
Shares issued on the exercise of service rights
There were no ordinary shares of Toys “R” Us ANZ Limited issued on the exercise of service rights during
the year ended 31 July 2024 and up to the date of this report.
Shares issued on the exercise of share appreciation rights
There were no ordinary shares of Toys “R” Us ANZ Limited issued on the exercise of share appreciation rights
during the year ended 31 July 2024 and up to the date of this report.
Indemnity 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 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 237 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 29 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.
22
For personal use only
The Directors are of the opinion that the services as disclosed in note 29 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.
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial
year by the auditor are outlined in note 29 to the financial statements.
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 report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the Directors
Kelly Humphreys
Chair
30 September 2024
Toys“R”Us ANZ Limited
Annual Report 2024
23
For personal use only
18
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
RSM Australia Partners
Level 27, 120 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 2024, 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 J MORILLO MALDONADO
Partner
Dated: 30 September 2024
Melbourne, Victoria
Auditor’s Independence Declaration
24
For personal use only
Financial Statements
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
26
Consolidated Statement of Financial Position
28
Consolidated Statement of Changes in Equity
29
Consolidated Statement of Cash Flows
31
Notes to the Consolidated Financial Statements
32
Consolidated Entity Disclosure Statement
86
Directors’ Declaration
87
Independent Auditor’s Report
88
Shareholder Information
94
Corporate Directory
97
25
Toys“R”Us ANZ Limited
Annual Report 2024
For personal use only
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the year ended 31 July 2024
Note
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Revenue from continuing operations
Revenue from contracts with customers
4
7,668
21,642
Cost of goods sold
(5,630)
(18,819)
Gross profit
2,038
2,823
Other Income
5
469
344
Expenses
Administration expense
(2,432)
(2,458)
Employee benefits expense
5
(3,430)
(4,748)
Marketing and selling expenses
(2,203)
(4,167)
Warehouse and distribution expenses
(522)
(1,304)
Total expenses
(8,587)
(12,677)
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
(6,080)
(9,510)
Finance income
64
7
Depreciation and amortisation expense
5
(3,036)
(2,915)
Impairment of goodwill
–
(11,128)
Finance costs
5
(2,766)
(2,561)
Loss before income tax benefit from continuing operations
(11,818)
(26,107)
Income tax benefit
6
317
316
Loss after income tax benefit from continuing operations
(11,501)
(25,791)
Loss after income tax expense from discontinued operations
7
(7,892)
(6,867)
Loss after income tax benefit for the year
(19,393)
(32,658)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
(400)
(234)
Other comprehensive loss for the year, net of tax
(400)
(234)
Total comprehensive loss for the year
(19,793)
(32,892)
Total comprehensive loss for the year is attributable to:
Continuing operations
(11,501)
(25,791)
Discontinued operations
(8,292)
(7,101)
(19,793)
(32,892)
26
For personal use only
Note
Consolidated
31 July 2024
Cents
31 July 2023
Cents
Loss per share from continuing operations
Basic loss per share
41
(11.24)
(29.89)
Diluted loss per share
41
(11.24)
(29.89)
Loss per share from discontinued operations
Basic loss per share
41
(7.72)
(7.95)
Diluted loss per share
41
(7.72)
(7.95)
Loss per share
Basic loss per share
41
(18.96)
(37.84)
Diluted loss per share
41
(18.96)
(37.84)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
Toys“R”Us ANZ Limited
Annual Report 2024
27
For personal use only
Consolidated Statement
of Financial Position
As at 31 July 2024
Note
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Assets
Current assets
Cash and cash equivalents
8
708
1,766
Trade and other receivables
9
–
837
Inventories
10
594
4,905
Other assets
12
905
208
2,207
7,716
Assets of disposal group classified as held for sale
13
16
3,119
Total current assets
2,223
10,835
Non-current assets
Property, plant and equipment
14
2,023
2,767
Right-of-use assets
11
8,186
11,167
Goodwill and other intangibles
15
2,837
6,899
Other assets
12
2,756
2,935
Total non-current assets
15,802
23,768
Total assets
18,025
34,603
Liabilities
Current liabilities
Trade payables
16
1,871
3,405
Contract liabilities/deferred revenue
66
114
Borrowings
17
14,838
12,084
Lease liabilities
18
564
576
Derivative financial instruments
19
505
–
Employee benefits
20
233
460
Provisions
222
280
Contingent consideration
21
210
–
Other current liabilities
23
1,779
2,044
20,288
18,963
Liabilities directly associated with assets classified as held for sale
24
3,128
1,565
Total current liabilities
23,416
20,528
Non-current liabilities
Borrowings
17
390
526
Lease liabilities
18
8,728
11,284
Deferred tax
6
421
738
Employee benefits
20
–
9
Contingent consideration
21
252
–
Total non-current liabilities
9,791
12,557
Total liabilities
33,207
33,085
Net assets/(liabilities)
(15,182)
1,518
Equity
Issued capital
25
295,540
292,920
Reserves
549
476
Accumulated losses
(311,271)
(291,878)
Total equity/(deficiency)
(15,182)
1,518
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
28
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Consolidated Statement
of Changes in Equity
For the year ended 31 July 2024
Consolidated
Issued
capital
$’000
Equity-
settled
employee
benefits
reserve
$’000
Convertible
note
options
reserve
$’000
Foreign
currency
translation
reserve
$’000
Accumulated
losses
$’000
Total
equity
$’000
Balance at 1 August 2022
292,965
2,121
–
20
(260,958)
34,148
Loss after income tax
benefit for the year
–
–
–
–
(32,658)
(32,658)
Other comprehensive loss
for the year, net of tax
–
–
–
(234)
–
(234)
Total comprehensive loss
for the year
–
–
–
(234)
(32,658)
(32,892)
Transactions with owners
in their capacity as owners:
Purchase of unmarketable
parcels
(107)
–
–
–
–
(107)
Issue of stock warrants
–
113
–
–
–
113
Issue of options
–
131
–
–
–
131
Options forfeited/cancelled
–
(1,738)
–
–
1,738
–
Issue of share appreciation/
service rights (net)
62
57
–
–
–
119
Issue of employee options
–
6
–
–
–
6
Balance at 31 July 2023
292,920
690
–
(214)
(291,878)
1,518
Toys“R”Us ANZ Limited
Annual Report 2024
29
For personal use only
Consolidated Statement
of Changes in Equity
(Cont.)
Consolidated
Issued
capital
$’000
Equity-
settled
Employee
benefits
reserve
$’000
Convertible
note
options
reserve
$’000
Foreign
currency
translation
reserve
$’000
Accumulated
Losses
$’000
Total
deficiency
in equity
$’000
Balance at 1 August 2023
292,920
690
–
(214)
(291,878)
1,518
Loss after income tax
benefit for the year
–
–
–
–
(19,393)
(19,393)
Other comprehensive loss
for the year, net of tax
–
–
–
(400)
–
(400)
Total comprehensive loss
for the year
–
–
–
(400)
(19,393)
(19,793)
Transactions with owners
in their capacity as owners:
Issue of ordinary shares,
net of issue cost
1,260
–
–
–
–
1,260
Sale of unmarketable parcels
55
–
–
–
–
55
Share issue for conversion
of convertible note
655
–
–
–
–
655
Share-based payments
–
176
–
–
–
176
Shares issued for Riot
Acquisition
350
–
–
–
–
350
Share issued to Penny Cox
– conversion of Loan
100
–
–
–
–
100
Shares and options issued
pursuant to the convertible
note facility
200
–
297
–
–
497
Balance at 31 July 2024
295,540
866
297
(614)
(311,271)
(15,182)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
30
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Consolidated Statement of Cash Flows
For the year ended 31 July 2024
Note
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
20,283
40,542
Receipts from other income (including government grants)
–
347
Payments to suppliers (inclusive of GST) and employees
(26,517)
(50,906)
Cash utilised in operations
(6,234)
(10,017)
Interest and other finance costs paid
(1,772)
(2,448)
Other income received
469
–
Net cash used in operating activities
38
(7,537)
(12,465)
Cash flows from investing activities
Payment for acquisition of business
34
(300)
–
Payments for property, plant and equipment
14
(5)
(1,014)
Payments for intangible assets
15
(292)
–
Interest and other investment income received
64
56
Proceeds from disposal of property, plant and equipment
–
9
Proceeds from disposal of intangibles
–
(16)
Proceeds from refund of security deposits
179
828
Net cash used in investing activities
(354)
(137)
Cash flows from financing activities
Proceeds from issue of shares
25
2,118
–
Proceeds from issue of convertible notes (net of transaction costs)
1,396
–
Proceeds from borrowings
4,256
2,610
Share issue transaction costs
(149)
–
Repayment of lease liabilities
(795)
(673)
Payments for buyback of unmarketable parcels
–
(107)
Net cash from financing activities
6,826
1,830
Net decrease in cash and cash equivalents
(1,065)
(10,772)
Cash and cash equivalents at the beginning of the financial year
1,766
12,538
Effects of exchange rate changes on cash and cash equivalents
7
–
Cash and cash equivalents at the end of the financial year
8
708
1,766
The above consolidated statement of cashflows include cashflow in relation to discontinued operations. Refer to note 7
for further details.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Toys“R”Us ANZ Limited
Annual Report 2024
31
For personal use only
Notes to the Consolidated
Financial Statements
31 July 2024
General information
The financial statements cover Toys “R” Us ANZ Limited as a Group consisting of Toys “R” Us ANZ Limited
and the entities it controlled at the end of, or during, the year. The financial statements are presented in
Australian dollars., which is Toys “R” Us ANZ Limited’s functional and presentation currency. Toys “R” Us ANZ
Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business are:
Registered office
Level 8, 210 George Street
Sydney, NSW 2000
Principal place of business
Unit 3, 45-49 McNaughton Road
Clayton, VIC 3168
A description of the nature of the Group’s operations and its principal activities are included in the
Directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors,
on 30 September 2024.
Note 1. Material accounting policy information
The accounting policies that are material to the Group are set out below. The accounting policies adopted
are consistent with those of the previous financial year, unless otherwise stated.
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 $19.4 million and
has cash outflows from operating activities of $7.5 million for year ended 31 July 2024, and as of that date,
the group’s current liabilities exceeded its current assets by $21.2 million and group’s total liabilities
exceeded total assets by $15.2 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 realise 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:
•
As disclosed in note 37, in August 2024, the Company raised approximately $2.49 million in capital from
existing and new investors and intends to raise additional capital in the next 6–12 months;
•
As disclosed in note 37, in August 2024, shareholders approved the drawdown of up to $2.715 million from
the convertible securities facility, subject to further agreement between the parties;
•
The ongoing strategic plan to ‘right-size’ the Australian business to significantly reduce operational costs
and release working capital tied up to Lease Bond;
32
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•
Included in current liabilities is an amount of $2.98 million of loan payable to TRU UK Kids, Inc. (“TRUK”),
which has been agreed to be fully offset against the assets of the UK operations upon wind down of the
UK entity, in satisfaction of all debts and liabilities owed to TRUK; 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.
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.
New or amended Accounting Standards and Interpretations adopted
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also
comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for derivative
financial instruments that have been measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in note 2.
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 33.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Toys “R” Us
ANZ Limited (‘Company’ or ‘parent entity’) as at 31 July 2024 and the results of all subsidiaries for the year
then ended. Toys “R” Us ANZ Limited and its subsidiaries together are referred to in these financial statements
as the ‘Group’.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
33
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are de-consolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are
eliminated. 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.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
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.
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.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Toys “R” Us ANZ Limited’s functional
and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars 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 financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian
dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for
the period. All resulting foreign exchange differences are recognised in other comprehensive income through
the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment
is disposed of.
Note 1. Material accounting policy information (Cont.)
34
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Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the Group: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer
of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Sale of goods
The Group generates the majority of its revenue from the sales of goods. Revenue from the sale of goods
is recognised at the point in time when the customer obtains control of the goods, which is generally at the
time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based
on either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income 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.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
35
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
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.
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.
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.
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 6 to the financial statements.
Discontinued operations
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 as a separate major line of business or geographical area of operations;
•
is a 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.
Note 1. Material accounting policy information (Cont.)
36
For personal use only
The results of discontinued operations are presented separately on the face of the statement of profit or loss
and other comprehensive income. 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.
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 includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
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 allowance for expected credit losses. Trade receivables are generally
due for settlement within 30 days.
The Group has applied the simplified approach to measuring 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
Stock on hand is 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 purchase and delivery costs,
net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated 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.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
37
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes
in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Non-current assets or disposal groups classified as held for sale
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.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant
and equipment over their expected useful lives as follows:
Leasehold improvements 3–5 years
Plant and equipment
3–7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life
of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken
to profit or loss.
Note 1. Material accounting policy information (Cont.)
38
For personal use only
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease
payments made at or before the commencement date net of any lease incentives received, any initial direct
costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership
of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
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 or loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised
at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any
impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any
impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets
are measured as the difference between net disposal proceeds and the carrying amount of the intangible
asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the
expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Goodwill
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.
Licenses and trademarks
Significant costs associated with licenses and trademarks are amortised on a straight-line basis over the
period of their expected benefit, being their finite life ranging from 3 to 20 years.
Customer database
Customer contracts acquired in a business combination are amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 5 years.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 5 years.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
39
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Impairment of non-financial assets
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 an asset’s fair value less costs of disposal and value-in-use.
The value-in-use is the present value of the estimated future cash flows relating to the asset using
a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
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.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability
in the statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised
cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of
time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option
that is recognised and included in shareholders equity as a convertible note reserve, net of transaction costs.
The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding
interest on convertible notes is expensed to profit or loss.
Borrowings with variable equity conversion features
Upon initial recognition, the Directors assess borrowings with conversion clauses for fixed or variable
conversion terms. Where terms are variable, at initial recognition an embedded derivative is recognised
at fair value, and the difference received between the consideration received for the note and the fair
value of the derivative is recognised in the underlying host (debt) contract.
Thereafter at each reporting date, the embedded derivative is reassessed at its fair value, with changes
in fair value taken to the profit or loss. The underlying host contract is recognised at amortised cost.
Costs of issuing the convertible note are amortised over the life of the underlying host contract.
Note 1. Material accounting policy information (Cont.)
40
For personal use only
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 Group’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.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs
are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of
a past event, it is probable 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 the best estimate of the
consideration required to settle the present obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted
using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage
of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are measured at the present value of expected future payments to be made in respect
of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date
on high quality corporate bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
41
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees
in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange
of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term
of the option, together with non-vesting conditions that do not determine whether the Group receives the
services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair
value of the award, the best estimate of the number of awards that are likely to vest and the expired portion
of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated
at each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by
applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and
conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the
liability is calculated as follows:
•
during the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period; and
•
from the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions
is the cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject
to market conditions are considered to vest irrespective of whether or not that market condition has been
met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has
not been made. An additional expense is recognised, over the remaining vesting period, for any modification
that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within the control of the Group or employee and is not
satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if they were a modification.
Note 1. Material accounting policy information (Cont.)
42
For personal use only
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date; and assumes
that the transaction will take place either: in the principal market; or in the absence of a principal market,
in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
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.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
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.
Note 1. Material accounting policy information (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
43
For personal use only
Notes to the Consolidated
Financial Statements
(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 (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition
of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables
in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended
31 July 2024. The Group has not yet assessed the impact of these new or amended Accounting Standards
and Interpretations.
Note 1. Material accounting policy information (Cont.)
44
For personal use only
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other
various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Key sources of estimation uncertainty
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.
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.
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to customers, the key performance obligation of
the Group is considered to be the point of delivery of the goods to the customer, as this is deemed to be the
time that the customer obtains control of the promised goods and therefore the benefits of unimpeded access.
Goodwill and other indefinite life intangible assets
The Group tests annually, or when impairment indicators are identified, whether goodwill and other intangible
assets have suffered any impairment in accordance with the accounting policy. The recoverable amount
of the cash generating units has been determined based on either relief from royalty models or the present
value of the expected cash flows. These calculations require the use of assumptions. A significant change
to these assumptions may affect the recoverable amount of the cash generating units.
The Group defines its cash generating units (CGU) as the smallest identifiable group of assets that generates
cash inflows. Under this interpretation, for the purpose of impairment of goodwill, the Group has identified
two CGUs, being the business-to-consumer (B2C) and business-to-business (B2B) CGUs. This goodwill was
assessed for indicators of impairment and no indicators were present.
Recoverability of inventory
The Group regularly assesses whether the net realisable value (NRV) of its inventories is reasonable in light
of changing market conditions. 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.
Toys“R”Us ANZ Limited
Annual Report 2024
45
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Intangible assets and goodwill
Intangible assets are amortised, based on the useful life assessed by management, as follows:
Software
3 years
Customer database
5 years
Patents
20 years
Trademarks
3–5 years
Licensed distribution agreements
1–20 years
Whilst the current useful lives are management’s best estimate, a periodic review is undertaken to ensure
these remain appropriate.
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.
Valuation of conversion features attached to the convertible notes
The Group has issued convertible debt instruments that contain embedded conversion features. The debt
component is valued based on discounting the contractual cash flows by the interest rate that would apply
to an otherwise identical debt instrument with no conversion feature, which usually involves significant
judgment in relation to identifying benchmark debt with similar features. The fair valuation of conversion
features requires significant judgment due to the reliance on various assumptions and market variables.
The fair value of the conversion feature is determined using a Monte Carlo simulation model, which
incorporates inputs such as the Company’s stock price, volatility, risk-free interest rate, and expected
terms until conversion. Changes in these inputs could result in significantly different fair value estimates.
Management continually assesses market conditions and updates assumptions as required.
Note 3. Operating segments
Identification of reportable operating segments
Based on the internal reports reviewed by the Board of Directors and key management personnel (who are
identified as the Chief Operating Decision Makers (‘CODM’)) to make strategic and operating decisions, assess
business performance and in determining the allocation of resources, management has determined that the
Group has two operating segments, being Business to Consumer (B2C) and Business to Business (B2B).
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.
Note 2. Critical accounting judgements, estimates and assumptions (Cont.)
46
For personal use only
Information about products and services
The principal products of each of these operating segments are follows:
•
B2C – direct-to-consumer sale of consumer products (toys, hobby and baby goods);
•
B2B – wholesaling and distribution of IT products; and
•
Corporate – relates to the corporate running costs of the Group.
Pursuant to classification of B2B segment as a discontinued operation (see note 7), operating segment
information from continuing operations have only been provided for B2C segment.
Intersegment transactions were made at market rates and are eliminated on consolidation. All intersegment
balances are eliminated on consolidation. There were no intersegment transactions during the year or account
balances at 31 July 2024.
The Directors have assessed that there are no major customers.
Operating segment information from continuing operations
Consolidated – ended 31 July 2024
B2C
$’000
Corporate
$’000
Total
$’000
Revenue
Sales to external customers
7,668
–
7,668
Other income
–
469
469
Cost of goods sold
(5,630)
–
(5,630)
Other expenses
(7,417)
(1,170)
(8,587)
EBITDA
(5,379)
(701)
(6,080)
Consolidated – ended 31 July 2023
B2C
$’000
Corporate
$’000
Total
$’000
Revenue
Sales to external customers
21,642
–
21,642
Other revenue
–
344
344
Cost of goods sold
(18,819)
–
(18,819)
Other expenses
(10,618)
(2,059)
(12,677)
EBITDA
(7,795)
(1,715)
(9,510)
Note 3. Operating segments (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
47
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Reconciliation from segment reporting to net profit/(loss) after tax from
continuing operations
Consolidated
31 July 2024
31 July 2023
EBITDA
(6,080)
(9,510)
Depreciation, amortisation and impairment expenses
(3,036)
(14,043)
Finance costs (net)
(2,702)
(2,554)
Loss before income tax expense from continuing operations
(11,818)
(26,107)
Income tax benefit
317
316
Loss after income tax expense from continuing operations
(11,501)
(25,791)
Depreciation, amortisation and impairment expenses by segment
Consolidated
31 July 2024
$’000
31 July 2023
$’000
B2C
1,581
12,692
Corporate
1,455
1,351
3,036
14,043
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.
Consolidated
31 July 2024
$’000
31 July 2023
$’000
B2C
3,598
4,100
B2B
–
4,067
Corporate
9,488
12,667
Total
13,046
20,834
Note 3. Operating segments (Cont.)
48
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Note 4. Revenue
Revenue
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Continuing operations
Revenues from contracts with customers
Revenue from the sale of goods
7,329
21,562
Other revenue
Other revenue
339
80
7,668
21,642
Disaggregation of revenue
The disaggregation of revenue from contracts with customers from continuing operations is as follows:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Operating segments
B2C
7,668
21,642
Geographical regions
Australia
7,668
21,642
Timing of revenue recognition
Goods transferred at a point in time
7,668
21,642
Toys“R”Us ANZ Limited
Annual Report 2024
49
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 5. Profit/(loss) for the year
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Loss before income tax from continuing operations includes the following
specific expenses:
Depreciation
Property, plant and equipment
715
614
Right-of-use assets
1,207
1,085
Total depreciation
1,922
1,699
Amortisation
Other intangible assets
1,114
1,215
Total depreciation and amortisation
3,036
2,914
Employee benefit expense
Other employee benefits
3,074
4,259
Post‑employment benefits – Defined contribution superannuation expense
292
361
Share‑based payments
64
128
Total employee benefits expense
3,430
4,748
Finance costs
Interest and finance charges paid/payable on borrowings
1,634
1,045
Interest and finance charges paid/payable on lease liabilities
857
1,053
Amortisation of interest on convertible notes
28
–
Other borrowing cost
247
463
Total Finance costs expenses
2,766
2,561
Other income
Rental income from sub‑lease of right‑of‑use assets
469
343
Cost of goods sold includes an amount of inventories recognized as an expense of $6,831,000 (2023: $17,819,000)
and reversal of provision for stock obsolescence of $1,201,000 (2023: expense of $1,000,000)
50
For personal use only
Note 6. Income tax
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Income tax benefit
Current tax (benefit)/expense in respect of the current year
(4,007)
(4,160)
Deferred tax expense comprises:
–
–
Deferred tax (benefit)/expense relating to the origination and reversal
of temporary differences
3,690
3,844
Aggregate income tax benefit
(317)
(316)
Income tax benefit is attributable to:
Loss from continuing operations
(317)
(316)
Loss from discontinued operations
–
–
Aggregate income tax benefit
(317)
(316)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit from continuing operations
(11,818)
(26,107)
Loss before income tax expense from discontinued operations
(7,892)
(6,867)
(19,710)
(32,974)
Tax at the statutory tax rate of 25%
(4,928)
(8,244)
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Impairment of goodwill and other intangible assets
1,017
3,337
Other expenses that are not deductible in determining taxable loss
17
32
Effect of current year’s unrecognised and unused tax losses and
temporary differences
3,894
4,875
Effect of reversal of deferred tax liabilities
(317)
(316)
Income tax benefit
(317)
(316)
Deferred tax assets
The following deferred tax assets relating to tax losses which have not been brought to account as tax assets:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Tax losses – revenue (gross)
102,696
90,080
Tax losses – capital (gross)
32,499
32,834
Total deferred tax assets not recognised
135,195
122,914
The above potential tax benefit at 25% on revenue losses of $25,674,000 (2023: $22,520,000) has not been
recognised in the statement of financial position as the recovery of this benefit is uncertain.
Toys“R”Us ANZ Limited
Annual Report 2024
51
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Deferred tax liabilities
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Customer database intangible assets
421
738
Deferred tax liability
421
738
Movements:
Opening balance
738
1,054
Credited to profit or loss
(317)
(316)
Closing balance
421
738
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 35.
(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.
Note 6. Income tax (Cont.)
52
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Note 7. Discontinued operations
Description
B2B Business
At the end of the year, following a strategic review, the Board concluded that the Mittoni business was
not core to its ongoing operations and decided to stop operating the business and focus on building its
core brands.
UK business
During the previous 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 Mittoni business operations and 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.
Financial performance information
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Revenue
9,778
15,718
Cost of goods sold
(9,434)
(12,556)
Total revenue
344
3,162
Other income
–
49
Marketing and selling expenses
(143)
(2,445)
Warehouse and distribution expenses
(2,256)
(2,273)
Employee benefits expenses
(1,640)
(1,988)
Administration expenses
(130)
(871)
Impairment of goodwill and other intangible assets (refer note 15)
(4,067)
(2,221)
Restructuring costs
–
(280)
Total expenses
(8,236)
(10,078)
Loss before income tax expense
(7,892)
(6,867)
Income tax expense
–
–
Loss after income tax expense from discontinued operations
(7,892)
(6,867)
Toys“R”Us ANZ Limited
Annual Report 2024
53
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Net cash used in operating activities
(2,012)
(2,659)
Net cash from financing activities
1,842
814
Net decrease in cash and cash equivalents from discontinued operations
(170)
(1,845)
Restructuring costs
As at 31 July 2024, the Group has provided for an amount of $222,000 (2023: $280,000) towards restructuring
and legal costs in association with exiting the UK operations and surrender of the UK licence.
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Carrying amount at the start of the year
280
–
Provision used during the year
(58)
–
Provisions recognised during the year
–
280
Carrying amount at the end of the period
222
280
Note 8. Cash and cash equivalents
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current assets
Cash at bank
708
1,766
Note 7. Discontinued operations (Cont.)
54
For personal use only
Note 9. Trade and other receivables
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current assets
Trade receivables
–
811
Less: Allowance for expected credit losses
–
(2)
–
809
Other receivables
–
28
–
837
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. The Group
has recognised a gain of $14,746 in profit and loss in respect of the expected credit losses for the year ended
31 July 2024 (2023: $Nil)
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Expected credit loss rate
Carrying amount
Allowance for expected
credit losses
31 July 2024
%
31 July 2023
%
31 July 2024
$’000
31 July 2023
$’000
31 July 2024
$’000
31 July 2023
$’000
Not overdue
–
–
–
655
–
–
1 – 60 days overdue
–
–
–
128
–
–
61 – 90 days overdue
–
–
–
11
–
–
Over 90 days overdue
–
12%
–
17
–
2
–
811
–
2
Movements in the allowance for expected credit losses are as follows:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Opening balance
(2)
(2)
Additional provisions recognised
–
(1)
Provisions reversed/utilized
2
1
Closing balance
–
(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.
Toys“R”Us ANZ Limited
Annual Report 2024
55
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 10. Inventories
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current assets
Stock on hand – at cost
713
6,344
Less: Provision for impairment
(119)
(1,439)
594
4,905
Movement in provision for obsolescence
Year ended
31‑Jul‑24
$’000
31‑Jul‑23
$’000
Balance at the beginning of the year
(1,439)
(473)
Additional provisions recognised
-
(1,000)
Provisions utilised/adjusted
1,320
34
Balance at the end of the year
(119)
(1,439)
Note 11. Right-of-use assets
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Non-current assets
Land and buildings – right-of-use
10,089
12,252
Less: Accumulated depreciation
(1,903)
(1,085)
8,186
11,167
56
For personal use only
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
Consolidated
Land and
buildings
$’000
Balance at 1 August 2022
–
Additions
12,252
Depreciation expense
(1,085)
Balance at 31 July 2023
11,167
Disposals
(1,774)
Depreciation expense
(1,207)
Balance at 31 July 2024
8,186
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.
During the year, the Group surrendered a portion of the warehouse space in Clayton, Victoria back to the
landlord. Refer note 37 for further information on events after the reporting period.
As at 31 July 2024, 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 12. Other assets
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current assets
Prepaid expenses
905
135
Prepaid deposits for purchase of inventory
–
73
905
208
Non-current assets
Bonds and security deposits
2,756
2,935
3,661
3,143
Note 11. Right-of-use assets (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
57
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 13. Assets of disposal group classified as held for sale
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current assets
Trade and other receivables
–
336
Inventories
16
2,173
Other current assets
–
610
16
3,119
Note 14. Property, plant and equipment
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Non-current assets
Leasehold improvements – at cost
939
951
Less: Accumulated depreciation
(170)
(81)
769
870
Plant and equipment – at cost
2,942
2,990
Less: Accumulated depreciation
(1,688)
(1,093)
1,254
1,897
2,023
2,767
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:
Consolidated
Plant and
equipment
$’000
Leasehold
improvements
$’000
Total
$’000
Balance at 1 August 2022
2,372
12
2,384
Additions
564
442
1,006
Disposals
(6)
(3)
(9)
Transfers in/(out)
(498)
498
–
Depreciation expense
(535)
(79)
(614)
Balance at 31 July 2023
1,897
870
2,767
Additions
5
–
5
Disposals
(29)
(5)
(34)
Depreciation expense
(619)
(96)
(715)
Balance at 31 July 2024
1,254
769
2,023
58
For personal use only
Note 15. Goodwill and other intangibles
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Non-current assets
Goodwill – at cost
30,522
29,695
Less: Impairment
(29,695)
(25,628)
827
4,067
Licenses and trademarks – at cost
375
375
Less: Accumulated amortisation
(63)
(44)
312
331
Customer database – at cost
5,271
5,271
Less: Accumulated amortisation
(3,867)
(2,810)
1,404
2,461
Software – at cost
576
281
Less: Accumulated amortisation
(282)
(241)
294
40
2,837
6,899
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
Consolidated
Goodwill
$’000
Licences
and
trademarks
$’000
Customer
database
$’000
Software
$’000
Total
$’000
Balance at 1 August 2022
15,195
2,692
3,515
45
21,447
Additions
–
–
–
16
16
Impairment of assets
(11,128)
(2,221)
–
–
(13,349)
Amortisation expense
–
(139)
(1,054)
(22)
(1,215)
Balance at 31 July 2023
4,067
332
2,461
39
6,899
Additions through business
combinations (note 34)
827
–
–
–
827
Additions
–
–
–
292
292
Impairment of assets
(4,067)
–
–
–
(4,067)
Amortisation expense
–
(20)
(1,057)
(37)
(1,114)
Balance at 31 July 2024
827
312
1,404
294
2,837
Toys“R”Us ANZ Limited
Annual Report 2024
59
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Impairment testing – Goodwill
The Group has identified that there are two cash-generating units which are aligned with the operating
segments disclosed in note 3 and against which goodwill and other intangible assets are allocated
and tested.
Goodwill
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Business to consumer (B2C)
827
–
Business to business (B2B)
–
4,067
Total
827
4,067
Recoverability of software, licences and customer database has been assessed at the time of creation/
subscription based on their useful life and is then amortised accordingly. All software, licences and
customer database are reviewed for their usefulness and validity annually and impaired if required.
As the operations of the B2B CGU have been discontinued during the year, the recoverable value
of the B2B CGU was below the carrying value of the CGU. As a result of this, the Group has recognised
an impairment charge of $4.07 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 for B2C CGU:
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 B2C CGU:
Revenue and expenses for FY25
B2C
Based on
approved
budgets
Projected average revenue and cost of sales growth rate p.a. after budget period
16.00%
Projected operating costs and overheads increase after budget period
5.00%
Pre‑tax discount rate
21.43%
Long‑term growth rate
3.00%
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.
Outcome of impairment assessment
Based on the above, the recoverable amount of the B2C CGU exceeded the carrying amount by $7.1 million.
Note 15. Goodwill and other intangibles (Cont.)
60
For personal use only
Sensitivity
As disclosed in note 2, 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:
(1) Revenue growth during the budget period would need to decrease by more than 10% before goodwill
would need to be impaired, with all other assumptions remaining constant.
(2) The pre-tax discount rate would need to increase by 9% 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 B2C CGU’s goodwill is based would not cause the CGU’s carrying amount to exceed its recoverable amount.
Note 16. Trade payables
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Trade payables
1,871
3,405
Refer to note 27 for further information on financial instruments.
Note 15. Goodwill and other intangibles (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
61
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 17. Borrowings
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Term loan – secured 1
14,238
11,500
UK Loan facility – secured
–
584
Short-term loan – Mercer (unsecured)2
600
–
14,838
12,084
Non-current liabilities
UK Loan facility – secured
–
526
Convertible note payable – at amortised cost3
390
–
390
526
15,228
12,610
1. Term loan
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 facility is secured against all assets of the Group, both present and future.
During the year, the Group entered into amended facility with the lender wherein the total facility
was limited to $13.4 million (excluding interest and fees) of which $13.0 million (Facility A) is repayable
by July 2025 and $0.4 million (Facility B) is repayable by September 2024. Facility A carried an interest
rate of 11.5% p.a. with an additional 1.5% p.a. line fees and Facility B carries an interest rate of 15% p.a.
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 2024, the Group is in breach of the financial covenants.
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 2024.
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 $14.2 million. However, the lender has not requested
early repayment of the loan. Refer note 37 ‘Events after the reporting period’ for information on the
waiver obtained from the lender subsequent to year‑end.
2. Short-term finance – Mercer
During March 2024, the Group entered into a loan facility agreement with mercer Street Global
Opportunity Fund II LP for a short-term loan of $600,000. The repayment amount is $690,000 payable
within six months from the date of the loan or a date mutually agreed between the parties, whichever
is later. The loan is unsecured.
62
For personal use only
3. Convertible notes
On 20 March 2024 the Company entered into a Convertible Securities Agreement with Mercer Street
Global Opportunity Fund II LP to provide funding to the Company up to $4,200,000 (Convertible Securities
Agreement or ‘CSA’). The initial drawdown was $700,000 (Tranche 1) and a further $785,000 (Tranche 2)
was drawn following shareholder approval granted on 17 May 2024.
The Company issued 793,000 convertible securities (CS) at $0.8827 per CS with a face value of $1.00
on 31 May 2024 (“Tranche 1”). Subsequently, on 17 July 2024 the Company issued 863,500 additional
CS at $0.9091 per CS with a face value of $1.00 (“Tranche 2”). Subject to CSA, further investment of up
to $2,715,000 CS can be issued in the future (“Further Tranche”).
The maturity date for Tranche 1 is 18 months from the issue date (30 November 2025) and Tranche 2 is
15 months from the date issue (16 October 2025). The convertible notes have a zero coupon and therefore
no interest is payable with the exception of a default event. The convertible notes are unsecured.
Total transactions costs were $388,574 at the date of issue of the convertible notes and unamortised
transaction costs of $360,000 have been offset against the convertible notes payable liability.
The conversion features attached to the notes represent embedded derivatives which were recognised
at fair value at the time of issue and thereafter at fair value at the end of each reporting period
(see note 19).
The Directors appointed an external valuation expert to perform a fair valuation of the embedded
derivatives as at the respective issue dates and as at 31 July 2024. The fair value methodology adopted
by the external valuer was the Monte Carlo Simulation model.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Total facilities
Secured loan
13,400
18,000
Used at the reporting date
Secured loan (excluding capitalised interest and fees)
13,400
12,610
Unused at the reporting date
Secured loan
–
5,390
Note 17. Borrowings (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
63
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 18. Lease liabilities
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Lease liability
564
576
Non-current liabilities
Lease liability
8,728
11,284
9,292
11,860
Reconciliation:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Opening balance
11,860
281
Additions during the year
–
12,252
Terminations
(1,770)
–
Interest expense
857
1,053
Lease payments
(1,655)
(1,726)
Closing balance
9,292
11,860
64
For personal use only
Maturity analysis of lease liabilities
2024
Within
1 year
$’000
1‑2 years
$’000
2‑3 years
$’000
3‑4 years
$’000
4‑5 years
$’000
After
5 years
$’000
Total
$’000
Lease payments
1,423
1,493
1,564
1,638
1,714
5,846
13,678
Less: Finance charge
(859)
(800)
(728)
(642)
(539)
(818)
(4,386)
Discounted Lease
Liabilities
564
693
836
996
1,175
5,028
9,292
2023
Within
1 year
$’000
1‑2 years
$’000
2‑3 years
$’000
3‑4 years
$’000
4‑5 years
$’000
After
5 years
$’000
Total
$’000
Lease payments
1,677
1,728
1,813
1,900
1,989
9,180
18,287
Less: Finance charge
(1,101)
(1,043)
(972)
(884)
(779)
(1,648)
(6,427)
Discounted Lease
Liabilities
576
685
841
1,016
1,210
7,532
11,860
Note 19. Derivative financial instruments
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Convertible note – fair value of embedded derivatives
505
–
Refer to note 27 for further information on financial instruments.
Note 20. Employee benefits
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Annual leave
175
366
Long service leave
58
94
233
460
Non-current liabilities
Long service leave
–
9
233
469
Note 18. Lease liabilities (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
65
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 21. Contingent consideration
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Contingent consideration 1
210
–
Non-current liabilities
Contingent consideration 1
252
–
462
–
1.
Represents management estimate of earn-out consideration payable calculated on expected contribution margin
of the acquired business over the earn-out period being two years ending 30 June 2026. The maximum earn-out
payable under the agreement is $1,000,000. Refer note 34 ‘Business combinations’ for further details on the
RIOT acquisition.
Note 22. Assets pledged as security
In accordance with the security arrangements of liabilities as disclosed in note 17 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.
Note 23. Other current liabilities
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Accrued royalties
807
57
GST payable/(receivable) – net
(8)
12
Payroll Accruals
271
375
Other accrued expenses
709
1,600
1,779
2,044
66
For personal use only
Note 24. Liabilities directly associated with assets classified as held
for sale
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Current liabilities
Trade payables
40
1,249
Other payables
37
316
Deferred revenue
6
–
Loan – Tru Kids Inc 1
2,977
–
Employee benefits
68
–
3,128
1,565
1.
UK loan facility
The Company entered into a secured loan agreement on 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. During the year, the Group entered into an agreement with TRUK wherein the Group shall execute
an instrument conveying any and all remaining assets of the UK operations to TRUK in full and final satisfaction
of the debt and liabilities owed by the Group to TRUK, including the loan. The parties agreed that the instrument
shall be executed at a mutually agreed later date.
Note 25. Issued capital
Consolidated
31 July 2024
Shares
31 July 2023
Shares
31 July 2024
$’000
31 July 2023
$’000
Ordinary shares – fully paid
115,690,728
863,086,674
295,540
292,920
Toys“R”Us ANZ Limited
Annual Report 2024
67
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Movements in ordinary share capital
Details
Date
Number
of Shares
Issue price
$’000
Balance
01–Aug–22
861,861,184
292,965
Shares issued as consideration for remuneration
31–Aug–22
1,225,490
$0.0510
62
Buy‑back of Unmarketable Parcels
4–Jul–23
–
–
(107)
Balance
31–Jul–23
863,086,674
292,920
Placement
17–Aug–23
59,831,374
$0.0110
658
Sale unmarketable parcels
–
55
Conversion of Convertible Notes
27–Oct–23
59,545,457
$0.0110
655
Placement to Mercer
26–Feb–24
84,615,385
$0.0065
550
Mercer Advisor shares-Jaszac Pty Ltd
26–Feb–24
2,307,692
$0.0065
15
Placement to Mercer
28–Mar–24
21,276,596
$0.0094
200
Riot Acquisition – part consideration
21–May–24
35,000,000
$0.0100
350
Penny Cox – conversion of Loan
23–May–24
10,638,298
$0.0094
100
Consolidation of shares (1:10)
31–May–24 (1,022,671,060)
–
Shares issued to Mercer
31–May–24
2,060,312
$0.0968
200
Capital raising costs
–
(163)
Balance
31 July 2024
115,690,728
295,540
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
Company in proportion to the number of and amounts paid on the 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.
Note 26. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 25. Issued capital (Cont.)
68
For personal use only
Note 27. 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.
Material 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.
Categories of financial instruments1
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Financial assets
Cash and cash equivalents
708
1,766
Trade and other receivables
–
1,173
Other assets
2,756
2,935
Total financial assets
3,464
5,874
Financial liabilities
Non‑interest bearing
1,911
4,655
Other liabilities
2,286
2,349
Fixed interest rate instruments – Lease liabilities
9,292
11,860
Fixed interest rate instruments – Borrowings
18,204
12,610
Total non-derivative financial liabilities
31,693
31,474
Derivative financial instruments
505
–
Derivative financial liabilities
505
–
Total financial liabilities
32,198
31,474
1.
Balances include financial instruments pertaining to discontinued operations (assets and liabilities directly associated
with classified as held for sale) as well.
Toys“R”Us ANZ Limited
Annual Report 2024
69
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
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. At a Group level, market risk exposures are measured through sensitivity analysis and stress
scenario analysis. In FY24, 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 financial assets and financial liabilities
at the reporting date were as follows:
Consolidated
Assets
Liabilities
31 July 2024
$’000
31 July 2023
$’000
31 July 2024
$’000
31 July 2023
$’000
US dollars
–
697
4,120
–
GBP
334
691
40
258
SGD
–
22
–
–
334
1,410
4,160
258
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.
Note 27. Financial instruments (Cont.)
70
For personal use only
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.
Impact on profit
or loss Gain/(loss)
31 July 2024
$’000
31 July 2023
$’000
10% increase in AUD against foreign currency
USD
412
70
GBP
(29)
43
SGD
–
2
383
115
Impact on profit
or loss Gain/(loss)
31 July 2024
$’000
31 July 2023
$’000
10% decrease in AUD against foreign currency
USD
(412)
(70)
GBP
29
(43)
SGD
–
(2)
(383)
(115)
Forward foreign exchange contracts
At 31 July 2024, there were no foreign exchange contracts (2023: Nil).
Interest rate risk
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’s exposure to interest rates on financial
assets and financial liabilities are detailed in the liquidity risk management section below.
Note 27. Financial instruments (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
71
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Interest rate sensitivity
As at 31 July 2024, the Group has a fixed interest rate of 11.5% p.a. (plus 1.5% line fees) on its secured borrowings
of $13.82 million (2023: $11.50 million) and a fixed interest rate of 15% p.a. on secured borrowings of $0.42 million
(2023: $Nil) as at the balance sheet date. It is the Group’s policy to protect part of the loans from exposure
to increasing interest rates.
The Group has a loan facility with its Licensor TRU Kids Inc. (TRUK) as at 31 July 2024 amounting to $2.98 million
(2023: $1.11 million). The loan carries a fixed interest rate of 10.56% p.a.
The Group has a short-term loan facility with Mercer amounting to $0.6 million as at 31 July 2024 (2023: $Nil),
which carries a fixed interest of 15% p.a.
The convertible notes issued during the year have a zero coupon and therefore no interest is payable with
the exception of a default event.
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. 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 one 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.
Note 27. Financial instruments (Cont.)
72
For personal use only
Liquidity and interest tables – financial liabilities
The following table details the Group’s remaining contractual maturity for its 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.
Consolidated
– 31 July 2024
Weighted
average
interest
rate
%
0–3 months
$’000
3 months
to 1 year
$’000
1–5 years
$’000
Over
5 years
$’000
Total
$’000
Non-derivatives
Non-interest bearing
–
1,911
–
–
–
1,911
Other liabilities
–
1,824
210
252
–
2,286
Fixed interest rate
instruments
12.44%
2,977
14,837
390
–
18,204
Total non-derivatives
6,712
15,047
642
–
22,401
Derivatives
Embedded
derivatives –
convertible notes
–
–
505
–
505
–
–
505
–
505
Consolidated
– 31 July 2023
Weighted
average
interest
rate
%
0–3 months
$’000
3 months
to 1 year
$’000
1–5 years
$’000
Over
5 years
$’000
Remaining
contractual
maturities
$’000
Non-derivatives
Non‑interest bearing
-
4,655
-
-
-
4,655
Other liabilities
-
2,349
-
-
-
2,349
Fixed interest rate
Instruments
11.42%
11,500
584
526
-
12,610
Total
non-derivatives
18,504
584
526
-
19,614
Refer note 18 for maturity analysis of lease liabilities.
Note 27. Financial instruments (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
73
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Liquidity and interest tables – financial assets
The following table details the Group’s expected maturity for its 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.
Weighted
average
effective
interest
rate
%
0–3 months
$’000
3 months
to 1 year
$’000
1–5 years
$’000
5+ years
$’000
Total
$’000
2024
Cash
–
708
–
–
–
708
Non‑interest bearing
–
–
–
–
–
–
Fixed interest rate
instruments
4.19%
2,756
2,756
3,484
–
–
–
3,464
2023
Cash
–
1,766
–
–
–
1,766
Non‑interest bearing
–
1,173
–
–
–
1,173
Fixed interest rate
instruments
1.37%
–
–
2,935
–
2,935
2,939
–
2,935
–
5,874
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.
Note 27. Financial instruments (Cont.)
74
For personal use only
Note 28. Key management personnel disclosures
Details of key management compensation
The aggregate compensation made to key management personnel of the Group is set out below:
Consolidated
31 July 2024
$
31 July 2023
$
Short-term employee benefits
913,823
1,117,583
Post-employment benefits
88,546
98,918
Other long‑term benefits
16,806
7,743
Termination benefits
–
278,419
Share-based payments
66,111
141,290
1,085,286
1,643,953
Note 29. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia
Partners, the auditor of the Company and its network firms:
Consolidated
31 July 2024
$
31 July 2023
$
Audit services – RSM Australia Partners
Audit or review of the financial statements
141,700
122,899
Other services – network firms
Compliance Services1
–
29,986
141,700
152,885
1.
Relates to services performed by network firms of RSM Australia Partners in relation to winding down and deregistration
of overseas subsidiaries
Note 30. Contingent liabilities and contingent assets
As at 31 July 2024, the Group had issued bank guarantees of $2.76 million (2023: $2.96 million). The Group
has placed an equivalent amount of cash deposit with the banks in relation to these bank guarantees
(see note 12).
There are no contingent assets as at 31 July 2024 (2023: $Nil).
Toys“R”Us ANZ Limited
Annual Report 2024
75
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 31. Licence guarantee commitments
Under the terms of various License Agreements, the Company guarantees the minimum level of license
payments. The commitment in relation to these guarantees not already recognised is as follows:
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
769
4,780
One to five years
2,953
24,683
More than five years
19,797
56,781
23,519
86,244
Note 32. 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 35 to the
financial statements.
(b) Transactions with Key Management Personnel
Key management personnel
Details of key management personnel compensation are disclosed in note 28 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 related to personal expenses incurred on a company
credit card.
During the financial year, there were no other reportable transactions between the Group and its Directors,
KMP, or their personally related entities (Related Parties) (2023: $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 2024 and 31 July 2023, 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.
76
For personal use only
Note 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
31 July 2024
$’000
31 July 2023
$’000
Loss after income tax
(5,666)
(30,984)
Total comprehensive loss
(5,666)
(30,984)
Statement of financial position
Parent
31 July 2024
$’000
31 July 2023
$’000
Total current assets
1,223
1,447
Total assets
29,424
38,406
Total current liabilities
18,704
16,519
Total liabilities
28,579
27,857
Equity
Issued capital
295,540
292,920
Equity-settled employee benefits reserve
865
689
Convertible note equity reserve
297
–
Accumulated losses
(295,857)
(283,060)
Total equity
845
10,549
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.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 July 2024 (31 July 2023: $Nil).
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 July 2024
(31 July 2023: $Nil).
Toys“R”Us ANZ Limited
Annual Report 2024
77
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Material accounting policy information
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1,
except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
•
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt
may be an indicator of an impairment of the investment.
Note 34. Business combinations
Acquisition of RIOT Art & Craft
During March 2024, Toys “R” Us ANZ Limited entered into an Asset Sale Agreement with the vendors of RIOT
Arts and Crafts business for the strategic acquisition of key assets (including inventory, brands and other
intellectual property) of the retail brand RIOT for the total consideration $1.12 million. This is an art and
craft business and operates in the B2C division of the Group. The acquisition of RIOT assets strengthens the
Group’s position in the growing e-commerce market and expands its House-of-Brands offering by adding
additional, complementary products across a number of highly profitable categories. The goodwill represents
brand synergy in the online sector, customer and wholesale expansion and operational efficiencies.
The acquired business contributed revenues of $0.50 million and loss after tax of $0.10 million to the Group
for the period from 22 March 2024 to 31 July 2024. The values identified in relation to the acquisition of Riot
Art & Craft are provisional as at 31 July 2024.
Details of the acquisition are as follows:
Fair value
$’000
Inventories
310
Other payables
(25)
Net assets acquired
285
Goodwill
827
Acquisition-date fair value of the total consideration transferred
1,112
Representing:
Cash paid or payable to vendor
300
Toys “R” Us ANZ Limited shares issued to vendor
350
Contingent consideration
462
1,112
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
1,112
Less: Contingent consideration
(462)
Less: Shares issued by Company as part of consideration
(350)
Net cash used
300
Acquisition costs charged to expensed to profit or loss
44
Note 33. Parent entity information (Cont.)
78
For personal use only
Note 35. Interests in subsidiaries
Name of Entity
Principal place of
business/Country
of incorporation
Ownership interest
31 July 2024
%
31 July 2023
%
Company
Toys”R”Us ANZ Limited (i),(iii)
Australia
100.00%
100.00%
Subsidiaries
UK TRU Limited (formerly UK Toys R Us Limited) (iii)
United Kingdom
100.00%
100.00%
Mittoni Pty Limited (ii),(iii)
Australia
100.00%
100.00%
Hobby Warehouse Pty Limited (ii),(iii)
Australia
100.00%
100.00%
Toys R Us Licensee Pty Limited (ii),(iii)
Australia
100.00%
100.00%
(i) Toys”R”Us ANZ Limited is the head entity within the tax consolidated Group.
(ii) These companies are members of the Australian tax consolidated Group.
(III) 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.
Note 36. Deed of cross guarantee
The following entities are party to a deed of cross guarantee created on 15 June 2022 under which each
company guarantees the debts of the others:
Toys”R”Us ANZ Limited (‘head entity’)
UK TRU Limited (UK Toys R Us Limited)
Mittoni Pty Limited
Hobby warehouse Pty Limited
Toys R Us Licensee Pty Limited
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare
financial statements and Directors’ report under Corporations Instrument 2016/785 issued by the Australian
Securities and Investments Commission.
The above companies represent a ‘Closed Group’ for the purposes of the Corporations Instrument,
and as there are no other parties to the deed of cross guarantee that are controlled by Pinnacle Listed
Comprehensive Limited, they also represent the ‘Extended Closed Group’.
The consolidated statement of profit or loss and other comprehensive income and consolidated statement
of financial position of the ‘Closed Group’ are substantially the same as the Group and therefore have not
been separately disclosed.
Toys“R”Us ANZ Limited
Annual Report 2024
79
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Note 37. Events after the reporting period
On 23 August 2024, the shareholders approved the drawdown of up to $2.715 million from the convertible
securities facility, subject to further agreement between the parties.
On 23 August 2024, the Group raised $2.49 million through a placement to new and existing institutional
and sophisticated investors.
On 20 September 2024, 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 2024.
No other matter or circumstance has arisen since 31 July 2024 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs
in future financial years.
Note 38. Reconciliation of profit/(loss) after income tax to net cash
flow from/(used in) operating activities
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Loss after income tax benefit for the year
(19,393)
(32,658)
Adjustments for:
Depreciation and amortisation
3,036
2,915
Impairment of goodwill and other intangible assets
4,067
13,349
Share-based payments expense
176
369
Foreign exchange differences
(296)
–
Other revenue
(64)
(106)
Loss on disposal of property, plant and equipment
33
–
Non-cash interest and other finance costs
866
–
Changes in net assets and liabilities, net of effects from acquisition and
disposal of business:
Decrease/(increase) in trade and other receivables
1,202
(380)
Decrease in inventories
6,795
2,773
(Increase)/decrease in prepayments and other assets
164
(139)
Increase/(decrease) in trade and payables
(3,640)
1,664
Decrease in deferred tax liabilities
(317)
(316)
Decrease in employee benefits
(166)
64
Net cash used in operating activities
(7,537)
(12,465)
80
For personal use only
Note 39. Non-cash investing and financing activities
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Additions to the right–of–use assets
–
12,252
Disposal of right–of–use assets
(1,774)
–
Shares issued as consideration for RIOT acquisition
350
–
Shares issued as consideration for entering into convertible notes
arrangement
200
–
Shares issued as consideration for capital raising
15
–
(1,209)
12,252
Note 40. Changes in liabilities arising from financing activities
Consolidated
Borrowings
$’000
Convertible
Notes
$’000
Lease
Liabilities
$’000
Total
$’000
Balance at 1 August 2022
10,000
–
281
10,281
Net cash from/(used in) financing activities
2,610
–
(673)
1,937
Additions of leases
–
–
12,252
12,252
Balance at 31 July 2023
12,610
–
11,860
24,470
Net cash from financing activities
4,256
1,396
(795)
4,857
Termination of leases
–
–
(1,770)
(1,770)
Other changes
949
(501)
(3)
445
Balance at 31 July 2024
17,815
895
9,292
28,002
Note 41. Earnings per share
31 July 2024
Cents
per share
31 July 2023
Cents
per share
Basic earnings/(loss) per share
From continuing operations
(11.24)
(29.89)
From discontinued operations
(7.72)
(7.95)
Total Basic Earnings/(loss) per share
(18.96)
(37.84)
Diluted earnings/(loss) per share
From continuing operations
(11.24)
(29.89)
From discontinued operations
(7.72)
(7.95)
Total Diluted Earnings/(loss) per share
(18.96)
(37.84)
Toys“R”Us ANZ Limited
Annual Report 2024
81
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Loss per share from continuing operations
Loss after income tax
(11,501)
(25,791)
Cents
Cents
Basic loss per share
(11.24)
(29.89)
Diluted loss per share
(11.24)
(29.89)
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Loss per share from discontinued operations
Loss after income tax
(7,892)
(6,867)
Cents
Cents
Basic loss per share
(7.72)
(7.95)
Diluted loss per share
(7.72)
(7.95)
Consolidated
31 July 2024
$’000
31 July 2023
$’000
Loss per share
Loss after income tax
(19,393)
(32,658)
Cents
Cents
Basic loss per share
(18.96)
(37.84)
Diluted loss per share
(18.96)
(37.84)
Number
Number
Weighted average number of ordinary shares*
Weighted average number of ordinary shares used in calculating basic
earnings per share
102,271,556
86,298,595
Weighted average number of ordinary shares used in calculating diluted
earnings per share
102,271,556
86,298,595
*
Potential shares comprising convertible notes, share options, service rights and share appreciation rights have not
been considered in the calculation of weighted average number of ordinary shares for diluted earnings per share
as they are anti-dilutive in nature, due to the losses incurred. Share numbers have been adjusted for the effects
of share consolidation.
Note 41. Earnings per share (Cont.)
82
For personal use only
Note 42. Share-base payments
(a) Expenses recognised
An expense of $176,501 (2023: $368,964) 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 2024:
Grant date
Expiry date
Exercise
price
Balance
at the
start of
the year1
Granted
Exercised
Expired/
cancelled
Balance
at the
end of
the year
23/11/2020
01/11/2023
$1.3800
169,158
–
–
(169,158)
–
23/11/2020
01/11/2024
$1.6600
169,672
–
–
–
169,672
23/11/2020
01/11/2025
$1.9900
172,618
–
–
–
172,618
01/05/2021
01/05/2025
$1.3800
169,196
–
–
–
169,196
31/05/2024
31/05/2027
$0.1162
–
5,593,804
–
–
5,593,804
680,644
5,593,804
–
(169,158)
6,105,290
Weighted average exercise price
$1.6045
$0.1162
$0.0000
$1.3800
$0.2471
1.
The options numbers have been adjusted for the effects of share consolidation.
The weighted average remaining contractual life of options outstanding at the end of the financial year was
2.66 years (2023: 1.39 years).
Toys“R”Us ANZ Limited
Annual Report 2024
83
For personal use only
Notes to the Consolidated
Financial Statements
(Cont.)
Set out below are the summaries of service rights granted under the employee incentive plan as at
31 July 2024:
Grant date
Expiry date
Exercise
price
Balance
at the
start of
the year1
Granted
Exercised
Expired/
forfeited/
other
Balance
at the
end of
the year
23/11/2020
10/12/2036
$1.8000
50,000
–
–
–
50,000
27/12/2023
27/12/2025
$0.0000
–
818,182
–
(272,727)
545,455
27/12/2023
27/12/2026
$0.0000
–
818,182
–
(272,727)
545,455
27/12/2023
27/12/2027
$0.0000
–
818,181
–
(272,727)
545,454
50,000
2,454,545
–
(818,181)
1,686,364
Weighted average exercise price
$1.8000
$0.0000
$0.0000
$0.0000
$0.0534
1.
The service rights numbers have been adjusted for the effects of share consolidation.
The weighted average remaining contractual life of service rights outstanding at the end of the financial year
was 2.70 years (2023: 13.37 years).
Set out below are the summaries of share appreciation rights granted under the employee incentive plan
as at 31 July 2024:
Grant date
Expiry date
Exercise
price
Balance
at the
start of
the year1
Granted
Exercised
Expired/
forfeited/
other
Balance
at the
end of
the year
21/09/2021
21/09/2026
$1.8000
13,000
–
–
(5,000)
8,000
27/12/2023
27/12/2028
$0.0000
–
1,454,545
–
–
1,454,545
13,000
1,454,545
–
(5,000)
1,462,545
Weighted average exercise price
$1.8000
$0.0000
$0.0000
$1.8000
$0.0098
1.
The share appreciation rights numbers have been adjusted for the effects of share consolidation.
The weighted average remaining contractual life of share appreciation rights outstanding at the end of the
financial year was 4.40 years (2023: 3.15 years).
Set out below is a summary of share warrants granted to the lender of the term loan as at 31 July 2024:
Grant date
Expiry date
Exercise
price
Balance
at the
start of
the year1
Granted
Exercised
Expired/
forfeited/
other
Balance
at the
end of
the year
28/07/2022
27/07/2025
$0.5000
1,800,000
–
–
–
1,800,000
1,800,000
–
–
–
1,800,000
1.
The share warrants numbers have been adjusted for the effects of share consolidation.
Note 42. Share-base payments (Cont.)
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(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:
Grant date
Expiry date
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
31/05/2024
31/05/2027
$0.0960
$0.1162
134.07%
–
4.048%
$0.0531
For the service rights and share appreciation granted during the current financial year, the valuation model
inputs used to determine the fair value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
27/12/2023
27/12/2025
$0.1100
$0.0000
153.75%
–
4.440%
$0.1100
27/12/2023
27/12/2026
$0.1100
$0.0000
153.75%
–
4.440%
$0.1100
27/12/2023
27/12/2027
$0.1100
$0.0000
153.75%
–
4.440%
$0.1100
27/12/2023
27/12/2028
$0.1100
$0.1100
153.75%
–
4.060%
$0.1100
(e) Other information
The weighted average share price during the financial year was $0.111 (2023: $0.263).
Note 42. Share-base payments (Cont.)
Toys“R”Us ANZ Limited
Annual Report 2024
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Consolidated Entity Disclosure Statement
31 July 2024
Entity name
Entity type
Place formed/
Country of
incorporation
Ownership
interest
%
Tax residency
Toys”R”Us ANZ Limited
Body Corporate
Australia
100.00%
Australia
UK TRU Limited
Body Corporate
United Kingdom
100.00%
United Kingdom
Mittoni Pty Limited
Body Corporate
Australia
100.00%
Australia
Hobby warehouse Pty Limited
Body Corporate
Australia
100.00%
Australia
Toys R Us Licensee Pty Limited
Body Corporate
Australia
100.00%
Australia
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Directors’ Declaration
31 July 2024
In the Directors’ opinion:
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
•
the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in note 1 to the financial statements;
•
the attached financial statements and notes give a true and fair view of the Group’s financial position
as at 31 July 2024 and of its performance for the financial year ended on that date;
•
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, there are reasonable grounds to believe that the members of the Extended
Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject
by virtue of the deed of cross guarantee described in note 36 to the financial statements; and
•
the information disclosed in the attached consolidated entity disclosure statement is true and correct.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the Directors
Kelly Humphreys
Chair
30 September 2024
Toys“R”Us ANZ Limited
Annual Report 2024
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72
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
RSM Australia Partners
Level 27, 120 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 controlled entities
(together referred to as ‘the Group’) which comprises the consolidated statement of financial position as at 31
July 2024, 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 material accounting policy information, the consolidated entity disclosure
statement 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 2024 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 (including independence standards) (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.
Independent Auditor’s Report
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73
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a loss of $19.4
million and had cash outflows from operating activities of $7.5 million during the year ended 31 July 2024. Also,
as at 31 July 2024, the Group’s current liabilities exceeded its current assets by $21.2 million, and the Group
had a net liability position amounting to $15.2 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
How our audit addressed this matter
Revenue recognition
Refer to Note 4 and Note 7 in the financial statements
During the year the group recorded revenue transactions
of $7.7 and $9.8 million for continued and discontinued
operations, respectively.
Revenue recognition is considered a Key Audit Matter
because of its significance to the Group’s reported
financial performance.
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.
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;
•
Searching and reviewing any large or unusual
transactions;
•
Performing cut-off testing over transactions recorded
either side of the year end, to ensure that revenues
were recorded in the appropriate period;
•
Conducting a combination of 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.
Toys“R”Us ANZ Limited
Annual Report 2024
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Independent Auditor’s Report
(Cont.)
74
Key Audit Matters (continued)
Key Audit Matter
How our audit addressed this matter
Impairment assessment of goodwill
Refer to Note 15 in the financial statements
At 31 July 2024, the Group had goodwill with a carrying
amount of $827,000 (31 July 2023: $4.1 million) relating
to business combinations in the current and previous
years.
As required by AASB 136 Impairment of Assets (‘AASB
136’), management has performed an impairment test
over the goodwill balance at 31 July 2024 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 identified that there were two CGUs for
the purpose of performing impairment testing (being
B2B and B2C businesses).
In addition, management performed a sensitivity
analysis over the value-in-use calculation, by varying
the assumptions used (growth rates, terminal growth
rate and WACC) to assess the impact on the valuations.
As a result of these tests, an impairment expense of
$4.1 million was recognised during the year in relation
to the goodwill of the B2B CGU.
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.
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 and other
available information 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;
•
Reviewing
calculations
of
carrying
amounts
considered for each CGU to ensure that the amounts
were appropriate;
•
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;
•
Reviewing
management’s
calculation
of
the
impairment loss determined as at 31 July 2024; and
•
Reviewing the disclosures in Note 15 to the financial
statements
to
assess
the
appropriateness,
completeness, and compliance with the disclosure
requirements of AASB 136 and AASB 138 Intangible
Assets.
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75
Key Audit Matters (continued)
Accounting for discontinued operations
Refer to Note 7 in the financial statements
During the year ended 31 July 2024, following a strategic
review, the Board concluded to wind down the Mittoni
operations (B2B business) agreeing that the business
was a non-core business and that the business does not
align with the House of Brands strategy. Pursuant to this,
the Mittoni B2B operations have been classified as
“discontinued operations”. During the prior year, the
Board concluded to restructure its UK business and
thereby classified the UK operations as “discontinued
operations”.
AASB 5 Non-current Assets Held for Sale and
Discontinued Operations (‘AASB 5’) requires specific
recognition, measurement and disclosure requirements
relating to assets, liabilities, revenues and expenses of
discontinued operations and disposal groups classified
as held for sale.
This was identified as a Key Audit Matter due to the
significant of the transactions and balances classified as
discontinued operations, as well the level of
management’s estimates and judgements involve in
identifying the account balances and revenue and
expenses relating to the discontinued operations.
Our audit procedures in relation to accounting and
disclosure of discontinued operations included:
•
Obtaining and reviewing internal and external
correspondences, minutes of the board meetings
and other relevant information to assess the
appropriate of the conclusion that the Mittoni B2B
operations were discontinued, including verifying the
timing of the management’s commitment to wind-
down this business to corroborate this occurred prior
to reporting period-end;
•
Assessing the calculations and accounting for assets
held for sale, related liabilities and revenues and
expenses relating to the discontinued operations to
corroborate are accurately identified and reported;
•
Assessing management’s determination of the
impairment of intangible assets relating to the
discontinued operations; and
•
Assessing accounting policy, account balance
classifications and Note disclosures to ensure that
they are in accordance with the requirements of
AASB 5.
Accounting for Convertible Notes
Refer to Note 17 and 19 in the financial statements
During the year, the Group entered into a Convertible
Securities Agreement with a lender to provide funding to
the Group for up to $4.2 million, under which the Group
issued 2 tranches of Convertible Notes having face value
of $1.5 million as at 31 July 2024.
Accounting for convertible loan notes has been
considered a key audit matter, due to the complexity of
the accounting treatment required under Australian
Accounting Standards.
Our audit procedures involved the assistance of our
Corporate Finance team and included, among others:
•
Reviewing the convertible note deed, to evaluate its
terms and conditions;
•
Evaluating the accounting treatment adopted to
determine whether it is in compliance with Australian
Accounting Standards, including confirming that the
instrument is a hybrid instrument, consisting of a host
liability and an embedded derivative, representing a
financial liability;
•
Recalculating the fair value of the instrument at
inception, and its subsequent measurement as at
balance date;
•
Evaluating the reasonableness of key inputs to the
valuation model; and
•
Assessing the appropriateness of the disclosures in
respect of the borrowings and the derivative financial
liability in the financial statements.
Toys“R”Us ANZ Limited
Annual Report 2024
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Independent Auditor’s Report
(Cont.)
76
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 2024; 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a)
the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001; and
b)
the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
(i)
the financial report (other than the consolidated entity disclosure statement) that gives a true and
fair view and is free from material misstatement, whether due to fraud or error; and
(ii)
the consolidated entity disclosure statement that is true and correct and is free of 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.
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77
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 2024.
In our opinion, the Remuneration Report of Toys“R”Us ANZ Limited for the year ended 31 July 2024, 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 J MORILLO MALDONADO
Partner
Dated: 30 September 2024
Melbourne, Victoria
Toys“R”Us ANZ Limited
Annual Report 2024
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Shareholder Information
The shareholder information set out below was applicable as at 18 September 2024.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Holding Ranges
Fully Paid Ordinary shares
Number
of holders
Total
Units
% of
total
shares
Issued
Options
Total
Units
Service
Rights
Units
Share
Appreciation
Rights Total
Units
1 to 1,000
192
35,731
0.02%
–
–
5,000
1,001 to 5,000
275
875,027
0.58%
–
–
3,000
5,001 to 10,000
200
1,548,044
1.02%
–
–
–
10,001 to 100,000
331
11,533,555
7.62%
285,713
50,000
–
100,001 and over
92 137,269,800
90.76%
27,084,900
1,636,364
1,454,546
1,090
151,262,157
100.00%
27,370,613
1,686,364
1,462,546
Holding less than
a marketable parcel
538
1,325,766
0.88%
–
–
8,000
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Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number
held
% of total
Shares
Issued
1
Directed Electronics Australia Pty Ltd
28,571,430
18.89%
2
Citicorp Nominees Pty Limited
25,432,479
16.81%
3
UBS Nominees Pty Ltd
10,073,670
6.66%
4
Jaszac Two Investment Trust
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